≡ Menu

You don’t go to fortune tellers, do you?  Below is a list of 2013 S&P 500 targets by Wall Street firm.  Admittedly, these are year-end numbers and we may be do for a pullback, but we have quickly outpaced all of their targets as the S&P 500 is now at 1667.  More often than not, forecasts aren’t worth the paper on which they’re written.

House S&P 500 Target       EPS
Wells Fargo 1,390 $103.00
UBS 1,425 $108.00
Morgan Stanley 1,434 $98.71
Deutsche Bank 1,500 $108.00
Barclays 1,525 $105.00
Credit Suisse 1,550 $104.90
HSBC 1,560
Jefferies 1,565 $112.90
Goldman Sachs 1,575 $107.00
BMO Capital 1,575 $106.25
JP Morgan 1,580 $110.00
Oppenheimer 1,585 $108.00
BofA Merrill Lynch 1,600 $110.00
Citi 1,615 $108.00
AVERAGE 1,534 $106.90


Instead of trying to time the markets, it is more important to have a well-diversified portfolio with an asset allocation that meets your needs and risk tolerance.

These markets have crushed the shorts as well as anyone that has been on the sidelines worried about fiscal cliffs, sequestration or problems in Europe.

Legging into the market via dollar-cost-averaging is a prudent strategy, but trying to pick tops or bottoms to enter or exit the market is a fool’s errand.

A great hour long video on investing. The philosophy aligns completely with how we invest at ELC Advisors.

Dont’ be fooled, most advisors do not adhere to the fiduciary standard, but rather the suitability standard. That means they put their own interests ahead of yours. Advisors practicing under the suitability standard have a higher duty to their firm than their clients.

Conflicts of interest often come into play at Wall Street firms. And when an advisor has a conflict between the firm and the client, the firm usually wins. Advisors often receive greater compensation when they don’t put the client first. Be sure that you’re working with an advisor that adheres to the fiduciary standard. Understand the conflicts of interest (pushing company product) that may arise and know what fees you’re paying. Less money paid in fees increases your overall return.

 Things to consider:


  1. Lower your investment expenses.
  2. Rebalance your portfolio to achieve the desired risk/reward profile.
  3. Be sure your advisor adheres to a fiduciary standard, not just a suitability standard.
  4. Utilize an Investment Policy Statement (IPS) to maintain a strong investment discipline.

Six ways they may help save your financial future.

Most people do not realize that index funds are one of the best investment tools out there.  Although that tide is starting to change as investors have become more knowledgeable.  Investors are taking notice that their traditional active money managers have been largely ineffective and they are looking for a smarter, more cost effective solution.  Below are six reasons why you should consider investing primarily via index funds.
Index Funds1) Index funds may add one to two percentage points to your annual return, without increasing risk. They can do this because they are a less expensive investment vehicle that is easier on the wallet.  Less money paid to active investment managers means more money for you.

2) Index funds have very little turnover in their portfolios.  This decreases trading costs and minimizes taxes by not incurring higher short-term capital gains tax within the fund.

3) Index funds will provide you with the full return of an asset class, less a minimal management fee.  The fee is typically less than .20% and can be as low as .05%, depending on the asset class.  In other words, at .05% it only costs $5 annually for a $10K investment.  This provides protection from managers that are bad stock pickers and charge high fees for their service.

4) Index funds provide total control over asset allocation.  If you want 15% of your money allocated to small cap value stocks, the goal is easily achieved.  You won’t be subject to active manager style drift.

5) Index  funds provide a high level of diversification.  While diversification does not guarantee higher returns, it does guarantee lower risk.

6) Index funds help take the emotion out of investing.  You suffer fewer cognitive biases using investment vehicles that provide market returns.  Chasing the hot stock or manager is usually a loser’s bet.

It’s a question financial experts get all the time: how should I chose an investment advisor?

The number of people offering some form of financial advice is quickly growing.  Smart Money reports, “the ranks financial planners, college aid advisers, mortgage brokers and more are expected to increase by 30% by 2018, to 271,200″ per the Bureau of Labor Statistics.

Obviously some of those 271,000 people will be better than others.  How do you find the advisor that is right for you?

It seems like a simple question, but  a checklist isn’t the only thing to consider, though it’s a good starting point.   Unscientific as it may sound, choosing an investment advisor requires a a little faith. You can investigate his or her background and look for certain good signs, but you also must be comfortable when you look them in the eye.

In a post-Madoff world a good relationship will be based on a lot of trust.

Trust: the most important part of choosing an investment advisor

Legally, an investment advisor is meant to be someone you can trust. Like your lawyer, they have a fiduciary responsibility to put your interests first. This is not the case with brokers (a.ka. stock brokers) who make money selling stuff and actually legally have an obligation to their employer. Generally selling more stuff is the most beneficial move for a brokerage firm, though not always the best for the client.

There are some red flags anyone should watch out for.  The most common psychological tactics con artists employ against their victims:

  • Promises of Wealth – The salesperson dangles the promise of wealth in a short period of time, often “guaranteed” with “little or no risk” involved. Remember: All investments carry risk.
  • Trappings of Success – The salesperson projects the image of success or offers testimonials, “proving” he and the offer are “legitimate.” Remember: Credibility can be faked.
  • The “Lemming” Effect – The salesperson tells you that others are investing and that you should too or risk losing out on a good deal. Remember: If everyone jumped off a cliff, would you?
  • Favors – The salesperson gives you something (like a free meal or a discount) hoping you will feel obligated to give him something in return (like your money). Remember: You have no obligation to return any business- related favor.
  • Act Now – The salesperson pressures you to “act fast” because the offer will only be available “for a limited time.” Remember: Do not feel pressured to make a quick investment decision.”

Questions to ask any prospective financial advisor

Here are the questions endorsed by the Consumer Federation of America, part of their brochure Cutting Through the Confusion.

■ What services do you offer?

■ What qualifications do you have to offer those services?

■ How do you charge for those services? Do you receive compensation from other sources if you recommend that I buy a particular stock, mutual fund, or bond?

■ Would my account be an advisory account or a brokerage account?

■ Are you required by law to always act in my best interests?  Will you put that commitment in writing?

■ What potential conflicts of interest do you have when recommending investment products to me, and will you disclose those conflicts?

■ Will you provide me with a written record of any disciplinary history for you and your firm?

■ Will you give me your Form ADV (the registration form that must be filed by investment advisers) and/or your Form U4 (the registration form used by persons who work with brokers)?