S&P 500 Analyst Ratings By Sector

Earlier this week, we ran a deep analysis of buy, sell, and hold ratings for the stocks in the S&P 500. In the report we identified the most loved and hated stocks in the index, along with names that may be good contrarian plays due to excessive bullishness or bearishness. Below is a condensed version of a larger summary table provided in the report focusing on analyst sentiment by sector. As shown, there are currently 11,732 analyst ratings for S&P 500 stocks, which equates to 23.5 analyst ratings per stock in the index. Talk about excessive.

The sector with the most analyst coverage is Technology at 29.1 analyst ratings per stock, but Energy is not far behind at 29.0. The Utilities and Materials sectors are the least covered by analysts at 18.5 and 18.8, respectively. So which sectors are analysts most bullish on at the moment? Given the fact that 50.4% of all ratings in the S&P 500 are Buy ratings, Energy is the biggest bullish standout with 61.2% Buy ratings. Four other sectors have a higher percentage of Buy ratings than the overall S&P 500 -- Consumer Discretionary, Healthcare, Industrials, and Technology. Analysts are least bullish on Utilities with 33.9% Buy ratings. Consumer Staples, Financials, Materials and Telecom are the four other sectors with a lower percentage of Buy ratings than the S&P 500 as a whole.

On the far right of the table you'll see the year-to-date change in the percentage of Buy ratings for the S&P 500 and its 10 sectors. For the S&P 500, Buy ratings have dropped by 1.5 percentage points, which means analysts have gotten less bullish on stocks this year even though the average stock in the index is up significantly at 19.73%. The Materials sector has seen the biggest drop in Buy ratings at -3.9 percentage points, followed by Financials at -2.4 and then Telecom, Healthcare and Industrials all at -1.8. The Utilities sector has actually seen a small uptick in Buy ratings at +0.1 percentage points, while the two Consumer sect! ors have seen a very minor downtick.

Source: S&P 500 Analyst Ratings By Sector

Harvesting Through The Tough Season - Three Farm Equipment Stocks In Perspective

In august, the Association of Equipment Manufacturers (AEM) published the mid-year review for the agricultural sector. Their findings point to a slowdown for the industry, highlighting a 9.5% decline on exports through the first half of 2013. Also, late soybean planting in the USA is expected to compound the industry's slowdown. So, what are the prospects for AGCO (AGCO), CNH Global (CNH), and Deere & Co. (DE) under such conditions?

Size, efficiency, diversity

CNH is the smallest of the three, and continues to grow international presence. For example, the firm bought 25% of India's TAFE, graving an important share of the tractors market. Additionally, returns in capital continue to improve through a business strategy based on internal profitability and working capital investments.

Future growth for AGCO remains in the international arena, in the Asian region specifically. Because, sale volumes in the US, South America, and Europe are expected to dwindle after five years of continued increments.

So, the focus has been shifted to the under exploited farmlands of Central Asia, Africa, and China. Also, new facilities are expected to be inaugurating in China and Africa, coupled with upgrades to US installations. However, future prospects are limited by import policy instability in the new markets.

Financially, AGCO is a solid company, and expected to improve once capacity expansions at German facility are fully integrated. However, I remain bearish about this stock, especially when the positions of most hedge funds remain small.

Under construction

The mid-size cap CNH Global is the fruit of a merger between Case and New Holland. However, the resulting company continues to face an intense competition, especially in the North American market. The good news is that profits were reported since its inception in 1999.

Growth for CNH Global will stalled as opportunities in the Latin American margin reach exhaustion. Prospects are aggravated by smaller ! exports rates to the region. Most importantly, the US division is expecting a 20% reduction in sales.

Prospects for the construction segment are no better. The dropping off of heavy equipment manufacturing in North America and other unprofitable segments are telling evidence.

The balance sheet for CNH Global shows a troubled company. Debt continues to rise as cash volumes are diminished, and margins do not improve. Management expects the situation to change once integration between Case and New Holland is fine-tuned.

I remain bearish about CNH because of financial risks and current unfavorable economic environment. Additionally, long time stockholder Mario Gabelli continues to reduce his position.

Shifting balance

Deere & Co. is the largest farm equipment manufacturer with a market cap of $32 mil. The company is present worldwide, but the US market remains the most important. The firm operates in three segments: agriculture (80%), construction (14%), and financial (5%), and declines in the construction segment are expected to continue.

The challenge ahead for Deere & Co. is to continue a business model based on margins and profitability improvements. More, opportunities for growth lie in developing markets where the firm holds small market positions –India, China, Russia, and Brazil

In India for example, products are yet to be adjusted to local needs, and market share remains below 15%. Also, sales in North and South America, management projects, will grow 5% and 20% each . In line, the firm projects a 7% increment in total sales for 2013, offsetting the lagging construction segment. Prospects are reinforced by expected record farm income levels in the US and high commodity prices worldwide.

Currently, I feel bullish about Deere & Co. because high commodity prices, greater planted area, and developing markets offer great opportunities for growth. Additionally, revenue sources continue to diversify and Warren Buffett turned into the largest stockh! older in ! less than a year.

Conclusion

I prefer Deere & Co. over AGCO and CNH Global because the company holds true growth potential, without any downside. Additionally, Deere & Co. holds a dominant position in the most relevant markets for the industry. And, the US market provides the company with the necessary backing to continue incrementing international footprint.

Disclosure: VaninaEgea has no position in any stocks mentioned

Hot Financial Companies To Buy For 2014

In April of last year I decided that the boundaries of financial metrics no longer mattered to me, and I embarked on creating my own unique index, dubbed the TMFULOI, to examine and help me determine what the most overvalued companies in the market were.

Far from an exact science, the TMFULOI takes into account a company's book value, price-to-sales, and price-to-cash flow ratio, allowing me to compare companies based on set parameters, which you can read more about here. Through the first two rounds of utilizing my index I was able to handily beat the S&P 500, my benchmark index, with the cumulative five stocks underperforming the S&P 500.

In my most recent instance using the TMFULOI, I added a growth discount parameter suggested by my Foolish colleague Rick Munarriz, who correctly pointed out that the initial TMFULOI valuation model I was using failed to account for, and even punished, rapidly growing companies. Having completed a third round using my newly adjusted TMFULOI value, I'm happy to say I have yet again surpassed the S&P 500 and am now a perfect three-for-three, despite LinkedIn (NYSE: LNKD  ) being a thorn in my side once again!

Hot Financial Companies To Buy For 2014: Cotton #2(CT)

Capital Trust, Inc., a real estate investment trust, operates as a real estate finance and investment management company that provides credit sensitive financial products in the United States. The company?s investment programs focus on loans and securities backed by commercial real estate assets, including mortgage loans, property and corporate mezzanine loans, commercial mortgage backed securities, and subordinate mortgage interests. Its balance sheet investments include various types of commercial mortgage backed securities and collateralized debt obligations or securities, and commercial real estate loans and related instruments. The company qualifies as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. Capital Trust, Inc. was founded in 1966 and is headquartered in New York, New York.

Hot Financial Companies To Buy For 2014: Gendis Inc Com Npv(GDS.TO)

Gendis Inc. operates and leases commercial real estate properties to commercial tenants in Canada. As of April 30, 2011, the company owned and leased six properties comprising an industrial facility complex and five commercial properties. It also invests in exchange-traded equity securities primarily in the energy and energy transportation sectors, as well as in private placements. The company was formerly known as General Distributors of Canada Ltd. and changed its name to Gendis Inc. in May 1983. Gendis Inc. was founded in 1939 and is headquartered in Winnipeg, Canada.

Top Dividend Companies To Buy For 2014: Annapolis Bancorp Inc.(ANNB)

Annapolis Bancorp, Inc. operates as a bank holding company for BankAnnapolis that provides commercial and retail banking services to small businesses, professional concerns, and individuals in Maryland. It accepts various deposit products, including transaction, savings, money market, individual retirement, saving accounts, checking accounts, and NOW accounts, as well as certificates of deposits and time deposits. The company also offers loan products comprising commercial loans, commercial real estate loans, construction loans, one- to four-family residential mortgage loans, home equity loans, and letters of credit; and consumer loans, such as personal lines of credit, as well as generally fixed rate installment loans secured by new or used automobiles, and new or used boats; and loans secured by deposit accounts. In addition, it provides cash management services, which include account analysis, remote deposit capture, merchant services, and a range of deposit products. T he company operates six branches in Anne Arundel County, Maryland; and one branch located in Kent Island in Queen Anne?s County, Maryland. Annapolis Bancorp, Inc. was founded in 1988 and is headquartered in Annapolis, Maryland.

Hot Financial Companies To Buy For 2014: SeaBright Holdings Inc.(SBX)

SeaBright Holdings, Inc., through its subsidiaries, provides multi-jurisdictional workers? compensation insurance for maritime customers, state act customers, and employers in the construction industry. It offers insurance coverage for prescribed benefits that employers are required to provide to their employees, who may be injured in the course of their employment. The company also involves in general liability insurance business in conjunction with workers? compensation insurance for construction projects written under a controlled insurance program. In addition, it provides medical bill review, utilization review, nurse and physician case management, and related services. SeaBright Holdings, Inc. distributes its products through independent insurance brokers, licensed wholesale insurance brokers, and third-party managing general agents. The company was formerly known as SeaBright Insurance Holdings, Inc. and changed its name to SeaBright Holdings, Inc. in May 2010. Se aBright Holdings, Inc. was founded in 1986 and is headquartered in Seattle, Washington.

Hot Financial Companies To Buy For 2014: KB Financial Group Inc (KB)

KB Financial Group Inc., a financial holding company, provides various banking and related financial services to consumers and corporations in Korea and internationally. It is involved in a range of businesses, including commercial banking, credit cards, asset management, life insurance, capital markets activities, and international banking. The company accepts demand deposits, time deposits, savings deposits, certificates of deposit, foreign currency deposits, and mutual installment deposits, as well as housing subscription time deposits and housing subscription installment savings deposits. It also offers commercial, industrial, construction, mortgages and home equity, credit card, and other consumer loans, as well as working capital and facilities loans. In addition, the company provides debt and equity securities investment and trading, derivatives trading, asset securitization, and investment banking services, as well as trustee and custodian services; international b anking services, including foreign exchange services and derivatives dealing, import and export-related services, offshore lending, syndicated loans, and foreign currency securities investment; trust account management services; and Internet and phone banking services. Further, it offers investment advisory services; real estate trust management; life insurance and wealth management products; and loan collection services and credit research services, as well as invests in venture and startup companies. Additionally, the company engages in computer system development, system maintenance, and information technology outsourcing services. As of December 30, 2011, it had a network of 1,165 domestic branches and offices, and 7 overseas branches. The company was founded in 2008 and is headquartered in Seoul, South Korea.

Gold Spiked, Dollar Fell

There's a multi-year high in demand from the jewelry sector and record demand for gold bars and coins, but slowing demand from central banks balanced it all out, writes MoneyShow's Jim Jubak, also of Jubak's Picks.

Gold spiked higher yesterday on news of more violence in the Middle East and an afternoon tumble in the dollar. Gold for December delivery is up 2.34% to $1364 an ounce. Gold stocks are up even more. Jubak's Picks portfolio members Goldcorp (GG) and Yamana Gold (AUY), for example, were up 5.94% and 5.55%, respectively, as of 2:45 PM New York time.

But the medium-term trends make me cautious here. The second quarter numbers from the World Gold Council, out yesterday, show a multi-year high in demand from the jewelry sector and record demand for gold bars and coins. But big outflows from gold ETFs and slowing demand from central banks more than balanced that out. Gold demand fell 12% in the quarter of a four-year low.

Of course, that's backwards looking. The one piece of data that makes me especially cautious looking forward is that a 6% year-over-year drop in gold supply in the quarter, which helped support gold prices, was almost totally due to a reduction in recycling, as individuals held onto gold jewelry rather than selling it because of low prices. Mine output increased by 4% in the quarter and supply from recycling fell 21% to 308.3 tons, the lowest since the third quarter of 2009. If gold supply from recycling picks up (or doesn't fall as much), that will remove some support for the price of gold, and if it picks up enough, it could lead to another round of production cuts from gold miners.

What's hard to call, of course, is the level of demand from ETFs. In the quarter, John Paulson's Paulson & Co, the biggest investor in the SPDR Gold Shares ETF (GLD), reduced its holdings by 53%. George Soros's Soros Fund Management sold its entire 530,000 shares in the Gold Shares fund, the world's largest gold ETF. Gold-backed ETF holdings fell 404.4 tons in the second quarter, according to Bloomberg.

The good news to that, is that so much selling indicates that investment demand might be bottoming. However, investment demand didn't bottom with the end of the quarter. Gold holdings at the SPDR Gold Shares ETF have fallen another 97.4 tons from the end of the quarter through August 8, according to Bloomberg.

The other uncertainty is central bank buying/selling. In the second quarter, central banks added just 71.1 tons to their reserves, down from 164.5 tons in the second quarter of 2012. Central bank buying totaled 534.6 tons in 2012, but central banks are on a pace to buy just 350 tons in 2013.

My own projection is that volatility in September (and fears of a government shutdown) and the current momentum in gold could take the metal back to the $1400 level of June or the $1460 level of May. But the big danger to this rally is that a tapering off of asset purchases by the Fed in either September or October could lead to a strengthening of the dollar that would stop the rally.

Full disclosure: I don't own shares of any of the companies mentioned in this post in my personal portfolio. When in 2010 I started the mutual fund I manage, Jubak Global Equity Fund, I liquidated all my individual stock holdings and put the money into the fund. The fund may or may not now own positions in any stock mentioned in this post. The fund did own shares of Yamana Gold as of the end of June. For a full list of the stocks in the fund as of the end of June see the fund's portfolio here.

403(b) Plans Are Ripe With Opportunity for Advisors

The public-sector pension crisis could help boost the profile of the only other retirement savings vehicle that governments, schools and public hospitals can rely on to help employees save for retirement: the 403(b) defined contribution plan.

Most in the industry, however, will tell you it’s a challenge to serve the 403(b) market, particularly that slice of plans that are not subject to the Employee Retirement Income Security Act. On the flip side, they’ll also tell you that the market is ripe with potential.

Participation rates in 401(k) plans hover around 70%, while participation rates for 403(b) plans is about 30%, said Chris DeGrassi, executive director of the National Tax Sheltered Accounts Association, a professional association that focuses on the non-ERISA market and small governmental and not-for-profit retirement plans.

“We’ve certainly seen, with the pressure placed on public employees from the pension side, a need to increase both participation rates and contribution rates [in 403(b) plans]. The way we see it, the demand for investment professionals to engage in and assist in this market has never been higher,” he said.

Total 403(b) assets reached a record $750 billion in 2010. Cerulli Associates of Boston predicted that aggregate 403(b) assets would grow steadily to $1.1 trillion by 2016.

The biggest problem with the 403(b) market, insiders say, is that it still isn’t the 401(k) market.

Specifically, the 403(b) market is, by its nature, focused on individuals because it is a voluntary, supplemental savings program, DeGrassi said. 

Plan sponsors will generally give employees access to numerous 403(b) retirement plan providers, but they don’t offer automatic enrollment, auto-escalation or employer matches. Instead, they just manage an employee’s pre-tax contributions into their selected 403(b) retirement plan.

Because it is up to employees to choose their own investments and investment provider and because their employers offer no incentive for them to set additional money aside, advisors pursuing the 403(b) market have to be comfortable working “belly-to-belly” with plan participants, he said. In the 401(k) model, of course, advisors give advice at the plan level rather than on a personal level.

“The challenge for an advisor is really finding ways to work with the employer to get access to participants to provide the education and professional services (they need) to get them to participate,” DeGrassi said.

That’s not only challenge, though. Additionally, advisors in this niche need to determine whether a potential client is covered by ERISA.

According to the Plan Sponsor Council of America’s 2013 403(b) Plan Survey, more than 76.3% of respondent plans were ERISA plans; 16.4% were non-ERISA and 7.3% were unsure of their plan’s ERISA status.

“There has been an attempt to ‘levelize’ the services and the way plans are run between the 401(k) and 403(b) marketplace, but I’m not so sure that levelization has been that effective,” said Lee Topley, managing director of the retirement plan consulting group at Unified Trust Co.

In most scenarios, school systems and hospitals have multiple providers offering 403(b) plans. Participants pick the provider they want their deferrals to go through. At that point, the plan sponsor wipes its hands of the matter. The relationship is between the service provider and the participant, Topley said.

The Department of Labor would like to see 403(b) plan sponsors held more accountable to their retirement plans.

Non-ERISA plans do not have to file a Form 5500 with the Department of Labor. They are not subject to testing, fiduciary or fee disclosure rules, said Sarah Simoneaux, president of Simoneaux & Stroud Consulting Services in Mandeville, La., a retirement services industry consultant who works with both for-profit and non-profit organizations.

Bruce Ashton, a partner in Drinker Biddle’s Employee Benefits & Executive Compensation Practice Group, believes advisors should treat all plans as if they are ERISA plans because it is a “good idea anyway from a good practice standpoint.”

That would mean providing plan sponsors with 408(b)2 fee disclosure notices, assisting them with getting providers and helping them with 404(a)5 participant disclosures.

“Even if those disclosures aren’t required, in some respects it may be easier for an advisor to help a client do that,” Ashton said.

Simoneaux recommends advisors who want to work within the 403(b) space partner with a third-party administrator that knows the market well.

““Fees are higher and there is a lot more work involved with multiple providers and giving financial advice,” she said. “(But) if this is what you really want to do, if this is the market you want to be in and you want to tackle the documentation on the non-ERISA side, work with a TPA record-keeper.”

As any seasoned advisor knows, if the employer is involved in the 403(b) plan, he or should could be dealing with an ERISA plan. If the plan sponsor can administer loans, certify hardship withdrawals, monitor investments or designates a single provider, there’s no question ERISA applies. Colleges fall into this category a lot, Simoneaux said.

Other typical ERISA 403(b) plans include hospitals, nonprofit entities like museums and foundations and private higher-education institutions.

Typical non-ERISA 403(b) plans include K-12 schools, public higher education, governmental 457 plans and churches.

Simoneaux believes that colleges and universities are a good target for advisors wanting to enter the 403(b) marketplace because many haven’t shopped their plans in more than a decade.

“Offer to do an ERISA audit with them,” she suggested.

Tim Maher, senior vice president and national sales manager for Natixis Global Asset Management, works closely with ERISA 403(b) plans, which he said are beginning to look, smell and act like corporate 401(k) plans.

Advisors in both spaces work with plan sponsors to provide education to participants, put plans in place and structure investment committees. They also are getting more creative in the types of investments available to both plans. Alternatives are becoming more popular, so financial advisors are helping plan sponsors put together more custom portfolios.

The bottom line? As many public-sector and nonprofit organizations look to move away from defined benefit pension plans, “there could be significant opportunities in the 403(b) space for advisors because of the sizable pool of assets – if they are willing to put the effort and time commitment to get those rollover dollars into the plan,” Unified Trust’s Topley said.

Also read:

Investment in 403(b) plans jumped in 2012

LIMRA study explores higher education, health care 403(b) plans

Fracking Improved Our National Security More Than the Department of Defense

Photo credit: Flickr/U.S. Army.

According to the U.S. Chamber of Commerce's Institute for 21st Century Energy, the increase in oil and gas production last year from fracking has significantly reduced our national security risks by increasing our own energy security. The index, which follows 37 separate metrics, showed a risk reduction in 26 of those metrics thanks to the boom in unconventional oil and gas production. With Syrian worries driving oil prices higher, securing our own energy is more important than ever. The good news is that, looking ahead, the institute is now projecting that our energy risks will be further reduced in the future as the United States produces more energy.

The Bakken and the Eagle Ford continue to lead the charge toward a more secure future. Those two areas have helped drive U.S. oil production to 7.6 million barrels per day, which is the highest output in 24 years. By producing more oil here at home, we have done what the Department of Defense hasn't been able to do, which is to secure our future sources of energy.

Production soars in the Eagle Ford
As the discoverer of the Eagle Ford Shale in Texas, the nation really does owe EOG Resources (NYSE: EOG  ) a debt of gratitude. This past June, production in the Eagle Ford averaged 621,000 barrels of oil per day, which is 60.2% higher than just last year. Of that total, EOG is producing 173,000 barrels of oil equivalent per day, which makes it the top producer in the play that's helping to secure our nation's energy future.

EOG is of course not alone in its quest. The nation's No. 2 natural gas producer, Chesapeake Energy (NYSE: CHK  ) , has shifted its focus to developing the oil-rich Eagle Ford. This past quarter the company produced an average of 85,000 barrels of oil equivalent per day, which is up a breathtaking 135% over last year. While we shouldn't expect the rate of growth to continue, however, overall oil production will continue to grow as both companies expect to continue drilling at least for the next decade. That will go a long way in continuing to secure our nation's energy future.

Bakken keeps getting bigger
Like the Eagle Ford, the Bakken is one of the biggest reasons America's energy supply is becoming much more secure. Just this past June, the play delivered 757,000 barrels of oil per day, which set a new record for the North Dakota-based oil shale. Here we have companies such as Continental Resources (NYSE: CLR  ) to thank, as the company is the leading producer in the region. It's also leading the exploration of the lesser-known Three Forks formation, which, when combined with the Bakken, is believed to contain 20 billion barrels of recoverable oil, which would almost double the current U.S. oil reserves.

In addition to Continental, there are a number of home-grown oil companies working overtime to turn this national treasure into a leading driver of national security. Two of these companies, Kodiak Oil & Gas (NYSE: KOG  ) and Oasis Petroleum (NYSE: OAS  ) , are almost exclusively focused on developing the oil shale of North Dakota. Kodiak has invested heavily over the past few years, which has enabled the company to grow its production from just 1,260 barrels of oil equivalent per day, or BOE/d, in 2010 to a plan of at least 30,000 BOE/d this year. Oasis has experienced a similar growth trajectory, growing from just 3,300 BOE/d in 2010 to an estimate of at least 31,500 BOE/d by the end of the year. The extra 60,000 BOE/d that these two companies are producing is oil that America no longer needs to import, thereby increasing our nation's energy security.

Final Foolish thoughts
While the nation still has a long way to go until we can declare our independence from foreign oil, it is a future that is growing more real by the day. If it wasn't for the technological advancements of horizontal drilling and hydraulic fracturing, we'd still be worried about our ever-increasing need for foreign oil. Instead, we have become OPEC's worst nightmare.

Given the worries of a Syrian contagion, which is causing the price of oil to spike, America needs to end OPEC's grasp on our economy. We can only do that by producing more of our oil oil. One company is helping to lead that charge, which puts you in the position to profit as America ends OPEC's dominance. In an exclusive, brand-new Motley Fool report, we reveal the company we're calling OPEC's Worst Nightmare. Just click here to uncover the name of this industry-leading stock, and join in the quest for a veritable landslide of profits!

Fed’s Fisher Tempers ‘Taper Tantrum’ Talk

I meant to do that.

That appears to be the attitude of the Fed when contemplating the taper tantrum in the wake of Chairman Ben Bernanke’s awkward comments on June 19 announcing the beginning of the end for the central bank’s quantitative easing.

Richard Fisher, president of the Dallas Federal Reserve, employed his usual folksy metaphors to describe investor behavior immediately following the announcement, claiming it was fully anticipated all along.

Calling investors “feral hogs” and the markets “manic depressive,” Fisher, an outspoken critic of QE and subsequent iterations, said “he doesn’t want to go from Wild Turkey to cold turkey overnight,” an apparent reference to the measured process planned for the unwinding.

The comments, made in an interview Monday with the Financial Times, appear to be part of an effort in the past week to calm markets, which fell significantly in the wake of Bernanke’s comments. Fisher said that although QE will begin to wind down, other forms of Fed stimulus will continue.

It “made sense to socialize the idea that quantitative easing is not a one-way street”, he said, according to FT, and emphasized any such move would be done cautiously.

Fisher, a nonvoting member of the Federal Open Market Committee, said pushback to ending the program would be felt, although he did not mention from whom.

He likened the market reaction to Bernanke’s signal that the bank could begin reducing its monthly bond purchases before the end of this year to the 1992 attack led by investor George Soros on the Bank of England.

“Markets tend to test things,” Fisher told the FT. “We haven’t forgotten what happened to the Bank of England [on Black Wednesday]. I don’t think anyone can break the Fed …But I do believe that big money does organize itself somewhat like feral hogs. If they detect a weakness or a bad scent, they’ll go after it.”

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Check out Taper Tantrum: Markets Recoil, Advisors Scramble on Fed News on AdvisorOne.

7 Things Clients Must Know to Stay Solvent in Retirement: Evensky

Worried about running out of money before you run out of life? Who isn’t? What about income dependent on the vagaries of an increasingly volatile market?

Leave it to Harold Evensky (left) to give it to you straight. The president of Evensky & Katz Wealth Management, professor of personal finance at Texas Tech University and all around industry personality, can quickly boil down the complexity of ensuring sustainable income in retirement.

1. Squaring the curve — The assumption has always been that people grow sicker as they age, and will therefore spend less. No longer; Evensky refers to what’s known as “squaring the curve” where traditional age and health statistics intersect on a graph.

“People are living longer, and are healthier for longer,” Evensky explains. “From personal experience, I just went on a lovely cruise with my wife. I saw a lot of older people, and they had their walkers and whatever, but they were out there, and they were spending.”

2. Returns — Evensky definitely buys into PIMCO’s theory of the “new normal.”

“We are, and will be, in a relatively low-return environment for the foreseeable future,” he notes. “This means taxes and inflation will matter that much more. It’s independent of sequence of return risk. It used to be that returns were high so the tax wasn’t quite as much of a burden. Not anymore.”

3. Withdrawal — Acknowledging sequence of return risk, he says proper withdrawal rates and strategies are “a bit of the luck of the draw. When you begin taking them is increasingly important.”

4. Psychology — Shortcuts in investing, mental accounting and the “misunderstanding of the complexity of risk” are all increasingly problems.

“I had someone come in to see me after the technology bubble collapsed. He said, ‘I was up 80%, now I’m down 60%. I should still be up 20%, yet I’m underwater. How?’ I had to explain to him that the 60% loss was off the increased amount. He was a smart individual, but didn’t realize that.”

5. Interest and dividends — Contrary to conventional wisdom, and many advisor investment philosophies in recent years, Evensky thinks a portfolio of interest- and dividend-paying securities is “extremely dangerous.”

“Let’s assume you’re dependent on a 4% withdrawal rate. In order to get that today, you have to have a heavy concentration in long-duration, low-quality bonds. If interest rates go up, you get more; if they go down, you get less. How do you plan for that? We need consistent sources of income, not sources that fluctuate.”

6. Management of expenses — “We have no control over the markets, so let’s control what we can: expenses and the impact of taxes.”

7. Market timing — The last point is the seduction of trying to time the market, to which Evensky simply concluded, “it makes no sense.”

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Check out Harold Evensky to SEC: Employ the ‘YOU’ Standard in Fiduciary Rule on ThinkAdvisor.

Obama: Decision by Fall on Next Fed Chief

Charles Dharapak/AP WASHINGTON -- President Barack Obama has said he's still considering a range of candidates to be the next chairman of the Federal Reserve and that whoever gets the job will need to focus in the near term on reducing unemployment. Obama said during a White House news conference Friday that former Treasury Secretary Lawrence Summers and current Fed Vice Chairman Janet Yellen are both highly qualified for the job, and that he's also considering others. He said he'll make his decision in the fall. Obama acknowledged that many think Summers has "an inside track" to the job after Obama gave a strong defense of him last week at a closed-door meeting with House Democrats. But Obama said he was simply standing up for Summers because he was "getting slapped around in the press for no reason." "The perception that Mr. Summers might have an inside track simply had to do with a bunch of attacks that I was hearing on Mr. Summers preemptively, which is sort of a standard Washington exercise that I don't like," Obama said.

Summers served as the head of the National Economic Council during Obama's first term and Treasury secretary under President Bill Clinton. Current Fed Chairman Ben Bernanke's current term ends Jan. 31. The president's choice to succeed Bernanke would have to be confirmed by the Senate. In his meeting with House Democrats, Obama had said that former Fed Vice Chairman Don Kohn was also being considered for the job. The administration's search for a successor for Bernanke has been unusually public. And it has stood in stark contrast to the more behind-the-scenes process that previous administrations have used for vetting potential Fed chairmen. A group of liberal Democratic senators has written Obama urging him to pick Yellen and House Democratic Leader Nancy Pelosi has also weighed in on Yellen's behalf. Summers has attracted support from former officials of the Clinton and Obama administrations who have said his crisis-management skills would make him the best choice. Obama said that his main objective is to find someone who strongly supports the Fed's dual mandate of keeping inflation in check while pursuing maximum employment. But he noted that unemployment is the bigger priority right now for the economy. "Right now the challenge is not inflation, the challenge is we've still got too many people out of work," Obama said "There's too much slack in the economy." -.