<ul class="summary-list"><li>Hedge-fund <keyword id="25931" type="COMPANY" weightage="60" keywordseo="billionaire">billionaire</keyword> <keyword id="986896" type="PERSON" weightage="60" keywordseo="Michael-Hintze">Michael Hintze</keyword> is stepping up <keyword id="928025" type="PERSON" weightage="60" keywordseo="succession-plans">succession plans</keyword> for leadership at his firm <keyword id="4485602" type="ORGANIZATION" weightage="60" keywordseo="cqs">CQS</keyword> after it suffered a record 40% loss this year, <keyword id="29740" type="CITY" weightage="60" keywordseo="Bloomberg">Bloomberg</keyword> said.</li><li>Hintze is forming a group of senior partners that will together create firm-wide strategy initiatives and share higher equity stakes, according to a letter seen by Bloomberg.</li><li>The formation of the group "reinforces our succession planning," Hintze said.</li><li>CQS suffered a 45% loss at his flagship fund in March and April this year after the firm's investments ran into deep trouble during the COVID-19 crisis.</li></ul>Billionaire trader Sir Michael Hintze is officially identifying senior leadership at his flagship London-based firm, according to <a href="https://www.bloomberg.com/news/articles/2020-11-17/hintze-ramps-up-succession-after-bruising-year-for-hedge-fund">Bloomberg</a>, after it suffered a record 40% loss this year.The investor revealed intentions to establish a group of senior partners at CQS, according to his note to clients seen by Bloomberg.Michael Peat, Soraya Chabarek, Prakash Narayanan, Craig Scordellis, and Jason Walker would make up the group. Aside from developing strategy together, the senior partners will share higher equity stakes in CQS, Bloomberg said. The formation of the group "reinforces our succession planning," Hintze said in his letter. "Importantly also for the future, I have stepped up our graduate recruitment programme. These changes will help to secure CQS' continuing success."The billionaire's change in strategy involved a promotion for Chabarek, who was previously the global head of distribution and business development, to an Executive Board member along with Hintze and Peat, according to the news agency. Read More: <a href="https://www.businessinsider.com/stocks-to-buy-healthcare-tech-companies-turbocharged-by-covid-19-2020-11">RBC says buy these 25 healthcare-tech stocks to reap the benefits of the US digital health industry, which has been accelerated by 5 years because of COVID-19</a>Hintze's flagship <keyword id="62375" type="ORGANIZATION" weightage="60" keywordseo="Hedge-fund">hedge fund</keyword> suffered a <a href="https://markets.businessinsider.com/news/stocks/billionaire-trader-michael-hintze-record-45-percent-loss-march-april-2020-6-1029275868">record 45% loss</a> in March and April as several of his investment bets suffered after the COVID-19 crisis led to business closures, supply-chain disruptions, and stay-at-home orders. The hedge fund manager's main bets included distressed debt, asset-backed securities, equities, and volatility strategies.CQS, which handles roughly $1.8 billion in investor capital, was down 41.6% up to October this year. The firm may begin to look at new funds including asset-backed securities, collateralized debt obligations, and regulatory capital <keyword id="31671" type="CITY" weightage="60" keywordseo="markets">markets</keyword>, according to Bloomberg.Hintze's letter said that the firm will begin a credit strategy with $75 million of seed capital and it has already received a €350 million ($415 million) investment for specific allocation of funds from an institutional client.CQS did not immediately respond to Business Insider's request for comment.Read More: <a href="https://www.businessinsider.com/warren-buffett-berkshire-hathaway-pharma-apple-costco-bill-smead-explains-2020-11">Veteran investor Bill Smead explains why Warren Buffett's Berkshire Hathaway bought pharma stocks, sold Apple, and exited Costco last quarter</a>

Hedge-fund billionaire Michael Hintze steps up succession planning at his flagship fund after it suffered a record 40% loss this year, report says

<ul><li><keyword id="6358963" type="DEFINITION" weightage="60" keywordseo="Warren-Buffett">Warren Buffett</keyword>'s <keyword id="6362665" type="ORGANIZATION" weightage="60" keywordseo="berkshire-hathaway">Berkshire Hathaway</keyword> revealed 5% stakes in five Japanese trading houses on Sunday.</li><li>The positions in Itochu, Marubeni, <keyword id="6427662" type="ORGANIZATION" weightage="60" keywordseo="mitsubishi">Mitsubishi</keyword>, <keyword id="138513" type="COMPANY" weightage="60" keywordseo="Mitsui">Mitsui</keyword>, and Sumitomo were worth a combined $6.9 billion as of Wednesday's close.</li><li>The billionaire investor was likely attracted by their depressed valuations and sprawling operations, and may have seen them as hedges against <keyword id="22195" type="COMPANY" weightage="60" keywordseo="Inflation">inflation</keyword> risk and US dollar weakness.</li><li>Here are six reasons why Buffett may have invested.</li><li><a href="https://www.businessinsider.com/">Visit Business Insider's homepage for more stories</a>.</li></ul>Warren Buffett's Berkshire Hathaway <a href="https://markets.businessinsider.com/news/stocks/warren-buffett-reveals-6-billion-investment-5-japanese-companies-2020-8-1029546397">recently disclosed</a> that it owns 5% of each of <keyword id="6355311" type="UNKNOWN" weightage="60" keywordseo="japan">Japan</keyword>'s five biggest trading companies or "sogo shosha": <a href="https://markets.businessinsider.com/stocks/itochu-stock?utm_source=markets&amp;utm_medium=ingestgest" target="_blank" rel="noopener">Itochu</a>, <a href="https://markets.businessinsider.com/stocks/marubeni-stock?utm_source=markets&amp;utm_medium=ingestgest" target="_blank" rel="noopener">Marubeni</a>, <a href="https://markets.businessinsider.com/stocks/mitsubishi-stock?utm_source=markets&amp;utm_medium=ingestgest" target="_blank" rel="noopener">Mitsubishi</a>, <a href="https://markets.businessinsider.com/stocks/mitsuico-stock?utm_source=markets&amp;utm_medium=ingestgest" target="_blank" rel="noopener">Mitsui</a>, and <a href="https://markets.businessinsider.com/stocks/sumitomo-stock?utm_source=markets&amp;utm_medium=ingestgest" target="_blank" rel="noopener">Sumitomo</a>. The positions, which Berkshire built over the past 12 months, were worth a <a href="https://markets.businessinsider.com/news/stocks/warren-buffett-scores-570-million-gain-japanese-stocks-2-days-2020-9-1029551264#">combined $6.9 billion</a> as of Wednesday's close.The famed investor may have backed the businesses because of their cheap valuations and varied operations, as well as the macroeconomic environment.Read More: <a href="https://www.businessinsider.com/saas-venture-capital-huntress-whistic-invest-cybersecurity-small-cities-2020-9" target="_blank" rel="noopener noreferrer">A scrappy VC reveals the 3 big advantages to finding startups in small towns across America instead of major tech hubs like Silicon Valley</a>Here are six potential reasons why Buffett is betting on the Japanese quintet:<h2>1. Bargain prices</h2>Buffett is renowned for identifying and <keyword id="35175" type="ORGANIZATION" weightage="60" keywordseo="investing">investing</keyword> in businesses that are undervalued by the market. He lived up to his reputation with the five Japanese trading houses, as four of them trade at a significant discount to book value, meaning their market capitalizations are lower than their net assets.The investor may have turned to Japan after struggling to unearth value on home soil. <keyword id="6354298" type="DEFINITION" weightage="60" keywordseo="Stocks">Stocks</keyword> were far from a bargain this time last year, when Buffett began building the Japanese stakes, and have rebounded from the coronavirus crash in record time, thanks to unprecedented interventions by the US government and Federal Reserve.Buffett invested in the Japanese companies at "laughably low" prices, highlighting the "tremendous" value on offer in the island nation, Dalton Investments chief Jamie Rosenwald <a href="https://www.reuters.com/article/us-usa-investors-buffett-analysis/why-buffets-bet-on-japan-could-turn-on-higher-inflation-weakening-dollar-idUSKBN25R2XB">told Reuters</a>.<h2>2. Low risk</h2>Buffett may be investing in a foreign country, but he's deeply familiar with what the five trading houses do. They could be described as mini-Berkshires, as they're conglomerates focused on traditional industries such as natural resources and shipping and have business interests around the world.The Japanese quintet are also firmly established, generate plenty of cash, boast competitive moats to fend off rivals, and several pay sizeable dividends, Jefferies Japan analyst Thanh Ha Pham <a href="https://www.bloomberg.com/news/articles/2020-08-31/buffett-s-berkshire-takes-stakes-in-japanese-trading-companies">told Bloomberg</a>.Read More: <a href="https://www.businessinsider.com/tesla-stock-investing-bull-case-fund-manager-david-baron-interview-2020-9" target="_blank" rel="noopener noreferrer">David Baron's fund has returned 93% to investors in the last 12 months thanks to a Tesla bet 5 years ago. He told us why he thinks the electric-car behemoth has much further to run, despite its huge rally.</a>Japanese companies are also known for their honest accounting, making the nation a "natural fit" for Buffett, Pham said in <a href="https://www.bloomberg.com/news/articles/2020-08-31/buffett-s-1977-letter-hints-at-why-he-likes-japan-trading-houses">another Bloomberg story</a>.The five firms offer a "winning combination" of global operations and "fingers in a lot of pies at an attractive price," James Armstrong, president of Henry H Armstrong Associates, told Reuters. <h2>3. Teaming up</h2>Buffett appears to see the Japanese companies as not just investments, but also potential partners for Berkshire's subsidiaries.The investor highlighted the quintet's many joint ventures around the world in his statement on Sunday, and expressed hope that "opportunities of mutual benefit" will emerge.<h2>4. Preparing for inflation</h2>Inflation fears are rising as governments and central banks continue trying to spend their way out of the coronavirus crisis. Their efforts so far include mailing out stimulus checks, bailing out distressed companies such as airlines and cruise lines, and plowing trillions of dollars into financial <keyword id="31671" type="CITY" weightage="100" keywordseo="markets">markets</keyword>.Central bankers have also slashed interest rates to almost zero, and Federal Reserve chief Jerome Powell <a href="https://markets.businessinsider.com/news/stocks/federal-reserve-inflation-jerome-powell-jackson-hole-comments-crisis-strategy-2020-8-1029540793">said last week</a> that inflation will be allowed to rise above the bank's previous 2% annual target for periods of time.Read More: <a href="https://www.businessinsider.com/stocks-to-buy-25-owned-outperforming-women-fund-managers-gs-2020-9" target="_blank" rel="noopener noreferrer">GOLDMAN SACHS: Female portfolio managers are outperforming their male counterparts so far in 2020. These are the 25 stocks they own the most compared to men.</a>Buffett may be betting on higher prices with his Japanese investments, Bill Smead, boss of Smead Capital Management, told Reuters."Buffett is migrating his investment to where you can create value through inflation," he said. "These are companies that will make more money if the price of oil [or] any input goes up."<h2>5. Dollar drop</h2>Worries about the pandemic's brutal fallout and stimulus deadlock have driven the US dollar to a <a href="https://markets.businessinsider.com/news/stocks/us-dollar-year-low-coronavirus-struggle-hedge-funds-short-2020-8-1029514034#">two-year low</a>, and a stronger Japanese yen means bigger profits for many Japanese companies.Buffett may have anticipated a US dollar decline and turned to Japan to diversify his currency exposure. Indeed, Berkshire sold 430 billion yen ($4 billion) worth of bonds last September — the biggest yen-denominated bond sale by a non-Japanese issuer in history.It sold another 195.5 billion yen ($1.8 billion) of bonds in April, meaning it has a total 625.5 billion of yen-denominated bonds outstanding. Berkshire cited that figure on Sunday as the reason it has "minor exposure to yen/dollar movements."<h2>6. Cash to burn</h2>Buffett is <a href="https://markets.businessinsider.com/news/stocks/why-warren-buffett-unhappy-berkshire-hathaway-record-137-billion-cash-2020-4-1029181516">constantly looking</a> for ways to responsibly spend Berkshire's massive cash pile, which totaled $147 billion <a href="https://markets.businessinsider.com/news/stocks/5-key-takeaways-warren-buffett-berkshire-hathaway-q2-earnings-2020-8-1029486853">at the last count</a>. His disclosure of the Japanese bets follows a flurry of purchases in recent weeks.For example, Berkshire struck a <a href="https://markets.businessinsider.com/news/stocks/warren-buffett-berkshire-hathaway-strike-10-billion-deal-dominion-energy-2020-7-1029368062">$10 billion deal</a> to buy Dominion Energy's natural-gas assets in July, <a href="https://markets.businessinsider.com/news/stocks/warren-buffett-bank-of-america-buying-years-pay-off-experts-2020-8-1029477087#">plowed close to $2.1 billion</a> into Bank of America stock in the 12 days to August 4, and appears to have repurchased <a href="https://markets.businessinsider.com/news/stocks/warren-buffett-berkshire-hathaway-7-billion-stock-buybacks-3-months-2020-8-1029490985#">more than $7 billion</a> of its own stock between May and July.Buffett may have simply bought the Japanese stocks because he had the cash to spare and they met his investment criteria.

Why Warren Buffett's Berkshire Hathaway has a $7 billion bet on 5 Japanese stocks

Alex Wong / Getty Images<ul><li>In the last decade, Warren Buffett has gained more fame as a value investor and <a href="https://markets.businessinsider.com/stocks/brk-b-stock">Berkshire Hathaway</a> has outperformed the S&amp;P 500. </li><li>This year, however, the company has stumbled, trailing the broader market and failing to secure a major acquisition. </li><li>In addition, Berkshire Hathaway's cash pile has grown to a record $128.2 billion, sparking investor concern that Buffett is having trouble finding appealing opportunities in a fully valued market. </li><li>Here are the biggest takeaways from Berkshire Hathaway's annual letters to shareholders from the last decade. </li><li><a href="https://www.businessinsider.com/">Read more on Business Insider</a>.</li></ul>Over the last decade, Warren Buffett, the "oracle of Omaha" and leader of <a href="https://markets.businessinsider.com/stocks/brk-b-stock">Berkshire Hathaway</a> has continued to grow his fame as a long-time value investor. Attendance at Berkshire Hathaway's annual shareholder meetings <a href="https://www.cnn.com/business/live-news/berkshire-hathaway-annual-meeting-2019/h_cd9b0cab317777c66cb906aba7953ab6">hit record highs</a>, the company <a href="https://www.businessinsider.com/warren-buffetts-bnsf-deal-2014-11">made major acquisitions</a>, and Buffett was <a href="https://www.businessinsider.com/warren-buffett-incredible-life-2017-1">even the subject of an HBO</a> documentary about his life. Berkshire Hathaway's stock performance has been spectacular as well. Even with some down years, the company has outperformed the broader market since 2010, growing share price roughly 245% through December 16 while the S&amp;P 500 index gained about 186%. This year, however, the company has been having a down year. From the end of 2018 to December 16, Berkshire Hathaway has trailed the S&amp;P 500, gaining about 11% while the market is up about 27%. Although the 2019 annual letter won't be released until early 2020, Berkshire Hathaway's quarterly reports have given investors a glimpse into the company's inner workings this year. The latest report showed that the company had a record $128.2 billion in cash during the quarter ending September 30, 2019. The cash stockpile has prompted concern from investors <a href="https://markets.businessinsider.com/news/stocks/four-analysts-on-berkshire-hathaways-128-billion-cash-pile-2019-11-1028659828#1-ubs-we-had-originally-forecasted-900m-in-share-repurchases-for-the-quarter-1">who aren't sure why Buffett isn't spending more,</a> either on a large acquisition or stock buybacks. Bill Smead of Smead Capital Management told Yahoo Finance that the record amount of cash could be to reassure shareholders if <a href="https://markets.businessinsider.com/news/stocks/warren-buffett-berkshire-hathaway-hoards-128-billion-cash-sick-again-2019-12-1028759792">Buffett, 89, or his business partner Charlie Munger, 95, are to fall ill</a>.Buffett's last acquisition, Precision Castparts, was finalized in 2016, and he hasn't made another successful purchase since. In his 2018 letter to shareholders, Buffett wrote that he hasn't made a major purchase because "prices are sky-high for businesses possessing decent long-term prospects."However, Buffett hit another obstacle this year when he tried to buy <a href="https://markets.businessinsider.com/news/stocks/warren-buffett-gets-outbid-latest-attempt-spend-cash-tech-data-2019-11-1028726551">Tech Data in November</a>: He was beaten by Apollo Global Management, and <a href="https://markets.businessinsider.com/news/stocks/warren-buffett-4-deals-hes-lost-because-no-bidding-war-cash-2019-12-1028731289">famously refuses to engage in bidding wars</a>.It's not the first time that Buffett has ended the year without making a major purchase, and he often expresses his disappointment in his annual letters. In the 2012 annual shareholder letter, Buffett wrote, "It's back to work; Charlie and I have again donned our safari outfits and resumed our search for elephants," which is what he calls major acquisitions. Without the ability to make as many major purchases as he'd like, Buffett has bumped up allocations in a number of his <a href="https://markets.businessinsider.com/news/stocks/warren-buffetts-top-stock-holdings-portfolio-berkshire-largest-apple-buys-2019-12-1028741612">favorite stocks over the last decade</a>, which included companies such as American Express, Coca-Cola, IBM, Wells Fargo, and Apple.Even though Buffett is known for his consistency - he's lived in <a href="https://www.businessinsider.com/warren-buffett-modest-home-bought-31500-looks-2017-6">the same house for 61 years</a> - his changing tastes can be seen in his stock picks. In 2018, Buffett told CNBC's Becky Quick that <a href="https://www.cnbc.com/2018/05/04/warren-buffett-says-berkshire-hathaway-has-sold-completely-out-of-ibm.html">Berkshire Hathaway had sold all of its holdings in IBM and ramped up investments in Apple</a>.Here are the biggest takeaways from the last decade of Berkshire Hathaway's annual letter to shareholders, written by Warren Buffett.

A Berkshire Hathaway decade in review: Here are the biggest takeaways from Warren Buffett's annual shareholder letters

<div class="KonaFilter image-container display-table float_right"><div><div class="image on-image">Reuters/Brendan McDermid</div></div></div>The next housing boom will be triggered by millennials.Like older demographic groups, the lumped-together cohort of 20- and 30-somethings is interested in getting married, starting families, buying homes, and living the aspirational suburban life.The problem is that they are <a href="http://www.businessinsider.com/millennials-are-just-like-everybody-else-2015-12">delaying all this</a>, in part to build careers in large metros.In <a href="http://smeadcap.com/smead-strategies/smead-blog/entries/2016/06/07/the-coming-housing-boom-millennials-in-exile/?utm_source=June+7%2C+2016+-+The+Coming+Housing+Boom%3A+Millennials+in+Exile&amp;utm_campaign=6%2F7%2F16+The+Coming+Housing+Boom&amp;utm_medium=email">a note Tuesday</a>, William Smead, CEO of Smead Capital Management, discussed why this lag among millennials could be responsible for the next housing boom.He wrote that their move into "exile" - away from home and college towns - is only delaying what will eventually be a boost for new home construction.Here's Smead (our emphasis):We would argue that many Millennials have removed themselves from their hometown and their college town via their employment and the lateness of marriage. This contributes directly to Ivy's "elongation." We find it easy to estimate that the current new homebuilding pace of 629,000 units in 2016 will grow to a 1.5 million unit run-rate within five years. This would truly be a boom and could carry the U.S. economy along with it.Numerous studies show that folks under thirty years of age change jobs much more often than prior generations. The average age to marry has risen above 28 years old, with men at 29 in the mix. BCA Research has taught us that American women who have three children are likely to bear more of them in their thirties than in their twenties. The Census Bureau just reported a drop-off in teenage pregnancies and a lower rate of birth for women in their twenties. This was offset by sizable growth in pregnancies between 30 and 45 (Janet Jackson not withstanding).Smead referenced a recent <a href="http://www.barrons.com/articles/ivy-zelman-housing-hazards-and-opportunities-1465024694?mod=BOL_hp_highlight_3">Barron's interview</a> with veteran housing-market analyst <a href="http://www.businessinsider.com/ivy-zelman-on-the-housing-market-in-barrons-2016-6">Ivy Zelman</a>, in which she noted the dire shortage of affordable housing on the market. She said this housing cycle is likely to be longer and flatter than past cycles.And Smead argues that millennials are the reason for this elongation - as they choose to settle and buy houses, that demand should propel the market if homebuilders are able to keep up."We believe that the current fears of a slower economy are the last gasp of a post-financial meltdown era and are about to be replaced by exiles in the US building homes and having families," Smead wrote."This will produce much higher economic growth, spawn higher interest rates and benefit companies with a direct and/or indirect connection to an America, which will be much different in ten years." <div class="margin-top"> <h3>NOW WATCH: <a href="http://www.businessinsider.com/obama-washington-dc-president-white-house-kalorama-neighborhood-2016-5">Here's the $5.3 million mansion the Obamas will reportedly live in after the White House</a></h3> <div> <div> <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="9jc3ZxMzE6QOCQ6ydkxJ3LsB84vAV-S-" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div> </div> </div> </div>

This is what will create the next housing boom

<div class="KonaFilter image-container display-table float_right"><div><div class="image">Google Finance</div></div></div>Stocks drifted higher on Wednesday as once again markets had a pretty uneventful day.As of Wednesday's close, the S&amp;P 500 is now just 12 points away from its record high and the Dow notched its first close above 18,000 since late April.<h2>Scoreboard</h2><ul><li>Dow: 18,005.1, +66.8, (+0.4%)</li><li>S&amp;P 500: 2,119.1, +7, (+0.3%)</li><li>Nasdaq: 4,974.6, +12.9, (+0.3%)</li><li>WTI crude oil: $51.40, +2%</li><li>10-year Treasury: 1.7%</li></ul><h2>Housing</h2>The US housing market has been a hot topic of late with commentary from analysts <a href="http://www.businessinsider.com/ivy-zelman-on-the-housing-market-in-barrons-2016-6">including Ivy Zelman</a> and <a href="http://www.businessinsider.com/closing-bell-june-6-2016-6">Conor Sen</a> out this weekend re-focusing the economic commentariat on the idea that the economic and consumer cycle, really, is driven by housing.And as for who will be the main driver of the housing market's next expansion, the answer is everyone's (least) favorite generational signifier: "millennials."Bill Smead, CEO of Smead Capital Management, <a href="http://www.businessinsider.com/millennial-housing-boom-2016-6">wrote in a note to clients this week</a> that Zelman's thesis of an upcoming "elongated" housing cycle seems write, and the answer is because young people are getting their start in like later.We would argue that many Millennials have removed themselves from their hometown and their college town via their employment and the lateness of marriage," Smead writes.Adding: "We find it easy to estimate that the current new homebuilding pace of 629,000 units in 2016 will grow to a 1.5 million unit run-rate within five years. This would truly be a boom and could carry the U.S. economy along with it."Neil Dutta, an economist at Renaissance Macro, also pointed out in a recent note to clients that this thesis is likely to play out because while millennials may have gotten a later start along the path to becoming "real" adults - you know, owning homes, having kids, etc. - they still take the path. <a href="http://www.businessinsider.com/millennial-housing-boom-2016-6">Read more from Akin Oyedele here »</a><h2>US Economy</h2>Job openings are at a record high. On Wednesday, the BLS reported that in April the number of jobs open in the US totaled 5.788 million, more than than the 5.67 million openings that were forecast. This, again, is also a record. This number wasn't all good, however, as the total number of hires fell slightly - not a shock given the decline in payroll gains in both April and May - and the hiring rate fell to 3.5% from 3.7% in the prior month.The report also showed that the quits rate fell to 2% in April, down from 2.1% the prior month. The quits rate is seen as a proxy for worker confidence in the economy with the thinking being that you won't quit a job unless you're reasonably confident you can find another one. In a note to clients following the report, Ian Shepherdson, an economist at Pantheon Macro, said that, "[Fed Chair Janet] Yellen is a keen watcher of the quit rate, citing it yet again in her speech in Philadelphia this week, so this decline reduces the chance of a July hike, at the margin. By the time of the September meeting, we expect the quit rate - which just moves inversely with the unemployment rate - will have risen again."<div class="KonaFilter image-container display-table"><div><div class="image">FRED</div></div></div><h2>Lululemon</h2>Lululemon <a href="http://www.businessinsider.com/lululemon-q1-2016-earnings-2016-6">reported earnings</a> on Wednesday. It was a slight miss. The stock rose 5%. Investors were fine with it!So, too, were analysts. Linette Lopez <a href="http://www.businessinsider.com/lululemon-great-quarter-q1-earnings-2016-6">thinks</a> there were too fine with it, though. Here's Linette:After missing <a href="http://www.businessinsider.com/lululemon-q1-2016-earnings-2016-6">analysts' earnings estimates by one penny,</a>Lululemon CEO Laurent Potdevin extolled the virtues of his company's new loose tops for layering and its menswear strategy. He sounded excited about opening 18% more square footage of stores over the quarter, and he praised his company for being "channel agnostic."It was a lovefest, and the only people more excited on the call than the CEO were the analysts. At least twice during the call, Potdevin's optimistic rundown of the company was met with an even more enthusiastic "great quarter ... really challenging environment ... really challenging ... great quarter" from Wall Street analysts.The "great quarter, guys" saying is something that's been termed, by some of the very analysts who use this idiom, the "most embarrassing" thing you can say as a Wall Street analyst. Though, admittedly, this is a hard job. As an analyst, you're paid to bring insights to your firm's clients they can't get elsewhere. Part of these insights, in theory, are developed from meeting with management. <a href="http://www.businessinsider.com/cliffs-natural-ceo-calls-out-wells-fargo-analyst-2014-10">But some managements can be fickle, prickly even</a>.Sometimes, when analysts are hard on management they may get less access, or slower access, or no access. And this would then make the analyst's job harder to do, the clients harder to serve, and so on. On the one hand being nice to management in a public forum like a conference call is embarrassing. On the other hand, it's just business.And business can be hard. I think I'm a bit more sympathetic to the analysts here than Linette is. Which is fine. We usually disagree. But the actual insight here is that inventory at Lululemon rose 21% from the same time last year. As a retailer, this is bad. High inventory means sales are coming, means margins will be lower, meanings earnings could fall. As an offset, Lululemon was pretty aggressive this quarter buying back stock. The circle of life. <h2>Additionally</h2><a href="http://www.businessinsider.com/every-stock-market-crash-in-past-60-years-2016-6">Every stock market crash in the last 60 years</a>. <a href="http://www.businessinsider.com/whiskey-etf-2016-6">There's a new whiskey ETF</a>. <a href="http://www.businessinsider.com/the-era-of-the-mobile-app-is-over-2016-6">The mobile app boom is over</a>. <a href="http://www.businessinsider.com/south-africa-gdp-first-quarter-2016-2016-6">South Africa is 'clearly heading in the wrong direction,' according to Capital Economics</a>. <a href="http://www.businessinsider.com/syria-economy-destroyed-2016-6">Syria's civil war has been terrible for its economy</a>.<a href="http://www.businessinsider.com/apple-changes-app-store-revenue-split-2016-6">Apple is making some changes to its App Store</a>. <div class="margin-top"> <h3>NOW WATCH: <a href="http://www.businessinsider.com/sports-authority-stores-closing-2016-5">All 460 Sports Authority stores are closing - here's when clearance sales begin</a></h3> <div> <div> <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="k1ZmJvMzE6BKGMaAhDMIsE2LAkYG_0El" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div> </div> </div> </div>

STOCKS DRIFT HIGHER: Here's what you need to know

<div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"></div></div></div>FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.
<a href="http://adviceiq.com/articles/lewis-j-walker-bargains-amid-downturns" target="_blank">Market Downturns Are A Perfect Time For Bargain Hunting</a> (AdviceIQ)
Market downturns have a way of grabbing attention and fueling anxiety amongst investors. However, "long-term investors should not worry, and instead see opportunity, " writes Lewis Walker, president of Walker Capital Management LLC. "Market downturns are times to buy good bargain stocks. Think back to early March 2009, the low point after the crash. America was on sale. If you bought stocks then, when they were cheap, you more than doubled your money as of now. "
Although financial pundits offer a variety of reasons for a market downturn, Walker believes "a simple explanation for the fall perhaps is the most rational of all - that's what markets do, periodically."
<a href="http://www.blackrockblog.com/2014/08/29/investing-lessons-napa-earthquake/?utm_source=feedly&amp;utm_reader=feedly&amp;utm_medium=rss&amp;utm_campaign=investing-lessons-napa-earthquake" target="_blank">What Investors Can Learn From Natural Disasters</a> (The BlackRock Blog)
According to Russ Koesterich, chief investment strategist for BlackRock and iShares chief global investment last week's Napa Valley earthquake "was a violent, but good, metaphor for the dangers lurking in financial markets."
For Koesterich, a decade-long Bay Area resident, the earthquake was a stark reminder of the risks in living in the region. He equates this experience with financial markets in that "stocks and other risky assets have been doing particularly well the last few years. So well, in fact, that it's easy to forget there are risks below the surface. While I continue to believe that equities and other risky assets can advance further this year, it's worth considering what to do when the next shock hits financial markets." 
<a href="http://www.advisorperspectives.com/commentaries/smead_082714.php" target="_blank">Active Management Is Still The Way To Go In Investing</a> (Advisor Perspectives)
As media outlets herald the rise of passively-managed investment vehicles, William Smead, chief executive and chief investment officer for Smead Capital Management believes that actively managed investing should still be the preferred method. 
Smead writes, "financial advisors and registered investment advisors feel severe pressure to throw in the towel on manager selection methodologies and accept index returns. Yet, many of these stories forget one central concept: indexes are actually inexpensive actively-managed portfolios. Every actively managed fund is an index itself."
He adds, "the recent negativity towards active management invites us to remind readers what we find useful in indexed common stock investing versus the value we find in active management. Under the logic pervaded by the crowd and the media, many managers and organizations are practicing poor performing versions of active management and investors are told, or being shamed into giving up on all efforts to actively manage a common stock portfolio."
<a href="http://www.financial-planning.com/30-days-30-ways/retirement-withdrawal-strategies-should-clients-use-annuities-2690283-1.html" target="_blank">The 4% Rule For Annuity Withdrawals May No Longer Be Viable </a>(Financial Planning)
Traditionally, withdraws from annuities were done based on the 4% rule. Under the rule, explains financial writer Donald Jay Korn, "a retiree can start by withdrawing 4% of accumulated savings, raise withdrawals to match inflation and, with certain assumptions, be fairly confident the money will last for 30 years."
"Recent studies indicate the 4% rule may have a high failure rate given today's low interest rates," says Ric Runestad, who heads a financial services firm in Fort Wayne, Ind. "The possibility of repeated bear markets adds to the risk of this regimen, as inflation-expanded withdrawals could speed asset depletion," adds Korn.
<a href="http://www.schwab.com/public/schwab/nn/articles/Market-Perspective" target="_blank">Here's What Is Happening In Market Today </a>(Charles Schwab)
"The stock market continues to exhibit great resiliency, with bouts of selling this year stopping short of a correction, and reversing quickly, " writes Charles Schwab chief investment strategist Liz Ann Sonders, director of market and sector analysis Brad Sorenson, and director of international research Michelle Gibley . Although, "stocks suffered a quick 4-5% decline," they recovered fairly rapidly and move to new highs," added the team at Schwab. In addition, longer-term interest rates labored higher only to plunge again.
"We remain optimistic about stocks for the foreseeable future, although we would prefer the kind of grind-higher market we've experienced recently over a melt-up," concluded the trio. "We would also welcome pullbacks and even a correction as it would keep sentiment contained; and could elongate the bull market. "

FINANCIAL ADVISOR INSIGHTS: There's No Better Time For Investors To Go Bargain Hunting Than During A Downturn

<div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"></div></div></div>NEW YORK (Reuters) - Warren Buffett, the billionaire chief executive of Berkshire Hathaway Inc, told investors on Saturday that the company had found his successor, and the company's vice chairman, Charlie Munger, identified two Berkshire executives as candidates.In Berkshire's annual report to shareholders, Greg Abel, the head of Berkshire's energy companies, and Ajit Jain, a top insurance executive, were said by Munger to be "proven performers who would probably be under-described as 'world-class.'""'World-leading' would be the description I would choose," Munger said in a letter to Berkshire shareholders. "In some important ways, each is a better business executive than Buffett."Buffett's son, Howard, would become non-executive chairman after the departure of his father, who is also Berkshire's chairman.In his previous letters to shareholders, the 84-year-old Buffett has said Berkshire board had been fully aware of his chosen successor but that he was keeping his options open.Investors have long speculated about who would, or could, succeed Buffett, particularly after he was diagnosed with, and then beat, prostate cancer in 2012.Munger, whom Buffett describes as "my partner," is 91."Both the board and I believe we now have the right person to succeed me as CEO - a successor ready to assume the job the day after I die or step down," Buffett said."In certain important respects, this person will do a better job than I am doing," Buffett added.Berkshire on Saturday also reported a 17 percent drop in fourth-quarter net income, but a 2 percent increase in full-year profit. Operating profit rose in both periods.Neither Buffett's nor Munger's letter on Saturday referred by name to Matthew Rose, executive chairman of the BNSF railroad unit, who has also been mentioned by investors as a possible successor.Buffett said BNSF is, by far, Berkshire's most important non-insurance unit but "was not good in 2014, a year in which the railroad disappointed many of its customers" despite capital outlays far exceeding those of Union Pacific Corp, its main rival.BUFFETT'S ABCs FOR NEW CEOBuffett strongly suggested in his letter that his potential successor already works within Berkshire and laid out the challenges facing his successor as Berkshire grows ever larger.He said Berkshire's earnings and capital resources will eventually reach a level where management will not be able to intelligently reinvest all of the company's earnings."At that time our directors will need to determine whether the best method to distribute the excess earnings is through dividends, share repurchases or both," Buffett said.Buffett said his successor will also need to avoid the "debilitating forces" that decades ago befell companies such as General Motors, IBM, Sears Roebuck and U.S. Steel."My successor will need one other particular strength: the ability to fight off the ABCs of business decay, which are arrogance, bureaucracy and complacency," he said. "When these corporate cancers metastasize, even the strongest of companies can falter."Buffett has run Berkshire since 1965, transforming it from a failing textile company into a conglomerate with a $363 billion market value and more than 80 operating businesses in such areas as insurance, railroads, energy, food and apparel.The Omaha, Nebraska-based company also has more than $117 billion of equity investments.ABEL, JAIN TOP CONTENDERSAge will also be a factor, and Buffett said Berkshire may be best off if his successor stays on for at least a decade."Our directors also believe that an incoming CEO should be relatively young, so that he or she can have a long run in the job," Buffett wrote. "It's hard to teach a new dog old tricks. And they are not likely to retire at 65 either - or have you noticed?"Buffett also said Berkshire's directors believe future CEOs should be internal candidates they know well. Abel, 52, leads Berkshire Hathaway Energy, and Jain, 63, has been Buffett's top insurance deputy for three decades.In Saturday's letter, Buffett said: "Ajit's underwriting skills are unmatched. His mind, moreover, is an idea factory that is always looking for more lines of business he can add to his current assortment."In last year's letter, Buffett called Abel an "extraordinary manager."Bill Smead, who oversees $1.3 billion at Smead Capital Management in Seattle and invests $55 million in Berkshire, called Jain a "brilliant" insurance executive but said Abel could be a better fit as CEO."I think you want someone who is good at overseeing numerous stand-alone companies," he said. "That would be advantage Abel."Because Berkshire Hathaway Energy is a "mini-conglomerate" itself, "you practice in the miniature and then ultimately that puts you in the position to be the one," Smead said.(Editing by David Holmes and Jennifer Ablan; Editing by Steve Orlofsky) <div class="margin-top"> <h3>NOW WATCH: <a href="http://www.businessinsider.com/iphone-headphones-tricks-2015-2">14 things you didn't know your iPhone headphones could do</a></h3> <div> <div> <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="o2OGM3czpWcydnvhjbkDBd6feXPuExiD" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div> </div> </div> </div>

It looks like Warren Buffett will eventually be replaced by one of these two men

FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.
<a href="http://wealthmanagement.com/viewpoints/david-active-management-vs-goliath-passive-indexes">Index Funds Are The Goliaths Of The Financial Advisory Industry</a> (WealthManagement.com) 
Using the David &amp; Goliath fable, Bill Smead of Smead Capital writes that active management is like David, "because it has lost to the Index as a group over the last 13 years." "The Goliaths of the investing world are the indexes, which include companies like Vanguard, Blackrock and State Street, among others," writes Smead. But he points out that passive funds have weaknesses like Goliath too because they "can be slow to move."
"It's our observation that mergers, bankruptcies, and dismal stock performance are the only ways to get out of an index. It seems that every five to ten years the S&amp;P 500 Index gets over-loaded with the most popular companies of the prior years. In 1999, it was tech and telecom stocks. Indexes, unlike the active managers were not nearly as nimble and could not adjust their portfolios quickly. In 2008, the overload was in energy, basic materials and heavy-industrial/international conglomerates"
He points out a few key reasons David or active managers, have been been beaten by the Goliaths. One key reason he cites is that "active managers are too active because of the pressure they feel to perform well every year, rather than relying on the ten-year numbers to justify their base of capital." And that to be successful stock pickers advisors need to "do what the index can't do and replicate what the index does well."
<a href="http://www.investmentnews.com/article/20140121/FREE/140129993#">There Was A Sharp Jump In Risk Tolerance At The End Of 2013</a> (Investment News) 
The end of 2013 saw a 40% increase in risk tolerance, according to the Acertus Market Sentiment Index, a monthly measurement of investor attitudes toward risk. This puts it in the 86th percentile relative to risk tolerance going back to 1986. Mitchell Eichen, CEO of Acertus Capital Management, said that investors are exhibiting "herd mentality" by pouring into stocks to chase gains. "This is indicative of investors' growing willingness to accept increased risk, a trend consistent with recent media reports of increasing risk tolerance," Eichen said.
<a href="http://www.businessinsider.com/best-performing-investments-since-2001-2014-1">Here Are The Best-Performing Investments Of The Millennium</a> (Oppenheimer)
Oppenheimer has put out an "asset quilt" showing the returns of all major asset classes over the past thirteen years. Emerging market stocks, gold, and real estate investment trusts (REITs) were the best-performing investments, while, commodities, market-neutral hedge funds, and the S&amp;P 500, were the worst. "For us, the total return quilt points to the quintessential importance of the age-old adage, 'Don't keep all your eggs in one basket', writes Oppenheimer's John Stoltzfus. "Diversification across asset classes is a key discipline not to be taken lightly or ignored by investors, particularly those who care for performance year to year."

<a href="http://www.fa-mag.com/news/study--retirement-savers-have-dangerous-lack-of-bond-knowledge-16679.html">There's A 'Dangerous Lack Of Bond Knowledge' Among Retirement Savers</a> (FA Mag) 
An investor survey from State Street Global Advisors has found that "retirement savers have a dangerous lack of bond knowledge," FA Mag's Ted Knutson reports. ""A lack of bond literacy could cause bigger problems now that participants say they have become more conservative," the firm said. "Participants may not understand the impact that greater conservatism can have on their portfolios' vulnerability to inflation and ability to generate the growth they need for retirement."
<a href="http://www.businessinsider.com/deflation-and-stocks-2014-1">Deflation Could Trigger A Quick Stock Market Melt-Up, Followed By A Meltdown</a> (Dr. Ed's Blog)
There has been some chatter about deflation lately. Eurozone core consumer prices are below 1% since October, and in the U.S. is at 1.7% through December in the U.S.. "Initially, deflation might actually be bullish for stocks, even causing a melt-up. That's because central bankers are already talking about the need to act decisively now to avoid it," writes Ed Yardeni. "Another round of ultra-easy monetary policies would surely cause stock prices to soar. If deflation prevails nonetheless, the melt-up would be followed by a meltdown, worsening the deflation."
"In general, falling consumer prices would be bad for corporate earnings. However, companies that are able to maintain some of their pricing power and earnings growth in a deflationary environment would certainly be highly valued."

Like Goliath, Index Funds Are Massive But They Also Have Weaknesses

FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.
<a href="http://smeadcap.com/smead-strategies/smead-blog/entries/2013/04/03/the-road-to-omaha-valuation-matters-dearly/?utm_source=April+3%2C+2013&amp;utm_campaign=April+3%2C+2013+Missive&amp;utm_medium=email">Cheap Stocks Outperform The Stock Market Over Time</a> (Smead Capital) 
Buying cheap stocks at the start of the year is a good investment strategy, according to Smead Capital. 
"To those investors who agree that valuation matters dearly, we believe there are two choices. The first choice is to buy all 100 of the lowest quintile stocks. The other choice is to have some qualitative screens to find individual securities off of this undistinguished list. Almost every company on the list has warts and/or some newsworthy problem either from exterior circumstances or through self-affliction."
<div class="image-container" style="width:580px"><div class="image"></div><a href="http://smeadcap.com/smead-strategies/smead-blog/entries/2013/04/03/the-road-to-omaha-valuation-matters-dearly/?utm_source=April+3%2C+2013&amp;utm_campaign=April+3%2C+2013+Missive&amp;utm_medium=email">Smead Capital</a></div> 
<a href="http://advisorperspectives.com/commentaries/ag_040313.php"> Successful Investors Need To Possess Six Key Traits</a> (Advisor Perspectives) 
Kendall Anderson of Anderson Griggs Investments, drawing on former NYU professor Doug Bellemore writes that for investors to be successful, they need to possess six key traits. 
1. Patience - Investors need to identify and purchase cheap stocks and wait for five to eight years. 2. Courage - The investor should have the courage to ignore those who disagree with him/her. 3. Intelligence and common sense. 4. Emotional stability - To not be overwhelmed by emotions on Wall Street and to be able to carve out the facts. 5. Hard work - Do meticulous research. 6."Willingness to sacrifice the investment protection of diversification."
<a href="http://www.reuters.com/article/2013/04/03/morganstanley-advisers-idUSL2N0CP0XM20130403">Two Advisors Leave Morgan Stanley For Prospera</a> (Reuters)
Stephen Shipley and John Rubottom have left Morgan Stanley Wealth Management to join independent Prospera Financial Services. The duo managed $121 million in assets. Morgan Stanley "has lost at least 68 veteran advisers who managed more than $10 billion at the firm," according to Reuters.<a href="http://www.businessinsider.com/stock-market-internals-breaking-down-2013-4"> </a>
<a href="http://www.businessinsider.com/stock-market-internals-breaking-down-2013-4">We Are Seeing Cracks In The Stock Market</a> (Business Insider)
Stock markets ended the first quarter on a high. But some experts say if you look below the surface, you're already beginning to see cracks. Here are some key signs from Doug Kass: 1. "The Russell 2000 underperformed on Monday (-1.3%) and was down (-0.5%) on an up day on Tuesday." 2. "The advance/decline line is eroding as the market's rise narrows." 3. "The number of new 52-week highs is narrowing." 4. "Transports trailed, down 1.5% and 1.2% on the first two days of the week, respectively -- check out the chart of FedEx (FDX)."
Kass goes on to point out that it is unusual when defensive stocks lead the market during new highs.
<a href="http://www.businessinsider.com/art-cashin-the-bitcoin-bubble-2013-4">We Are Witnessing The Tulip Bubble In Real-Time</a> (Art Cashin)
UBS' Art Cashin thinks the Bitcoin craze is like the Dutch tulip bubble of the 17th century. "It is rare that we get to see a bubble-like phenomenon trade tick for tick in real time. Usually it's kind of regional aggregate pricing like real estate reports. But, all that may be changing – before our very eyes – quite literally. The bubble du jour may be something called a 'Bitcoin'."
Aggressive bidding for Bitcoins has caused prices to double to over $100 in two weeks. "Last night trading turned a bit whacky and the Bitcoin spiked above 145 before plunging in a few trades back to $126," wrote Cashin. "Just what the world needs – a "safe" currency."

5 Smart Insights For Financial Advisors

FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.
<a href="https://pressroom.vanguard.com/nonindexed/TIPS_inflation_protection_still_has_risks.pdf">Investors Should Not Consider A TIPS Portfolio To Be A Risk-Free Inflation Hedge</a> (Vanguard)
Treasury Inflation Protected Securities (TIPS) have become popular among investors as they being to expect inflation to rise. While Vanguard does think diversifying portfolios to include bonds like TIPS is smart, they do think investors should be aware that these aren't risk free.
"Like conventional Treasury bonds, TIPS can decline in value over any short-term period. In other words, investors should not view a TIPS portfolio as a risk-free inflation hedge. Considering that the best long-term predictor of bond returns is the starting yield, with TIPS real yields near zero today, long-term expected real return of TIPS would also be near zero.
"…Investors should consider TIPS as a long-term investment to mitigate the impacts of unexpected and high inflation. As with most investments, the short-term performance of TIPS, both positive and negative, is an unreliable basis for long-term return expectations. Given the current low-yield environment, the return outlook for TIPS (as with most U.S. bond investments today) is muted and likely to be more volatile than in the past. Nevertheless, the strategic case for bond diversification remains strong —including that for TIPS — given the uncertainty of the future inflation outlook."
<a href="http://blogs.wsj.com/moneybeat/2013/04/17/feds-rosengren-broker-dealers-are-potential-threat-to-stability/">Broker-Dealers Pose A Threat To Financial Stability</a> (The Wall Street Journal)
Boston Fed president Eric Rosengren said that Wall Street's broker-dealers still pose a threat to financial stability. 
“Despite this history of failure and substantial government support, little has changed in the solvency requirements of broker-dealers. The status quo represents an ongoing and significant financial stability risk. In my view, then, consideration should be given to whether broker-dealers should be required to hold significantly more capital than depository institutions, which have deposit insurance and pre-ordained access to the central bank’s Discount Window." 
<a href="http://www.businessinsider.com/ubs-go-away-in-may-2013-4">Now Is A Good Time For Investors To Dial Back On Risk</a> (UBS)<a href="http://www.businessinsider.com/ubs-go-away-in-may-2013-4"></a>
Sell in May and go away is an old investment adage. Jonathan Golub at UBS believes that recent data points to another sell-off in Spring. 
"Looking at incoming data, we believe 2013 is ready to provide us with a fourth spring break in as many years. ...Since mid-November the market's advance has been out of sync with weak earnings and economic trends (consensus GDP is for 2% growth in 2013). More recently, a number of market indicators that typically move with equities have begun to point south. These include economic surprises, bond yields, inflation expectations, commodity prices, and investor sentiment. …Earnings growth has slowed to a crawl, and is likely to remain anemic."
<div class="image-container" style="width:588px"><div class="image"></div>UBS</div>
<a href="http://smeadcap.com/smead-strategies/smead-blog/entries/2013/04/16/the-road-to-omaha-being-a-business-owner/?utm_source=April+17%2C+2013&amp;utm_campaign=April+17%2C+2013+Missive&amp;utm_medium=email">How To Identify High Quality Stocks - Lessons From Warren Buffett And Ben Inker </a>(Smead Capital Management)
William Smead, CIO at Smead Capital Management agrees draws on Warren Buffett and writes that investors should determine whether to own a company's stock or a business based on qualitative and quantitative factors. In qualitative terms he writes that investors should own "businesses with 'addicted' customer bases." This is because "the pricing power of an addicted customer base business is described above."
In terms of quantitative attributes Smead draws on research from Ben Inker of Grantham, Mayo, Van Otterloo. There are four quantitative factors too look for, namely 1. Strong balance sheet 2. Profit margins 3. Low earnings volatility, and 4. Low share-price volatility. 
<a href="http://www.businessinsider.com/blackrock-sp-500-vs-equity-fund-flow-2013-4">Investors Buy And Sell Stocks At Exactly The Wrong Times</a> (BlackRock)
"Unfortunately, investors often take actions counterintuitive to investing best practice. In an ideal world, investors 'buy low, sell high.' Though the rule seems simple, we've often seen investors do the exact opposite, especially during volatile times."
<div class="image-container" style="width:580px"><div class="image"></div><a href="https://www2.blackrock.com/us/financial-professionals/market-insight/chart-of-the-week/chasing-negative-performance">BlackRock</a></div>

<div class="KonaFilter image-container display-table float_right"><div><div class="image"><a href="http://pictures.reuters.com/C.aspx?VP3=SearchResult&amp;ALID=2C0FQE2HRPNJ#/SearchResult&amp;ALID=2C0FQE2HRPNJ&amp;VBID=2C0FC0XV38_A&amp;POPUPPN=13&amp;POPUPIID=2C0FQEORULY2">Reuters/Mohammed Salem</a>Disabled Palestinians play sitting volleyball during a local sports championship organized by Al Jazeera club in Gaza City.</div></div></div>Here is what you need to know.<a href="http://www.businessinsider.com/r-feds-yellen-says-us-still-on-track-for-more-rate-hikes-2016-4">Janet Yellen says the US economy is on the right track</a>. Thursday evening in New York, Fed Chair Janet Yellen and her three predecessors took part in an International House panel. Yellen suggested that the labor market was "close" to full strength and that the US wasn't experiencing a "bubble economy." For the most part, Yellen and her predecessors were in agreement, saying that "China's growing prominence posed more opportunity than threat, and that fiscal policymakers should step up more to support the Fed's economic stimulus," according to Reuters.<a href="http://www.businessinsider.com/verizon-to-place-bid-for-yahoo-google-considering-bid-too-2016-4">Verizon is reportedly prepping a bid for Yahoo</a>. According to Bloomberg, Verizon is expected to make an offer for Yahoo next week, and Google is considering a bid as well. The report says Verizon is willing to buy both Yahoo's core internet business (which Yahoo values at at least $8 billion) and its stake in Yahoo Japan. Verizon would replace Yahoo CEO Marissa Mayer with AOL CEO Tim Armstrong and Verizon's executive vice president, Marni Walden, according to the report. The deadline for bids to be submitted is Monday.<a href="http://www.businessinsider.com/gap-march-sales-share-price-2016-4">Gap announced horrible March sales</a>. The retailer said same-store sales fell 6% in March, more than the 5% decline that was expected by the Bloomberg consensus. The month was especially grim for the company's Banana Republic label, which witnessed a 14% plunge in sales."While March proved challenging, we remain focused on taking the necessary steps to improve results across the portfolio throughout the year," Gap CFO Sabrina Simmons said. The stock is down about 3% in premarket trade.<a href="http://www.businessinsider.com/r-investors-stick-with-pfizer-ceo-after-allergan-deal-scrapped-2016-4">Pfizer's CEO is staying</a>. Pfizer CEO Ian Read will stay with the firm after walking away from its $160 billion merger with Allergan, Reuters reports. Read decided not to move ahead with the merger after the US Treasury announced new measures that would block the tax benefits of the deal. For Read, it was the second major deal in two years to be blocked by a government. His attempt at buying the London-based drugmaker AstraZeneca for $118 billion was thwarted by British politicians in 2014. "Read shouldn't be the fall guy," Tony Scherrer, director of research at Smead Capital Management, told Reuters.<a href="http://www.businessinsider.com/r-stock-etfs-add-sixth-week-to-streak-of-inflows-lipper-2016-4">Stock ETFs saw a sixth straight week of inflows</a>. Reuters reports that data from Lipper showed that stock ETFs saw $3.5 billion worth of inflows during the seven days that ended Wednesday. The main beneficiary was ETFs with US-based companies, as those products attracted $2.3 billion of investor capital while international funds added $888 million. "ETF investors have fueled the bull market since the end of February," Jeff Tjornehoj, Lipper's head of Americas research, said.<a href="http://www.businessinsider.com/david-cameron-had-shares-in-offshore-fund-2016-4?r=UK&amp;IR=T">David Cameron will publish his tax returns</a>. The UK's prime minister will make his tax returns public "in the coming weeks" after he admitted to profiting from his dad's offshore fund. Cameron told ITV political editor Robert Peston that he and his wife owned about £30,000 worth of shares in the trust and that he sold his stake before he became prime minister. Cameron's father's fund was revealed in the Panama Papers document leak.<a href="http://www.businessinsider.com/ons-data-on-uk-manufacturing-and-industrial-production-for-february-2016-4?r=UK&amp;IR=T">UK manufacturing production was ugly</a>. The latest data from the Office of National Statistics showed that UK manufacturing production fell 1.1% month-over-month in February, worse than the 0.2% drop that was anticipated. Production slid 1.8% year-over-year, which missed expectations of a 0.7% decline. Pantheon Macroeconomics says the surveys "point to a deepening of the slump in manufacturing ahead." The British pound is flat at 1.4060.<a href="http://www.reuters.com/article/eurozone-greece-inflation-idUSEON1C75DK">Greece is back in deflation</a>. Consumer prices in Greece unexpectedly fell in March. Prices dropped 0.7% YoY, well shy of the 0.2% gain that economists had forecast. February's 0.1% uptick was the first period of price gains since late 2012. The euro is little changed at 1.1369.Stock markets around the world are mostly higher. Spain's IBEX (+1.4%) leads in Europe after Hong Kong's Hang Seng (+0.5%) paced the advance in Asia. China's Shanghai Composite (-0.8%) lagged. S&amp;P 500 futures are higher by 11.00 points at 2,046.00.US economic data remains light. Wholesale inventories will be released at 10 a.m. ET, and the Baker Hughes rig count will cross the wires at 1 p.m. ET. The US 10-year yield is higher by 3 basis points at 1.72%. <div class="margin-top"> <h3>NOW WATCH: <a href="http://www.businessinsider.com/why-drug-cartels-commit-violence-545-pm-narconomics-tom-wainright-2016-3">There's a terrifying reason why people are warned to stay inside at 5:45 p.m. in parts of Mexico</a></h3> <div> <div> <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="kwd3Q3MjE6YwPEBxl0qvyYTwU1cXeoB9" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div> </div> </div> </div>

10 things you need to know before the opening bell

FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.
<a href="http://advisorperspectives.com/commentaries/smead_032113.php">Here's What Will Happen To Dividends Over The Next 10 Years</a> (Advisor Perspectives)
Bill Smead of Smead Capital Management writes that his firm is making four key positive assumptions about the U.S. economy that others aren't. These he says are 1. The Chinese economic slowdown will hurt commodity prices and bolster the U.S. economy. 2. Echo-boomers will start to buy homes and have children. 3. Housing is most affordable it has been in his lifetime. 4. These three should lead to much better economic and earnings growth than other developed countries. 
"If our companies grow earnings at 8% (because of their qualitative superiority) and the payout ratio on them rises to 50%, our dividend the eleventh year would be 8.4% of today’s cost basis. At a range of a 2% to 6% dividend yield on our portfolio, you’d get a range of 40% to 400% appreciation over the next ten years. Include the dividend payments along the way and we believe we can approach long-term common stock investing with a great deal of confidence."
<a href="http://online.wsj.com/article/SB10001424127887323419104578374672793628616.html?mod=googlenews_wsj">Financial Advisors Are Losing Out To Direct Providers</a> (The Wall Street Journal)
Investors are abandoning traditional financial advisors, and are managing their money through "direct providers", according to Cerulli Associates. 
Scott Smith of Cerulli told The Wall Street Journal that direct providers haven't had their reputation tarnished by the financial crisis and lawsuits that followed. He also pointed out that "compared to advisory firms, direct firms are more advanced in their client portals as well as online and mobile client access."
"Direct clients are able to complete the majority of their requests and transactions online or over the phone themselves, which provides an advantage in maintaining a greater number of clients." 
<a href="http://www.businessinsider.com/socgen-gold-is-going-to-1375-2013-3">Gold Will Fall To $1,375 By The End Of The Year</a> (Societe Generale)
Societe Generale thinks gold is going to fall to $1,375 per ounce by the end of this year. That's down 15 percent from its spot price. They think the decline will be driven by 1. A strengthening U.S. dollar 2. Higher real interest rates 3. Outflows from precious metals exchange traded products (ETPs) 4. Hedge funds reducing their net long positions.
<div class="image-container click-to-enlarge" style="width:580px"><div class="image"><a title_source="Societe Generale" title_caption="" class="zoomin" href="http://static2.businessinsider.com/image/514b4470eab8eabc0b000009-960/screen shot 2013-03-21 at 1.32.58 pm.jpg"></a></div>Societe Generale</div> 
<a href="http://www.businessinsider.com/rajaratnams-brother-insider-trading-charge-2013-3">Raj Rajaratnam's Younger Brother Is Charged With Insider Trading</a> (Business Insider)<a href="http://www.businessinsider.com/rajaratnams-brother-insider-trading-charge-2013-3"></a>
Galleon founder Raj Rajaratnam's younger brother, Rajarengan Rajaratnam, has been charged with insider trading. Rajarengan is said to have pocketed $1.2 million in profits. George Venizelos, the FBI's assistant director-in-charge said "Rajarengan's career arc has descended to the same place his brother's did less than four years ago: defendant."
Rajaratnam is currently serving an 11-year sentence for securities fraud and insider trading. Rajarengan is currently living Brazil.
<a href="http://blog.alliancebernstein.com/index.php/2013/03/20/five-key-themes-for-equity-investors/">5 Investment Themes For 2013</a> (Alliance Bernstein)
Stock markets have had a good start to the year but the slower pace of economic growth is expected to limit earnings growth. In this environment, Alliance Bernstein has five key investing themes. 
1. Emerging market health care 2. European bank deleveraging - "we foresee a continuing reduction of risk-weighted assets (RWA) …this may prompt banks to de-emphasize their commercial books of business in favor of holding sovereign debt, which has a lower regulatory risk rating." 3. Pricing power - "companies that are capable of pushing up prices should have an advantage in an environment of sluggish economic growth". 4. Cheap high-beta stocks. 5. Dividend growth.

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