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The Best of What They Said and I Read week ending 12/11/16

Short excerpts from articles I found interesting.

I may not agree with the author and the following material is not intended as investment advice.

U.S. Global Investors – Investor Alert – December 9, 2016 by Frank Holmes

  • “…The major market indices finished up this week. The Dow Jones Industrial Average gained 3.06 percent. The S&P 500 Stock Index rose 3.08 percent, while the Nasdaq Composite climbed 3.59 percent. The Russell 2000 small capitalization index gained 5.62 percent this week…The 10-year Treasury bond yield rose 8 basis points to 2.46 percent.”
  • “…Amazon unveiled Amazon Go, a grocery-store concept that will automatically add shoppers’ products to a digital cart so they can walk out without waiting in a checkout line. The first store is set to open in downtown Seattle in 2017.”
  • “…Barely half of 30-year-olds earn more than their parents did at a similar age, a research team found, an enormous decline from the early 1970s when the incomes of nearly all offspring outpaced their parents. Even rapid economic growth won’t do much to reverse the trend, according to the report. Economists and sociologists from Stanford, Harvard and the University of California set out to measure the strength of what they define as the American Dream, and found the dream was fading.”
  • “…Gold may see increased buying out of the Middle East after the Accounting and Auditing Organization for Islamic Financial Institutions designated gold investments as Shariah-law compliant. Considering the size of Islamic Finance participants, the interest may be high, and should prove bullish for gold prices.” Barron’s – Get Ready For Dow 20,000 – December 10, 2016 by Andrew Bary
  • “…A resurgent Dow Jones Industrial Average is rapidly approaching the historic 20,000 mark, finishing Friday at 19,756 following another week of postelection gains that included its 23rd record close of 2016 and a 3.1% rise in the five sessions…The Dow industrials have risen 8% since Donald J. Trump’s surprise election victory on Nov. 8 and are up 13% for the year, topping both the Standard & Poor’s 500 index and the Nasdaq which have climbed 11% and 9%, respectively.”
  • “The rally has helped restore some luster to the Dow, which trailed the S&P 500 in six of the seven years ending in 2015 and has been long eclipsed by the S&P as a benchmark for U.S. institutional investors…The Dow may end up being the index to own during Trump’s presidency. The president-elect’s proposals to cut regulation and stimulate economic growth could disproportionately benefit manufacturing and financial companies at the expense of more-defensive and interest-rate-sensitive consumer, drug, and utility stocks, which are underrepresented in the Dow.”

The Wall Street Journal – Merrill to Brokers: More Referrals or Pay Cut – December 8, 2016 by Michael Wursthorn

  • “…Merrill Lynch will require its brokers to make at least two client referrals to other parts of parent Bank of America Corp. next year to avoid a cut in pay…At Merrill, brokers who fail to refer at least two customers in 2017 to other parts of Bank of America – including its online brokerage platform, Merrill Edge; its retail bank; and other units – will have 1% shaved from their take-home pay or deferred compensation, depending on how much they produce in fees and commissions, people with knowledge of the matter said…”
  • “…When you have a referral that goes across business lines it’s always a tricky thing,” said Alois Pirker, a research director at Boston consulting firm Aite Group. “There is a fine line. As soon as you put in place strong incentives and goals, you create conflict.” Brokerages are likely to run into the problem further as they attempt to position their brokers as advice givers and away from stock pickers.”

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