Monthly Archives: April 2014

American Lifestyle the Magazine Celebrating America #63

We thought you might enjoy a look at the May issue #63 of American Lifestyle Magazine. It’s a gift that we send to clients and we’d like to share with you in “soft” form.  We hope you like it.
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Did you know that there is an e-Delivery Gap?

Closing the e-Delivery Gap

The slow adoption of e-delivery is well known and of concern to most custodians and financial organizations. Pershing LLC ( one of the largest prime brokerage firms is owned by BNY Mellon) joined with Beacon Strategies to conduct the 2013 e-Delivery Survey 
Pershing measured this gap by comparing the industry’s current reality to its expectations for e-delivery adoption. On average, survey respondents said they expect 53.1% of investors to enroll in e-delivery of at least one type of communication. Keep in mind that 88% of respondents also indicated that e-delivery is an important initiative. The real e-delivery gap is the difference between the expectation level of 53.1% and actual adoption of e-delivery for different types of communications, as expressed by survey participants.
Investors, advisors and brokerage home offices rely increasingly on technology, and e-delivery is an important component in this strategy with benefits such as convenient anytime, anywhere access. This growing reliance on technology, however, is at odds with levels of adoption that are often less than 20%. See the infographic below.
Consider saving a few trees, speeding up your statements and turning your recordkeeping into “soft copies”.

Getting Paid Not to Work

According to David A. Rosenberg Chief Economist & Strategist for the wealth management firm Gluskin Sheff :

The social safety net is supporting a record number of Americans. In fact, the Cato Institute published a controversial study last summer, concluding that in 39 states, those individuals astute enough to tap the myriad of government benefit programs at all levels got paid at least as much as an administrative assistant (in 11 states, as much as a school teacher)! Now not everyone is lazy, but at the margin, when governments create disincentives to work, some will choose not to. From 2010 to 2013, the data show that individuals leaving the labour force due to disability accounted for an unprecedented 28% of the overall tally — this compares to 18% who were classified as “disabled” from 2007 to 2010.

The Graduate – Supply vs. Demand

According to David A. Rosenberg Chief Economist & Strategist for the wealth management firm Gluskin Sheff : Firms are reporting difficulty in finding qualified applicants for the job openings they have available. The latest Fed Beige Book highlighted labour shortages in health care, technology, transportation services, engineering and construction.

Perhaps part of the problem is that the U.S. education system is churning out graduates that are not really in great demand by the private business sector — we didn’t read much about the demand for social scientists and psychologists in the Beige Book. We’ve reached a state where more people are graduating with expertise in homeland security than in either computer science or math.

As a side note I’ve always thought it was interesting that we let 18 year olds make one of the largest financial decisions that a family will ever encounter- a $200k+ decision about which college to attend and what major to pick. College guidance and admissions people say it’s all about the “fit” and “following the passion”. Interesting and maybe true but I think the law of supply and demand is a more important factor to consider.

Economic Outlook Q1 2014- An Economic Thaw, but a New Cold War

An Economic Thaw, but a New Cold War
By: James R. Solloway, CFA, Managing Director SEI Investments Management Corporation , Senior Portfolio Manager 

The Portfolio Strategies Group recently released its first-quarter 2014 Economic Outlook. A summary of its conclusions is provided below:

 Equities have turned a bit more volatile this year—and for good reason. Disruptive cold and snowy weather during the first quarter has made recent economic data coming out of the U.S. statistics mills about as reliable as those that are made in China. The invasion of the Crimean peninsula by Russian troops has raised the specter of a renewed cold war. Throw in the longer run worries surrounding the political, economic and financial health of several emerging countries, and one might expect investors to go into permanent hibernation.

 Global stock markets bounced higher following a brief dip in the latter part of January, with the U.S. leading the way. The ability of equities to quickly overcome periodic stumbles (in the U.S. and other developed markets, at least) underscores investors’ willingness to assume risk even when economic and geopolitical uncertainties are on the rise. The fact that pullbacks in developed equity markets remain brief and shallow suggests that the rotation out of cash and fixed-income assets and into stocks is still very much in play.

 Emerging-market equity, however, continues to underperform. Although emerging-market valuations are attractive versus the U.S. market (near decade-long lows), both political and economic factors have reduced our conviction that
the value in emerging-market equities will be realized over the near term.

 Geopolitical concerns and a further easing of inflation pressures around the globe sparked a stronger rally in sovereign debt than we expected at the start of the year. However, performance has been good in the fixed-income areas our managers have been emphasizing, especially high-yield and dollar-denominated emerging-market debt. Since the yield on Treasury and investment-grade corporate bonds remain low relative to their own history and to inflation, we continue to expect more volatile assets (including equities) to outperform less volatile ones.

 In equities, the excessive investor enthusiasm in developed markets at the start of the year has eased; the negative sentiment toward emerging-market equity has not abated. Momentum strategies were quite successful in January and February but hit a road block in March. We are mindful that momentum-focused markets can become dangerous as participants crowd into the same trade and leverage up in an effort to improve returns.

 Stocks in Europe are well bid despite the tepid growth we mentioned earlier. There has been a shift in relative performance, with more domestically oriented sectors outperforming those that are export dependent. Our managers think this convergence play has more to go. With the exception of low-volatility strategies, our U.K. and European managers favor industrials, technology and consumer discretionary sectors and are underweight consumer staples. Valuations are not stretched, and there is conviction that global growth will accelerate.

 In alternative strategies, managers are adding to their equity exposure as the environment improves for bottom-up stock picking. Short positions, however, are not hurting performance this year because the market is less directional. Activist investing and mergers-and-acquisition strategies also are contributing to performance. Opportunities in the event-driven space are expanding and transactions are getting bigger. In fixed income, alternative strategies are more
balanced, with yields and spreads not offering any big opportunities, in our managers’ opinions. Most of the emphasis is on structured credit, such as commercial and residential mortgage-backed securities.

A full-length paper is available here if you wish to learn more about this timely topic.

This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice. This information is for educational purposes only. There are risks involved with investing, including loss of principal. Current and future portfolio holdings are subject to risks as well. Diversification may not protect against market risk. International investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles or from economic or political instability in other nations. Emerging markets involve heightened risks related to the same factors as well as increased volatility and lower trading volume. Narrowly focused investments and smaller companies typically exhibit higher volatility. Bonds and bond funds will decrease in value as interest rates rise. High yield bonds involve greater risks of default or downgrade and are more volatile than investment grade securities, due to the speculative nature of their investments. Information provided by SEI Investments Management Corporation, a wholly owned subsidiary of SEI Investments Company. Neither SEI nor its subsidiaries are affiliated with your financial advisor.