1.

I was reading Barron’s this weekend and I noticed that the fund family, DFA, is the third-ranked fund family for 2021. I then harkened back to the early 90’s and my days at 275 Madison Avenue, where our little marketing firm shared space with several companies on the 29th floor tower. The office was nothing to boast about. One of the companies there was the NYC marketing office for DFA, then a two-fund family only offered to institutions. In fact, our firm took over DFA’s corner office space when they left. They had built-in shelves and was the corner office on this cluttered floor. Nothing special indeed. And DFA, well they now manage about $679 billion in assets. I had totally forgot about that office and DFA. The 1990’s and NYC were awesome. Anyone could start a business and be located on Madison Avenue. And some companies went a bit further than others…

2.

Inflation is here and The Fed will start raising rates in March. Annuity rates will go up from here, Right? In a normal world, I would concur. This is not a normal world.
The Fed plans on raising the discount rate, which is the overnight rate charged to banks. This is the only rate they adjust; overnight rates. There are no guarantees longer term rates go up. In fact, many astute Fed followers think the 10-year bond yield will drop below 1.50%. They see a slowing economy from here. The world is upside down now so I wouldn’t be surprised if rates decrease from here. I would start talking to clients about the current competitive rates. For seniors, the more guarantees the better right now…

3.

Did you notice the E Trade “baby trader” ads were back during the Super Bowl this year. Wasn’t the last time we saw this cute little guy back in 2007? Yes, just prior to the greatest financial implosion ever. I think it was silly to bring back this ad and I think it’s a bad omen for the markets. Isn’t it so insanely naiive to bring back this ad when we are in the middle of the “everything bubble” currently?

4.

Bank of Japan steps in to curb rising yields, to buy ulimited 10-year JGBs.” –Rueters
Do these central banks look beyond the here and now? What will this mean in 10 years? 20 years? I think it was Jim Rickards that said, “In 2008 we bailed out the banks, during the next crisis, we will be bailing out the central banks.”

5.

Fixed annuity interest rates have ticked up for your clients. Don’t assume it will continue. But one thing is certain; volatility will get worse! One solution is to start moving assets into guarantees. The partial withdrawal feature is a way to add flexibility to an annuity purchase. Taking up to 15% each year to diversify is an overlooked annuity benefit. Call NestEgg Builders for more assistance.