In an article for the Financial Times, Derek Brower discussed recent weakness in energy stocks due to increasing worries of a recession despite a recent string of strong earnings reports. This follows a two year rally which was fueled by production cuts in 2020, a better than expected economy, and the war in Ukraine. 

Last year, the energy sector was up more than 50%, while the S&P 500 finished down double-digits. This year in contrast, the S&P 500 has an 8% gain, while the energy sector is down 5%.

According to Wall Street analysts, investors are looking past companies’ strong results due to expectations that recent trouble in the banking sector will translate into reduced economic activity and demand for crude oil. 

Another indication is that dividend yields in energy stocks are nearly double those found in financial stocks and quadruple those of tech stocks. Inflation is proving to be a significant headwind as production costs have increased, eroding margins with lower oil prices. Another is that productivity in the Permian Basin has declined by 30% over the last 2 years, another reason that margin contraction is likely.

Finsum: Following major outperformance in 2022, energy stocks have underperformed so far this year due to increasing recession fears.

Calling Donnie Deutsch….calling Donnie Deutsch.

Line, um, two. Go ahead.

Good thing, too, because, like a vigorous workout, developing a brand -- from pinpointing a name to a logo, can almost feel as if it’s pushing you to your limits What’s more, if branding and marketing isn’t in your DNA, the challenge is magnified, according to lpl.com.

Your creative chops aside, to build your financial practice, your best bet’s a methodical approach:

1. Define your value proposition
2. Pick your DBA name
3. Develop a logo
4. Develop a Website
5. Execute with Consistency

Brand equity, of course, is the gauge of the perceived value of a brand name product, according to quatrics.com.

Nurture yours – because it abets your ability to squeeze more out of profit margins.

Brand equity is defined by the added value associated with a brand name that rings a bell among those who hear it. In fact, when it comes to brand loyalty, it’s all in. That’s not all; it can help ascertain pricing.

Um, fixed income investors seemingly were more than glad to host the going away party, according to JP Morgan.com.

That’s especially in the aftermath of one of the worse years on records for bonds. The culprit? Yep; the Fed, and its hyper active barrage of rate hikes. And, yes again, the last of it should spell stability this year to the bond market. That said, investor should bear in mind:

How far will the Fed go before concluding its rate hiking campaign?

How might credit perform in a year where both economic and profit growth are set to slow?

How will impaired liquidity impact price action?

Now, on one hand, of course, with volatility comes risk. But it also can be the land of opportunity, according to lazardassetmanagement.com. Consequently, investors shouldn’t duck and dodge fixed income like a bill collector but embrace the possible upside by going eye to eye and confronting volatility.  

“In this unusual environment, we believe investors may want to move out of a passive mindset and consider investments beyond ‘plain vanilla’ bonds. By being creative, being active, and diversifying globally, investors can find fixed income solutions that may set up portfolios for the longer term with attractive return potential.”

Algo Chain, a fintech wealth management startup, is launching an AI powered toolkit subscription service which utilizes ChatGPT 3.5 Turbo. The service offers a variety of ETF model portfolios that use technical signals and macro data points to help users navigate markets and optimize asset allocation. 

The AI is designed to generate signals and suggest allocations based on historical precedent. It enables advisors to sort through thousands of ETFs to find the ideal combination of factors to suit a client’s needs. 

Given the proliferation of AI tools following the release of ChatGPT 3.0 earlier this year, it’s not surprising to see the technology applied to wealth management. The company believes that the bulk of a portfolio’s returns are due to asset allocation. Thus, it offers insight into how various asset allocations have performed in various circumstances. 

This is Algo Chain’s second model portfolio offering. Earlier this year, it launched six model portfolios in tandem with HANetf, representing various themes. It’s expected that we will continue to see a proliferation of AI-backed tools to enhance model portfolio offerings over the coming months.

Finsum: Algo Chain is launching an AI powered toolkit to help enhance and optimize ETF model portfolios offerings.

In an article for InvestmentNews, Jeff Benjamin discussed the need for succession planning especially as there are about 100,000 advisors that are expected to retire over the next decade. In total, they are estimated to control $10 trillion in assets. 

Of this group, 45% intend to transfer ownership to employees or a family member. Around 30% are looking for an external transition, while 25% do not have a firm succession plan. According to industry insiders, this is a major challenge for the industry especially as succession plans take time to prepare. Additionally, there needs to be guidelines for alternative scenarios especially as fewer young people are entering the industry.

Even in the event of a sale, there are complications and contingencies that need to be considered such as your clients’ comfort and the financing of such a transaction. With internal transitions, unexpected events can also arise such as relationships souring with prospective owners that result in a shift of strategy or advisors being recruited away to other firms. 

Finsum: Financial advisors need to have a succession plan. This is especially critical given the wave of retirements that is expected to hit over the next decade.