Bernstein Analyst: Retail Investors Will Return to Equity Market

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Brad Hintz, a senior analyst at Bernstein Research and a former CFO of Lehman, issued a report today asking, "U.S. Brokerage: Off to a Flying Start or Stumbling Out of the Gates?" Hintz's conclusion: "Bernstein expects a prolonged fixed income cycle through 2012," with slowly rising interests rates in Europe and the U.S. but neverthless "will lead to a continuation of trading volumes on both sides of the Atlantic. In effect, we expect a 2004-2006 prolonged fixed income in the face of rising rates and not a 1994-style precipitous fixed income decline." As for retail?

I heard lots of complaints from FAs about clients who were too scared to do anything in the equity market in 2010 and even more recently --- even as stocks celebrated a second-year anniversary of a bull market on March 9. While Hintz says, "Our investment thesis for the institutional broker/dealers focuses on a cycle call that assumes the largely institutional firms, i.e. Goldman Sachs and Morgan Stanley, will outperform as equity underwriting and M&A businesses recover in a domestic upturn and the higher margin banking businesses recover. Those securities frims that are more exposed to late cycle businesses --- retail and asset management --- will outperform in the mature stages of the economic cycle as retail investors return to the equity market,"

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REP. Editor-in-Chief David Aldo Geracioti on the business of Wall Street from a free-market perspective.

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David Aldo Geracioti

Is the editor-in-chief of REP. magazine.  He is also a devotee of the Austrian School of Economics leading lights Ludwig von Mises, Friedrich von Hayek, Murry Rothbard and to other thinkers in...
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