GARY SHILLING: Here Are My 9 Investment Picks For This Risk On World (A Gary Shilling's Insight)
Gary Shilling thinks that "despite the many warning signs related to economic growth and financial markets here and abroad," we're still in a risk-on world.
Shilling has nine investments he thinks are attractive 1. Treasury bonds; 2. Selected income-producing securities; 3. Small luxuries; 4. Consumer staples and foods; 5. The dollar against the Canadian and Australian dollars; 6. Selected health care providers and medical office buildings; 7. Low P/E stocks; 8. Productivity enhancers; 9. North American energy producers ex renewables. Meanwhile, he thinks select commodities and emerging market stocks and bonds are unattractive.
Investors Pour Money Into US-Based Bond Funds For Third Week (Reuters)
Money poured into U.S.-based bond funds for the third straight week, Reuters reports. Investors in mutual funds put $2.3 billion into bond funds in the week ended February 26. "We're now seeing stability (in bond yields), and that's a comfort to investors," Todd Rosenbluth, director of mutual fund research at S&P Capital IQ told Reuters. Stock funds saw $5 billion in inflows in the same week.
An Important Difference Between The All-Time-High Stock Market Today And The Dotcom Bubble Of The 90's (Morgan Stanley)
The S&P 500 hit an all-time high on Tuesday. Some might think this is similar to what we saw before the tech bubble in the 90s. The "price to opportunity" and "price to eyeballs" metrics that appear to be justifying recent tech deals and software and internet valuations are fueling this sentiment," writes Morgan Stanley's Adam Parker.
But Parker does think there is an important distinction between what we're seeing now and what occurred in the 90s. "The percentage of stocks with price-to-sales exceeding 5x that are in the top quintile of the market by market capitalization. Most of the highly priced stocks are not the mega caps that dominated the expensive spectrum during the internet bubble."
Morgan Stanley
Advisors Warn About Taking Loans Against 401(k)s (The Wall Street Journal)
401(k) participants have been taking out larger loans against their plans since the financial crisis, reports Murray Coleman at the Wall Street Journal citing a recent study by AON Hewitt. One in four participants in 401(k) plans and related accounts has borrowed against their account, according to the study.
But people need to be cautious about taking out such loans, advisors warn. This is because if they default on these loans the amount that is still owed will most likely be considered taxable income. And if they're below a certain age they can also face a 10% early-withdrawal penalty. "It's important to let people know that they risk kissing any chance for a tax refund at the end of the year goodbye if they take out a 401(k) loan and can't pay it off," Marilyn Plum at Ballou Plum Wealth Advisors tells Coleman.
IRA Investors Waiting Until The Last Minute Are Paying A 'Procrastination Penalty' (Vanguard)
Individual retirement accounts (IRA) are very popular and play a significant role in retirement savings. But many IRA investors wait until the last minute to make a tax contribution, even though their window extends from January 1 through the April tax filing deadline the following year, according to Stephen Weber and Maria Bruno at Vanguard. But they warn that those who wait till the last minute are missing out.
"Missing out on a year's worth of tax-advantaged compounding is like paying a "procrastination penalty." As shown in the hypothetical example at right, over 30 years, a "last-minute" investor could wind up with $15,500 less than an "early bird" investor, even assuming the same contributions and investment returns."
