The stock market had a great run in 2013, with the S&amp;P 500 rising 30%. But some warn that stocks now look expensive and expect a correction. 
Will Danoff - manager of $108 billion Fidelity Contrafund and considered one of <a href="https://twitter.com/ReformedBroker/status/418925152076697600">the best active managers</a> of all time - says that there are still opportunities in stocks. <a href="https://www.fidelity.com/viewpoints/investing-ideas/finding-growth-stocks-now?ccsource=email_weekly">He sees opportunities in the consumer discretionary and tech sectors.</a>
In the consumer discretionary space, he is looking at companies that can tap global consumers:
"I have positioned Fidelity® Contrafund® with big commitments to two sectors: consumer discretionary and technology. These sectors have been large and profitable, and therefore tend to be fertile ground for stock picking. In the consumer discretionary sector, the fund is focused on companies with strong brands, good business models, and the ability to expand overseas, and companies that are gaining market share and growing earnings. At the last date of Contrafund's disclosed holdings, top positions in this sector included TJX Companies, the off-price retailer that has more than tripled its earnings per share since 2006; Disney, which has more than doubled EPS since 2006; and Discovery Communications, which has quadrupled earnings in the past five years.* In addition, the fund has very large positions in Starbucks, Nike, and Estee Lauder, all of which have increased EPS by more than 2.5 times in the last seven years.*
Danoff is a bit more cautious on technology considering the large number of initial public offerings (IPOs) we've seen and on account of disruptive technologies that makes companies more vulnerable to competition. But again he favors strong brands.:
"As in the consumer discretionary sector, the fund has favored growing companies with strong brands and sustainable business models, and those companies that have shown evidence they can migrate profitably to the mobile Web world. Google, Amazon, and Facebook have all been very large positions in the fund.*
"...The fund's big commitment to Yahoo differed somewhat from most of its other growth-oriented tech investments. Yahoo has been a cheap turnaround story led by new CEO Marissa Mayer. The company performed well in the past year, as the market realized that its holdings in Yahoo Japan and Alibaba were very valuable, and usage on Yahoo's Web sites grew nicely.
"Another large opportunity in technology is in the exploding area of enterprise software. The last big shift in enterprise software came 20 years ago during the move to client-server architecture. Now, corporations are rapidly adopting the software-as-a-service (SaaS) model. With SaaS, corporate customers effectively "rent" the latest software, which is automatically updated so all users are on the latest release and customers can run the software in the SaaS vendor's data centers if they want. Therefore, the SaaS solution is cheaper, more effective, and easier to manage than the old client-server product. As of the last date of disclosure, the fund owned SaaS players such as salesforce.com, Workday, NetSuite, Concur Technologies, and ServiceNow, and does not own any client-server dominated companies such as Oracle or SAP. SaaS valuations are high, but I am confident in the growth outlook."
Danoff is however cautious on the energy and telecom sectors.
<a href="https://www.fidelity.com/viewpoints/investing-ideas/finding-growth-stocks-now?ccsource=email_weekly">Read the entire interview here »</a>

Here's How The Manager Of One Of The World's Biggest Mutual Funds Plans To Invest In 2014

<div class="KonaFilter image-container display-table"><div><div class="image on-image"><a href="https://institutional.fidelity.com/app/video/9871691/fidelity-fixed-income-investment-process-transparency">Fidelity</a></div></div></div><ul class="summary-list"><li>On Wednesday, Fidelity launched its new Founders Fund, which exclusively invests in companies whose founders are still senior managers or board members.</li><li>Dan Kelley, the fund's lead porfolio manager, gave Business Insider an exclusive look at the three attributes he looks for when investing in an entrepreneur.</li></ul>If you talk to enough portfolio managers, it will eventually become clear just how much they value companies whose <a href="https://www.businessinsider.com/baillie-gifford-what-the-early-unicorn-investor-looks-for-in-a-company-spotify-lyft-airbnb-2018-9" target="_blank" rel="noopener">founders are still heavily involved</a>.But Fidelity - the investment giant boasting more than $7.1 trillion in client assets - has taken it one step further.On Wednesday, the firm <a href="https://www.businesswire.com/news/home/20190220005254/en/Fidelity-Investments%C2%AE-Launches-Industry%E2%80%99s-Actively-Managed-Mutual" target="_blank" rel="noopener">launched the Fidelity Founders Fund</a> (<a href="https://fundresearch.fidelity.com/mutual-funds/summary/315911594" target="_blank" rel="noopener">FIFNX</a>), which is designed to invest solely in companies that still have their founders attached as either a senior manager or board member. The fund will be actively managed by Dan Kelley, a portfolio manager with more than a decade of stock-picking experience. The epiphany that led to the fund's creation came after a meeting Kelley attended with Will Danoff and Joel Tillinghast, two legendary Fidelity managers."They realized that during their multi-decade investment tenures that they tended to favor founder-led companies," Kelley told Business Insider by phone. "They found they were usually solid long-term outperformers versus the market. The light bulb went off and we decided to pursue the idea further."<h2>The 3 attributes Fidelity looks for in a founder</h2>"I want to find the secret sauce."All of Kelley's efforts around identifying founders trace back to that single mandate. He wants to know what makes an entrepreneur stand out, and he's interested in transformational thinking that goes beyond conventional wisdom.Here are the three main attributes Kelley looks for in a founder. All quotes in this section are attributable to him.(1) A deep interest in the customer experience"A lot of the most successful companies I'm seeing on the founder-led front really start with the customer experience first, then work their way backward. It becomes kind of viral when a lot of customers are using a service or product, and they're talking about it on social media. You get these powerful network effects.""In this day and age, if you come up with an idea and you focus on commercializing it without appreciating the customer's perspective, you're missing the big picture.""These founders are customer-obsessed, they want feedback from the customer, they're thinking about the whole complete customer experience, and they really want to convert customers into advocates for their whole product, service, or brand."(2) An innovative mindset"Getting back to the long time horizon of this universe, I want founders that are seeing the world differently than it exists today. They're focused on being disruptive to the marketplace. They're leveraging the fact that they're creative and think differently to change the status quo. That usually involves and unmet need out there that they can fulfill.""Sometimes it's doing things differently, in a less cumbersome manner. There are numerous examples of companies that started with just a basic idea of how to make a product better, and then ends up drastically changing how business is done in whatever vertical.""If you want to compound at a growth rate well above the market over time, you have to be doing something different."(3) Skin in the game"The best managers and leaders also have a lot of skin in the game. What I mean by that is they have a significant portion of their net worth in the stock.""When you have that, interests are incredibly aligned with us as shareholders so that you do the right thing for the shareholder and you don't get caught up in the noise. You're worried about the value creation over a number of years.""When people aren't investing in you because of macro conditions, you're continuing to invest in yourself. You're doing what's right in the long term, because these are viewed as their babies. They want to see them grow and prosper."<h2>Other methodology</h2>By Kelley's count, there are more than 700 companies in the US that meet his core criteria for founder involvement. And there are multiples of that outside the US. So simply identifying them is just part of the battle.Within that large universe of founder-led firms, Kelley then looks for high-growth opportunities that he thinks are being underappreciated by the market on a three- to five-year basis.Now that the initial portfolio has been established, Kelley plans to build and reduce positions based on shifts in valuation that create dislocations - and future investing opportunities. "You double down when there are drawdowns on some of these names, because they are high-growth and often times don't have near-term valuation support," he said. "You can make even more in terms of returns in the long-term."This is an approach that requires a high degree of conviction - one that Kelley has achieved through a rigorous diligence process that involves complex financial modeling and multiple in-person meetings with companies.As for which stocks are in the portfolio, Fidelity won't disclose that until the end of April. But, according to Kelley, the group will go well beyond the tech and healthcare sectors - otherwise known as the areas one might initially look when pursuing founder-led companies."The index is between 40 and 50% tech and healthcare," Kelly said. "But I'm finding really interesting, innovative founder-led companies across all sectors." <div class="margin-top"> <h3>NOW WATCH: <a href="https://www.businessinsider.com/earth-north-south-poles-flip-magnetic-field-2018-4">Earth's north magnetic pole is on the move - here's what will happen when our poles flip</a></h3> <div> </div> </div>

Investing behemoth Fidelity just launched the first-ever fund for founder-led companies. Here's the 3-part 'secret sauce' its manager looks for when picking entrepreneurs.

<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://www.advisorperspectives.com/commentaries/confluence_012115.php">A Power Vacuum In Saudi Arabia Would Be "Profoundly Dangerous"</a> (Advisor Perspectives)
There have been reports about King Abdullah of Saudi Arabia's poor health and hospitalizations - and that's got everyone worried about what that means for the oil market and OPEC.
"For now, the greatest immediate risks to the region and markets from this issue are if (a) Abdullah were to become incapacitated or die, and (b) Crown Price Salman simply isn't capable of ruling," writes Bill O'Grady. "Since it isn't clear that Prince Muqrin would take power, a succession battle could develop sooner than expected."
"Given the challenges Saudi Arabia faces, from dwindling American power in the region to a stronger Iran and the breakdown of nation states in the area, a power vacuum in Saudi Arabia would be profoundly dangerous. If conditions deteriorate, it would likely end the current bear market in oil and lead to higher overall inflation in the developed world," writes O'Grady.
<a href="http://wealthmanagement.com/blog/rich-millennials-more-likely-keep-advisors-poor-millennials">The Wealthier Millennials Are, The Less Likely They Are To Fire Their Parents' Advisors</a> (Wealth Management)
New research from TD Ameritrade suggests that wealthier millennials are more likely than their poorer counterparts to keep their parents' financial advisors. Roughly two-thirds (63%) of high-net-worth millennials who are already using their parents' advisors have no plans to change, while only one-third of "mass affluent investors," reports Megan Leonhardt.
"As you move down the wealth spectrum, while the problems are the same, their advisors are less able to afford the training they need on how to connect," Vic Preisser, founding director of the Institute for Preparing Heirs, told WealthManagement.com in October. "The advisors to the very wealthy can afford to get the training on how to connect with the heirs."
<a href="http://www.fa-mag.com/news/young-successful-millennials-are-perfect-prospective-advisor-clients-20513.html">Young And Successful Millennials Are A Promising Market For Advisors Looking To Add Clients</a> (Financial Advisor Magazine)
A new report by TD Ameritrade shows that there are three subgroups of millennial investors - but advisors aren't getting at them.
While over half of advisor clients are over 60, just 10% of them are under 40. And 70% of "potential high-net-worth millennials" want an advisor to help with finances, 
"Our latest research shows RIAs would be well-serving pursuing young investors who may not have great wealth yet, but who have high earnings potential and are eager to work with a professional advisor," said Tom Nally, the president of TD Ameritrade Institutional.
<a href="http://www.reuters.com/article/2015/01/20/us-funds-contrafund-google-idUSKBN0KT1EK20150120">Fidelity's Contrafund Trimmed A $7 Billion Stake In Google</a> (Reuters) 
"Fidelity's $100 Billion Contrafund has trimmed a roughly $7 billion stake in Google Inc because of portfolio manager Will Danoff's view that the stock faces a potentially choppy market over the short term," reports Tim McLaughlin.
"We trimmed the position based on our view that the stock's short-term performance could remain choppy as investors digest the company's increased investment in data centers, as well as other initiatives not directly tied to its core search business," Contrafund said in its fourth-quarter update for investors.
<a href="http://www.investmentnews.com/article/20150120/FREE/150129992/james-gormans-profitability-goal-leans-on-morgan-stanleys-wealth">Morgan Stanley Wealth Management's Role Continues To Grow</a> (InvestmentNews)
Morgan Stanley's CEO James Gorman latest plan to help the firm achieve a 10% return on equity involves a greater role for its wealth management division.
"Although Mr. Gorman did not provide a time frame for the actions, he said he expected the execution of the 'bank strategy' which aims to grow Morgan Stanley's banking operations in part by adding clients from the wealth management group, and a reduction of expenses would help the overall company hit 10%, up from 8.9%," reports Mason Braswell.

The Could Be A Power Vacuum In Saudi Arabia - And It Would Be 'Profoundly Dangerous'

<table class="image-container float_right" width="200"><tr><td><div class="image"></div>Getty Images Entertainment/ Stephen Lovekin/Staff</td></tr></table>Hedge fund titan <keyword id="1150206" type="PERSON" weightage="60" keywordseo="Bill-Ackman">Bill Ackman</keyword>, who has been in the spotlight lately for his big <a href="http://www.businessinsider.com/bill-ackmans-herbalife-presentation-2012-12">Herbalife short</a>, is putting on a hedge fund <keyword id="5555" type="ORGANIZATION" weightage="60" keywordseo="conference">conference</keyword> in the coming weeks.
On February 13, Ackman, the CEO of $12 billion <keyword id="1651980" type="COMPANY" weightage="60" keywordseo="Pershing-Square-Capital-Management">Pershing Square Capital Management</keyword>, and Mark Axelowitz, managing director from UBS Private Wealth Management, will co-host the <a href="http://www.theharbor.org/our-programs/upcoming-events/item/2013-harbor-investment-conference">2013 Harbor Investment Conference</a> at the JPMorgan Chase Conference Center in Midtown Manhattan.
The annual event brings together some of the industry's top investors to share trade ideas, while raising money for the <a href="http://www.theharbor.org/">Boys &amp; Girl's Harbor. </a>
It's unclear what Ackman will be talking about or what investment pick he might present, but he will be making himself available for a Q&amp;A session with the audience and that could get really interesting.
In addition to Ackman, the other speakers this year include, Andrew Feldstein (BlueMountain Capital), Mick McGuire (Marcato Capital Management), Howard Shainker (Bow Street), Mona Sutphen (Managing Director of UBS AG and former White House Deputy Chief of Staff for Policy) and David Weinreb (CEO of The Howard Hughes Corporation). 
Business Insider will be there covering the event. 
In the meantime, let's review how last year's investment picks did. 
These ideas were shared on February 2, 2012. Some were before the closing bell and others were given after the bell that day. They were all embargoed from the public until after the closing bell on February 3.
For this report, we used data from Yahoo! Finance and tracked the stock's performance from February 3 through January 30, 2013. 
Here's the rundown:
<ul>
<li>Catherine Wood (CIO of Thematic Portfolios at AllianceBernstein): Her Fusion-io (FIO) pick is <a href="http://finance.yahoo.com/echarts?s=FIO+Interactive#symbol=fio;range=20120203,20130130;compare=;indicator=;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;">down 9.8%</a> while her Tesla Motors (TSLA) pick is <a href="http://finance.yahoo.com/echarts?s=TSLA#symbol=tsla;range=20120203,20130130;compare=;indicator=;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;">up 21.45%</a> and her Genomic Health (GHDX) pick is <a href="http://finance.yahoo.com/echarts?s=GHDX#symbol=ghdx;range=20120203,20130130;compare=;indicator=;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;">down 4.26%</a>.</li>
<li>Stephen Raneri (LionEye Capial): His DST Systems (DST) pick is <a href="http://finance.yahoo.com/echarts?s=DST#symbol=dst;range=20120203,20130130;compare=;indicator=;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;">up 26.16%</a>.</li>
<li>Howard Shainker (Bow Street): Rentech (RTK) is <a href="http://finance.yahoo.com/echarts?s=RTK#symbol=rtk;range=20120203,20130130;compare=;indicator=;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;">up 65.57%</a> and Rentech Nitrogen (RNF) is <a href="http://finance.yahoo.com/echarts?s=RNF#symbol=rnf;range=20120203,20130130;compare=;indicator=;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;">up 92.64%</a>.</li>
<li>William Danoff (Portfolio Manager, Fidelity Contrafund): His Noble Drilling (NBL) pick is <a href="http://finance.yahoo.com/echarts?s=NBL#symbol=nbl;range=20120203,20130130;compare=;indicator=;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;">up 5.12%</a>.</li>
<li>Bill Ackman: His JCPenney (JCP) investment pick is <a href="http://finance.yahoo.com/echarts?s=JCP#symbol=jcp;range=20120203,20130130;compare=;indicator=;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;">down 49.76%</a>. His other picks did much better, though. Ackman recommended buying Howard Hughes (HHC), which is <a href="http://finance.yahoo.com/echarts?s=HHC#symbol=hhc;range=20120203,20130130;compare=;indicator=;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;">up 40.65%</a>. He also recommended Justice Holdings, a cash shell company that traded on LSE with the ticker "JUSH." It's now Burger King. The closing price of Justice on Feb. 3, 2012 was $13.89. Burger King World closed at $17.81 yesterday, so that's up 28.2%.</li>
<li>**BONUS** Boaz Weinstein (Saba Capital): He <a href="http://www.businessinsider.com/revealed-legendary-hedge-fund-manager-boaz-weinsteins-big-trade-2012-2">recommended buying the Investment Grade Series 9 10-Year Index CDS (maturing on 12/20/2017)</a>, which is the same security the JPMorgan CIO desk was short as part of the "London Whale" trade. </li>
</ul>
Now let's do some simple math for a bit. 
Let's say these ten stock picks make up a portfolio. If we take the stocks and have them all equally weighted, the performance of this portfolio would be approximately 21.59%, according to our calculations. 
For comparison, the S&amp;P is up 13.31% since February 3, 2012. Meanwhile, the <a href="http://www.barclayhedge.com/research/indices/ghs/Equity_Long_Short_Index.html">Barclays Long/Short hedge fund index was 6.32% YTD</a> through December 2012. The January numbers were not available at the time of this report.

Bill Ackman's Big Hedge Fund Conference Is Coming Up - Here's How Last Year's Stock Picks Did 

<div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"></div></div></div>Good morning! Here's what you need to know:
Alibaba's Record-Breaking IPO May Already Be Covered. "<a href="http://www.businessinsider.com/r-alibabas-record-ipo-covered-after-first-few-roadshow-meetings-sources-2014-9">Alibaba Group Holding Ltd has received enough orders for its record-breaking initial public offering</a> to cover the entire deal within just two days of its launch, people familiar with the IPO process said on Wednesday," reported Reuters' Jessica Toonkel, Olivian Oran and Elzio Barreto. "There was no indication as to where most of that demand was in the $60-$66 per share indicative range for the IPO, said the people, who couldn't be named because details of the offering demand aren't yet public."
...Investors Say Alibaba's Jack Ma Is Killing It... "While corporate governance remains a concern, several fund managers and analysts said [Alibaba CEO] <a href="http://www.businessinsider.com/r-jack-ma-capital-lite-model-impress-at-alibabas-boston-ipo-event-2014-9">Ma gave an impressive performance</a> during the company's pitch in Boston on Tuesday for what stands to be the largest-ever U.S. technology IPO," reported Reuters' Tim McLaughlin. "He's executed well," said Will Danoff, who runs Fidelity Investments' $111 billion Contrafund.
...But None Of Alibaba's Bankers Have The Whole Story. "Alibaba Group Holding Ltd's desire to keep tight control over its $21.1 billion share sale has left a vacuum at the helm of its banking syndicate, leading underwriters to take unusual steps to manage the offering, according to sources familiar with the situation," reported Reuters' Liana Baker, Elzio Barreto and Olivia Oran. "The move gives Alibaba control of the process as no one bank has a complete picture of what is going on. It also helps avoid potential pitfalls of relying too much on one institution. Facebook's botched 2012 IPO was also one of the reasons for this choice, sources have previously said."
Dollar General Goes Hostile With Family Dollar Bid. "<a href="http://www.businessinsider.com/r-dollar-general-to-go-hostile-with-91-billion-family-dollar-bid-sources-2014-9">Dollar General Corp said it would take its $9.1 billion offer</a> directly to shareholders of Family Dollar Stores Inc , after being spurned twice by its smaller rival," reported Reuters' Siddharth Cavale. "The company said it had started a tender offer to buy all shares of Family Dollar for $80 per share."
Microsoft Is Near A $2 Billion Deal. "<a href="http://online.wsj.com/articles/microsoft-near-deal-to-buy-minecraft-1410300213">Microsoft Corp. is in serious discussions to buy Mojang AB</a>, the Swedish company behind the popular 'Minecraft' videogame, according to a person with knowledge of the matter," reported the WSJ's Evelyn Rusli, Shira Ovide, Sven Grudenberg and Joann Lublin. "The deal would be valued at more than $2 billion and could be signed as early as this week, the person said. A Microsoft spokesman declined comment, as did Mojang Chief Executive Carl Manneh."
U.S. Mortgage Applications Drop. The MBA Mortgage Applications Index dropped by 7.2% during the week ending September 5, a sign that fewer Americans are on the market to buy a home.
Sign Of Life In The French Economy. Industrial production activity unexpectedly climbed by 0.2% month-over-month in July; economists were expecting a 0.5% decline from the ailing economy. "A second month of positive growth in the French industrial sector is encouraging, but mean-reversion in energy production is distorting the headline print," noted Pantheon Macroeconomics' Claus Vistesen. "Energy production was up 2.0% month-on-month with the other key goods production components weak across the board. The improvement is real, but we would like to see more broad-based gains across sectors before we get too optimistic."
Markets Are Mixed. In Europe, Britain's FTSE is up 0.2%, France's CAC 40 is up 0.1%, and Germany's DAX is flat. Asia closed mixed with Japan's Nikkei up 0.2% and Hong Kong's Hang Seng down 1.9%. U.S. futures are up modestly with Dow futures up 13 points and S&amp;P futures up 1.4 points.
Ackman Goes Hyperbolic On Allergan. "Allergan has distinguished itself in running the most shareholder-unfriendly, hostile defense process perhaps in the history of corporate America," said Pershing Square Capital's Bill <a href="http://www.businessinsider.com/ackman-letter-to-allergan-2014-9">Ackman in a letter to Allergan's board</a>. Ackman and Valeant Pharmaceuticals are currently trying to take over the Botox-maker.
Santander Chairman Dies. "<a href="http://www.businessinsider.com/r-santander-chairman-emilio-botin-dies-aged-79-2014-9">Emilio Botin, one of Spain's most powerful men</a>who transformed Santander from a small domestic lender into the euro zone's biggest bank, has died of a heart attack, aged 79," reported Reuters' Sonya Dowsett and Sarah White. "The bank said on Wednesday it would hold a board meeting later in the day to nominate a successor as chairman. Analysts and investors have long expected this would be Botin's eldest daughter Ana Botin, who heads Santander's British business."

10 Things You Need To Know Before The Opening Bell

<div class="image-container float_right"><div class="image"><a href="http://i.imgur.com/XaiUx.gif">Imgur</a></div></div>FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.
<a href="http://www.ft.com/intl/cms/s/0/53e40c80-73c4-11e3-beeb-00144feabdc0.html?siteedition=intl#axzz2pHDB9T3w">Investors Are Throwing Money At One Fund Manager's Inflation Bet</a> (Financial Times) 
Michael Aronstein's Mainstay Marketfield fund has been drawing a lot of attention after it quadrupled to $18 billion in the last twelve months. Aronstein thinks inflation is bound to return and markets are missing early signs. And investors have given him a vote of confidence by putting billions on his bet that central banks will wait too long to end their loose monetary policies, reports Stephen Foley at the Financial Times. "They never fail to make that error," Aronstein told Foley "because they're structured as bureaucracies and they have to wait until they have enough evidence to convince everybody in the room."
The fund has done well because it "protected investors from the worst of the financial crisis," reports Foley, and because "riding a wave of interest in so-called alternative mutual funds, which mimic hedge funds in giving their managers wide latitude to invest as they see fit, including by taking negative bets as well as positive ones - something that is instrumental in surviving a bear market." 
<a href="http://www.sungardeninvestment.com/hedged-dividend-investing-the-debate-starts/">What Traditional Investors Are Getting Wrong About Hedged Dividend Investing</a> (Sungarden Investment Research)
Robert Isbitts at Sungarden Investment thinks he has a strategy to help fight the retirement income crisis facing retirees as they realize the bond market has changed. Isbitts is talking about a strategy based on hedged dividend investing. "That is, we aim to achieve a portfolio income yield of 3% over the S&amp;P 500 (or about 5% yield in today's market) not with high quality bonds, but via a combination of individual stocks, hedging securities and possibly some income-oriented ETFs."
The strategy sparked some criticism from those that stick to more traditional investment strategies. "We don't believe that a "moderate risk" investor should stay in the same place all of the time. Market conditions create reasons to tilt one way or the other. In EXTREME cases (2008 decline/2009 rebound) we want to give ourselves the flexibility to go another 15% in either direction, or 20 (in the case of a 2008 scenario) or 80 (in the case of a 2009 scenario)." 
"When modern portfolio theorists …rebalance their clients' accounts, I have seen this is often done AFTER a major change has occurred in the market. So, if stocks lose a ton of money, buy more stocks and sell bonds. BUT, that assumes that 1. the client has stuck around long enough to endure the stock decline (whereas a hedged investor feels pretty comfy) and 2. that moving into bonds at that point is not a suicide mission. Look at the recent market activity (2012-2013): stocks have roared, bonds have petered out and yield very little. Is this about the time that MPTers are rebalancing from stocks to bonds? This sure did work for the last 30 years! But now, from today's rates? THAT is our point at Sungarden - past is not prologue."
<a href="http://www.businessinsider.com/sp-500-inflection-points-2014-1">This Nerve-Wracking Stock Market Chart Is Getting Scarier</a> (JPMorgan Funds)<a href="http://www.businessinsider.com/sp-500-inflection-points-2014-1"> </a>
In their Q1 presentation on the markets and the economy, David Kelly and the market strategy team at JP Morgan Asset Management, highlight a chart on S&amp;P 500 inflection points. This chart shows the S&amp;P 500 at different inflection points since the late 90s. As valuation are getting more expensive, everyone is guessing at the when the next one will occur.
<div class="image-container"><div class="image">JP Morgan Funds</div></div>
<a href="http://www.businessinsider.com/fidelitys-danoff-on-2014-investments-2014-1">Here's How The Manager Of One Of The World's Biggest Mutual Funds Plans To Invest In 2014 </a>(Fidelity Investments)
Despite the run up in stocks, Will Danoff, manager of $108 billion Fidelity Contrafund, sees opportunities in the stock market. In particular he's looking at consumer discretionary and tech stocks. "In the consumer discretionary sector, the fund is focused on companies with strong brands, good business models, and the ability to expand overseas, and companies that are gaining market share and growing earnings."
He's a bit cautious about tech stocks considering the role of disruptive technologies in increasing competition and the large number of IPOs we've seen. But again he says, "the fund has favored growing companies with strong brands and sustainable business models, and those companies that have shown evidence they can migrate profitably to the mobile Web world. Google, Amazon, and Facebook have all been very large positions in the fund."

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Here's How The Manager Of One Of The World's Biggest Mutual Funds Plans To Invest In 2014

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The Could Be A Power Vacuum In Saudi Arabia - And It Would Be 'Profoundly Dangerous'

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