Glassman Wealth Services LLC

Yield drought fatigue syndrome has been on the rise, especially with retirees’ who depend on income from their portfolios to pay for their living expenses. It has affected a lot of other investors who have fled the volatility of the stock market in recent years for less risky assets like Treasuries.  And with Ben Bernanke’s latest announcement that the Fed plans to keep interest rates low until at least late 2014, the condition is expected to get worse.

Since there does not seem to be a cure on the horizon, is there at least a remedy that may boost yields for retirees and investors without them having to incur a lot of risk?

Barry Glassman spoke with Sharon Epperson on CNBC’s Power Lunch today about ways to overcome this lack of yield.  In the interview, Barry points out 4 things retirees and investors can do now to potentially improve their investment income.  Click HERE to see the interview.

Our research paper,  ”Yield Drought – Retirees Greatest Challenge,” first published in June, 2010, takes an  in-depth look at the causes of our yield drought, and why Barry said then that it would “exist for longer than most retirees believe, and perhaps longer than they can afford.”   It also explains some yield drought relief strategies.  Click HERE for your copy of “Yield Drought – Retirees Greatest Challenge”

Glassman Wealth Services was ranked in the top 10 nationally of RIA “Practices to Watch” by Financial Planning Magazine.  Read more about our Awards and Accolades.

As financial advisors, we look at a broad range of market and economic forces to form our investment decisions. In our monthly economic report, we take a look at the effects these forces have had on markets nationally and globally during the month. This broader perspective helps us to provide more insightful investment and financial planning advice to our clients. Click Here for report.

Individual investors continue to move out of stock and stock funds  and are now heavily underweight equities in favor of bonds according to the American Association of Individual Investors.  Allocations to stock and stock funds fell 3.4% to 53.1%, while allocations to bonds and bond funds increased 2.3% to 21.3%. The remaining 1.1% found its way to cash, which currently stands at 25.7% weight.

Growing pessimism is also reflected in recent mutual fund flow data from the Investment Company Institute (ICI).  In the past six months through October, investors pulled $122 billion from equity mutual funds, with nearly all of that coming from domestic equity funds.  Foreign equity funds experienced outflows of “only” $7.5 billion. 

Naturally, money is flowing into the relative safety of cash and fixed income funds.  During the same six-month period, bond funds picked up $61 billion.  Bonds continue to receive favorable treatment from investors, despite the fact they allocated more than $620 billion into bond funds in 2009 and 2010. 

November is proving no different.  Another $12 billion fled equity funds through November 22, while $20 billion found its way into fixed income funds. 

Interestingly, Institutional investors and asset managers gradually became more optimistic and are taking a slightly different tact.  Despite market volatility and headline risks, a Reuter’s poll of US asset managers found the average allocation to equities increased 2.6% to 63.7% in November.  Bond allocations shrank 2.7% to 29.3% during the month. 

They may have cause to be optimistic.  Data from the Stock Trader’s Almanac shows that December is the single best month of the year for the S&P 500 since 1950, and the second best month of the year for the DJIA.  With an average gain of 1.7% for both indices, holiday cheer appears to overtake the markets and encourage a holiday buying spree. 

Only time can tell if this will be another holiday season to celebrate.  Given the typically inaccurate positioning of individual investors and ability of institutional investors to position ahead of rallies, it may be time to bet on black this holiday.  Of course, the lingering crisis in Europe does little to soothe frayed nerves this year, so investors not prepared to endure the volatility should probably watch this one unfold from the sidelines.

Barry speaks with Lauren Young of Reuters about what the debt ceiling dilemma may mean to investors. Read more.

In our Monthly Economic report, we take an in-depth look at the changes in our markets and the effects of economic policy nationally and globally. This broader perspective provides greater clarity in understanding the forces that affect investment performance and future expectations. Click Here to Read More.

For many strategists, it is never too early to start predicting the future. In this instance, the annual ritual of S&P price targets is already in full gear for 2011.

Equity strategists are actually doing quite well for 2010, with the markets only a few points away from the year end price target that was estimated at the beginning of this year.  It should come as no surprise that analysts are expecting the markets to climb higher next year, resulting in a gain of slightly less than 10%.

For the first time in nearly two years, fixed income mutual funds experienced a net outflow.  In the two weeks ending November 24^th, bond funds recorded outflows of roughly $6 billion.  Compared to the massive flows into bond funds over the previous two years this may seem rather insignificant, but it may be the start of a shift in sentiment for investors.

Barry Glassman has emphasized and practiced collaborative financial planning between his clients’ accountants, attorneys and other advisors long before this became the industry’s latest buzzword. Click Here to read more about our Wealth Advisor Summit and how collaboration helps families to more effectively plan and realize their financial goals.

Headlines out of Europe continued to weigh on investor confidence and the Dow Jones Industrial Average fell 4.0% while the S&P 500 index was off 4.2% last week.

From a historical perspective, the most recent 10% correction is roughly in line with prior pullbacks following bear market troughs.  Since the rebound began in March 2009, the S&P 500 index has experienced 5 corrections greater than 5%.  Relative to 5 prior recoveries since 1974, this is entirely normal and in 3 of those instances, the deepest correction was more than 14%.  While this may not ease our nerves as we continue to experience this volatility, it does help us to know that these types of corrections are within the historical norm.

Source: Goldman Sachs