Barron's Recap (3/2/12): Wealth Managers See Calmer Seas Ahead
This weekend in Barron's online: a Penta asset-allocation survey, the Dow ready to hit a record high, and the prospects for Barnes & Noble, Danone, Forestar Group and Asian markets.
"More Stocks, Fewer Bonds" by Karen Hube.
After years of investing defensively, the largest wealth-management firms in the country finally are growing cautious of bonds and becoming more enthusiastic about stocks. It looks like the start of the so-called Great Rotation, the long-awaited move by investors out of bonds and into stocks.
Barron's conducted an asset-allocation survey, based on the model portfolios from 40 of the largest wealth-management businesses , including banks, trust companies and investment firms. The survey found that not only are many wealth managers cutting back on bonds, they are curtailing their holdings of cash as well.
And in equities, wealth managers are turning their attention overseas once more, particularly in Europe, Japan and emerging markets. In the United States, big dividend payers are still the best bet, but value stocks are coming back into favor too.
The article also takes a look at how the respondents did in 2012. The goal was to protect client assets from risks while still finding growth. Even though the doomsday scenarios never happened, and the most-avoided asset classes were among last year's top performers, by and large wealth managers accomplished their goals.
The article also includes a table of the asset allocation recommendations of the 40 firms.
In "The Bull Leaps Higher but Comes Up Short," Kopin Tan suggests that with stocks so cheap, corporations healthy and investor enthusiasm low, the Dow Jones Industrial Average is set to hit a new high any day now.
"Beware a Low Bid for Barnes & Noble" warns the board of the struggling bookseller not to allow a repeat of the recent fiasco at Dell (NASDAQ: DELL). Barnes & Noble (NYSE: BKS) has plenty of options, and it deserves a serious offer.
Jonathan Buck's "New Life for the Old World" sees conditions for a sustained rally in European stocks as improving, and they may be poised to rise nearly 10 percent. The article suggests that some of the best bets can be found in Poland and in European bank stocks.
Asian markets have soared 22 percent since last June, easily outpacing the Dow, says Reshma Kapadia in "From Laggard to Leader: The Asian Transformation." And they look poised for further gains, with China, Japan and South Korea likely to lead the group.
In Jonathan Buck's "Fermenting Change at Danone," the focus is on the French dairy giant's cost cutting and chasing profits instead of market share. Activist investor Nelson Peltz has taken a stake and believes the company can lift shareholder value.
"Shaking the Money Tree" by Jack Hough offers advice on where to find three percent dividend yields in stocks with growth potential. Chevron (NYSE: CVX), BB&T (NYSE: BBT), Ford (NYSE: F) and Time Warner Cable (NYSE TWC) are some suggestions.
David Englander's "Rich Assets, Cheap Shares" features small-cap real estate developer Forestar Group (NASDAQ: FOR). It trades at a 40 percent discount to net asset value, but the gap soon may start to close as the housing market recovers.
Causeway Capital Management is profiled in "International Bargain Hunters" by J. R. Brandstrader. Causeway's expertise is in spotting value where others do not. They "like to be paid to wait while the rest of the market comes around to their way of thinking."
Financial advisor and contrarian Scott Siegel of J.P. Morgan Securities offers his best advice for finding good opportunities in high-yield bonds as investors move back into stocks. This in Alexander Eule's " Sticking with Bonds."
"A Generic Rx for Success" by Leslie P. Norton turns the CEO spotlight on Heather Bresch of Mylan (NASDAQ: MYL), who once successfully fought the U.S. Food and Drug Administration on lax inspection of foreign drug manufacturers.
"Thinking About the Unthinkable" is an editorial commentary by Thomas G. Donlan in which he suggests that the most recent fiscal crisis is but a shadow of the one to come.
Columns in this weekend's Barron's discuss:
- Politicians and yet another contrived a fiscal crisis
- The Dow edges close to an all-time high
- Technology that promises to transform how mobile-phone traffic is handled
- Bringing high-priced stocks and ETFs within reach of more investors
- Three "invisible" costs that erode mutual funds' investment returns
- ProShares Advisors and "alternative" ETFs
- Dividend hikes from Home Depot (NYSE: HD), Deere (NYSE: DE) and others
- Bill Clinton's role in the financial crisis
- The sequester as an opportunity
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