FINANCIAL ADVISOR INSIGHTS: Stock market valuations don't matter until they matter

Screenshot via Bloomberg TV

Liz Ann Sonders

Stocks are rallying despite the drop in earnings expectations (Charles Schwab)

Charles Schwab Chief Investment Strategist Liz Ann Sonders notes, "History shows that market valuation doesn't necessarily matter…until it does." S&P 500 forward earnings-per-share growth has turned negative in part because of the strong dollar, the drop in oil prices (for energy companies), and an uptick in wages. While this typically happens in recessions, Sonders says, "I don't think the US economy is at risk of a recession, even with earnings growth having dipped into negative territory."

Long-term care costs are hurting Genworth Financial (Investment News)

Genworth Financial is struggling under the weight of its long-term care burden. The company warned of 'material weakness' in some of its accounting, and according to Investment News, "has been raising premiums again and again" to cover its shortfalls. The insurance industry underestimated the cost of long-term care, the impact of low interest rates, and the life expectancies for the baby boomer generation, and its costing insurers billions of dollars.

There is too much complacency regarding inflation (Financial Advisor)

Investors are becoming too complacent in regards to inflation, according to Invesco Solutions Chief Investment Officer Duy Nguyen. Mr. Nguyen told Financial Advisor, "Inflation should be viewed as a long-term challenge that can hurt portfolios whether inflation is high or simply above average. Even slightly above-average inflation can significantly erode wealth over time."

Advice from top financial advisors (Go Banking Rates)

Go Banking Rates asked some of the industry's top advisors for advice on how to deal with high profile clients, here is what they had to say. Travis Higgins says, "I try to build a relationship. You try to relate to them in a way that they understand and you know where they're coming from. If you make that connection, they'll have that trust in you, and you'll have that credibility." Higgins also believes no two clients are alike, and that a plan should be structured to tailor ones career and interests. Rob Wilson, who advises several former athletes and performers notes, "All the league does is get you a head start on life," he said. "You have tons and tons of options in what you can do if you've been a good steward of your money. I don't suggest to any of my athletes - unless we start talking about a $30- to $40-million contract - you always have to have your eye on what's next."

Making a great impression (Financial Planning)

Remember the old adage, "You don't get a second chance to make a first impression?" Financial Planning gives some advice to advisors who are struggling to attract, and keep, clients. The publication suggests practicing an elevator pitch, asking deep questions to understand clients' needs, and paying close attention to non-verbal communication.