How To Be A Better Investor

By Larry Fink, Chairman & CEO of BlackRock

Cable TV. Social media. Even newspapers. With all the information swirling around us, it’s easy to get obsessed with watching the market’s gyrations. And it’s tempting to think you can outperform everyone else if you just listen closely enough. The truth is, most of what’s out there is just noise.

Daily ups and downs are a fact of the markets. But you’re not investing for one day. Most people are investing to realize goals that are years, if not decades, down the road. And getting too wrapped up in how the markets will react to what’s going on in Ukraine at the moment, or the latest news out of Washington, is going to distract you from your life goals—like saving for your kids’ college fund or planning for retirement.

Does this mean you should set up your portfolio one day and never look at it again? Of course not. It means that your focus when investing should be on what you’re trying to achieve.

If you’re saving for a down payment on a home, you might have a timeframe of just a few years and need one strategy. Saving for your child’s college costs is another timeframe—10 to 20 years. And retirement takes a whole other level of thinking. Young people today are looking at a timeline of more than half a century.

Imagine your money is like an employee: you want it to work for you. Are you going to stand over your money’s shoulder, micromanaging and questioning every single thing—and ruining its productivity? Or are you going to put it on a solid path and give it the room to succeed?

But you shouldn’t have to do this alone. Those of us in asset management need to take this conversation beyond the ticker tape. Yes, investors want sophisticated analysis and carefully managed funds—but what’s most important to people is getting the products (and the advice) that will take them to the finish line.

So when you think about what to do with your money, don’t think about what’s on the news. Don’t think about what’s important to talking heads or the Twitterati. Think about what’s important to you, and what your goals are. And remember just how long it takes to achieve each of them.

Read more: BlackRock, The Blog

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The views expressed here are that of myself or the cited individual or firm and do not constitute a recommendation, solicitation, or offer by myself, D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

 The Jacksonville Business Journal has ranked D2 Capital Management in the top 25 of Certified Financial Planners in Jacksonville.  The Firm is also a member of the Financial Planning Association of Northeast Florida, the Jacksonville Chamber of Commerce, the Southside Businessmen's Club, and the Beaches Business Association. 

Diversify With Dividend Funds

By Max Chen, ETF Trends

Demand for dividend stocks and exchange traded funds remains robust as investors continue looking for ways to generate income in a low interest rate environment.

A number of factors contribute to the ongoing appeal of investing in dividend ETFs. For instance, dividend payouts provide downside protection or help cushion short-term dips, writes John Prestbo for MarketWatch.

Additionally, investors will find that steady dividend stocks reflect more mature or established companies that are steadfast against temporary swings in the equities market.

“Research has shown that the market does not fully incorporate these beneficial attributes into the prices of quality firms, so high-quality stocks have better risk-adjusted returns over time than lower-quality stocks,” according to Morningstar analyst Abby Woodham.

Dividend plays strengthened in the the recent sell-off in small-caps and growth stocks.

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The D2 Capital Management Multi-Asset Income Portfolio is overweight in dividend funds.  Current yield on the portfolio is 5.30% and year to date the portfolio is up 7.91%.

Disclosure:  I own the D2 Capital Management Multi-Asset Income Portfolio

The views expressed here are that of myself or the cited individual or firm and do not constitute a recommendation, solicitation, or offer by myself, D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

 The Jacksonville Business Journal has ranked D2 Capital Management in the top 25 of Certified Financial Planners in Jacksonville.  The Firm is also a member of the Financial Planning Association of Northeast Florida, the Jacksonville Chamber of Commerce, the Southside Businessmen's Club, and the Beaches Business Association. 

1 in 4 Americans is saving nothing for retirement

By Chuck Jaffe, MarketWatch

There’s a big difference between not saving enough and not saving at all.

You will only find out how big that difference is if you live it out, and a new study suggests that more people than ever are doing just that.

The latest Country Financial Security Index released last week showed that one in four Americans, across all age groups, is not saving at all for retirement. A majority of respondents (55%) said they either are not participating in a workplace sponsored retirement plan like a 401(k) or they don’t know if they are in a plan.

In certain age groups, nearly half of respondents no longer believe it’s possible for a typical middle-income family to save for retirement.

Nations can kick problems like this down the road, coming up with stall tactics and delays that ensure trouble comes as far down the line as possible, pushing trouble out of the lifetime of many current adults even as they raise the danger level for future generations.

Individuals, however, need to rely on themselves. Social Security was never intended to be more than a crutch, so relying on it to be the bulk of support is to guarantee that you will limp financially to life’s finish line.

Surveys have long shown that people “aren’t saving enough” by standards defined by the financial planning community. The side that seldom gets discussed in those surveys is that those situations don’t have to play out badly; investors have a tendency to increase their retirement savings as they near the end of their working life — when they no longer have to worry about college tuitions — and so they close the gap.

Moreover, the savings level that financial advisers consider adequate, in general, goes beyond what the average person needs because it assumes a very long, active life span. Falling short of that “perfect” level of savings isn’t a big deal for someone who is shooting for it, because coming reasonably close should ensure a nest egg that is more than adequate.

But the problem with all of these surveys is that they don’t allow for the logical follow-up question, because for folks who are not saving at all for retirement or who knowingly are under-saving with no visible means for recovering, there’s a simple, logical retort: What the heck are you people thinking?

It may seem like a rhetorical question, but it’s not.

Instead, it’s part of a bit of a self-test for your own financial planning.

The first part, of course, is that basic question about savings, namely: “What are you doing to save and do you think it will be sufficient to at least get you close to your financial goals?”

The second question is: “What will you do if your savings is insufficient?”

This is not about relying on Social Security to prop you up, it’s about what you would do in case of financial disaster, because that’s what you could be facing.

Start listing the options and there will be choices, starting with easy things like “give up travel plans,” crossing through “sell off belongings” and ending with things like “move in with the kids” or “learn to eat cat food.”

Those are not the financial “plans,” they are calamities.

They are the kinds of things you hear from people who suffered catastrophic health-care issues that drained their savings, or who fell victim to financial fraud. They tell stories about those drastic measures and stark choices when fate or some crook robbed them of the future they had built and planned for themselves.

If you’re not saving, however, you are the thief here, the one stealing from your future. You’re forcing those horrible decisions on yourself.

Unless you are independently wealthy and set for life, spending and saving decisions are about trade-offs, delaying gratification today for comfort tomorrow, balancing today’s wants against tomorrow’s needs and your ability to provide for both.

You either set yourself up for a comfortable retirement, or you live in discomfort through it.

Americans need to face the music now, while they can still change the tune. Otherwise, the building retirement-savings crisis in this country will hit home in personal, uncomfortable ways.

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The views expressed here are that of myself or the cited individual or firm and do not constitute a recommendation, solicitation, or offer by myself, D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

 The Jacksonville Business Journal has ranked D2 Capital Management in the top 25 of Certified Financial Planners in Jacksonville.  The Firm is also a member of the Financial Planning Association of Northeast Florida, the Jacksonville Chamber of Commerce, the Southside Businessmen's Club, and the Beaches Business Association. 

Triple Crown a Bad Bet for Dow

By Michael Driscoll, Wall Street Journal

Horse-racing fans might be rooting for a California Chrome victory at the Belmont Stakes next month, but stock investors aren't. A racehorse winning the Triple Crown is decidedly bearish for the Dow.

The Super Bowl Indicator annually advises on which way stocks will turn, but the Triple Crown Predictor comes into play much less often. Only 11 times in the past century—starting with Sir Barton in 1919—has a horse swept the Kentucky Derby, Preakness Stakes and Belmont Stakes. On eight of those occasions, the Dow Jones Industrial Average came up lame, ending the year in the red.

Coincidence, you say? Well, maybe. (OK, probably.) But note that, since the Dow was introduced in 1896, it has risen two out of every three years, a 66% winning percentage that is nearly the inverse of the results in Triple Crown years. And in most of the years a horse swept the three contests, stocks that had put in middling performances ahead of the racing season took nasty dives after it.

Take the most-recent winners: In 1977 and 1978, Seattle Slew and then Affirmed won at Churchill Downs, Pimlico and Belmont. But they couldn't outrun stagflation, and neither could the stock markets, which gave up a fifth of their value across the two years.

Racing fans hope 2014 breaks a dry spell for the horses. Fans of stocks hope the year breaks other trends, too.

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The views expressed here are that of myself or the cited individual or firm and do not constitute a recommendation, solicitation, or offer by myself, D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

 The Jacksonville Business Journal has ranked D2 Capital Management in the top 25 of Certified Financial Planners in Jacksonville.  The Firm is also a member of the Financial Planning Association of Northeast Florida, the Jacksonville Chamber of Commerce, the Southside Businessmen's Club, and the Beaches Business Association. 

Sell in May? Don’t Overreact

By James Stack, President, InvesTech Research and Stack Financial Management

Summers may be prone to stock market weakness, but investors still enjoy gains the majority of the time. Looking at the seasonal summer performance of the S&P 500 (SPX) since 1960, we’ve seen that 63% of the summers saw the market move higher. If we look only at these positive summers, the average gain was 6.4%.

In fact, we found that the market was just as likely to experience double-digit gains over the summer period as double-digit losses. There were seven years where the summer period ended with greater than a 10% gain and an equal number of years with summer losses exceeding 10%.

Of course, that’s not as strong as the winter track record, where double-digit gains outnumbered double-digit losses by 5:1, but it’s a sound reason to take the annual “Sell in May” script with a grain of salt.

More importantly, those double-digit summer losses occurred only during bear markets. Indeed, all seven double-digit summer losses since 1960 coincided with these bear market periods.

Only three summers (1971, 1977, and 2011) saw six-month declines greater than 5% that were not associated with a bear market. Of course, sizable market corrections are always possible, but unless bearish warning flags are flying, summer weakness has generally been mild.

In addition to the seasonality observed in the performance of the S&P 500, sector leadership tends to shift significantly as the market moves from the November-April period into the summer months. As a result, there are some steps you might consider.

Healthcare and Staples are the most resilient sectors during the summer, and it’s generally a good idea to have a substantial allocation in these segments. Technology is a close third.

Conversely, the Industrials, Consumer Discretionary, and Materials sectors have averaged negative returns in the summer, and this may be a good time to trim positions.

Overall, the stock market may tend to lose momentum from May through October, but it’s important to remember that this period is usually profitable as long as bearish warning flags remain absent.

Try to not overreact to the “Sell in May” headlines as it’s far more important to rely on our key indicators which, for now, are still in bullish territory.

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The views expressed here are that of myself or the cited individual or firm and do not constitute a recommendation, solicitation, or offer by myself, D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

 The Jacksonville Business Journal has ranked D2 Capital Management in the top 25 of Certified Financial Planners in Jacksonville.  The Firm is also a member of the Financial Planning Association of Northeast Florida, the Jacksonville Chamber of Commerce, the Southside Businessmen's Club, and the Beaches Business Association. 

Worst move a retirement investor can make

By Mitchell Tuchman, MarketWatch

In defense circles, it's known as "fighting the last war."

A country shaped by a protracted conventional conflict can be unprepared for guerrilla attacks. A nation used to commanding the high seas is unlikely to muster an effective standing army.

Fighting the last war with your investments is a major tactical blunder. Sticking to a fashionable outlier investment strategy, however comforting it might have been in a crisis, is just asking for unbearable financial pain .

Something like that is happening to investors right now. The Swiss investment house UBS found that people in their early to mid-30s with at least $100,000 to invest keep a staggering 42% of that money in cash.
Comparatively, global money managers are at 5%, according to Bank of America . That's higher than in recent months but far less than flush young investors.

You can't blame youth for hoarding cash. Virtually their entire financial life has been a series of gargantuan panics — the housing collapse, the credit crisis, the Great Recession and so on. A flock of black swans seemed to be upon us.

This is quite a change from the experience of their parents. Most retirees alive today lived through the (mostly) economic good times following World War II, a far different environment than their Depression-era forebears saw.

The baby boomers witnessed market collapses and recoveries repeatedly and learned one kind of lesson. Their young adult children have seen a big crash happen exactly once — albeit a far deeper and more scary decline — and have drawn quite another conclusion.

Both are dead wrong. Both are fighting the last war.

Yet every time the nodding heads on cable TV sound the alarm for imminent disaster the market sloughs it off and sets a new all-time high.

Money managers, particularly those who put their names behind bold predictions in the media, have a lot of incentive to make such calls. It's their job to be the public faces of large, otherwise anonymous investment houses. And they have reasonable intellectual cover for doing so. Markets change, so strategies should change with them, they contend.

For the serious retirement investor, however, dashing around from strategy to strategy is the worst possible course of action. Like the young people in the UBS poll eventually will realize, extreme concentrations greatly increase the risk of being underinvested as markets rise and overinvested when the eventual setbacks finally do arrive.

The answer is to own a balanced portfolio of diversified investments that takes into account your emotional response to loss and the number of years until your retirement. Rebalancing a portfolio is a remarkably powerful way to unemotionally capture gains while keeping exposure to unseen risks at a minimum.

The people running financial interview shows on television really don't want to hear that much. It's a bit boring and doesn't help fill airtime or sell advertising slots. But that is exactly how patient investors build wealth in all markets, year after year.

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The views expressed here are that of myself or the cited individual or firm and do not constitute a recommendation, solicitation, or offer by myself, D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

 The Jacksonville Business Journal has ranked D2 Capital Management in the top 25 of Certified Financial Planners in Jacksonville.  The Firm is also a member of the Financial Planning Association of Northeast Florida, the Jacksonville Chamber of Commerce, the Southside Businessmen's Club, and the Beaches Business Association. 

$1M is not what it used to be

By Matt Sirinides, Investment News

$1 million hasn't been what it used to be for more than 20 years.

One million dollars in 1960 — around the time when having $1 million took hold in the popular imagination as a symbol of ultimate wealth — had the buying power of approximately $8 million dollars today.

Inflation has averaged 2.78% for the past 30 years. If we exclude the 10-year period from 1974 through 1984, when inflation averaged nearly 8%, the rate has been remarkably consistent since 1914, holding at around 2.75%. If we use that inflation rate as a rough guide, the equivalent of $1 million in 2014 will be $5 million in 2074 (in 60 years). If the place of the $1 million dollar payday in today's lexicon is outdated — and it is — by then, it will be positively extinct.

Today's retirees are doubtless already aware of how far (or short, as the case may be) $1 million dollars will stretch. Average life expectancy at age 65 in the U.S., according to the Centers for Disease Control and Prevention, is 85. Without making any daring assumptions about their portfolio, a couple with a $1 million nest egg can expect to draw $40,000 to $45,000 a year for the duration of a 20-year retirement.

Housing costs also add up quickly and account for more than one-third of a retirees' expenses, according to a Census Bureau consumer expenditure survey. But the largest concern is covering health care and medical expenses. A couple who expects to pay 90% of their own health care costs out of pocket for the span of a 20-year retirement would need $261,000 for that run, according to the Employee Benefit Research Institute, which adds up to more than 25% of a $1 million nest egg.

According to a recent survey of investors by the Insured Retirement Institute, 33% of respondents said they expected to work beyond 65, and only 16% had at least $1 million saved. The U.S. has a record 9.63 million households with a net worth of $1 million or more, according to a recent report by the Spectrem Group. Even those millionaires would still be more than $7 million shy of joining the now-infamous “one percent” — which requires a net worth of more than $8.5 million.

If all of this hasn't sufficiently diminished what it means to be a millionaire, consider that by the time the average Generation X couple retires (2035), $1 million may not be enough to cover housing costs. By the time a Millennial couple retires (2055), $1 million will barely cover the cost of out-of-pocket health care expenses.

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The views expressed here are that of myself or the cited individual or firm and do not constitute a recommendation, solicitation, or offer by myself, D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

 The Jacksonville Business Journal has ranked D2 Capital Management in the top 25 of Certified Financial Planners in Jacksonville.  The Firm is also a member of the Financial Planning Association of Northeast Florida, the Jacksonville Chamber of Commerce, the Southside Businessmen's Club, and the Beaches Business Association. 

Peritus High Yield fund Tops $1B in Assets

By Tom Lydon, ETF Trends

The AdvisorShares Peritus High Yield ETF (HYLD) is the newest entrant to the $1 billion exchange traded fund (ETF) club, cementing its status as one of the largest actively managed ETFs in the process.

HYLD is managed by California-based Peritus Asset Management, which specializes in unearthing opportunities in the high yield corporate and loan markets. Earlier this year, HYLD earned the prestigious five-star rating from Morningstar.

“We’ve seen increased interest from financial advisors, pension plans and family offices in the high yield market,” added Ron Heller, managing partner of Peritus, in a statement. “Historically low interest rates continue to hurt yield investors, and we feel that the market has come to understand that high yield bonds and leveraged loans are incredibly efficient in an active ETF structure. I’m tremendously proud of the team at Peritus and the great work they continue to do.”

HYLD currently sports a 30-day SEC yield of 7.93%.

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AdvisorShares Peritus High Yield Fund is a component of the D2 Capital Management Multi-Asset Income Portfolio.  The portfolio's current yield is 5.27% (as of 13 May 2014).

Disclosure:  I own the D2 Capital Management Multi-Asset Income Portfolio

The views expressed here are that of myself or the cited individual or firm and do not constitute a recommendation, solicitation, or offer by myself, D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

 The Jacksonville Business Journal has ranked D2 Capital Management in the top 25 of Certified Financial Planners in Jacksonville.  The Firm is also a member of the Financial Planning Association of Northeast Florida, the Jacksonville Chamber of Commerce, the Southside Businessmen's Club, and the Beaches Business Association. 

Sun Shines on Dividend Funds Again

By Todd Shriber, ETF Trends

On Thursday, 51 U.S.-listed exchange traded products hit new all-time highs. Highlighting investors’ thirst for income, preparation efforts for a possible case of the summer doldrums or both, nearly a quarter of the ETFs making new highs yesterday were dividend ETFs.

And that does not include the multitude of MLP and utilities funds that also hit new highs. Investors have also been putting new cash to work with dividend ETFs after pulling money from some payout funds in the first quarter.

The ALPS Sector Dividend Dogs ETF (SDOG) made a new high Thursday and since the start of April, the fund has pulled in over $56 million in new assets. Year-to-date, SDOG is up almost 6%. SDOG surged 34.2% last year.

The ETF applies the “Dogs of the Dow” theory to S&P sectors, buying five highest-yielding stocks in each of the S&P 500 index’s 10 sectors. SDOG caps sector weights at 10% and individual holdings weights at 2%. A 10% weight to utilities is more than triple the weight the sector commands in the S&P 500 and that has been a boon for SDOG in a year when utilities have shined. The ETF has a 30-day SEC yield of 3.56%.

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ALPS Sector Dividend Dogs ETF (SDOG) is a component of the dividend oriented D2 Capital Management Multi-Asset Income Portfolio.  The current yield on the portfolio is 5.29% (as of 8 May 2014).

Disclosure:  I own the D2 Capital Management Multi-Asset Income Portfolio

The views expressed here are that of myself or the cited individual or firm and do not constitute a recommendation, solicitation, or offer by myself, D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

 The Jacksonville Business Journal has ranked D2 Capital Management in the top 25 of Certified Financial Planners in Jacksonville.  The Firm is also a member of the Financial Planning Association of Northeast Florida, the Jacksonville Chamber of Commerce, the Southside Businessmen's Club, and the Beaches Business Association. 

Real Estate Funds Strengthen on Recovering Economy

By Max Chen, ETF Trends

After a poor showing last year, real estate investment trust exchange traded funds are outpacing the broader markets and could continue to outshine common stocks.

Year-to-date, the Vanguard REIT ETF (VNQ) has gained 13.7%.  In comparison, the S&P 500 Index has only inched up 2.6% so far this year.

Real estate observers argue that that REITs have further room to run as consumer confidence and real estate prices continue to rise, reports Constance Gustke for CNBC.

“There’s room for more growth in REITs, since real estate will be stellar,” Bruce Garrison, a managing director at Chilton Capital Management, also said.

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Vanguard REIT ETF (VNQ) is a component of the D2 Capital Management Multi-Asset Income Portfolio.  

Disclosure:  I own the D2 Capital Management Multi-Asset Income Portfolio

The views expressed here are that of myself or the cited individual or firm and do not constitute a recommendation, solicitation, or offer by myself, D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

 The Jacksonville Business Journal has ranked D2 Capital Management in the top 25 of Certified Financial Planners in Jacksonville.  The Firm is also a member of the Financial Planning Association of Northeast Florida, the Jacksonville Chamber of Commerce, the Southside Businessmen's Club, and the Beaches Business Association.