The Source at AXA-Equitable

Source Readers Score High in Financial Literacy Survey

admin — Fri, 20 Apr 2012 20:57:43 +0000

Last week on The Source at AXA Equitable explored the concept of “financial literacy,” highlighting the research of two academic experts – Drs. Annamaria Lusardi and Olivia S. Mitchell.

Lusardi and Mitchell have identified three economic concepts that individuals should understand when making financial decisions:

• Compound Interest
• Inflation
• Risk Diversification

Based on these concepts, they developed three questions to measure financial literacy around the world. In support of National Retirement Planning Week 2012, we posted these three questions on The Source and invited readers to test their financial know how.

So far, the results indicate that Source readers are a financially savvy bunch with a good understanding of compound interest, inflation and risk diversification.

Click here to get the answers and results!

When it comes to financial knowledge, you can never have enough. For information and resources on a wide range of financial topics from managing family finances to saving for retirement, visit AXA Equitable’s online Learning Center.

Although we used the questions devised by Drs. Lusardi and Mitchell, the answers reported in our survey are not based on a random sample of participants and only represent the answers given by readers of the Source who opted to complete the survey.

AXA Equitable Life Insurance Company (NY, NY)

GE-68278 (4/12) (exp. 4/14)

What does it mean to be “financially literate?”

admin — Fri, 13 Apr 2012 14:28:06 +0000

The term “financial literacy” is used often, but not always clearly defined. A recent editorial in InvestmentNews (“Setting a Standard for Financial Literacy,” March 4, 2012) drew attention to this fact, pointing out how several U.S. government organizations, including the Government Accountability Office, National Financial Educators Council and the President’s Advisory Council on Financial Literacy, all define the term “financial literacy” differently.

Having many definitions of “financial literacy,” the editorial argued, is “confusing and self-defeating for all those with an interest in making Americans become smarter about investing and managing money.”

It’s time for clarity. The Securities and Exchange Commission (SEC) has reportedly been mandated to study the existing level of “financial literacy” among retail investors and report its findings to Congress by July 21, 2012. (Source: SECURITIES AND EXCHANGE COMMISSION [Release No. 34–64306; File No. 4–626] Comment Request on Existing Private and Public Efforts To Educate)

Meanwhile, two academic experts on the topic – Drs. Annamaria Lusardi and Olivia S. Mitchell – are working on clarifying how to measure financial literacy. In their report, “Financial Literacy Around the World: An Overview,” (Journal of Pension Economics and Finance, June 2011) they identify three economic concepts that individuals should understand when making financial decisions:

• Compound Interest

• Inflation

• Risk Diversification

Based on these three concepts, Lusardi and Mitchell developed three questions to measure financial literacy. According to their report, “financially literate” individuals are more likely to plan for retirement.

In the support of National Retirement Planning Week 2012, AXA Equitable is highlighting Lusardi and Mitchel’s three questions, and we hope you will take a minute to anonymously answer these questions. We will post the results of the survey and the actual answers next week.

One week isn’t enough to plan for retirement, but it’s enough to start. We hope our suite of retirement planning apps, tools and online resources will help.

GE 68144 (4/12)(Exp 4/14)

The Bugaboo in the Background: Inflation

DWinter — Fri, 16 Mar 2012 22:30:44 +0000

News Brief from AXA Equitable: Highlights from recent notable market news reports
March 16, 2012

Better-than-estimated economic and corporate reports spurred the S&P 500 to rise above 1,400 this week for the first time in almost four years. The index is on pace for the best quarter since 1998.

So, where’s the party you ask?

Not so fast….By week’s end, both stocks and the sentiment of some experts seemed tempered by inflation concerns, fueled by rising oil and consumer prices.

“The bugaboo in the background is oil prices,” Madelynn Matlock, of Huntington Assets Advisors, told Bloomberg. “Things are improving at a slow, but steady pace. If oil prices pop up, it will be a different story.” (Bloomberg: “Most U.S. Stocks Decline as Oil Rally Bolsters Concern,” by Rita Nazareth, March 16, 2012).

Popping oil prices triggered the cost of living to increase in February by the most it has in 10 months, foreshadowing this week’s reports of consumer confidence unexpectedly falling in March.

Robert Arnott, chairman of Research Affiliates, a Pimco subadviser, warned in an InvestmentNews interview this week that the real story on inflation will soon be told.

“We’ve been protected by a sputtering economy,” he said. “If the economy regains traction and we get slow to moderate growth, we’ll see higher inflation sooner than we’d like.” (InvestmentNews: “Real Story on Inflation will soon be Told,” by Dan Jamieson, March 15, 2012)

IMPORTANT — AXA Equitable, AXA Advisors, LLC (member SIPC) and their affiliates do not provide tax/legal advice, or investment or market research. The quotes provided in this News Brief have been excerpted from media reports for general informational purposes only and do not represent the opinions of AXA Equitable, AXA Advisors or their affiliates, associates or employees. AXA Equitable and its affiliates make no representation as to the accuracy or completeness of any statements, statistics, data, opinions, forecasts, or predictions provided herein, nor will this information necessarily be updated or supplemented at any time. Any reference to market or index performance is for informational purposes only. It is not possible to invest directly in an index. This material is not intended, and should not be relied upon, as investment or financial advice and does not constitute an offer or solicitation of any kind.

The Sword of Damocles Doesn’t Fall on Europe

DWinter — Fri, 09 Mar 2012 20:31:50 +0000

News Brief from AXA Equitable: Highlights from recent notable market news reports
March 9, 2012

The Sword of Damocles hangs less ominously over Europe, for the time being anyway. Stock markets tumbled early in the week but eventually regained footing as investors reacted to soft European economic data and nervously watched developments in Greece‘s debt drama.

European stock markets and U.S. financial shares in the S&P 500 edged higher, following private creditors’ acceptance of a Greek debt swap, paving the way for a sovereign restructure and avoiding a disorderly default.

“This is a story of isolating Greece and preventing a massive financial contagion,” Charles Schwab analyst Brad Sorenson told Bloomberg (Bloomberg: “S&P 500 Poised for Fourth Weekly Advance as Job Growth Exceeds Estimates,” by Rita Nazareth, March 9, 2012.)

Advances in U.S. stocks sent the S&P 500 toward its fourth weekly rally, bolstered by Department of Labor (DOL) payroll news that indicates the best six-month job growth streak since 2006.

“By any stretch, this is an encouraging report,” J.P. Morgan economist Anthony Chan told The Wall Street Journal, “more people are joining the labor force and the unemployment rate is not going up.” (Wall Street Journal: “Job Report Lifts Stocks,” by Christina Berthelsen and Chris Dietrich, March 9, 2012). This week’s DOL data release also showed that wholesale inventories increased in January, indicating that companies anticipate increased demand for products.

Birinyi Associates founder, Laszlo Birinyi, who correctly predicted the bull market would survive its 2011 mid-year correction, told Bloomberg this week that “the market is saying some very good thinks about the economy. While we may have stumbled for a day or two, I think the race is still on.” (Bloomberg: “Birinyi Still Bullish on U.S. Stocks,” by Whitney Kisling and Betty Liu, March 8, 2012)

Cold Feet in a Hot Market

DWinter — Fri, 02 Mar 2012 21:06:23 +0000

News Brief from AXA Equitable: Highlights from recent notable market news reports
March 2, 2012

Retail investors continue to appear largely aloof to the year’s stock market rally.

The S&P 500 has recorded its best start since 1991, and The Dow closed above 13000 on February 28 for the first time since May 2008. Individual investors, however, seem unconvinced that the recovery is real enough to merit diving into stocks.

Many retail investors remain on the sidelines or view the 2012 stock rally as an opportunity to sell not buy. The fund tracker EPFR Global reports that individual investors pulled $8.3 billion out of U.S. stock funds since the beginning of the year and put almost $10.6 billion into bonds funds (Wall Street Journal: “Investors’ Sell Signal: Surging U.S. Stocks,” by Joe Light, March 1, 2012).

Sam Stovall of S&P Capital IQ told the Journal that he sees the stock rally hinging on individual skeptics. “Markets may be at a tipping point. If individual investors decide to dive in, they have a lot of dry powder to drive the market higher. But if they don’t, it will be difficult for the rally to continue much longer.”

Defying the skeptics, the economy continued to show signs of improvement this week, buoyed by wage gains and improved consumer confidence (Bloomberg: “U.S. Wage Gains Signal Boost to Spending,” Shobhana Chandra, March 2, 2012).

The growing economy stirred Wells Capital to issue a report this week cautioning that 2012 “will be ‘lousy’ for Treasuries as the growing U.S. economy hurts bonds and supports stocks.” (Bloomberg: “Paulsen Predicts ‘Lousy Year’ for Treasuries,” Wes Goodman, February 28, 2012).

Wells’ chief investment strategist, James W. Paulsen, reportedly recommends underweighting ‘safe haven’ investments.

Signs of U.S. Expansion Eclipse Euro Woes But Oil May Seep In

DWinter — Fri, 17 Feb 2012 18:06:41 +0000

News Brief from AXA Equitable:
Highlights from recent notable market news reports
Feb. 17, 2012

Better than expected U.S. labor, housing, and manufacturing reports drew attention this week away from concerns over Greece and the euro zone. U.S. unemployment claims fell to their lowest level in nearly four years, mid-Atlantic manufacturing orders expanded at the fastest pace in four months, and January housing starts exceeded expectations, spurring index gains and degrees of optimism on Wall Street.

Chris Rupkey, economist at Bank of Tokyo-Mitsubishi, gushed to Bloomberg that “the economy’s wheels just keep spinning faster and faster,” (Bloomberg: “Drop in Jobless Claims Points to Spending Gains,” by Timothy R. Homan and Bob Willis, February 16, 2012). Less was more for Edward Crotty, of Davidson Investment Advisors, who told the Journal that he’s “not sure there’s enough strength for the market to run away at this point, but stock valuations can go up merely on an alleviation of worries.” (Wall Street Journal: “Dow Closes at Higest Level in Nearly 4 Years,” by Jonathan Cheng, February 17, 2012)

News of domestic growth coincided with glimmers of hope on the Greek debt crisis, or at least evidence of the market’s resiliency in absorbing euro zone shocks. Bill Street of State Street Global Advisors told the Journal that “the market generally has digested the Greek issue and sees it as a nonsystemic issue at this point.” (Wall Street Journal: “As Vector, Greece Loses Its Potency,” by Charles Forelle, February 15, 2012).

Meanwhile, economists cautioned that rising oil prices could emerge as the next threat to the fragile economy (Wall Street Journal: “Oil Rise Imperils Budding Recovery,” by Ben Casselman and Conor Dougherty, February 16, 2012). Oil prices have reportedly climbed sharply in recent weeks, as tensions spill in the Mideast. This “has the power to derail an economic recovery that’s not looking very strong already,” Paul Dales, of Capital Economics, told the Journal.

Officially a Bull Market

DWinter — Fri, 10 Feb 2012 19:57:36 +0000

News Brief from AXA Equitable:
Highlights from recent notable market news reports
Feb. 10, 2012

The stock market has now officially entered a bull phase, after nearly tipping into bear market territory last year, with the MSCI All-Country World Index having risen 20 percent from its October low (“Defensive Stocks Lose for First Time Since 1999 Amid Bull Market,” by Matt Walcoff, Feb. 9, 2012, Bloomberg).

Sudhir Nanda of T. Rowe Price Group told Bloomberg: “Last year, investors tended to hide in things which are stable, paying reasonable dividends … This year, people looked at the U.S. and said, ‘Things are not really that bad.’ If the economy is humming, people tend to buy more of the sectors which will profit from growth, industrials, materials and things like that.”

Laurence D. Fink, CEO of BlackRock, sees a bright enough future in stocks to advise going all in (“BlackRock’s Fink Says Investors Should Be 100% in Equities,” by Bei Hu and Susan Li, Feb. 8, 2012, Bloomberg).

“I don’t have a view that the world is going to fall apart, so you need to take on more risk,” he told Bloomberg. “You need to overcome all this noise. When you look at dividend returns on equities versus bond yields, to me it’s a pretty easy decision to be heavily in equities.”

Warren Buffett, CEO of Berkshire Hathaway, seems to have a similar view taken from the bond-market perspective (“Warren Buffett: Why stocks beat gold and bonds,” by Warren Buffett, Feb. 9, 2012, Fortune). In an adaptation from his upcoming annual letter to shareholders, he writes:

“The riskiness of an investment is not measured by beta (a Wall Street term encompassing volatility and often used in measuring risk) but rather by the probability – the reasoned probability – of that investment causing its owner a loss of purchasing power over his contemplated holding period. Assets can fluctuate greatly in price and not be risky as long as they are reasonably certain to deliver increased purchasing power over their holding period. And as we will see, a nonfluctuating asset can be laden with risk.”

Buffett adds: “High interest rates, of course, can compensate purchasers for the inflation risk they face with currency-based investments – and indeed, rates in the early 1980s did that job nicely. Current rates, however, do not come close to offsetting the purchasing-power risk that investors assume. Right now bonds should come with a warning label.”

IMPORTANT — AXA Equitable, AXA Advisors, LLC (member SIPC) and their affiliates do not provide tax/legal advice, or investment or market research. The quotes provided in this News Brief have been excerpted from media reports for general informational purposes only and do not represent the opinions of AXA Equitable, AXA Advisors or their affiliates, associates or employees. AXA Equitable and its affiliates make no representation as to the accuracy or completeness of any statements, statistics, data, opinions, forecasts, or predictions provided herein, nor will this information necessarily be updated or supplemented at any time. Any reference to market or index performance is for informational purposes only. It is not possible to invest directly in an index. This material is not intended, and should not be relied upon, as investment or financial advice and does not constitute an offer or solicitation of any kind.

Napa Valley Voted Top Retirement Destination Choice

DWinter — Tue, 10 Jan 2012 22:50:47 +0000

Napa Valley Welcome Sign, Photographed by Stan Shebs, September 2005

Napa Valley, CA is the preferred place to retire, according to the participants of AXA Equitable’s “Destination Retirement Sweepstakes.” AXA Equitable launched the sweepstakes to mark the retirement of its advertising campaign star − “the 800lb gorilla in the room.” The public was invited to enter the sweepstakes featured on Facebook and Twitter (@AXA_Equitable). Sweepstakes entrants chose from four places where the gorilla could retire and entered a contest to win a trip to the destination that received the most votes. Napa Valley was chosen above North Carolina, Puerto Rico and Florida.

Land of Plenty
By all accounts, Napa Valley is indeed a special place. The area’s original Wappa Indian inhabitants used their word “napa” to describe a “Land of Plenty.” Today, the official County of Napa website describes it as “America’s legendary wine, food and wellness destination…. one of the most rare and precious agricultural preserves on earth – a place that moves in perfect synchrony with the seasons.” A website called www.TopRetirements.com describes Napa as “an interesting retirement community for active adults who enjoy wine, a warm climate, and great restaurants.”

Reality Checklist: Retirement Relocation
While sweepstakes are fun and retirement should be too, relocating requires serious consideration, no matter what your life stage, whether you’re moving around the corner, across the country or around the world.

If you’re thinking about retiring to another state or country, there are social, medical, financial, and legal issues to consider. Retirement relocation has become an industry in itself, with many places vying for retirees with tax breaks and other perks. Services abound on the internet advising retirees on relocation. There’s even a magazine called “Where to Retire” self-described as “the authoritative source of useful information for the 700,000 Americans who move to new towns to retire every year.”
Before you load up the truck, do your research. Retirement isn’t a vacation. It takes long-term planning about things like healthcare quality and access, taxes, community, transportation and cultural offerings. To get started, U.S. News offers a checklist.

Once you’re ready, maybe you’ll decide to join the 800lb gorilla in Napa…

Wary Words on Stocks vs. Bonds in 2012

admin — Fri, 06 Jan 2012 14:33:41 +0000

News Brief from AXA Equitable: Highlights from recent notable market news reports
January 6, 2012

Burton Malkiel, author of “A Random Walk Down Wall Street,” is recommending stocks over bonds for 2012, predicting a 7 percent yield on stocks vs. just 2% on the 10-year Treasury bond (“Where to Put Your Money in 2012,” by Burton G. Malkiel, Jan. 5, 2012, The Wall Street Journal), but not everyone is so sure.

Goldman Sachs’s David Kostin expects U.S. stocks will end 2012 no higher than at year-end 2011, which was no higher than year-end 2010 (“Street Wary on Its Random Walk,” by Steven Russolillo, Jan. 4, 2012, The Wall Street Journal). Morgan Stanley takes it one step further predicting the S&P 500 will end the year down 7%, citing slowing global growth, The Journal reported.

Adam Parker of Morgan Stanley told The Journal that the U.S. dollar’s strength against the euro is a strong signal for weaker earnings, adding, “We think the risk reward is skewed to the negative.”

Uri Landesman of Platinum Partners in Manhattan, told The Journal that while he expects the S&P will end the year higher, “I agree with the assessment that it’s going to be another very volatile year.”

Byron Wien of Blackstone Group sides with the optimists, writing in his annual “10 Surprises” list that oil will fall to $85 a barrel this year, the S&P will rise to 1,400, U.S. GDP will exceed 3 percent, and unemployment will drop below 8 percent (“Wien Sees Oil Falling to $85, S&P 500 Topping 1,400 in 2012,” by Lu Wang, Jan. 3, 2012, Bloomberg).

“The drop in the price of oil and the rise in the stock market improve both consumer confidence and spending patterns,” Wien wrote. “Recession fears and even ‘the new normal’ view of prolonged slow growth are called into question.”

Nevertheless, sentiment will surely play a role, and frustration and skepticism dominate as investors enter the new year (“World’s Woes Leave Lasting Scars,” by Tom Lauricella, Jan. 3, 2012, The Wall Street Journal).

“This dour demeanor comes after a year where many investors learned they had underestimated just how volatile and unpredictable life would be as the world’s major developed economies contend with a mountain of debt,” The Journal reported.

High Volatility, Low Returns: Now What?

DWinter — Fri, 30 Dec 2011 14:46:19 +0000

News Brief from AXA Equitable: Highlights from recent notable market news reports
December 30, 2011

High volatility in stock prices – double the average over the past five decades – has coincided with the S&P 500 on track to notch its smallest year-end price change, around 1 percent, since 1970 when it inched down 0.1 percent (“S&P Volatility Double Average as Index Moves Least Since ’70,” by Inyoung Hwang and Alexis Xydias, Dec. 27, 2011, Bloomberg).

By a wide margin, the highest-returning stocks have been those of companies in the so-called defensive sectors – consumer staples, for example, that are less sensitive to economic trends – compared to economy-dependent sectors, Bloomberg reported. So is the glass half full or half empty?

“The combination of a very crowded trade and a market that’s very cheap with a lot of doubters suggests to me the place to put funds is in the market overall,” Andrew Slimmon of Morgan Stanley Smith Barney told Bloomberg.

The glass-half-empty crowd argues that the stock market now offers fewer buying opportunities because of the run-up in defensive sectors, Bloomberg notes, but as The Wall Street Journal reports, an economic recovery in the U.S. is hard to ignore as it generates increasingly positive signals (“Data Suggest Recovery Gaining Steam,” by Ben Casselman, Dec. 30, 2011, The Wall Street Journal).

The latest jobs, housing, and manufacturing statistics “suggest that the economic recovery is once again gaining momentum after nearly stalling out earlier this year,” The Journal reported, noting that recession anxiety peaked last summer but now is easing on signs of steady though still slow economic growth.

“We continue to hear people say that the U.S. recovery is fragile, and that’s the wrong word,” Michael Gapen, an economist with Barclays Capital, told The Journal. “It’s durable. It’s just not robust. It’s a moderate expansion.”

IMPORTANT – AXA Equitable, AXA Advisors, LLC (member SIPC) and their affiliates do not provide tax/legal advice, or investment or market research. The quotes provided in this News Brief have been excerpted from media reports for general informational purposes only and do not represent the opinions of AXA Equitable, AXA Advisors or their affiliates, associates or employees. AXA Equitable and its affiliates make no representation as to the accuracy or completeness of any statements, statistics, data, opinions, forecasts, or predictions provided herein, nor will this information necessarily be updated or supplemented at any time. Any reference to market or index performance is for informational purposes only. It is not possible to invest directly in an index. This material is not intended, and should not be relied upon, as investment or financial advice and does not constitute an offer or solicitation of any kind.