Chart of the Week
With many asset classes at their lowest yields, amid increasing volatility the income challenge for investors and retirees is enormous. However, the range of asset classes that can help generate attractive yields may be broader than most realize.
Although 2012 was a year in which major catastrophes were avoided, it remained a year of "risk-on/risk-off" trading as investors continuously reacted to developments in Europe early in the year and political trends in the US as the year drew to a close.
With investors starved for returns, emerging markets offer tremendous opportunities. Emerging markets' GDP and wealth accumulation have great long term growth potential based on growing exports and commodity production.
While we continue to believe (or hope) a compromise deal between Republicans and Democrats on the fiscal cliff issues is the most likely outcome by the end of the year, the probability has dropped and the scope has narrowed.
Amidst difficult financial times, emotional instincts often drive investors to take actions that make no rational sense but make perfect emotional sense. As a result, the average investor underperformed most asset classes over the past 20 years.
In this period of intense differences over the future path of policy, anxiety and uncertainty have been the most reliable descriptors of sentiment. Strangely, volatility has been very low while this policy uncertainty has been very high.
Be careful that emotions aren’t the driver of buying and selling, as they may not be the best signaler for the "right" time to do so. Oftentimes, our emotional instincts will tell us to do the exact opposite of what we should do.
With the current 15% dividend tax rate set to expire at year-end, the concern among many investors is that higher dividend tax rates would significantly hurt a favored sector, dividend-paying equities.
Many investors are grappling with the challenges of planning for their futures. With the realization that a typical 65-year-old couple has a 50% chance of living to age 94, confidence in achieving a financially secure retirement has declined.
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- Daily Stat
Daily facts and figures to help inform investment decisions.