Cover story: The current situation for recent and near-retirees is dicey, even for those with solid savings; “Retirement calculators often use historical average market returns—as much as 12% for stocks and 6% for bonds—but even the rosiest of optimists don’t expect anything near that over the next decade.”
1) Political risks aside, Europe’s fundamentals look decent, and the loss of confidence in the euro could be a boon for the region’s multinational corporations, lifting exports and profits;
2) Positive on LNC: Despite an industry downturn, the firm, which specializes in variable annuities, has delivered respectable returns, and shares remain a bargain;
3) Cautious on ETCG, GBTC: Digital currency securities have made millions for investors who got in early, but they trade at huge premiums to their underlying net asset value and could be affected by future regulatory shifts;
4) Cautious on AAPL: At this year’s Worldwide Developers Conference, Apple could unveil augmented reality, artificial intelligence, and cross-platform app features that might allay investor concerns about the iPhone.
Tech Trader: “Cloud computing is altering how the Street looks at company financials and what it will pay for stocks;” The upside is that companies can sell more to the same customers over years, but the risk is that firms become too inward looking and miss new trends.
Trader: One of the problems the market faces is that leadership is too narrow, says Satya Pradhuman of Cirrus Research, noting the high valuation of the best-performing large-cap stocks relative to the market; Cautious on DLTR: Shares are down, and while investors could hold on in hopes of a bounce, they may be better off cutting their losses and closing out their positions; The promise of managed-futures strategies in a portfolio is that they generate uncorrelated returns, but that doesn’t matter if returns are consistently negative.
Interview: Rob Arnott, founder of Research Affiliates, says index-fund managers can do better by going after overlooked alpha, and that AAPL shouldn’t be in the S&P 500.
Profile: Eddie Yoon, manager of Fidelity Select Medical Technology and Devices Portfolio (FSMEX) and Fidelity Select Health Care Portfolio (FSPHX), doesn’t view healthcare as a defensive sector and invests for “secular growth” (FSPHX top 10 holdings: UNH, BDX, BSX, HUM, AMGN, VRTX, AZN, SYK, BAX, ISRG).
Follow-Up: Positive on CRM: One of Salesforce’s strengths is that its customers are “sticky” because the software pairs so well with so many applications from other vendors.
European Trader: Many of the world’s largest metal producers already have operations in the U.S. and can shift production there to avoid Donald Trump’s recently imposed tariffs, and they have substantial markets elsewhere to draw on.
Emerging Markets: Very little is clear about Brazil’s short-term outlook, given years of corruption scandals affecting all of the established political parties, but many investors still aren’t fleeing.
Commodities: “The Atlantic hurricane season has just begun, raising the potential for disruptions in a variety of commodities markets, from oil and natural gas to crops such as oranges and cotton.”
Streetwise: Banks should avoid getting involved in social causes such as gun control, says Vito Racanelli, and their fiduciary duty is to earn the best return for shareholders by servicing legal businesses.