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1. Do Clients Know There Are No Risk Free Investments?
We have enjoyed a very long bull market. Many clients have short memories. Based on the analogy “A rising tide lifts all boats” they sometimes get euphoric and want to take themselves far out on the risk curve in the hope of getting a big return. As their advisor, you need to remind them risk free investments don’t exist. Put another way, all investments come with a degree of risk. Risk or “What Could Possibly Go Wrong?” Here are several things that could cause a client’s investment in a “sure thing” to sour. — Bryce Sanders
2. Amid Kerfuffle, ARK Disruptive Recipe Remains Compelling, Relevant
One reason why so many of us enjoy investing is that the endeavor, like politics and sports, delivers clearly defined outcomes. In fact, investing might be the clearest of those three fields. At the end of the day, market participants are either making or losing money. Perhaps it's those similarities with politics and sports that lead to others in the world of finance, namely hype and criticism directed at star fund managers. ARK Investment Management founder Cathie Wood is on the receiving end of plenty of both, though 2021 has brought about much more in the way of negative vibes than praise. — Todd Shriber
3. The Most Important Factor in Offering Advice
Imagine this scenario: Your closest female friend just got engaged – to a complete loser. He’s not a very nice person, and he’s clearly not good for her. You see it, her other friends see it, her family sees it – marrying that loser is a mistake that could cost her thousands of dollars and the prime of her life. What would you do? Have you ever tried to do something about a situation like this? — Dan Smaida
4. Implications for Equity Investing at Historic Valuations
“What is a stock worth?” This seemingly simple question opens up a Pandora’s Box. With billions of shares of stocks traded worldwide every day answering this question might seem like an impossible task. To bring clarity to a complex question, sometimes it is best to return to the basics. The legendary investor Benjamin Graham, once said, “In the short run, the market is a voting machine but in the long run, it is a weighing machine.” This quote is an excellent starting point for determining “What is a stock worth?” The price of a stock is how investors “vote” for a stock in the short run. The earnings of a stock are how investors “weigh” a stock in the long run. — Marc Ado
5. Orion Advisors Marries Behavioral Finance, Tech Platforms
Seasoned advisors know well that in many cases while PhD doesn't follow their names, there are very much elements of psychology and talk therapy involved with advising clients. To that point, some advisors are getting attune to behavioral finance and that's a good thing. Even basic of knowledge of this concept is a solid addition to an advisor's toolbox. — Todd Shriber
6. Fastest Bull Market In History
When you add higher inflation levels, which is outpacing wage growth, and a reduction in liquidity to a weakening economy, the pressure on margins will likely be higher than anticipated. While none of this means that investors should “sell everything” and hide in cash, it does suggest a more logical approach to risk management is required. There remains an ongoing bullish bias that continues to support the market near term. Bull markets built on “momentum” are very hard to kill. Warning signs can last longer than logic would predict. The risk comes when investors begin to “discount” the warnings and assume they are wrong. It is usually just about then the inevitable correction occurs. Such is the inherent risk of ignoring risk. — Lance Roberts
7. A Bigger Investing Opportunity Than TikTok
Imagine you could turn back the clock and invest in one of today’s “unicorns.” Which company would you back? For me, it’s a no-brainer, and I’ll explain why in a minute. But I should first explain something. Unicorns are private companies worth more than $1 billion. They’re called unicorns because they used to be rare. But there are now nearly 800, according to CB Insights. Unicorns don’t trade on the stock market yet. To invest in them, you need to be a venture capitalist (VC)… or have deep pockets and connections. — Justin Spittler
8. In the Finverse, Trading Is Just Gaming in Reality
Building on the Finverse, I always remember the big trading scandals of the 2000s with Jérôme Kerviel of Société Générale and Kweku Adoboli of UBS. In fact, it probably applies to all rogue traders of notoriety, including the most infamous one, Nick Leeson of Barings Bank. What did they all have in common? Gaming. — Chris Skinner
9. Don’t Ask Clients for Ideas. Do This Instead
How do you discover how to improve your service? Client driven practices keep in touch with client needs, wants, and preferences and make adjustments as they change. So, it seems natural to ask clients what you can do better or what you can add to your business to do a better job for them. One good reason not to do this is that it doesn’t reliably work. — Stephen Wershing
10. Joe Biden’s Executive Order is Great for This “Backdoor EV” Play
Did you hear Joe Biden’s big announcement? He recently signed an executive order for half of all new car sales in America to be electric by 2030. This is great news for electric automakers like Tesla, right? Just as gas guzzling cars made early Ford and GM shareholders rich, the transition to electric vehicles will do the same for a new class of EV stocks. But I don’t recommend buying Tesla, or any other automaker, today. There’s an even more lucrative way to profit from the coming electric car boom. One that will help you make money no matter who wins the EV race. This stock has already handed Disruption Investor members 200%+ gains. And my research shows it could triple again as electric cars go mainstream. — Stephen McBride
11. How Your Competitive Advantage Can Be Stated Clearly and Simply
How your competitive advantage can be stated clearly and simply. What’s your competitive advantage in the market? What distinguishes your organization from your competition? What sustaining differential advantage do you have? All of these questions try to get at the answer to the question “Why should I do business with your company and not one of your competitors?” — Roy Osing