George Soros spoke at an Asian investment conference yesterday and told the crowd the current market meltdown reminded him of 2008, on the eve of the worst recession in decades. (Perhaps now's a bad time to seed his former executive's private fund, slated to be the largest hedge fund launch of all time.) While the statement got a ton of press, there was also plenty of dissent. Critics pointed out that this time, it's different (of course, those are the four most dangerous words in investing, according to Sir John Templeton.) "This is more about currencies than credit, more about emerging markets than developed ones," wrote Martin Tillier on Nasdaq.com. For one, China's troubles will be relatively isolated, he says. For another, the commodity collapse and soaring dollar have been telegraphing the market slide for some time. "This has more of a feel of a fear-led selloff," he says. And that may open up some opportunities for value hunters. In the meantime, Ritholtz Wealth Management's Ben Carlson has some rational perspective on bear markets, including this: "The reason so many investors fail is because they make poor decisions when markets fall."
The automated investment services faced their first major test in 2015, so how did they hold up? Neither Betterment nor Wealthfront publish Global Investment Performance Standards data, so research analyst and industry blogger Meb Faber estimated performance based on his earlier calculations of the robos’ allocations. On his blog, Faber said all four likely lost money in 2015, with Betterment losing between 0.28 percent and 3.16 percent, depending on the allocation model, and Wealthfront losing between 1.08 percent and 4.59 percent. This isn’t surprising considering most assets performed poorly in 2015, yet inexperienced investors complained on social media. “People [who] flip out about being down 5 or 10% don’t understand these portfolios have lost 30 to 50% historically!” Faber said, adding that this online reaction will be interesting to watch in a bear market. “Accounts will start to leave at -20% if conversations in the industry is any indication, and without someone to talk to, will be interesting to see if the robos can weather that storm.”
The Harsh Reality of Taking a Break
Life happens and sometimes you need to take a break from work. This is especially true for women, 30 percent of whom say they’ve taken a planned career break, 25 percent who took an unplanned one and 11 percent who say they plan to take one at some point in the future. But quitting without a job or a real plan is not the way to go, writes Sallie Krawcheck, who did just that. When she returned to work after having her son, she took a 60 percent pay cut. And that’s not unusual. Almost 20 percent of women reported taking a pay cut after a career break, according to an August survey fielded to the Ellevate Network members. Another 20 percent of women surveyed reported they had not been able to find a job to come back to yet. Krawcheck recommends beefing up your savings if possible before taking a break, enough to cover the necessities for the duration.
Millennials Winning at Saving for Retirement
Millennials are saving a greater percentage of their income than baby boomers and Generation Xers, according to a new report from Fidelity, Money.com is reporting. The report found that more Americans (45 percent) were considered prepared for retirement in 2015 than 2013, when only 38 percent were ready. The reason for the jump is better saving and investment allocation, Fidelity states. Millennials are saving 7.5 percent of their income, compared to 5.8 percent in 2013. That's a higher savings rate than their elders, who are still saving larger percentages of salary but have not boosted their contributions. According to the study, baby boomers are the most prepared for retirement, while Gen X and Millennials are nearly ready at the same rate. Still, 55 percent of Americans are not on track for retirement, the study states.
