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For some time it has been argued that as baby boomers retire stock prices will be pushed down. Daniel Wallick, a principal with Vanguard’s investment strategy group, doesn't think that's true. In fact he points out three key reasons for this.
1. The impact of the retiring baby boomer generation will be spread out. "It’s 1946 to 1964 in terms of birth years. So that means that as baby boomers start to retire, they’re not all going to retire on the same day."
2. "The percentage of stock ownership by baby boomers as a cohort is very similar to previous cohorts. …So the fact that it’s baby boomers as opposed to previous generations or subsequent generations really hasn’t altered the amount of stock that that group owns."
3. Finally we need to think of the concentration of wealth. "The top 10% of all equity owners own 88% of all the stock and the reason that that’s significant is if you have that much wealth concentrated, you’re not in a position where you need to sell. So, you have enough disposable income or additional assets that you’re not required to spend that down to live on."
Global Assets Under Management To Rise Above $100 Trillion By 2020 (PriceWaterhouseCoopers)
Global assets under management will climb to $102 trillion by 2020, from $64 trillion in 2012, according to a report from PricewaterhouseCoopers. In North America alone, AUM is expected to climb to $49 trillion by 2020, from $33.2 trillion in 2012. This is more than the AuM for Europe, Asia Pacific and Middle East & Africa combined.
The report also found that "by 2020, the industry is likely to see the emergence of a new breed of global managers, one with highly streamlined platforms, targeted solutions for the customer, and a stronger and more trusted brand." These managers will not only emerge from the traditional fund complexes, but from among the ranks of large alternative firms as well.
Barclays Is Changing How It Compensates Advisors And They're Not Happy About It (The Wall Street Journal)
Barclays Wealth & Investment Management division in the Americas is changing the way it compensates advisors, according to Corrie Driebusch at The Wall Street Journal. Not only will their compensation be based on the amount of money they bring in, it will also be cut for misconduct. Driebusch says the new policy has already prompted some of the advisors to look for new jobs.
From Driebusch: "Barclays advisers will receive about half of their pay in the form of a monthly payment; the other half will be paid out every three months, according to people familiar with the new arrangement. While both payments will be are based on a production formula similar to that at other firms, the quarterly payment also takes into account values-based criteria that include professional conduct and customer complaints. Poor performance in these areas could lead to a reduced payout."
It Turns Out John Maynard Keynes Was Also A Good Money Manager (The New York Times)
John Maynard Keynes is universally known for Keynesian economics. But New York Times' John Wasik points out that Keynes was a money manager too. "What I found was that Keynes stumbled several times before he succeeded — he was almost financially wiped out three separate times — but he got back in the game and altered his thinking to build wealth long term," Wasik writes."
After nearly losing it all, "Keynes went about-face in the early to mid-1930s to concentrate on a company’s “enterprise” value, which is also known as “book” or “breakup” value," writes Wasik. "This intrinsic view of a company’s true worth stripped out the overly emotional component that is often reflected in stock prices. As a result, he often picked companies that had promising futures, but were unloved at the time."
Here Are The 4 Big Trends From This Quarter's Earnings Calls (Goldman Sachs)
The Q4 earnings season at its halfway mark. And Goldman Sachs is out with its "Beige Book" of macro anecdotes from company conference calls. In the report David Kostin highlights four key themes to emerge from this earnings season.
1. Margin expansion will be difficult in 2014 but firms will continue to look for ways to rein in costs.
2. Continued optimism for emerging market growth and are actively invested in prospects for emerging market growth.
3. Companies ready to spend record levels of cash even as they highlight dividend and buyback spending.
4. FX is a common headwind to revenue growth.