10 investing New Year’s resolutionsArticle added by Danielle Andrus on January 5, 2016
Danielle Andrus

Danielle Andrus

Joined: June 09, 2015

Along with the familiar examples of collective optimism at the end of every year — losing five pounds, quitting smoking, definitely returning library books on time from now on — the financial industry likes to offer its own New Year’s resolutions.

Those resolutions range from keeping clients on track with budgeting and basic financial management, to predictions for what the Fed’s future rate hikes will mean for their portfolios.

Here are 10 bon mots from industry experts and observers on what to expect and how to respond in the new year.

Josh Brown, The Reformed Broker

The prolific tweeter and planner at Ritholtz Wealth Management collected wisdom he’s gathered from other experts this year.

Among the most important lessons is that as digital innovation spreads further into consumer’s lives, it becomes harder to get an accurate picture of risk.

He cited Izabella Kaminska of FT Alphaville, who called digital liabilities an “underpriced risk factor when assessing the value of potential tech unicorns.”

For example, popular “sharing economy companies” like Airbnb and Uber drastically underaccount for operating costs associated with everything from insurance coverage to capital depreciation and customer relations. “In other words, I learned there really is no free lunch and that every advantage that information tech innovation affords us, in time opens the door to an equal and equivalent disadvantage,” she said.


Charles Rotblut, Editor, AAII Journal

“Only follow strategies you can stick with no matter how good or bad market conditions are,” Rotblut said.

It’s easy to think you’re good at investing when the market is doing well, he wrote, and tempting to make changes when it starts to turn around. “In between is the reality that the long term lasts beyond the period of time that our emotions are willing to consider.”

Adam Zuercher, Co-Founder and CEO, Hixon Zuercher Capital Management

Zuercher’s resolutions point out how important it is to remember the basics: make a monthly budget, stick to your budget, save more, make the most of your retirement contributions.

He noted that just 8 percent of people keep the New Year’s resolutions they make. To get over that hump, he suggests making resolutions that are easy and concrete.

“In our experience, people who set goals for themselves and create strategies to pursue them are much more likely to see success,” he wrote. “One study found that investors who leveraged specific financial strategies saw greater long-term financial success. Sit down with your loved ones to discuss your financial goals.”

Roger Wohlner, Financial Writer

Wohlner targeted mutual funds in his resolutions, specifically when to consider selling one.

One indication that it might be time to sell — or two, really — is a significant inflow or outflow of dollars. Mutual fund managers should stay fully invested within their mandate, he said. So if an investor is in a large growth fund, the manager shouldn’t be investing in cash.

On the other hand, “money follows success,” Wohlner wrote. Unfortunately, an infusion of too much new cash too quickly can “pose a real problem” for managers trying to find good investments within a fund’s style.

“I am not an advocate of the frequent buying and selling of mutual funds or any other investment vehicle for that matter,” Wohlner wrote. “However, mutual fund investing is not about sending in your money and forgetting about it. Successful mutual fund investors monitor their holdings and make changes when and if needed based upon a number of factors.”


Kathryn Vasel, Financial Reporter, CNN

Like Zuercher, Vasel stressed the importance of a solid financial foundation, urging investors to pay off debt and create an emergency fund as part of their financial resolutions. As the Fed begins raising rates, she said “2016 is the year to commit to reducing consumer debt.”

Many credit cards have variable interest rates, she noted, which means the interest consumers pay will increase as the Fed continues to raise rates.

Jade Fu, Investment Manager, Heartwood Investment Management

Oversupply will “be a persistent theme” in energy in 2016, according to Fu.

OPEC’s latest estimate is that the world’s oil glut is roughly equal to 2 million barrels a day, representing nearly 2% of global demand, Janet Levaux wrote in late December.

“More recently, financial markets have been particularly frustrated by indicators showing that U.S. stockpiles remain elevated. Market consensus forecasts, however, suggest that while the supply surplus is expected to continue until at least the latter part of next year, excess oil inventories should begin to decrease over the course of the year,” Fu explained in his 2016 outlook analysis.

Robert Sinche, Global Strategist, Pierpont Securities

The U.S. dollar is expected to remain at the top of the world’s currencies, but appreciation will slow down in 2016.

On Dec. 28, Bernice Napach of ThinkAdvisor cited Sinche, who said, “The dollar had a pretty explosive move already, based on the Fed hiking this year. There is not a lot of further upside in the dollar now, maybe 5 percent.”

The Fed’s future rate hikes will determine how much higher the dollar moves, according to Sinche, who noted two future hikes are already priced into the exchange rate.


Bob Rodriguez, Managing Partner, First Pacific Advisors

The bull market that has been hanging on for the last six years doesn’t fill Rodriguez with much hope. He told ThinkAdvisor contributor Jane Wollman Rusoff, “I hate the stock market.”

He predicted the industrial sector is either already in or about to enter a recession, and mining is “being crushed.” He’s unloaded energy from his own portfolio and is “watching Shanghai steel rebar (construction reinforcements) prices, which recently hit a low of about 1,980 yuan. That's indicating the industrial weakness in China. Thus, we have industrial manufacturing headwinds worldwide.”

Robert Bloink and William Byrnes, Texas A&M University School of Law

It’s not every day investors get a little certainty in their financial diet, so the Protecting Americans from Tax Hikes Act of 2015, which was signed by President Barack Obama on Dec. 18, brought a little bit of good news in the form of permanent tax provisions.

For one, the provision that allows taxpayers aged 70 and a half older to make tax-free charitable donations directly from IRA accounts is now permanent, “ending years of uncertainty in individual tax planning,” Bloink and Byrnes wrote for ThinkAdvisor. “The tax-free treatment of charitable donations from IRA accounts lets these taxpayers directly transfer an RMD of up to $100,000 per year ($200,000 per couple if each spouse has a separate IRA) to a qualified charity without increasing their tax burden.”

However, they noted, if a taxpayer has already taken his or her RMDs for 2015 RMDs, that taxpayer is not entitled to retroactively allocate those funds to charity in order to take advantage of the provision.

Timothy Paulson, Fixed Income Investment Strategist, Lord Abbett

Paulson expects rising interest rates and a flattening yield curve for 2016, however, he warned investors to keep in mind that “markets move when expectations change, and those expectations could be volatile as we get more information on economic data” throughout the year.

Steven Rocco, high-yield portfolio manager at Lord Abbett, added that he is bullish on high-yield bonds for 2016, unless the economy goes in to a recession, which isn’t likely. Jamie Green reported in December that Lord Abbett predicts the default rate on high-yield issues will rise to “about 4.5 percent during 2016, versus a level of around 2 percent in 2015, with most of the increase coming from energy and metals issuers.”

Originally posted on ThinkAdvisor.com
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