Wealth Management
While stock selection often gets the most attention, the true driver of portfolio performance is typically asset allocation, with around 90% of variability linked to how investments are distributed across asset classes. Different asset classes perform well under different economic conditions—stocks might excel in growth periods, while bonds provide stability during downturns.
Goldman Sachs has analyzed various economic scenarios to suggest optimal asset mixes for maximizing risk-adjusted returns over the next decade. For sluggish growth or stagflation, they recommend a heavier allocation to Treasury bonds and real assets, while minimizing exposure to growth stocks.
In a scenario of strong growth and low inflation, the maximum allocation to stocks should still be capped around 70%. Ultimately, a diversified mix, including US Treasuries, remains crucial regardless of the economic outlook.
Finsum: Keep in mind the relative risk profiles of these asset classes when constructing your portfolio.
The cryptocurrency market experienced a sharp downturn recently, with Coinbase suffering its worst week of the year and Marathon Digital plummeting by 20%. Broader crypto-related equities hit their lowest point since February, reflecting concerns about the U.S. economic outlook and a general decline in risky assets, including Bitcoin and Ether.
Historically, September has been a challenging month for crypto, adding to the pessimism; the Crypto Fear & Greed Index is now in "Extreme Fear." Market volatility was compounded by weak U.S. labor data, further impacting investor sentiment.
Despite these setbacks, trading volumes rose in August, suggesting some continued market engagement. Attention is now on the Federal Reserve's potential interest rate cut, which could impact crypto markets.
Finsum: We are seeing an increased correlation between crypto and traditional market moving news, this could be a long term trouble or a short term reflection of the asset classes risk.
Annuities offer a dependable source of income in retirement, primarily provided by life insurance companies. With various annuity products available, the challenge is identifying the most reputable providers that align with your retirement needs.
Bankrate guides this process by evaluating companies on customer satisfaction, financial strength, product diversity, and other key criteria. Their analysis includes top providers like Allianz Life, known for its wide selection of fixed index annuities, and Prudential, offering diverse annuity types with flexible options.
Pacific Life, another strong contender, stands out for its financial stability and customer service, despite higher minimum premiums. Choosing the right annuity provider involves weighing factors like fees, accessibility, and product offerings to match individual retirement goals.
Finsum: Index annuities are an increasingly important vehicle for those nearing retirement as inflation has been such an important investment factor in recent years.
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At CES 2024, innovative tech products continued to capture attention despite Apple’s preemptive announcement of the Vision Pro headset earlier in the year. Standout devices included:
- The Rabbit R1, a compact AI assistant designed with Teenage Engineering, which can handle simple tasks, play music, and more, all for $199 starting March 2024.
- The Audio Pro C20 emerged as a versatile wireless speaker that supports multiple streaming options, doubles as a soundbar, and connects to a turntable, available in February 2024 for $550.
- LG unveiled its first transparent TV, the 77-inch Signature OLED T, which can transform into a 3D display or a functional visual piece when not in use. This year’s CES showcased a range of groundbreaking gadgets that highlighted new possibilities in consumer electronics.
Finsum: CES 2024 reaffirmed its status as the world’s premier tech event, showcasing cutting-edge innovations that promise to redefine the future of consumer electronics and lifestyle technology.
Model portfolios simplify portfolio management, allowing financial advisors to deliver customized investment strategies without starting from scratch. Leveraging technology, advisors can access high-quality, ready-made models that can be adjusted to meet specific client needs.
Customizing these portfolios provides a balance between using institutional expertise and offering personalized service. Advanced analytics tools are seamlessly integrated, enabling advisors to filter, screen, and select the best-performing assets based on millions of data points.
Tracking performance over time with precision ensures that clients see accurate, realistic outcomes. This approach gives advisors a competitive edge, allowing them to scale their practice while maintaining individualized attention.
Finsum: Having the analytics at your fingertips can really aid in distilling complex information to clients.
The financial volatility of recent years has made it clear that traditional retirement strategies may no longer suffice. The old 60/40 portfolio split between stocks and bonds has proven inadequate, as demonstrated in 2022 when both asset classes declined significantly.
Retirees now face unique challenges such as sequence of return risk and inflation, which require a more adaptive investment strategy. Alternative investments, like private equity and venture capital, can offer opportunities for diversification and potential outperformance over traditional assets. Meanwhile, alternative strategies, such as long/short equity and merger arbitrage, provide potential protection during market downturns.
Despite their complexity and potential downsides, incorporating alternatives can help retirees achieve a more resilient portfolio that balances growth, income, and capital preservation.
Finsum: Moreover, stocks and bonds are experiencing increasingly high correlation in returns compared to the last four decades, which should draw more inflow into alternatives.