Posts Tagged ‘news’


Today’s blog post is written by Withum Wealth Management’s Investment Advisor, Austin Hagaman, CFP, AWMA. 

Every year Barron’s, a widely respected financial news publication, interviews Wall Street’s “Top” Investment Strategists regarding their thoughts on the year ahead. Included in this article is a section where Barron’s asks each strategist to forecast which sectors they think will perform the best and worst over the coming year.  Barron’s published their “2017 Outlook” on December 19, 2016.

pic 1Now that we are a little more than half way through 2017, I think it is fitting to check in on how Barron’s “Top” Wall Street strategists are doing. Spoiler alert: At this point, they don’t deserve much more than a participation trophy (which, for the record, I am firmly against).


To evaluate Barron’s “Top” Wall Street strategists I calculated their consensus forecast for each sector by totaling the number of positive and negative forecasts issued in the article.  You will see from the chart below that Financials was predicted to be the favorite in 2017 with eight of the Wall Street strategists giving the sector positive reviews and none of the strategists listing it as a sector to “avoid”. Consumer Staples found itself at the bottom of the list earning an almost unanimous “avoid” recommendation.


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To measure the Wall Street strategists forecasting abilities, I simply compared the top three best performing sectors in the first half of the year to the strategists’ top three most favored sectors. As you can see in the charts below, thus far it has been a questionable year for Barron’s “Top” Wall Street strategists. Only one of the strategists’ three most favored sectors, Health Care, was a top performer in the first half. Financials, the sector the Wall Street strategists favored the most, turned out to be one of the worst performing, underperforming both the S&P 500 and 7 out of the other 9 sectors in the index. Consumer Discretionary also looks to be defying the strategists’ expectations. Their forecast called investors to “avoid” Consumer Discretionary, one of the best performing sectors in the first two quarters Lastly, the Industrial sector seems to be holding strong—albeit marginally—for the strategists. Industrials was their third most loved sector and it is currently outpacing the S&P 500 by 0.20%.

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To be fair, we are only about half way through 2017. A lot can happen over the next couple of months that could shed a better light on the strategists’ forecasting abilities. But how does their performance in the first six months of 2017 compare years past? According to Fritz Meyer, an independent economist who runs a very similar annual assessment, the strategists don’t have a great track record.  Meyer notes that since beginning his study in 2005 there has not been one year where the strategists have outperformed the S&P 500. Meyer writes in a blog, “The predictions of Wall Street’s so-called “top” strategists’ are about as reliable at sector forecasting as monkeys throwing darts.”


There were two thoughts that came to mind when I assembled and assessed the data for this piece:

  1. While a lot of news is centered on truth, this is a reminder that we need to appreciate media outlets for what they are, entertainment, and not get too caught up on the sensational story of the moment. It is prudent for investors to stay focused on meeting their long-term goals and resist the urge to try to drastically outsmart the market. Making small tactical changes to a portfolio can certainly pay dividends, but abandoning the principles of diversification by excessively under or over-weighting a sector can humble even the most experienced Wall Street investors.
  2. Unfortunately, Wall Street has become exceptionally good at pushing themes that are easy to sell and sound good in theory but fail to play out as proposed. Investors should be cautious not to overpay for “smoke and mirrors”. While there are plenty of honest advisors in the industry, working with large retail institutions and brokerage houses in an investment advisory capacity can come with conflicts of interest that work to the investor’s disadvantage. Investors can look to reduce these conflicts of interest by making sure their advisor is a Registered Investment Advisor (RIA) with a fiduciary responsibility.

I am proud to say that Withum Wealth is a Registered Investment Advisor (“RIA”) regulated by the SEC that operates independent of the large Wall Street intuitions and brokerage houses. As a firm that takes our fiduciary duty seriously, we choose not sell products to clients that may provide further compensation to the firm. Removing these potential conflicts of interest helps us center our attention on what we believe the client truly needs: an advisor that will help them cut through the noise and focus on what actually drives long-term returns.

Stay tuned for more updates on financial news!

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The following is a news alert that we received from Thomson Reuters/PPC, the tax research service to which we subscribe.  It is very disturbing, and all our clients and friends of the firm should be aware of it:

Consumers and Tax Professionals Targeted in IRS E-mail Schemes:  The IRS has seen an approximate 400% surge in phishing and malware incidents so far this tax season. The emails are designed to trick taxpayers into responding to official communications that lead to websites designed to imitate official looking websites. The sites ask for social security numbers and other personal information. The sites also carry malware which infect computers and allow criminals to access files or track keystrokes to gain information. “While more attention has focused on the continuing IRS phone scams, we are deeply worried this increase in email schemes threatens more taxpayers,” Koskinen said. Tax professionals also are reporting phishing schemes to obtain their online credentials. If a taxpayer receives an unsolicited email that appears to be from either the IRS e-services portal or an organization closely linked to the IRS, report it by sending it to phishing@irs.gov. IR-2016-28.

Rules of Thumb:

  • If the “IRS” or “Treasury Department” calls you threatening legal action against you for a tax issue of which you are unaware, hang up – IT IS A HOAX!  As we have pointed out in earlier blog posts, the IRS will never initiate action against you without following strict protocol and they will certainly not call you about something without corresponding with you in writing beforehand.
  • Similarly with e-mail – if an e-mail claims to be an official communication, don’t believe it.  Actually, try not to open it to avoid malware issues.  The bottom line is, the IRS does not use e-mail for “official communication.”[1]  However, if you have a doubt about the authenticity of an e-mail, you can call the IRS at the appropriate number (found at:  https://www.irs.gov/uac/Telephone-Assistance) and speak with them about it.  And, of course, consider reporting the incident as indicated above.

The Internet is a wonderful thing, but with the good comes the bad, and the ability to defraud uninformed taxpayers is right up there with the bad.  Don’t let these geeky, tech-savvy criminals take a bite out of you.

[1] If you are already under examination and working with an agent, s/he may use e-mail to communicate with you, but you will already know who s/he is.  In any event, the communication will not be “official.”

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