January 2012 - NorthStar Capital Advisors

Weekly Market Review ~ Friday, 1/27/12

On Monday, stocks took a break from their recent rising trend, remaining essentially unchanged as investors waited for Apple’s upcoming earnings report. The S&P 500 suffered its first losing day after six winning sessions on Tuesday, following unexciting quarterly earnings report and a report of Greek debt-relief talks reaching an impasse. After hours Tuesday, Apple released a very positive earnings report, its first since Steve Jobs stepped down. This report coupled with a statement by Fed Chair Ben Bernanke indicating that interest rates would remain low into 2014 fueled a rally on Wednesday. On Thursday, some of these gains were given back as mixed economic indicators offset good earnings reports by Caterpillar and 3M. Stocks closed the week on Friday on a down note when news surfaced that the US GDP from October to December rose at a smaller rate than was expected.

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Why Brokers Still Needn’t Put Clients First

The battle over your broker’s “fiduciary” role has moved in a new direction — away, some say, from a lot of clients’ best interests.

A major push by consumer advocates to hold stockbrokers to the same client-comes-first standard of care required of investment advisers — the so-called fiduciary standard — seemed close to success only a year ago.

The Securities and Exchange Commission had called for the new rules, despite brokers arguing that dispensing advice was only a part of their business model and they shouldn’t be held to the same standard as advisers in all situations.

Now, the SEC is saying it won’t write any new rules until it studies how much they might cost the industry.

Under current rules, brokers only need to ensure the products they sell their clients are “suitable,” and not necessarily the best possible or least expensive option. For example, a broker can sell a client a variable annuity that comes with a generous commission over a cheaper product, says Andrew Stoltmann, a Chicago-based securities lawyer who represents investors in arbitration and litigation. Advisers, on the other hand, are held to a fiduciary standard that requires them to recommend the less-pricey option, he says.

[Read the rest of this article at SmartMoney]

Weekly Market Review ~ Friday, 01/20/12

The holiday-shortened week opened on Tuesday with a moderate gain on positive economic news from China, Germany, and the US that indicates that an economic recovery appears to be progressing, albeit at a slow rate. On Wednesday, the S&P 500 rose above the 1300 level for the first time since July, as investors cheered a rise in confidence among home builders. Stocks made it three-for-three on Thursday after news that weekly initial jobless claims dropped to their lowest levels since 2008 was released. On Friday, mixed earnings reports led to an advance in the Dow but a flat session for the S&P 500 and the NASDAQ.

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Renovation Rebound ~ Remodeling instead of moving

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“People are remodeling instead of moving” according to David Crowe, chief economist of the National Association of Home Builders.

The key to this are the huge number of current homeowners who either are unable to sell their currents homes, or if they do, no longer will qualify for a new mortgage, or lack a 15-25% down payment for another purchase in order to move.

During Q3 2011, homeowners took out $5.3 billion in home equity/refinancing. That has been driving some of these renovations.

Regardless, housing will remain a dark spot in the economy for an extended time.

Weekly Market Review ~ Friday, 01/13/12

On Monday, stocks started off the week with another gain, albeit a modest one, as Alcoa kicked off the earnings season. On Tuesday, the Dow rose to its highest level since July, before the S&P US debt downgrade and debt ceiling fiasco of late summer, as Alcoa’s report of a diminished aluminum supply sparked buying. The major indexes were mixed on Wednesday, as the market failed to gain traction in light of reports indicating that Europe’s economy is slowing. On Thursday, stocks managed a small gain despite disappointing initial jobless claims, December retail sales, and business inventories reports. Threats by the S&P to downgrade several Eurozone countries sovereign debt led to a moderate sell-off on Friday.

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Merrill Lynch Targets Richer Clients in 2012

Have an account or thinking about an account with Merrill Lynch? If you’re not bringing at least $250k to the table, you might want to think twice. Starting in 2012 Bank of America’s Merrill Lynch division is no longer paying its advisers for new accounts under $250k. Previously, the cut off was $100,000 dollars.

This means that none of Merrill’s 15,000 financial advisers will pursue new clients with accounts less than $250k because they won’t get paid for their effort. Merrill will be happy to accept your “small” account but you have to question the attention you’ll receive as the thundering herd focuses on richer clients. This latest move by Bank of America herds <$250k accounts into house accounts, removing any incentive for “advisers” to support you.

Accounts with less then $250k comprise 4% of the $2.2 trillion in client assets managed by Merrill. Owners of that $88 billion might be wise to consider gravitating away from such a big firm. These investors will be best served by smaller, more client-focused advisory firms. (shameless plug alert: NorthStar Capital Advisors is a small, independent company where we enjoy a personal relationship with each of our clients).

As with most service-based industries, size matters…the larger the firm and the smaller your invested assets, the less you matter.

Weekly Market Review ~ Friday, 01/06/12

After the market holiday on Monday, stocks rung in the new trading year on Tuesday with a healthy 1.5% gain after news of positive international jobless and manufacturing reports became known. On Wednesday, the major indexes finished largely unchanged as liquidity issues in Europe offset optimism over auto makers reports of improved year-over-year sales. The Dow had its first losing session of 2012 on Thursday, although the losses were modest following an afternoon rally. On Friday, a 200,000 person increase in US nonfarm payrolls in December failed to spark a rally, as the market fell moderately.

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Where Are People Searching For Homes?

From Trulia’s database of home searches, based on their web traffic from 2006 through 2011:

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