FINANCIAL ADVISOR INSIGHTS: Gary Shilling Recommends One Asset Class For Conservative Investors

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Gary Shilling: Cash Is A Good Bet For The Conservative Investor (The Globe And Mail)

"I think for a conservative investor right now, cash is not a bad option. There still is some inflation in the economies of the world – but not much. So cash is not eroding due to inflation the way it was way back in the 1970s. But when you really look at investments…we are going through this de-leveraging - in other words, working down the excess debt that was driven up by financial institutions of the world... while that’s going on I think we are going to have very slow growth in the economy.

"Certainly, for equity markets, things have gotten very frothy, people are not paying attention to fundamentals and the slow growth in the world. But I think they will be forced to. With this in mind and the likelihood that we got another five years of this de-leveraging to go … I think cash is not a bad place to be for the foreseeable future for the conservative investor.

"The fact is, the S&P 500 is actually down from its peak in 2000. From 12 years ago, it is actually down 4 per cent. If anybody at the onset of 2000 had said, you’re going to lose money over the next 12 years, would that person want to go into stocks? I don’t think so. Why take a tremendous risk if you’re going no where and I think that’s the condition we continue to be in. The downside risk is much greater than the upside potential."

Oppenheimer Ordered To Pay Client $1.2 Million (The Wall Street Journal)

An arbitration panel ordered Oppenheimer to pay Texas investor Lloyd A. Gillespie $1.2 million after he accused two of its brokers of "excessive trading in his account to generate hefty commissions".

Oppenheimer was found liable for about $848,000 in compensatory damages and interest, $174,000 in attorney's fees, and $52,000 in costs, but rejected claim on punitive damages. Meanwhile, the brokers' request to wipe these allegations from their record were also rejected.

Why Dylan Grice Is Bearish In 2013 (Advisor Perspectives)

Dylan Grice said questions about trust are "fundamentally embedded" in the markets and that trust "moves the economy". And it is this feature of money that makes inflation such a threat. “You cannot have this trust if you do not have money that you can trust,” Grice said. “When you devalue money, you devalue trust.”

"This outlook – trust is breaking down, the past seems to be repeating itself – is why Grice said his investment outlook is very conservative for 2013.

"Financial markets don’t exist in a vacuum,” Grice said. “That breakdown in trust, the financial market analog of that is higher yields. If you don’t trust someone, what do you do? You want a high risk premium. You want higher interest rates.”

A Frustrating Trend In The Stock Market Continues To Break The Bears' Hearts (Business Insider)

There is a growing divergence between earnings expectations and stock prices. "Since the end of the fourth quarter (December 31), analysts have also reduced earnings growth expectations for Q1 2013 (to 2.2% from 2.5%) and Q2 2013 (to 6.7% from 6.8%)," according to John Butters at FactSet.

The S&P 500 Is Heading To 1,665 (Dr. Ed's Blog)

Ed Yardeni says his year-end S&P 500 target continues to be 1,665, which would put the index up 16.7 percent in 2013.

"The bull’s stamina has been based on performance-enhancing earnings. The forward earnings of the S&P 500, S&P 400, and S&P 600 all rose to fresh record highs during the week of January 17, and are up 80.7%, 85.8%, and 102.7%, respectively, since the week of May 7, 2009. Actual revenues and operating earnings stopped growing on a y/y basis during Q3-2012. However, I’m expecting that better global economic growth will boost both of them this year."

New Poll Shows How Crazy Bullish Investors Are Getting (Bloomberg)

Bloomberg's Rich Miller and Simon Kennedy report that international investors are the most optimistic on stocks than they have been in the past 3.5 years. 53 percent said they are bullish on stocks.

Of those polled only 53 percent said the U.S. economy is improving but 38 percent believe that it offers the best opportunities compared with other major global economies.