(New York)

We run a lot of bearish stories in FINSUM, and with good reason—there are a lot of them out there and we feel the need to share those views with advisors and investors. However, when there is a credible bullish story, we jump at the chance to run it. Today we have one. Robert Shiller, perhaps the godfather of doom and gloom with his CAPE ratio, has just made an uncharacteristic statement: he says that stocks may rise much higher before eventually falling. The Nobel laureate says “The stock market could get a lot higher before it comes down … It’s highly priced, but it could get much more highly priced”. Shiller had previously been warning (last year) about how overpriced the market was. Shiller says the reinvigorated market has to do with President Trump’s pro-business drive.

FINSUM: It is interesting to hear someone as typically bearish as Shiller saying that stocks may rise a good deal more. Something to pay attention to.

(New York)

The truth is that most everyone loves dividend stocks. Nowhere is that statement more true than among the US’ retirees, who have a major reliance on dividend income for their everyday expenses. Thus, here are three stable dividend stocks that investors should consider: Scotts Miracle-Gro (~3%), IBM (4.3%), and AT&T. The latter two are well-understood and have strong market positions, with AT&T essentially benefitting from an oligopoly. Miracle-Gro is an interesting choice as it has a good underlying business, but has been hammered this year by a handful of short-term issues, but thus offers a good chance at price growth and a solid dividend.

FINSUM: IBM is almost in the dividend aristocrat club, having raised its payout 23 years in a row. AT&T looks quite stable too.

(Washington)

The SEC’s best interest rule has been giving brokers headaches almost since the demise of the DOL rule. Many groups have commented on the rule’s failing, including its governance on the use of titles and its deeply confusing attempt at delineating between brokers and advisors. However, one of those gripes now seems to have played out in practice, as early results from the SEC’s testing of its Customer Relationship Summary form (CRS) has essentially failed. According to the chief of the firm hired to do the study for the SEC, “Overall, participants had difficulty throughout the proposed CRS with sorting out the similarities and differences between the broker/dealer services and investment advisor services, and integrating this information across sections”.

FINSUM: This supports exactly what everyone in the industry has been saying—the rule is totally confusing and does nothing to help consumers. The SEC is going to have to do a major rewrite.

(New York)

There are a lot of anniversaries to pay attention to this month, not least of which is the 10-year anniversary of the Financial Crisis. This has unsurprisingly sparked a whole wave of articles portending the next crisis. However, another kind of anniversary might be even more troublesome—that stocks are now higher priced than in the dotcom era. While the S&P 500’s P/E ratio is still not quite as high as then, rich valuations are more pervasive now, and price to sales valuations are higher, according to one market analyst. Actually, price to sales is the more worrying metric as stocks in the S&P 500 are now trading at 2.7x revenue versus just 1.2x in 2000.

FINSUM: Stocks are very richly valued right now, that is certain. However, that does not, in itself, portend any immediate problem for the market.

(San Francisco)

The market has periodically started to worry about the regulation of the tech industry. For a while that felt a bit premature, but given recent events, it is starting to feel more real. For instance, the FTC has just begun a marathon of hearings, which will run through November, into the state of competition and consumer protection in the digital economy. The hearings are about more than tech though, as they are fundamentally about inequality and worker’s rights across the whole of the economy. The head of the FTC said “In my view, basing antitrust policy and enforcement decisions on an ideological viewpoint (from either the left or the right) is a mistake”.

FINSUM: These hearings seem like the first stage of what might prove to be big changes for anti-trust policy in the US. If changes do happen, we believe they will be much more far-reaching than just for tech.