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Tempting TIPS

Lower inflation expectations as a result of falling oil prices have weighed on TIPS prices during the second half of 2014. TIPS underperformance has led to the lowest market-implied inflation expectations of the past four years We do, however, find TIPS an attractive high-quality option and certainly more appealing than Treasuries as a result of recent underperformance.

Potential Outcomes of the Final FOMC Meeting of 2014

Statements following the final FOMC meeting of 2014, particularly on the recent drop in oil prices and its impact on the U.S. economy, could have ramifications for near- and longterm monetary policy. The FOMC will also provide markets with a new set of targets at this meeting...

Will Shoppers Bring Holiday Cheer for Markets?

We expect holiday shoppers, bolstered by lower energy prices, to help support potential stock market gains. Although the severity of the oil price decline has been unsettling, we view the decline as positive for U.S. consumers overall. Retail stocks should deliver some cheer for markets this holiday season, but don’t stuff those stockings with too much of them.

High-Yield Bonds & Oil Prices Revisited

peak of $107 per barrel on June 20, 2014, through Monday, December 8, 2014, we take another look at the impact of lower oil prices on the high-yield bond market. Recent high-yield market weakness has already accounted for a rise in defaults from lower oil prices. Even with weakness from rising defaults, we believe high-yield bonds may outperform their high-quality counterparts in 2015 due to their existing yield advantage.

Favorable Policy Environment for Stocks in 2015

We expect the policy environment in 2015 to be supportive for stocks. The transfer of power to Republicans may have a meaningful impact on broad policy measures. Regardless of the political party in power, the year before the presidential election has historically been a good one for stocks.

Beige Book Suggests That Recent Market Concerns Around Global Growth May Be Overdone

The report suggested that U.S. economic activity has “continued to expand,” and in general, optimism regarding the economic outlook far outweighed pessimism, as it has for the past 18 months or so. For the first time in this business cycle, the latest Beige Book contained more than one mention of employers having difficulty finding low-skilled workers, and retaining and compensating key workers.

2015 Fixed Income Outlook: Handle with Care

With sustained improvement in economic growth, slowly rising inflation, and the approach of the Fed’s first interest rate hike, bond prices are likely to decline in 2015. High-yield bonds and bank loans can help investors manage this challenging bond market.

Can Stocks Deliver the Goods in 2015?

We believe stocks will deliver mid- to highsingle- digit returns in 2015. We expect earnings, and not valuations, to do the heavy lifting in producing potential stock market gains for investors in 2015. Monetary policy is in transit in 2015, when stocks will face a shift from the very loose monetary policy of the Federal Reserve’s (Fed) quantitative easing (QE) program to an environment in which the Fed begins to hike interest rates. Valuations for the S&P 500 remain slightly above long-term ave​

U.S. Economic Growth Picks Up

We believe the U.S. economy will continue its transition from the slow gross domestic product (GDP) growth of 2011 – 2013 to more sustained, broad-based growth. We expect the U.S. economy will expand at a rate of 3% or slightly higher in 2015, which matches the average growth rate over the past 50 years.​

Current Conditions Index 11/19/14

Read real-time insight into the trends that shape LPL Financial Research’s recommended actions to manage portfolios, it has proven to be a useful investment decision-making tool.

Overseas Influences

Demand from overseas investors once again helped the bond market shrug off stronger economic data and weak Treasury auction demand. Favorable yield differentials between Treasuries and key overseas bond yields may provide lingering support for the domestic bond market. The Fed, this week’s release of Fed meeting minutes, and the European economy likely hold the keys to unlocking the low-yield environment.​

Emerging Markets Opportunity Still Emerging

We believe emerging markets (EM) fundamental conditions are set for improvement in 2015, based on our outlooks for economic growth, earnings, and policy. Valuations are compelling and EM may be situated to recapture some of their relative losses from a technical perspective, particularly in Asian markets. However, somewhat mixed fundamental and technical pictures suggest a better opportunity may be forthcoming.

Japan Check-In: Will the Weak Q3 GDP Reading Draw a Policy Response

The much weaker than expected Q3 GDP reading in Japan is a modest threat to overall global growth for 2014 and into 2015. We continue to believe the global economy will continue to expand in 2014, 2015, and beyond. The pace and composition of the policy response from Japan in the coming weeks and months are critical.

High-Yield Bonds & Oil Prices

We find it premature to draw conclusions regarding oil prices and the performance of the broad high-yield bond market. Default rates, the pace of economic growth, and the strength of credit quality metrics among high-yield issuers — not oil prices — will be the primary drivers of high-yield bond market returns.

Current Conditions Index 11/12/14

Read real-time insight into the trends that shape LPL Financial Research’s recommended actions to manage portfolios, it has proven to be a useful investment decision-making tool.

Solid Earnings Season Spelled Out

While the certainty provided by an election outcome has been positive for the stock market over time, our positive stock market outlook is based much more on fundamentals. It does not get more fundamental than earnings, which are on track to grow by 10% year over year for the second straight quarter. Earnings season is not over, but with about 90% of S&P 500 companies having reported results, we are ready to declare it a success.

Consumer Conditions

The drop in gasoline prices over the fall and summer months has been a plus for spending, but other factors have a much bigger impact on the consumer. The better tone to the labor market, the sharp rise in household net worth, and prerecession levels of consumer confidence all act as supports for the consumer. However, stubbornly weak wage and income growth remain as key constraints on spending. Sustained economic growth is the best way to ensure solid employment growth.

Current Conditions Index 11/5/14

Read real-time insight into the trends that shape LPL Financial Research’s recommended actions to manage portfolios, it has proven to be a useful investment decision-making tool.

High-Yield Divergence

The headwinds of rising high-quality bond yields and increasing new issuance have slowed the advance of high-yield bonds in late October 2014, relative to stock market gains. Nonetheless, we expect high-yield bonds may improve as economic expansion, earnings growth, and low defaults continue to drive our positive outlook. We continue to expect a challenging, lowreturn environment across the bond market, with high-yield bonds a likely bright spot.

S&P Is Not GDP

It is important to recognize that the S&P 500 is not GDP. S&P 500 companies have different drivers for earnings than the components that drive GDP. The backdrop of solid business spending within a slower trajectory of overall GDP growth can be a favorable one for the stock market. Although stocks are at the low end of our target 10–15% S&P 500 return range for 2014, we see further gains between now and year end as likely, with profit growth as a primary driver.

QE Ended, Now What?

The Fed ended its bond purchase program last week and the bar has been set fairly high for restarting more QE. The economy is in far better shape today, compared with the start of QE in 2008 and the end of QE1 and QE2. It is probably too soon to know if QE has “worked,” and the better question may be, can the U.S. economy stand on its own without QE? We believe the BOJ and ECB are likely to do more QE.

Reduce Debt, the Systematic Way

In America today, carrying some debt is unavoidable but how much debt is tool much? Assess your debt and begin reducing it with three easy steps .

Current Conditions Index 10/29/14

Read real-time insight into the trends that shape LPL Financial Research’s recommended actions to manage portfolios, it has proven to be a useful investment decision-making tool.

Breaking Up

The Fed will end outright bond purchases this week, barring any surprises from this week’s Fed meeting. The end of bond purchases should not create much market reaction, as bond investors focus more on global economic growth and expectations for interest rate hikes. The Fed’s breakup will not be a clean one as it maintains a steady influence in the MBS market.

Recovery Reality

The U.S. economy is improving, and in many cases is back to normal, but it remains stubbornly weak in some areas. “Real world” indicators that point to the health of the economy include crane rental rates and customer traffic in restaurants. Economic uncertainty — likely a drag on economic growth in 2011, 2012, and 2013 — has faded as a concern in 2014, consistent with the Fed’s most recent Beige Book.​

Corporate Calm

We remain confident in corporate America’s ability to generate solid earnings growth in the current global economic environment despite the slowdown in Europe (and to a lesser extent, China). A number of U.S. companies have performed relatively well in Europe, with some not yet seeing signs of a slowdown in their business. The business environment overseas appears to be good enough for companies to largely maintain their outlooks for the rest of the year and into 2015.

Current Conditions Index 10/22/14

Read real-time insight into the trends that shape LPL Financial Research’s recommended actions to manage portfolios, it has proven to be a useful investment decision-making tool.

Stay on Guard

Yields may remain low for evidence of any fallout or contagion to the U.S. economy; a stretch of stronger economic data or bolder action by overseas central banks are likely needed catalysts for higher yields. The on-guard mentality in the bond market has pushed back timing for Federal Reserve interest rate hikes.

Oil Hits the Skids

We believe the oil sell-off is overdone and expect the commodity to find a floor in the low $80s. We expect firming global growth to increase the market’s confidence in global oil demand despite weakness in Europe. Energy service stocks are particularly oversold and may be attractive as the services-intensive U.S. energy renaissance continues.

Modest to Moderate Economic Growth Continues

The latest Beige Book reflects a picture of the U.S. economy that has, thus far, been largely unaffected by current geopolitical headlines.Optimism regarding the economic outlook far outweighed pessimism, as it has for the past 18 months or so.

Current Conditions Index 10/15/14

Read real-time insight into the trends that shape LPL Financial Research’s recommended actions to manage portfolios, it has proven to be a useful investment decision-making tool.

Disinflation Infatuation

Inflation expectations have fallen sharply in recent weeks, driven by European disinflation, lower energy prices, and overall growth concerns. The persistence of low inflation expectations may intensify the “lower for longer” theme via lower growth expectations and delays to potential Federal Reserve (Fed) interest rate hikes.

Pullback Perspective

We see the recent increase in volatility as normal within the context of an ongoing bull market. We do not believe the age of the bull market, at more than 5.5 years old, means it should end. We maintain our positive outlook for stocks for the remainder of 2014 and into 2015.

Gauging Global Growth in 2014 & 2015

The pace of growth in the global economy is a key driver of global earnings growth, and ultimately, the performance of global equity markets. Global GDP growth in 2014 remains on track to accelerate versus 2013’s pace, and the consensus is forecasting acceleration in global growth in 2015. Potential growth headwinds in 2015 include...

Current Conditions Index 10/8/14

Read real-time insight into the trends that shape LPL Financial Research’s recommended actions to manage portfolios, it has proven to be a useful investment decision-making tool.

Slowing Momentum

A challenging bond market environment will likely persist over the remainder of the year and perhaps beyond. Valuations across many bond sectors remain above historical averages and reflect an expensive market. We believe corporate bonds may provide investors with the best defense in what will likely be a continuation of the low-return environment.

Earnings Preview: Welcomed Opportunity to Focus on the Micro

Earnings season is here and may counteract the negative headlines with another dose of positive fundamental news. We expect the third quarter of 2014 could produce another good earnings season, which we believe may positively impact stocks. While there are some headwinds, Europe in particular, the U.S. economic backdrop is supportive and profit margins should remain high, given the few signs of cost pressures.

Blasé on the Budget

The nation’s fiscal situation has improved dramatically in the past five years due to overall economic improvement and a combination of higher tax rates and modest spending increases. However, structural and demographic problems that will drive the deficit over the next several decades remain in place. If policymakers continue to ignore critical warning signs, the near-term improvement in the budget picture is unlikely to last.

Current Conditions Index 10/1/14

Read real-time insight into the trends that shape LPL Financial Research’s recommended actions to manage portfolios, it has proven to be a useful investment decision-making tool.

Housing Hiatus?

We continue to expect housing may add to GDP growth in 2014 and for the next several years as the market normalizes following the severe housing bust of 2005 – 2010. Housing affordability and supply, and the supply and demand for home mortgages, will likely determine the pace at which housing increases GDP growth in the years ahead. The inventory of new and existing homes for sale as a percentage of total households has never been lower.

Grading on a Curve (the Yield Curve, That Is)

The yield curve has a perfect record in signaling recessions over the past 50 years. One of our “Five Forecasters,” the yield curve tells us that a recession and significant market downturn are likely a ways off.

Current Conditions Index 9/24/14

Read real-time insight into the trends that shape LPL Financial Research’s recommended actions to manage portfolios, it has proven to be a useful investment decision-making tool.

The State of States

A change of seasons should be noted by municipal investors, as a seasonal increase in new issuance may be a catalyst to lower returns after a strong 2014. It is not uncommon for revenues to slow as the economy matures, and we do not view the slowdown in state tax revenues as worrisome for municipal bond investors.

Don’t Fight the ECB? (Part 2 of 2)

Last week we discussed why buying European stocks now, following the recent stimulus announced by the ECB, is very different from buying U.S. stocks during periods of Fed stimulus in recent years. This week we take a deeper dive into the investment opportunity in Europe and evaluate fundamentals, valuations, and technicals. We recommend that investors “fight the ECB.” We do not believe the additional stimulus is enough for us to recommend European equities over U.S. equities at this time.

Mind the Gap

The key now for the Fed, as it deliberates when to begin to raise rates, is to gauge how quickly the output gap is likely to close. The pace at which the U.S. economy takes up slack is likely to command a great deal of attention from the Fed and market participants in the coming months. We believe the first Fed rate hike is likely to occur in about a year’s time, assuming the economy tracks the FOMC’s forecast.

Current Conditions Index 9/16/14

Read real-time insight into the trends that shape LPL Financial Research’s recommended actions to manage portfolios, it has proven to be a useful investment decision-making tool.

Fed Nerves

Despite recent weakness, bonds continue to discount the pace and magnitude of Fed rate hikes. A few facets of this week’s Fed meeting may reveal whether the recent pullback in bonds continues to stabilize.​

Fall FOMC Watch

We continue to expect the Fed to again cut its bond purchase program and remain on pace to exit QE by year end. However, odds have increased that the Fed could change “something” at this week’s FOMC meeting, including omitting its promise to keep rates low for a “considerable time” or providing the public with an update to its exit strategy. We are continuing to watch...

Federal and State College Financial Aid Programs

The cost of financing a college education can be daunting to many families. The good news is that a family does not have to be in a low-income bracket to qualify for many current aid programs.

Current Conditions Index 9/10/14

Read real-time insight into the trends that shape LPL Financial Research’s recommended actions to manage portfolios, it has proven to be a useful investment decision-making tool.

Growth Signals

The combination of additional cuts to overnight borrowing rates and the announcement of the ABS purchase program was slightly more than expected from the ECB. Bond markets sent growth signals in response to ECB action in the form of higher yields, higher inflation expectations, and a steeper yield curve.​

Back to School With the Three Rs:

We believe the “three Rs” are keys to the outlook for the stock market: revenues (and profits), reinvestment, and the renaissance in manufacturing. We expect stocks to garner support from these three Rs in the form of continued growth in revenues and profits, more corporate reinvestment, and continued steady gains for the U.S. manufacturing sector.

Beige Book: September 2014

Over the past three Beige Books, the BBB has averaged +100, the highest reading over any three consecutive Beige Books since at least 2005. The latest Beige Book indicates to us that the negative headwinds that have held the U.S. economy back over the past seven years may finally be abating. Health care and the ACA have remained a consistent source of concern among Beige Book respondents, although the impact has faded a bit recently. Despite the recent barrage of bad news on...

Current Conditions Index 9/3/14

Read real-time insight into the trends that shape LPL Financial Research’s recommended actions to manage portfolios, it has proven to be a useful investment decision-making tool.

Is It Extreme?

Although the decline in US Treasury yields has been significant in 2014, it is not quite at an extreme when viewed historically. However, the decline in European government bond yields has reached an extreme. Given the influence of European government bond yields on U.S. yields, this week’s ECB meeting may determine the market’s next move.

Central Bankapalooza

The market is not expecting the ECB to begin QE this week, although other forms of policy support are likely. The data continue to suggest that more aggressive monetary policy from the ECB would have only a muted impact on the real economy unless the fractured banking system can be repaired. Policy divergences among the world’s major central banks are likely to intensify in late 2014 and beyond.

Midterms May Mean More Gains for Stocks

The resolution of election uncertainty — and ending the predominantly negative rhetoric surrounding the campaigns — has historically been a positive for the stock market. We continue to see opportunities for further stock market gains over the course of 2014, based upon fundamentals rather than the potential for sweeping legislative change.

Current Conditions Index 8/27/14

Read real-time insight into the trends that shape LPL Financial Research’s recommended actions to manage portfolios, it has proven to be a useful investment decision-making tool.

Bond Yields Around a First Rate Hike

Historically, bond yields have begun to move more forcefully four to six months ahead of a first rate hike from the Fed. We believe the rise in interest rates may begin sooner this cycle due to lower yields and more expensive valuations. We favor capitalizing on year-to-date bond strength and recommend a defensive posture consisting of short to intermediate bonds.

Ready, Set, HIKE!

The first rate hike by the Fed has never been an indication of a market peak. On average, the first rate hike has taken place 37% into the economic cycle (measured peak to peak). The S&P 500 has returned on average, another 58% after the first rate hike (price return) before the market peak for the economic cycle. The initial market reaction to a rate hike is, on average, negative, but the data show it pays to be invested.

Data Dilemma: When Final Isn’t Final

Revisions to GDP don’t often change the overall picture of the health, or lack thereof, of the economy. Despite cutbacks to congressional funding of data collection at the federal level in recent years, the GDP data are a lot more accurate than they used to be. About every five years, the BEA does a “comprehensive revision” to GDP, and at that point, GDP for any specific quarter is just about as final as it will get, as the BEA has 98% of the data it needs to calculate GDP.

Current Conditions Index 8/20/14

Read real-time insight into the trends that shape LPL Financial Research’s recommended actions to manage portfolios, it has proven to be a useful investment decision-making tool.

Geopolitics & Bonds

Geopolitical risks powered bonds to another weekly gain, but historically such gains have been short-lived and given way to other fundamental drivers. Low volume summer trading may keep bond yields pinned near year-to-date lows over the near term.

Crystal Ball?

We believe the LEI is one of the better indicators to foreshadow recession. The latest information from the LEI suggests a positive backdrop for stocks and low risk of recession.

Exporting Good Old American Know-How Part 2

Our fastest growing exports are not always as visible as some of the items we consume and import daily. Most major service export categories have experienced near 10% growth per year for the past 10 years. Good Old American Know-How is our most abundant resource.

Current Conditions Index 8/13/14

Read real-time insight into the trends that shape LPL Financial Research’s recommended actions to manage portfolios, it has proven to be a useful investment decision-making tool.

European Influence

The strength of European government bonds has supported demand for US Treasuries due to more attractive yield differentials. European influences may continue over the near term, but we expect U.S. bond yields to reconnect to domestic economic data in coming months.

Exporting Good Old American Know-How Part 1

The United States has a trade surplus in the service sector, where we are creating relatively high-paying jobs. Many U.S. service-related jobs require advanced degrees and advanced skills, and help to make possible our booming business in service exports, much of it tied to Good Old American Know-How. Our competitive advantage in the service sector should help to continue to drive employment higher in this sector, especially in areas that require advanced skills.

Turning Down the Noise

Volume has picked up during the recent downturn. No, we are not talking about trading volumes; we are talking about the volume from your TVs with talking heads warning about an impending stock market downturn. If you turn off the TV and focus on what the market is telling you, rather than the talking heads, you can tune out the noise.

Enhancing Charitable Gifts With Life Insurance

If you are a regular donor to charity, life insurance could help you to make a much larger gift to your cause of choice.1 Instead of making periodic cash contributions to a charity, you could use the same amount to pay the premium on a life insurance policy to benefit the charity. Upon your death, the charity would receive the full face value of your policy—which would likely amount to considerably more than you could afford to donate during your lifetime.

Current Conditions Index 8/6/14

Read real-time insight into the trends that shape LPL Financial Research’s recommended actions to manage portfolios, it has proven to be a useful investment decision-making tool.

Stock Market Valuations Suggest That This Bull Market Still Has Teeth

Losing under 3% in a week seems a minor concern given historical market ups and downs; nevertheless, investors may begin to wonder if stock market valuations are signaling a decline. Since the end of the last significant sell-off for stocks, the market has been in a pretty consistent upward trend. Valuation is a poor market-timing indicator; while valuation should always be considered, it is a blunt tool that should be taken into broader context.

Reconnected?

With the release of the GDP figures for the second quarter of 2014 (along with revisions to the data back to 1999), the disconnect appears to be fading. The data released so far for the third quarter suggest that the underlying economy had decent momentum as the third quarter began. The data continue to suggest that the U.S. economy is poised to post growth in the second half of 2014 above the long-term run rate of the economy.

Current Conditions Index 7/30/14

Read real-time insight into the trends that shape LPL Financial Research’s recommended actions to manage portfolios, it has proven to be a useful investment decision-making tool.

Calling the Feds Bluff

Futures continue to indicate the bond market believes the Fed does not have an ace up its sleeve and that ultimately they will not raise rates as high as they project. A host of top-tier economic data may influence bonds more this week given the absence of new forecasts and a press conference following this week’s Fed meeting.

Second Quarter Earnings Season Update

Amid the barrage of nearly constant economic and market data, nothing is more important to assess the health of corporate America than the quarterly check-in that we affectionately call earnings season. As earnings season approaches its halfway mark, it’s a good time to take a look at what we’ve learned so far.

Midsummer Madness

Only nine times in over 14 years have the FOMC meeting, GDP report, ISM report, and the employment report — all often marketmoving events — occurred in the same week. Historically, these weeks have exhibited 20% more volatility than an average week over this time span, as measured by the S&P 500 Index. This week is unlikely to be just another boring midsummer week for financial market participants.​

Current Conditions Index 7/23/14

Read real-time insight into the trends that shape LPL Financial Research’s recommended actions to manage portfolios, it has proven to be a useful investment decision-making tool.

Modest-to-Moderate Economic Growth Continues 7/21/14

The latest edition of the Fed’s Beige Book indicates that the negative headwinds that have held the U.S. economy back over the past seven years may be declining. The rebound in our Beige Book Barometer over the past several months is consistent with the Fed’s view that the drop in economic activity was mostly weather related. Despite the recent barrage of bad news, optimism on Main Street remains high...​

Is Congress Contemplating QE4?

If a tax holiday is enacted and the repatriated funds by multinational corporations are used to buy back shares or retire debt, it could potentially act as a very potent market stimulus equivalent to the height of the Fed’s QE3.

Municipal Mid-Year Outlook

We do not expect the municipal bond market to repeat first half strength over the second half of 2014. A gradual rise in yields to compensate for better growth, a modest rise in inflation, and the start of Fed rate hikes in roughly one year’s time will likely pressure bond prices slightly lower through year end. We continue to believe the taxable bond market is likely the main catalyst to the next move in municipal bond prices.

Counting Down the Months

A common worry among investors is that the stock market may fall as the Fed gets closer to hiking rates. In fact, the S&P 500 has posted a gain in the 12 months ahead of the first rate hikes over the past 35 years.

Gauging Global Growth in 2014 and 2015

Global GDP growth in 2014 remains on track to accelerate versus 2013’s pace, excluding the impact of the weather. The pace of growth in the global economy is a key driver of global earnings growth, and ultimately, the performance of global equity markets. In our view, markets may already be looking ahead to the second half of 2014, and especially the third quarter, to gauge the true underlying pace of global growth.

Portfolio Compass 7/9/14

A snapshot of LPL Financial Research’s views on equity & alternative asset classes, the equity sectors, and fixed income.

Current Conditions Index 7/9/14

Read real-time insight into the trends that shape LPL Financial Research’s recommended actions to manage portfolios, it has proven to be a useful investment decision-making tool.

Managing Health Care Costs: Tips for Small Businesses

Employer-sponsored health insurance is considered by business owners and employees alike to be one of the most important benefits available in the workplace today. Yet skyrocketing costs are making it more difficult for small businesses to attract and retain skilled workers with the promise of health insurance

Earnings Season: A Show About Nothing

Much like the television comedy Seinfeld, which celebrated its 25th anniversary this past Saturday, July 5, 2014, the second quarter earnings season is likely to be “a show about nothing.”

Disconnect?

We continue to expect that U.S. economic growth may rebound to a 3% pace for all of 2014. The June 2014 jobs report was undeniably strong on all fronts, standing in sharp contrast to the weak performance of the economy in the first quarter of 2014. The last time the economy created at least 200,000 jobs per month for five consecutive months was in late 1999 through early 2000, when the U.S. economy was growing between 4.5% and 5.0%.

Current Conditions Index 7/2/14

Read real-time insight into the trends that shape LPL Financial Research’s recommended actions to manage portfolios, it has proven to be a useful investment decision-making tool.

A Challenging Second Half Looms

After broad based strength over the first half of 2014, we expect yields may rise in the second half of 2014 as global growth strengthens and inflation picks up from recent lows. Higher valuations have increased the challenges facing investors.

Investor’s Almanac Field Notes

Similar to a farming almanac, our Investor’s Almanac is a publication containing a guide to patterns, tendencies, and seasonal observations important to growing. The goal of farming is not merely to grow crops, but to sustain living things — investing shares the same goal.

LPL Financial Research's Mid-Year Outlook 2014

At this year’s halfway point, we offer the LPL Financial Research Mid-Year Outlook2014: Investor’s Almanac Field Notes containing key observations and updates to our outlook for 2014.

Understanding Your Retirement Income Replacement Ratio

Although the term retirement income replacement ratio sounds formidable, it’s actually a simple, understandable concept that doesn’t require any fancy math. The ratio helps you zero in on your retirement savings goal and periodically measure your progress as you move toward your target. Will you need 60%, 75%, 90% or even 100% of the income you have in your last year of work to maintain a desirable standard of living after you retire?

World Cup and World CPI Are Heating Up, Risking Mistakes by Key Players

Just as the World Cup has been heating up, increasing the risk of player mistakes, the world consumer price index (CPI) has also been heating up, complicating the task for policymakers at the world’s central banks and increasing the risk of mistakes that could have market implications.

Portfolio Compass 6/25/14

A snapshot of LPL Financial Research’s views on equity & alternative asset classes, the equity sectors, and fixed income.

Current Conditions Index 6/25/14

Read real-time insight into the trends that shape LPL Financial Research’s recommended actions to manage portfolios, it has proven to be a useful investment decision-making tool.

Behind the Curve?

Despite the Fed labeling the recent inflation increase as “noise,” longer-term bond yields rose, inflation expectations increased, and the yield curve steepened — all signs of the bond market pricing in inflation risks. As the low inflation pillar of year-to-date bond strength fades, it may be one more reason to be cautious in the bond market.

USA $17.1 Trillion | GER $3.8 Trillion

The U.S. economy is poised to outperform Germany in the years ahead thanks to better demographics, better productivity, and a more focused central bank. Today the U.S. economy is in far better shape than the German economy. Advantage U.S.A.

Current Conditions Index 6/18/14

Read real-time insight into the trends that shape LPL Financial Research’s recommended actions to manage portfolios, it has proven to be a useful investment decision-making tool.

Bond Market Perspectives

We believe bank loans could be one of the more attractive fixed income asset classes based on our economic and market outlook for the second half of 2014 and believe recent negative headlines are misplaced. A still low interest rate environment, a growing economy, and strong demand for floating rate debt have all fueled growth in the bank loan market.

Emerging Opportunity

Emerging market stocks have now pulled ahead of the performance of the S&P 500 Index for 2014, which may finally mark the beginning of the turn for EM relative performance.

FOMC: Need to Know

We continue to expect the Fed to trim QE by $10 billion per month this year and to remain on pace to exit QE by the end of 2014. Our view remains that the current center of gravity at the FOMC will likely err on the side of keeping rates lower for longer. Markets should expect that the Fed will be content with keeping its fed funds rate target near zero until key labor market indicators make significant progress toward “normal.”

Current Conditions Index 6/11/14

Read real-time insight into the trends that shape LPL Financial Research’s recommended actions to manage portfolios, it has proven to be a useful investment decision-making tool.

Portfolio Compass 6/11/14

A snapshot of LPL Financial Research’s views on equity & alternative asset classes, the equity sectors, and fixed income.

Central Bank World Cup

Strong economic data has weighed on bonds to start June but favorable yield differentials between Treasuries and European government bonds have helped limit the domestic bond weakness. Divergent central bank policies may still mean bonds yield to growth.

Who Are the Buyers and Sellers?

At the heart of it, all markets come down to buyers and sellers. Taking a look at who is buying and who is selling can tell us something about the durability of the market’s performance and what may lie ahead.

Modest-to-Moderate Economic Growth Continues

The latest edition of the Fed’s Beige Book indicates that the negative headwinds that have held the U.S. economy back over the past five years may be declining. The rebound in our Beige Book Barometer is consistent with the Fed’s view that the contraction in economic activity was mostly weather related. We continue to expect...

Current Conditions Index 6/4/14

Read real-time insight into the trends that shape LPL Financial Research’s recommended actions to manage portfolios, it has proven to be a useful investment decision-making tool.

Irrepressible Bonds

Investor positioning and changed Federal Reserve expectations had a particularly beneficial impact on robust bond market performance in May. Unbalanced investor positioning may have run its course, and investor expectations about the Fed may be as good as it gets.

No Debate: Stock and Bond Markets Agree

No debate here: Over the past five years, modest declines in bond yields in the range of 0 – 50 basis points occurred along with modest gains of 0 – 10% for stocks.

Better Gauges of Global Growth Ahead

As markets brace for this week, we continue to expect that the U.S. and global economies may accelerate in 2014 relative to 2013’s growth rate. We continue to expect that the FOMC will taper QE by $10 billion per meeting, exit the program by the end of 2014, and begin to raise interest rates in late 2015. Our view remains that...

Portfolio Compass 5/28/14

A snapshot of LPL Financial Research’s views on equity & alternative asset classes, the equity sectors, and fixed income.

Current Conditions Index 5/28/14

Read real-time insight into the trends that shape LPL Financial Research’s recommended actions to manage portfolios, it has proven to be a useful investment decision-making tool.

Oil, Oil Everywhere

Why — if the United States is producing more oil and consuming less than it was a decade ago — is the price of oil going up, and what does it mean for investors?

Capital Spending Check-up

We do not think the economic weakness in Q1 is the start of another recession, and, indeed, we continue to expect real GDP will expand 3.0% in all of 2014. We believe the conditions are in place for a pickup in business spending, and we expect the pace of business capital spending to accelerate over the next several years.

Municipals Bloom Amid Drought

Limited new issuance and Treasury market strength have powered municipal bonds to their best start since 2009. In conjunction with lower yields and higher valuations, near-term caution may be warranted as the first signs of selling pressure emerge and a challenging seasonal period looms. Absent a new bout of economic weakness, we see additional municipal price gains as limited.

Snapback

We do not think the first quarter GDP report will be a harbinger of a recession in the near future. We continue to believe the U.S. economy will accelerate in 2014 (relative to 2013), and that GDP will increase 3.0% for the year. The LEI indicates that the risk of recession in the next 12 months is negligible at 4%, but not zero.

Japan Going Godzilla

If Godzilla-sized quantitative easing aligns with a fading impact from recent tax hikes, increasing political support for corporate tax cuts, and a push by government pension funds into stocks, it may mean a blockbuster summer for Japanese stocks.

Investing Through Life’s Stages

Read this simple guide on how to get started in investing and how to reassess your investment strategies through multiple life changes.

Portfolio Compass 5/14/14

A snapshot of LPL Financial Research’s views on equity & alternative asset classes, the equity sectors, and fixed income.

Current Conditions Index 5/14/14

Read real-time insight into the trends that shape LPL Financial Research’s recommended actions to manage portfolios, it has proven to be a useful investment decision-making tool.

Slim Pickings

Bond market strength in 2014 has led to more expensive valuations across the bond market, not just in Treasuries. Narrow yield spreads by themselves do not imply a pending market correction and spreads can stay narrow for a long time. However, after a strong start to 2014, lower yields in combination with narrower yield spreads illustrate the lack of opportunity in the bond market.

The Best Indicator May Be a Long Way From Signaling the Start of a Bear Market

The volatility we call “market storms” is likely to continue to be a characteristic of markets this year, caused by well-known factors, such as: geopolitical conflict in Russian border countries, slower economic growth in China, or a weak start to the year for the U.S. economy, among others, but also lesser-known factors like the Oklahoma earthquakes, solar flares disrupting communications, and the Ebola outbreak...

Dollar on the Verge?

While the dollar may gain ground in the coming months and quarters as the economy accelerates, we continue to believe the dollar will slowly depreciate over time — continuing the trend that has been in place since the early 1970s. The weaker dollar has, at the margin, made our exports more attractive, pushed up the costs of goods we import, and, most importantly...

Current Conditions Index 5/7/14

Read real-time insight into the trends that shape LPL Financial Research’s recommended actions to manage portfolios, it has proven to be a useful investment decision-making tool.

The New Conundrum

Several factors, led by short covering, pushed bond prices higher in the face of stronger economic data last week. Like the Greenspan conundrum of 2005, we expect an improving economy and the eventual onset of Fed rate hikes to gradually push bond yields higher.

Global Earnings Picture Reveals Dramatic Regional Differences

Earnings forecasts are being cut sharply overseas, raising the questions of how much of a value international developed market stocks are and whether they can outperform the U.S. market in 2014.

Central Bank Pulse

Key emerging market central banks have raised rates within the past year in an effort to combat inflation, the threat of inflation, or current account imbalances. Most developed market central banks are on hold or easing. The divergence among global central bank policies creates both risks and opportunities for global investors, and especially active managers who invest globally.

Portfolio Compass 4/30/14

A snapshot of LPL Financial Research’s views on equity & alternative asset classes, the equity sectors, and fixed income.

Current Conditions Index 4/30/14

Read real-time insight into the trends that shape LPL Financial Research’s recommended actions to manage portfolios, it has proven to be a useful investment decision-making tool.

One Year Later

The broad bond market has almost fully recouped the damage done from the 2013 selloff with some sectors having fully recovered. We do not expect a repeat of 2013, but the rebound in bond prices, higher valuations, and lower yields have created new challenges that may lead to lower returns.

Run for the Roses

The animal spirits of business leaders and investors may be re-emerging, resulting in more investment that may herald better growth.

Mid-Spring Surprise

Only eight times in over 14 years have the FOMC meeting, GDP report, ISM report, and the employment report — all often market-moving events — occurred in the same week. Historically, these weeks have exhibited 20% more volatility than an average week over this time span, as measured by the S&P 500 Index. This week is unlikely to be just another boring mid-spring week for financial market participants.​

Current Conditions Index 4/23/14

Read real-time insight into the trends that shape LPL Financial Research’s recommended actions to manage portfolios, it has proven to be a useful investment decision-making tool.

The Big Bang Theory: Inflating the Stock Market

It does not take a Ph.D. to see that we may be witnessing a big bang in inflation, but the early stages of accelerating inflation have been historically good for the economy and stock market.

Beige Book: Window on Main Street

Weather was again a key theme in the Beige Book with 103 mentions, down from 119 in March. However, the mentions in April were in a much less negative context than in March. The Affordable Care Act continues to be a key concern for Main Street.

Kids & Money: Nurturing Your Child’s Financial Growth

Most kids learn the basics of money and making change in elementary school, but probably won’t learn how to manage money unless they choose finance as a career path. That means it is up to all of us to see that our children reach adulthood prepared to face life’s fiscal challenges.

Portfolio Compass 4/16/14

A snapshot of LPL Financial Research’s views on equity & alternative asset classes, the equity sectors, and fixed income.

Current Conditions Index 4/16/14

Read real-time insight into the trends that shape LPL Financial Research’s recommended actions to manage portfolios, it has proven to be a useful investment decision-making tool.

Mixed Messages

The market-friendly overtures from the Fed may help keep bond yields in the current low range, but much of the good news from the Fed is already priced into the bond market. Investors may be more willing to downplay Fed news and refocus on economic data, which will ultimately drive the Fed’s decisions. Breaking out of the yield range now will likely depend on improving economic data over the next several weeks.

The Weakest Earnings Cycle in 55 Years

This has been the weakest earnings cycle in 55 years. Earnings growth needs to improve to support valuations and drive the stock market higher. Fortunately, growth may be set to improve in the coming quarters.​

Gauging Global Growth in 2014 & 2015

The stabilization in growth forecasts for both 2014 and 2015 is a sign that perhaps the market is more confident now that the global economy is in the middle innings of an expansion. While the forecasts for GDP growth for 2014 and 2015 have generally moved higher for developed economies over the past 18 months, growth estimates for emerging market economies have generally moved lower.

The Future According to the Bond Market

At any given time, current bond market pricing may provide a view of future economic growth, interest rates, inflation, and when the Federal Reserve (Fed) may raise interest rates, how fast, and by how much. The low level of longer-term bond yields, a flatter yield curve, and subdued inflation expectations all could signal a sluggish economic environment. Bond market indicators do not always come to fruition and taking a contrarian view from future indications may provide opportunities.

Current Conditions Index 4/9/14

The CCI is a weekly measure of the conditions that underpin our outlook for the markets and economy. It provides real-time insight into the trends that shape our recommended actions to manage portfolios and has proven to be a useful investment decision-making tool.

Jobs Looking for People Redux

The JOLTS data continue to tell a familiar story: the labor market is healing, but it still has a long way to go to get back to normal. Looking around the country at open jobs by industry, firm size, and pay, it seems like a good time to be a business and professional services worker in the South looking for work in a small-to-medium sized (50 to 249 employee) business.

Surprise: Cyclicals May Soon Come Back

The very tight relationship between economic surprises and the performance of cyclicals suggests cyclicals may soon make a comeback relative to more defensive sectors.

Current Conditions Index 4/2/14

The CCI is a weekly measure of the conditions that underpin our outlook for the markets and economy. It provides real-time insight into the trends that shape our recommended actions to manage portfolios and has proven to be a useful investment decision-making tool.

Portfolio Compass 4/2/14

A snapshot of LPL Financial Research’s views on equity & alternative asset classes, the equity sectors, and fixed income.

No Fooling, Good Quarter for Bonds

Bond prices rose across the board following a difficult 2013 and yields fell, with the 10-year Treasury yield closing the first quarter 0.3% lower. At a 1.8% quarterly return for the Barclays Aggregate Bond Index, the pace of bond performance is unsustainable, and we continue to suggest a defensive posture against rising interest rates in the bond market with an emphasis on more economically sensitive sectors.

Is the Party Over?

At any given time, there are always some bubbly valuations among industries and stocks that are hot. But overall, looking at valuations, the party in the stock market may not be just getting started — but it is not yet close to being over.

Labor Market Report Card

Weather will still be a factor in the March employment data & the markets may give the economy another “free pass” for yet another potentially weak jobs report. In our view, the Fed would have to see a sharp slowdown (less than 50,000 jobs per month) or ramp up (over 300,000 jobs per month) to slow down or speed up tapering before fall 2014.

Current Conditions Index 3/26/14

The CCI is a weekly measure of the conditions that underpin our outlook for the markets and economy. It provides real-time insight into the trends that shape our recommended actions to manage portfolios and has proven to be a useful investment decision-making tool.

Giving Credit to High-Yield Credit

High-yield bond valuations remain elevated for a good reason — strong credit quality and low defaults continue to support the sector. A closer look at underlying credit quality indicates high-yield bond prices may remain well-supported for most of 2014. We still find lower-rated high-yield bonds and bank loans offering some attractive opportunities in the bond market for 2014.

What Is Priced In?

The stock, bond, and commodities markets appear to have priced in a return to a positive environment for investors consisting of stronger economic and job growth accompanied by a return of some mild inflation.​

What’s the Yellen Surprise?

The Fed’s target for the fed funds rate in the long term is lower than in prior rate hike cycles. The market has already priced in Fed rate hikes beginning in mid-2015. Sustained growth in real gross domestic product (GDP) above 3.0% at any time over the next three years could elicit an earlier start to rate hikes by the Fed and/or more rate hikes once they commence. The Fed’s communication with investors and the public remains muddled, at best.

Portfolio Compass 3/19/14

A snapshot of LPL Financial Research’s views on equity & alternative asset classes, the equity sectors, and fixed income.

Current Conditions Index 3/19/14

The CCI is a weekly measure of the conditions that underpin our outlook for the markets and economy. It provides real-time insight into the trends that shape our recommended actions to manage portfolios and has proven to be a useful investment decision-making tool.

Fed Reacquaintance

Unlike weather-impacted economic data or geopolitical tensions, the Fed is likely to reiterate its gradual journey to less bond market-friendly policy. A change in the Fed’s forward guidance to more qualitative measures may pressure bond prices lower and yields higher as the bond market prices in uncertainty.​

March Madness in the Markets

As the NCAA basketball tournament gets down to its own sweet sixteen while the rest of March plays out, it is a good time to reflect on the sixteen competing drivers of the markets that may make for an exciting showdown in the weeks and months to come. There will likely be some upsets that result in volatility as these factors face off against each other.

Making a Statement

Markets will soon be asking: When will the Fed raise rates? What measures of inflation, employment, and other economic indicators will the Fed be watching most closely? How fast will rates rise once rate hikes begin? We expect the FOMC to revamp its overly complex statement beginning at this week’s FOMC meeting. We continue to expect the FOMC to taper quantitative easing by $10 billion at each FOMC meeting this year.

Current Conditions Index 3/12/14

The CCI is a weekly measure of the conditions that underpin our outlook for the markets and economy. It provides real-time insight into the trends that shape our recommended actions to manage portfolios and has proven to be a useful investment decision-making tool.

Beware the Ides of March

The month of March has historically been difficult for bond investors. Given the good start to the bond market so far in 2014, bond investors should be aware of seasonal factors that may negatively impact bond performance.

Keeping Up With Your IRA: Tax Season Tips

If you’re one of the millions of Americans who owns either a traditional individual retirement account (IRA) or a Roth IRA, then the approach of tax season should serve as a reminder to review your retirement savings strategies and make any changes that will enhance your prospects for long-term financial security. It’s also a good time to open an IRA if you don’t already have one.

Europe’s Big Bet

The ECB made a big bet last week that the Eurozone economy is picking up fast enough to avoid the need for any further stimulus. We are not so sure. Until some key catalysts emerge, the risks to stocks in Europe may outweigh the rewards.

Still Growing, With Limited Wage and Price Pressures

In early 2014, harsh winter weather has replaced policy uncertainty as the biggest weight on the economy. Our Beige Book Barometer decreased to +62 in March 2014 from +76 in January 2014, as weather received 119 mentions. The Affordable Care Act continues to be a key concern for Main Street.

Portfolio Compass 3/5/14

A snapshot of LPL Financial Research’s views on equity & alternative asset classes, the equity sectors, and fixed income.

Current Conditions Index 3/5/14

The CCI is a weekly measure of the conditions that underpin our outlook for the markets and economy. It provides real-time insight into the trends that shape our recommended actions to manage portfolios and has proven to be a useful investment decision-making tool.

Weather and Treasury Yields

We expect uncertainty over the true trajectory of the economy to keep Treasury yields range bound over the near term. We believe investors should remain on guard for the unwinding of weather-related impacts, which may push bond prices lower and yields higher. The predominant impact following colder and snowier winter weather was higher yields in 2010, 2007, and 1996.

Stocks Go From Great to Good as the Bull Turns Five

After five years, the second most powerful bull market in post-WWII history may be getting a second wind...​

Janet Yellen’s Employment Report

The market will be especially interested in the unemployment rate this month, because just a 0.1% drop to 6.5% pushes the rate to the Fed’s threshold of 6.5%. Yellen made it clear last week that the Fed was in no hurry to raise rates when the unemployment rate crosses the 6.5% threshold. In our view, the Fed is not likely to raise rates until late 2015 or even early 2016.

Current Conditions Index 2/26/14

The CCI is a weekly measure of the conditions that underpin our outlook for the markets and economy. It provides real-time insight into the trends that shape our recommended actions to manage portfolios and has proven to be a useful investment decision-making tool.

Weather Exhaustion

A burgeoning divergence between Treasury yields and economic data suggests the bond market is looking forward to spring and a clearer read of the economic data free of weather distortions. The bond market is also acknowledging the Fed remains on a slow course to remove accommodation that is not adequately reflected in today’s prices and yields.

The Real Reason for the Rebound

The idea of a change in Congress to a more business-friendly environment may be a welcome thought for many market participants and a behind-the-scenes reason for the rebound.

Residential Recovery Redux

Almost all of the factors supporting an ongoing recovery in housing remain in place, but the rise in rates will likely slow the pace of the recovery somewhat. Many, if not all, of the other housing indicators we watch also suggest ongoing recovery in the housing market in the quarters and years ahead.​

Portfolio Compass 2/19/14

A snapshot of LPL Financial Research’s views on equity & alternative asset classes, the equity sectors, and fixed income.

Current Conditions Index 2/19/14

The CCI is a weekly measure of the conditions that underpin our outlook for the markets and economy. It provides real-time insight into the trends that shape our recommended actions to manage portfolios and has proven to be a useful investment decision-making tool.

Lies, More Lies, and Charts

One of the reasons that charts forecasting an imminent stock market “crash” are able to make their way around the internet almost every year is that charts can lie.

The Inflation Conversation: Part 2

When policymakers say there is no inflation, they mean the rate of change in the general price level, or the inflation rate, is moderate. Quality adjustments and definitions are two of many reasons for the apparent disconnect in “the inflation conversation.” For policymakers like the Fed, the low rate of increase in the inflation rate expected by the FOMC this year (1.5%) and next year (1.75%) suggests that inflation is “well contained.”

Maintain a Good Credit Rating

For better or for worse, the American way of financial life relies on debt as a way of solidifying a desired lifestyle. Therefore, it is important to establish a good credit history if you intend on making more substantial, debt-financed purchases in the future.

Add More Bond — James Bond — to Your Portfolio

50 years ago, in the James Bond movie Goldfinger, an alternative to the traditional car helped Bond out of some risky situations. 50 years later, bonds are facing a risky situation — and alternatives to traditional investments may help to capitalize on it.

The Inflation Conversation: Part 1

At her first public appearance as Fed chairwoman tomorrow, Janet Yellen is likely to say that inflation is in more danger of falling below the Fed’s target of 2% than accelerating higher. Market participants’ view of inflation is similar to the Fed’s view that inflation remains well contained.

Developing Worries

Uncertainty over emerging market (EM) weakness and whether the weather is truly responsible for recent softness in economic data is likely to keep bond yields range-bound over the near term. We believe the U.S. economy will resume the improvement that began in late 2013 and EM growing pains will not impact broader financial markets over the longer term.

Turn Down the Volume

It is not unusual to see the market dip 3% in a month; what was unusual about January’s stock market trading was the volume surging to levels not seen since May 2010. Such spikes have historically coincided with losses, but they were not sustained for long.

The Employment Situation: Slow Climb Back

The January 2014 employment report will garner plenty of attention from market participants, the media, and the public as the labor market continues its slow climb back to the pre-recession peak. The Federal Reserve will be watching for key metrics: the participation rate, long-term unemployment, wages, and hiring..

Current Conditions Index 1/29/14

Over the past week, the LPL Financial Current Conditions Index (CCI) slid to 225. The CCI has been more volatile in recent weeks. The path of the CCI suggests modest, but steady economic growth in the United States...

Sentiment & Positioning

Positioning and sentiment-related buying and selling are not the only drivers of the bond market, but when coupled with fundamental drivers, they can be a potent combination. Bond investors may refocus on economic data now that positioning and sentiment appear more balanced...

Time to Hit the Pause Button?

This week (January 27 – 31, 2014) the Federal Reserve’s (Fed) policymaking arm, the Federal Open Market Committee (FOMC), holds the first of its eight meetings this year. The meeting is being held against the backdrop of a wave of volatility in global financial markets, as market participants brace for another round of tapering by the FOMC...

Investor’s Guide to the 2014 State of the Union Address

President Obama’s State of the Union (SOTU), scheduled for Tuesday, January 28, is unlikely to be a big market mover. But three areas of the market may see some impact...

A Clean Slate: Review and Rebalance Your Portfolio

There is no better time to take a fresh look at your investment strategies than the beginning of the new year. And while there is no one-size-fits-all approach to investing for the future, reviewing your goals annually can help you stay on track from month to month--and year to year.

It Pays to Plan Ahead: 2013 Year-End Tax Planning

As 2013 draws to a close, the last thing anyone wants to think about is taxes. But if you are looking for potential ways to minimize your tax bill, there’s no better time for planning than before year-end. And, with the higher rates put in place with the passage of the American Taxpayer Relief Act of 2012, being tax efficient is more important than ever.

An Estate Planning Checklist

Because you have worked hard to create a secure and comfortable lifestyle for your family and loved ones, you will want to ensure that you have a sound financial strategy that includes trust and estate planning. With some forethought, you may be able to minimize gift and estate taxes and preserve more of your assets for those you care about.

Changing Jobs or Retiring? Don’t Forget Your Retirement Savings!

If you’re like many Americans, you probably intend to rely on your employer-sponsored retirement plan savings for a significant portion of your retirement income. So when it comes time to make important decisions, such as what to do with the money in your plan when you change jobs or retire, you should be fully aware of your options...

Consider Prepaid Tuition Plans for College Savings

If you’re currently investing for your children’s college education or are planning to do so in the near future, you may want to consider a state-sponsored prepaid tuition plan. Generally speaking, these plans, which are now available in many states, allow you to pay tomorrow’s tuition bills at today’s tuition rates. In addition...

Understanding and Managing Risk in a Bond Portfolio

As interest rates spiked in the second quarter of this year, many bond investors shifted gears from intermediate and long-term bonds to bonds with shorter maturities. The relationship between interest rates and bond prices is just one of many potential risks associated with bond investing. So why consider bonds?

Using Life Insurance to Ensure Business Continuity

The loss of critical personnel can be life threatening to small businesses; however, it's a risk that life insurance can often mitigate. In fact, life insurance policies are frequently used in plans aimed at making it possible for a business to survive a change of ownership or the loss of a partner, the chief executive or an employee whose creative talent, technical knowledge or salesmanship drives the business...

How to Work With a Financial Advisor

The continuously shifting investment climate, the sheer number of investment products to choose from and the emergence of employee-driven retirement savings plans, such as 401(k) plans, have all contributed to the increased need for qualified financial advice. No matter what your level of investment experience or sophistication, you may benefit from developing a relationship with a financial advisor...​

Home Refinancing Basics

In recent years, Americans seeking to capitalize on low interest rates have lined up to refinance their mortgages--often resulting in significantly lower monthly payments. While it’s true that refinancing has the potential to help reduce the costs associated with borrowing money to own a home, it is not necessarily a strategy that makes sense for every individual...

Key Questions About Retirement Income Planning

Managing money in retirement involves decisions about withdrawal rates, asset allocation and a host of other factors that will impact your lifestyle and how long your assets will last. Following are some straightforward answers to commonly asked questions about planning for income needs in retirement.​

Small-Business Financing: Debt vs. Equity

Business owners who seek financing face a fundamental choice: Should they borrow funds or take in new investment capital? Since debt and equity are accounted for differently, each has a different impact on earnings, cash flow and taxes...

Strategies for Tax-Efficient Investing

Just about every investor knows, it’s not necessarily what your investments earn, but what they earn after taxes that counts. After factoring in federal income and capital gains taxes, the alternative minimum tax, and any applicable state and local taxes, your investment returns in any given year may be reduced by 40% or more.

Saving for Short-Term Financial Goals

Most of us know we need to save for our future goals. Buying a home, providing an education for our children and investing for a secure retirement are the most common long-term savings goals. But what about next year’s vacation, remodeling or refurbishing your house, or buying a second car?

Naming Beneficiaries of Insurance Policies and Retirement Plans

One estate planning concern that is shared by people from all walks of life is who gets what when you pass on. While some individuals logically may assume that a last will and testament is the only official forum to express such decisions, that is not always the case. Often, an equally important issue is determining who to name as beneficiary on life insurance policies, employer-sponsored retirement plan accounts and IRAs, since beneficiaries of these assets are paid directly as named...

Getting Your Children Involved in Saving for College

The planning required to send a child to college may seem overwhelming, but parents do not have to do all the work. Getting children involved in college planning may be an excellent way to teach responsibility to young people—a lesson that could reap benefits well beyond their college years.

Diversification: A Fundamental Strategy for Reducing Portfolio Risk

Diversification is one of the most basic investment concepts. It is used by novice investors and sophisticated portfolio managers alike to help reduce portfolio risk and dampen the negative effects of market volatility. The premise behind diversification is easy to grasp: When you own a range of investments, you may reduce risk by creating the potential for better performers to compensate for poor performers.

Good Debt, Bad Debt: Keys for Knowing the Difference

Today debt and instant credit are part of our everyday lives. The convenience of instant credit, however, has taken its toll. Many individuals use credit cards to spend more than they earn. Some, who never use credit, can be denied a loan or credit when they have a justifiable use for it. Using credit establishes a history of financial responsibility: Until you establish a credit history, your chances of qualifying for an important loan, such as a mortgage, are greatly reduced.

Making a Charitable Choice

The greatest benefit of charitable giving is the knowledge that you’ve made a positive contribution to others. At the same time, charitable giving can also provide tax breaks so long as you are aware of some rules and keep track of what you’ve donated.

Tax Strategies for Retirees

In this world nothing is certain except death and taxes. - Benjamin Franklin. That saying still rings true centuries after the former statesman coined it. Yet, by formulating a tax-efficient investment and distribution strategy, retirees may keep more of their hard-earned assets for themselves and their heirs.

Your Second Wind - Starting a New Business in Retirement

For generations past, retirement represented an extended period of leisure time punctuated by occasional games of golf and bridge. But today, with lengthening life expectancies and dwindling pensions, many Americans are looking to retirement as an opportunity to start a new business.

Using 529 Plans to Invest for College & Manage Wealth

Paying for a child’s or grandchild’s college education is an expensive proposition, even for many high-net-worth Americans. Today’s elite institutions promise graduates a rewarding future, but at a cost that more often than not extends well into six figures. Enter the 529 plan, a tax-advantaged investment vehicle generally available to families regardless of their income level. For affluent parents and grandparents, a 529 plan offers a variety of potential benefits

Women & Retirement: What You Need to Know

More than half of women (53%) surveyed recently are the primary breadwinners in their households, yet only 20% consider themselves “very well prepared” with their financial decision making.1 Nearly one-third of those surveyed said they earn more than their spouse as a direct result of the rocky economy. Among male breadwinners, 45% consider themselves

Pay Yourself First - and Regularly - With Dollar Cost Averaging

To remain financially responsible, everyone must pay bills on a regular basis. These bills include mortgages, utilities, car loans and credit cards. Unfortunately, many people do not also heed the oft-quoted advice to pay themselves first. The reality is that a steady saving and investing plan is sometimes necessary to help pursue such financial goals as paying for a wedding or new car, buying a house and funding retirement. One strategy that can help you develop a

Incentive Trusts-Keeping a Steady Hand on the Tiller

A good legacy may work wonders for those left behind, but you may feel that your heirs need more than just financial benefit from your estate. If you would like to provide direction to your heirs and help ensure that they pursue important life goals, you may consider including incentive trusts in your estate plans.

Rebalancing to Keep Your Portfolio on Track

Over time some asset classes or investments inevitably outperform or underperform others causing your portfolio allocation to shift. This is especially true during times of heightened volatility, like the markets are experiencing today. This shift, also known as “portfolio drift,” can significantly increase a portfolio’s risk and cause it to become misaligned with its target allocation.

 
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