Last week a federal court ruling essentially struck down the fiduciary rule proposed by the Department of Labor during the Obama administration and which has been in limbo ever since. The ruling stipulated that the Labor Department was not authorized to make the regulation to hold advisors to a higher standard, and while the rule isn't entirely dead yet, the Labor Department announced they would not enforce the standard. The rule requires advisors to put their clients interest first when providing advice on certain retirement accounts. If you thought that was always the case, surprise! It wasn't, and still isn't.
Remember way back to your first paycheck. The moment you open the envelope anticipating the windfall when all your hard work pays off. Then, like a swift kick to your gut, realty hits. Your takeaway earnings are almost always way lower than what you expected.
When looking for any professional advisor, it is important to be able to match their characteristics, temperament, client profile and experience level to your own profile.
In late January, we wrote an article on SeekingAlpha voicing our opinion and concern that gold pessimists were ignoring certain fundamental issues that typically affect gold demand and prices.
Investors may be looking at the latest report of the inventory to sales ratio and thinking, 'yeah baby', here comes that growth we were waiting for.
Not so fast!! Even though the inventory to sales ratio has been on a steady decline, a look behind the numbers reveals some lingering concerns.
We continue to chug along for what potentially could be a 9th consecutive year of positive returns for the S&P 500. (Investors can invest in the S&P 500 through the SPDR S&P 500 Trust ETF (NYSEARCA:SPY) and other passive index ETFs). The difference this time compared to the heyday of the tech boom is that returns from 1991 to 1999 averaged over 21% each year and 4 of those years had returns in excess of 30%! During the current bull market, the S&P 500 has averaged just 14.7% - so the euphoria accompanying the 1990's is not really evident this time around - at least not yet. In fact, there seems to be what I would characterize as an uncomfortable level of complacency even though there are a group of experts that are wary of what is now the second longest bull market for the S&P.
I have been reading quite a few articles drawing comparisons between the fiscal spending policies of Donald Trump and those of Ronald Reagan - perhaps in the hope that the stock market will have similar results this time around. During Reagan's presidency from 1981 to 1988, there was only one year in which the S&P 500 - which could now be invested in through the SPDR S&P 500 Trust ETF (NYSEARCA:SPY) - had a negative return and that was in 1981. After that, the S&P 500 went on an 8-year winning streak. Could that possibly happen again? Not likely, but that doesn't mean the stock market should be avoided.
The arguments for and against investing in commodities are usually centered around population growth, the rise of the middle class, technological innovation (fracking, biogenetics, etc.), production spikes, political turmoil, slowing Chinese growth, infrastructure spending, hedging, and speculation. You don't have to flip through too many pages in the Wall Street Journal to find news stories on any one of these global dynamics.
There are several reasons why investors buy gold.
As a safe haven asset - during times of uncertainty, investors buy gold for the comfort of knowing that if currencies disappear and/or financial assets become worthless, at least they know their gold holdings would be worth something. Forget the challenges of storing this gold - it provides peace of mind and that, in and of itself, is worth a great deal to some.
As an inflation hedge - it has been well documented that gold is a good hedge against inflation. In fact, our analysis of data going back to 1971 confirms a strong positive correlation between gold and personal consumption expenditures (PCE). PCE is the primary measure of consumer spending on goods and services in the U.S. and since consumer spending accounts for almost 70% of US GDP, it is counted on as a measure of inflation.
As a piece of jewelry. - 'nuff said.
Which is why I am a bit confused by so many 2017 forecasts for gold prices to decline from current levels, in some cases dramatically. I guess I'm in the contrarian camp (Oh no, not again) because I think that if there is any risk in gold it is that it surprises to the upside.