Investment forecaster Jeffrey Kleintop gave his first book a title that's ideally suited for these times. He called it “Market Evolution: How to Profit in Today's Changing Financial Markets.”
Here are some investing tips from local financial advisers: True financial planning begins with an honest assessment of one's resources, goals, values and attitudes about money and investing, as well as a realistic view of expected investment returns. We advocate for diversified, well-constructed strategies designed to withstand short-term challenges while providing steady growth over the long-term. We also believe in focusing on that which each investor can control: diligent budgeting, keeping investment costs low and restraint from knee-jerk reactions to bad (or good) news. The year has begun with hints of optimism, but uncertainty still looms both at home and abroad, and we would caution against trying to outsmart the market. That said, while the current interest rate environment is mostly perceived as a negative, we would submit that there are ways to capitalize on it. Perhaps this is an opportunity to invest in a business or real estate, or to refinance existing debt at a lower rate.Mario Nardone, chartered financial analyst MFCP Planners, Mount Pleasant Our base case forecast is limited returns for stock and bond markets in 2013. With our expectation of limited upside potential in the markets, we intend to stay nimble and liquid in order to help protect on the downside.Doug English, chartered financial analyst Carolinas Retirement Specialists, North CharlestonRisk on or risk off? Since the financial crisis of 2008, these are the new investment buzzwords and have become synonymous with volatility. Unfortunately, the market's volatility has scared away investors. To be successful these days, investors must take advantage of market volatility. There are plenty of great companies far less volatile than the market. Accenture, EcoLab, TJX and Wal-Mart are four examples. Without the violent price swings of the market, each has managed to grow earnings and dividends despite economic and political headwinds. Even in 2008. No one knows what 2013 will hold, but one thing is certain, volatility is here to stay. Volatility provides opportunity to buy good stocks at sale prices. Use it to build a portfolio of companies achieving consistent earnings and dividend growth. You'll sleep better knowing that you own a quality portfolio with significantly less volatility than the stock market. Billy Little, chartered financial analyst Tandem Investment Advisors, Charleston Master Limited Partnerships: As measured by the Alerian MLP Total Return Index, MLPs have outperformed the S&P 500 by nearly 10 percent per year since 1996. This performance should continue in the years ahead as MLPs offer high yields and high distribution growth and their businesses are basic utilities involved in the transportation via pipeline of natural gas and petroleum distillates. We like Kinder Morgan (KMP), Enterprise Products (EPD), Plains All American (PAA), Calumet Specialty Products (CLMT), and Access Midstream (ACMP). Our goal is to take $1 million portfolios of MLPs, generate about $65,000 in tax-advantaged income and grow that income to $165,000 over the next 15 years, while generating 13 percent to 15 percent average annual returns. This asset class we see outperforming both stocks and bonds over the next five to 15 years as America's natural gas shale boom is developed. Working with a knowledgeable investment adviser and accountant is essential.Tyson Halsey, chartered financial analyst Income Growth Advisors LLC, Daniel Island
It isn't a new release. It went to print almost seven years ago, making it ancient history in the archives of Wall Street.
But the thrust of Kleintop's investment guide is as relevant as ever. The financial markets are still evolving and still changing, though at a much faster pace than they did in 2006.
And Kleintop is still dispensing advice about how to play them as chief market strategist for Boston-based advisory LPL Financial Research. He shared his thoughts about the outlook for stocks, bonds and other investments in 2013 and beyond last week with clients of Carolinas Retirement Specialists.
He wasn't exactly bullish.
“This year, we're more defensively positioned,” Kleintop said.
He wasn't bearish, either.
“There will be some great values created in the market this year for long-term players,” said Kleintop, whose firm makes it money by advising 13,000 wealth management professionals about where to invest their clients' money.
The year is still young, but 2013 has been profitable for stock investors, thanks in part to a decent run of corporate earnings and the Jan. 1 political deal that averted, for now at least, that dreaded one-two punch of tax hikes and federal spending cuts known as the “fiscal cliff.”
Investors who had pulled money off the table are responding by putting more skin in the game. U.S. stock mutual funds hauled in $13 billion during the first two weeks of January. By contrast, over the last half of 2012, withdrawals outnumbered deposits for 24 straight weeks.
The broad-based S&P 500 index last week cracked the 1,500 level for the first time since December 2007, the same month the last recession began. Four weeks into the new year and stocks already are up about 5 percent, or, as Kleintop put it, “a pretty good footing.”
Yet he predicts the market will lose some of that traction in the back half of 2013, largely because of the economic anemia that's already infecting European stalwarts Germany and France.
Kleintop isn't suggesting that investors head for the exits. Far from it. In fact, he took up a challenge Wednesday at a Mount Pleasant luncheon to make the case for staying in the markets as opposed to cashing out and burying the money in the backyard.
Kleintop noted that U.S. stock values are at bargain-basement levels based on their price-to-earnings ratio and other indicators. Also, the big, thorny, lingering fiscal cliff issues, namely the debt ceiling and the across-the-board federal budget cuts, will almost certainly get resolved before they blossom into a market crisis, he said.
“Things tend to go right most of the time,” he said.
Kleintop predicted that 2013 will be a transition year for investors.
“I think Washington ultimately will forge a compromise that will put markets on this 'path of least resistance,' ” he said, referring to the theme of his 2013 outlook.
That path should lead to more confidence and more clarity by late spring, which in turn should drive more spending, more capital investment and more jobs. Also, the turnaround in China and other parts of Asia will help U.S. companies on the export side.
“We have the economic engine,” Kleintop said. “The gears just need to move a bit.”
On the whole, 2013 probably won't be a standout for investors because of Europe's problems abroad combined with relatively lackluster profits and growth at home.
“But it plants the seeds for coming out of this in 2014 and beyond,” said Kleintop, whose firm does no trading itself. “It's where, again, the real opportunities are created. If you look back to some of the great years when you could have bought, like '81, those are the opportunities. ... I think if you look back in five years you'll be very happy that you got money out of those bank accounts. ... It doesn't have to be in stocks. There are bonds and other places to put it. Plant those seeds now.”
Contact John McDermott at 937-5572.