Investing

The new year could bring more economic uncertainty and market volatility, but there are still plenty ways to shield yourself from potential headwinds, advisors say. 
Here are a few of the strategies they are using to steer their clients through the ups and downs.

By most measures, the new year is off to a good start. However, economists and business leaders alike predict there are rougher times ahead for the market and the economy.
Year to date, the S&P 500 and Dow Jones Industrial Average have advanced about 4% and more than 2%, respectively, while the Nasdaq Composite is up 5.9%.

Yet inflation remains a persistent problem. The consumer price index for December showed prices cooled 0.1% from the month before but were still 6.5% higher than a year ago.
“The easing of inflation pressures is evident, but this doesn’t mean the Federal Reserve’s job is done,” said Bankrate.com’s chief financial analyst, Greg McBride. “There is still a long way to go to get to 2% inflation.”
Even as the Fed’s battle with inflation is leading to success, it will come at the price of a hard landing for the economy, according to a survey of chief financial officers conducted by CNBC. Economists have been forecasting a recession for months, and most see it starting in the early part of the year.
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To make the best of the current climate, advisors recommend a few key money moves in the year ahead.

Here are their top four strategies to shield yourself from stock market volatility, rising interest rates and geopolitical risk — not to mention fears of an impending recession.  

1. Pay down high-interest debt

“This is a great time to pay down some of those higher interest loans outstanding,” said David Peters, a financial advisor and certified public accountant at CFO Capital Management in Richmond, Virginia.
Credit card rates, in particular, are now more than 19%, on average — an all-time high. Those annual percentage rates will keep climbing, too, as the Fed continues raising its benchmark rate.
“For so long we’ve been pretty spoiled in the markets,” Peters said. In some cases, it used to make financial sense to tap cheap credit for a larger purchase, rather than withdrawing money from a savings or investment account. Now, “we need to reverse our way of thinking.”
Consider this: “If you have a loan with an interest rate of 6% and you pay the principal down on the loan, it is almost the same as getting a 6% return on your money in the markets,” he said.
If you currently have credit card debt, “grab one of the zero-percent or low-rate balance transfer offers,” McBride advised. Cards offering 15, 18 and even 21 months with no interest on transferred balances are still widely available, he said.

2. Put your cash to work

Once you’ve paid down debt, Peters recommends setting some money aside in a separate savings account for emergency expenses.
“Online savings accounts can be a way to earn money in times when other investments may not be returning well,” he said.
However, although some of the top-yielding online high-yield savings accounts are now paying more than 3.6%, according to DepositAccounts.com, even that won’t keep up with the rising cost of living.
Ted Jenkin, CEO at Atlanta-based Oxygen Financial and a member of CNBC’s Advisor Council, recommends buying short-term, relatively risk-free Treasury bonds and laddering them to ensure you earn the best rates, a strategy that entails holding bonds to the end of their term.
“It’s not a huge return but you are not going to lose your money,” he said.
Another option is to purchase federal I bonds, which are inflation-protected and nearly risk-free assets.
I bonds are currently paying 6.89% annual interest on new purchases through April, down from the 9.62% yearly rate offered from May through October 2022.
The downside is that you can’t redeem I bonds for one year, and you’ll pay the last three months of interest if cashed in before five years.

3. Boost retirement contributions

Once you’ve paid down high-interest credit card debt and set some money aside, “putting more into your retirement accounts right now can be a great move,” Peters said. 
You can defer $22,500 into your 401(k) for 2023, up from the $20,500 limit in 2022. The new provisions in “Secure 2.0” will further expand retirement plan access and open up more opportunities to save going forward, Peters said, including making it easier for employers to make contributions to 401(k) plans on behalf of employees paying down student debt.
Even if you’re balancing contributions with short-term goals, you should still contribute enough to take full advantage of company matches, he added, which is like getting an additional return on your investment.

4. Buy the dip

“Investors willing to take on additional risk might consider ‘buying the dip’ by looking at sectors that took an especially hard it and could now be undervalued,” said certified financial planner Bryan Kuderna, founder of the Kuderna Financial Team in Shrewsbury, New Jersey, and the author of the upcoming book, “What Should I Do with My Money?”
“Tech took it on the chin, Amazon lost half their market cap, if there was too much of a pullback there may be opportunity,” he said.
Kuderna recommends dollar-cost averaging, which helps smooth out price fluctuations in the market. Investing in set intervals over time can also help you avoid emotional investing decisions.
However, a long-term horizon is critical to this type of approach, Kuderna added, which means being prepared to leave that money alone.
“The overall advice I have is don’t watch the market too closely, that’s when people start to get emotional and that’s when mistakes happen.”
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Longevity can have a greater impact on how long retirement money lasts than today’s record high inflation, according to a new report.
Surya Kolluri, head of the TIAA Institute, recommends a three-pronged approach to savings combining Social Security benefits, a guaranteed lifetime income product and investments.
There are several key age benchmarks after 50 to be aware of in retirement planning.

Given today’s ongoing high inflation, many Americans worry they may not have put away enough money for retirement. They fear that sharp increases in food and energy prices and transportation and medical care costs could significantly affect their retirement savings.
Yet there’s another important factor to consider: your life expectancy.

A new report from the TIAA Institute and George Washington University reveals that more than half of American adults don’t know how long people generally tend to live in retirement, which given their possible longevity could have them failing to save enough money to last as long as they themselves do. 

‘Longevity literacy’ needed in retirement planning

Studies have shown financial literacy among women consistently lags that of men, yet the report found the “longevity literacy” of women is greater than men, with 43% of women demonstrating strong longevity knowledge, compared to 32% of men. 
It’s a “striking result,” said George Washington University economist Annamaria Lusardi, director of the school’s Global Financial Literacy Excellence Center. “We might actually need to provide help to women, because they are aware, for example, of the fact that they live long but they might not know about how to deal with their living long.”
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In consequence, greater education about retirement planning will be especially important for women, she said.

On average, American men and women retire in their mid-60s. Yet many of them may not realize that at age 60, on average, men may live another 22 years and women could live 25 years longer, according to the Social Security Administration’s calculations. 
To make your retirement money last, it is important to use a three-pronged approach, said Surya Kolluri, head of the TIAA Institute. “Some combination of Social Security, a guaranteed lifetime income [product], and then investments on top of that” might be a good way to hedge the risk of inflation and rocky financial markets, he said. 

Inflation adjustments up 401(k), IRA contribution limits

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Inflation adjustments for 2023 have also increased the amount of money that you can save in retirement accounts. This year, you can put up to $22,500 in a traditional or Roth 401(k), plus a $7,500 “catch-up” contribution if you’re 50 or older for a total of $30,000.
You can also put up to $6,500 in a traditional or Roth IRA. With a $1,000 catch-up contribution, you could save a total of $7,500 if you’re 50 or older. 

Here are the key ages in retirement planning

As you near retirement, or if you’re already retired, there are key milestones to keep in mind for accumulating and withdrawing the money you’ll need for your later years. Considering you may live into your mid-80s, here are some other important ages to keep in mind:  

At 50, you can add even more money to your retirement accounts.
At age 59½, you can start to make withdrawal money in IRAs and 401(k) plans. If you take it out earlier, you’ll likely pay a 10% tax penalty.
Between 62 and 70, you can claim Social Security benefits — but if you start taking it at 62 you’ll get 30% less than you would at your full retirement age (which varies depending on the year of your birth). On the other hand, you’ll see an 8% annual increase in your benefit for every year after your full retirement age that you wait to claim your benefits, up to age 70.
At age 65, you should apply for Medicare — or you may have to pay a penalty if you’re not covered by another health plan.
And, turning 73 has become a very important birthday. As of Jan. 1, a new law requires you to start making withdrawals — or taking “required minimum distributions” from IRAs and 401(k)s — by April 1 after the year you reach age 73. The age for taking RMDs will increase to 75 in 2033.

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No one knows what will happen with markets in 2023. That uncertainty can feel out of control, but there are things you can control and steps you can take.
Assess where your investment portfolio, liquid cash flow and retirement savings stand.
Consider tax-efficient charitable giving and take investment concerns to a fiduciary financial advisor.

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Before looking forward to 2023, we should pause to reflect on 2022.
The following quote from Jason Zweig of The Wall Street Journal sums up this very difficult year for investors: “Investing isn’t an IQ test; it’s a test of character.” Indeed, the most successful investor is not necessarily the smartest person in the room but the one with the most patience and self-discipline.

Our investing character was certainly tested throughout 2022. It was a dismal year for investing, with both stocks and bonds down — by 19% and 13%, respectively. The result was one of the worst years in history for the traditional balanced portfolio of 60% stocks and 40% bonds, which lost nearly 17% for the year.
Looking forward to 2023, the team here at Francis Financial reviewed several outlooks from major Wall Street firms, including JPMorgan, Goldman Sachs, Barclays and others, to help answer the question of what to expect in the next year.
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As you might expect, there is a wide array of estimates for what markets may look like in 2023, but there seemed to be consensus on a few key items:

With the U.S. Federal Reserve raising rates as aggressively as they have, most expect a minor recession for the country’s economy.
Earnings results for companies are likely to come down more than analysts currently estimate.
Inflation will continue to decline, allowing the Fed to slow and ultimately stop further rate increases around the 5% level.

The current economic uncertainty is leading to substantial variability in market forecasts, with firms estimating stock returns will be anywhere from flat to up 10% by the end of the year. The only agreement is that getting there will be a bumpy ride, with many ups and downs.

However, there is more optimism with the bond markets, with intermediate-term bond yields now above 5%, providing hope that we will see a much stronger 2023 on the bond side.
Rest assured, that outlook is about as solid as your holiday Jell-O salad.
Market forecasts are an interesting exercise in learning about potential future outcomes. As Yogi Berra once said, “It’s tough to make predictions, especially about the future.”

Regardless of how certain the prognosticators sound or how much logic they cite to support their predictions, they will be wrong. Until we build the DeLorean from “Back to the Future,” no one knows what will happen with markets in 2023. That uncertainty can feel out of control, but there are things you can control and steps you can take to make sure you are ready for whatever 2023 may bring.

1. Assess where your portfolio stands

An annual check-in with your financial advisor about your portfolio is a good practice, mainly because our lives change. As we age or as life circumstances evolve, we should reevaluate our risk tolerance. Taking stock of the previous year’s happenings is key. For example, a new child, a new job or a change in retirement plans may necessitate a change in your investment strategy.
It’s also essential to analyze the portfolio from a tax-efficiency perspective. Over the coming months, investors will be reminded how important a tax-efficient investment strategy is for their portfolio.
Investors will start receiving 1099 forms tallying taxes due to the IRS for investment income and capital gains in 2022. Holding your investments in the most tax-appropriate type of account can enhance your savings plans by helping to reduce or even eliminate taxes.
Taxable accounts, such as brokerage accounts, are best for investments that produce less in taxable gains or income. Candidates include tax-managed or index mutual funds and exchange-traded funds. Brokerage accounts are also a good home for municipal bonds.
Tax-advantaged accounts, such as individual retirement accounts and 401(k) plans, are best for investments that produce significant taxable returns. Candidates include actively managed mutual funds and ETFs. Retirement accounts are also a good home for taxable bonds and real estate investment trusts. 

2. Conduct a cash-flow review

Thianchai Sitthikongsak | Moment | Getty Images

Tracking your spending and savings is one of the most important steps to building a sound financial plan. Be sure to review your projected saving and spending targets for 2023. An excellent place to start is by revisiting where your money went in 2022.
Most credit cards will send you a year-end credit card expense report with your total spending for this last year neatly categorized for you. These reports typically arrive in mid-January, but you can often log into your account online to get your report sooner.
Search your credit card spending summary for saving opportunities. Are you being charged for monthly subscriptions you no longer use? Can you uncover other potential money leaks, such as excessive restaurant or take-out charges, taxi or rideshare costs, and impulse and unplanned purchases? Sometimes we spend mindlessly, and over time, this can make a big dent in our wallets.
Once you have plugged any holes in your budget, turn to your emergency fund. Building your emergency fund is the most important investment in keeping your budget on track. The general advice is to have enough saved in this fund that you can pay all expenses for three to six months. A well-cushioned emergency fund is the best defense against unexpected costs that can leave you financially vulnerable.
At my firm, we recommend accumulating six months of expenses, particularly if you have one source of income, income that fluctuates or less job security than is ideal. If your expenditures increased this year, because you took on a larger mortgage or for some other reason, reassess to determine whether you still have an appropriate emergency fund.
The best way to make that assessment is through careful budgeting and monitoring of expenditures. If you are struggling to build that emergency fund, you may need to take a hard look at some of your other discretionary expenses and consider eliminating them until you reach the target fund balance.

3. Make sure you’re saving enough to meet your goals

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Knowing if you are contributing enough to retirement accounts is crucial.  One rule of thumb for a starting point is the 4% withdrawal rule. This formula states that in retirement, you can withdraw up to 4% of your final account balance sustainably. Sticking to this withdrawal rate gives you a high probability of not outliving your money during a 30-year retirement.
For example, if you accumulate $1 million, you can withdraw about $40,000 for your first year of retirement. If the balance is $975,000 on the second year, you can only safely take out $39,000. Financial advisors recommend having extra cash on hand to dip into for those times when your investment portfolio does not grow enough from capital gains, dividends and interest income to make up for the previous year’s distribution, therefore reducing the amount you can take out the year after.
Once you have your financial goals identified, use all the tax-advantaged accounts available to you. Retirement plans, educational savings 529 plans and health savings accounts can help you minimize taxes and efficiently save for the future. Contribution limits increased for all three of these savings vehicles this year, as well.
For 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan, the 2023 contribution limit will increase to $22,500, up from $20,500 for 2022. The catch-up contribution limit for employees ages 50 and over increased to $7,500, up from $6,500. Sometimes companies change or add to their retirement plan investment options, so review those to ensure you are invested in the most solid investment choices available.
While the IRS does not levy federal contribution limits on 529 plans, most parents contribute only up to the annual gift tax exclusion so as not to incur gift taxes. The annual gift tax exemption for 2023 rose to $17,000, up from $16,000 in 2022.
Know that friends and family members can also get in on the action by contributing to your kids’ 529 plans. Even better, these contributions do not eat into your annual gift tax exclusion or ability to fund the 529 educational plan.

Savvy college savers also have the option to super-fund a 529 plan. Super-funding lets you invest a lump sum contribution equal to five times the annual gift tax exclusion. This contribution is treated as if it occurs over a five-year period for gift tax purposes.
If parents are flush with cash in 2023 and want to make significant headway saving for college, each parent can contribute $85,000 (5 x $17,000) per child. If both parents use their super-funding option, they can double the contribution to $170,000 per child in 2023.
If you have a high-deductible insurance plan, HSAs allow you to save pretax dollars for medical care now and in retirement. The HSA contribution limits for 2023 rose to $3,850 for an individual and $7,750 for a family, up from the 2022 limits of $3,650 and $7,300, respectively. Those 55 and older can contribute an additional $1,000 as a catch-up contribution, as well.
One of the easiest ways to increase your retirement, education or HSA contributions is when you receive a raise. Rather than adjusting to spending the extra income, boost your contributions to increase your savings painlessly.
According to Willis Towers Watson, the average U.S. pay increase is projected to hit 4.6% in 2023. Employers are paying more due to high inflation and tight labor markets, which gives you an effortless opportunity to bump up your savings.

4. Consider charitable giving

Once you have met your savings goals, you may want to give to charitable organizations. Giving to charities should also be given attention to ensure you have a thoughtful plan of how, when and what to give. After all, everyone wins if you can maximize those gifts simply by being tax-efficient.
Instead of writing a check to a charity, look into donating highly appreciated stocks directly to the charitable organization. Alternatively, you can set up a donor-advised fund, which will allow you to donate stocks, bonds and cash to an account that can be invested and grow over time.
An added benefit is that you will receive an immediate tax deduction for any money added to the account without the pressure to immediately give all the money away. You can recommend grants from the DAF over time, and donating is extremely easy.

5. Share other concerns with an advisor

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What other concerns do you have? Whether it’s concerns about inflation, high-interest rates, recession fears or something more personal, it never hurts to share those with your financial advisor.
The good thing about a test of our financial character is that we can always learn from it and improve. We can become better investors, which will positively impact our portfolios regardless of market conditions.
Successful investing does require strong character, including patience with the markets, self-discipline in attention to your portfolio and sound judgment. Know that you do not have to do this alone and your financial advisor is there to help.
If you do not currently have a financial expert on your team, you can find a fee-only, fiduciary financial advisor that perfectly meets your needs at www.NAPFA.org.

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Nearly 15.9 million people have signed up for health coverage through the exchange during open enrollment, which started Nov. 1, according to the Centers for Medicare & Medicaid Services.
Most people who get health insurance this way qualify for tax credits that reduce the cost of premiums.
Open enrollment for the federal exchange ends Jan. 15, although if your state has its own marketplace, it may have a later deadline.

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If you don’t have health insurance for 2023, you may still be able to get it through the public marketplace.
Open enrollment for the federal health-care exchange ends Sunday, with coverage taking effect Feb. 1. If your state operates its own exchange, you may have more time.

Most marketplace enrollees — 13 million of 14.5 million in 2022 — qualify for federal subsidies (technically tax credits) to help pay premiums. Some people may also be eligible for help with cost sharing, such as deductibles and copays on certain plans, depending on their income.
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So far, nearly 15.9 million people have signed up through the exchange during this open enrollment, which started Nov. 1. Four out of 5 customers can find 2023 plans for $10 or less per month after accounting for those tax credits, according to the Centers for Medicare & Medicaid Services.
After the sign-up window closes, you’d generally need to experience a qualifying life event — i.e., birth of a child or marriage — to be given a special enrollment period.
For the most part, people who get insurance through the federal (or their state’s) exchange are self-employed or don’t have access to workplace insurance, or they don’t qualify for Medicare or Medicaid.

The subsidies are still more generous than before the pandemic. Temporarily expanded subsidies that were put in place for 2021 and 2022 were extended through 2025 in the Inflation Reduction Act, which became law in August.
This means there is no income cap to qualify for subsidies, and the amount anyone pays for premiums is limited to 8.5% of their income as calculated by the exchange. Before the changes, the aid was generally only available to households with income from 100% to 400% of the federal poverty level.
The marketplace subsidies that you’re eligible for are based on factors that include income, age and the second-lowest-cost “silver” plan in your geographic area (which may or may not be the plan you enroll in).

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While some of the state programs are voluntary, others require companies to either have their own 401(k) plan or facilitate automatically enrolling employees in a Roth IRA through the state’s option.
Of these so-called auto-IRA programs that are up and running, workers have saved more than $630 million.
Some employers are choosing to offer a 401(k) plan instead of participating in their state’s program.

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Whether you have access to a retirement plan through work increasingly depends, at least partly, on where you live.
Within the last decade, 16 state legislatures have adopted retirement-savings programs targeting workers whose employers don’t offer a 401(k) plan or similar option. Some programs are up and running, while others are in the planning stages. 

Some also are voluntary for businesses to participate in. But most require companies to either offer their own 401(k) or facilitate automatically enrolling their workers — who can opt out — in individual retirement accounts through the state’s so-called auto-IRA program.
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“On average, we’ve seen one to two new state programs enacted each year and expect that trend to continue in 2023,” said Angela Antonelli, executive director of Georgetown University’s Center for Retirement Initiatives.
“We should see program assets soon exceed $1 billion, and more than 1 million saver accounts soon in 2023, and then more rapidly continue to grow as other states open,” Antonelli said.

Here’s what’s in the pipeline

Last year, Maryland and Connecticut launched their auto-IRA programs, joining Oregon, California and Illinois. Colorado and Virginia are expected to do so this year. Others — including Delaware, New Jersey and New York — are still in the planning phases.

Overall, 46 states have taken action since 2012 to either implement a program for uncovered workers, consider legislation to launch one or study their options, according to Antonelli’s organization. 

Although there are some differences in the programs, they generally involve auto-enrolling workers in a Roth IRA through a payroll deduction starting around 3% or 5%, unless the worker opts out (about 28% to 30% do so, Antonelli said). There is no cost to employers, and the accounts are managed by an investment company.
Contributions to Roth accounts are not tax-deductible, as they are with 401(k) plans or similar workplace options. Traditional IRAs, whose contributions may be tax deductible, are an alternative in some states, depending on the specifics of the program.
Among the current auto-IRA programs, workers have amassed more than $630 million among 610,000 accounts through 138,000 employers, according to the center.

About 57 million lack access to a workplace plan

Of course, there’s still a long way to go to reach all of the estimated 57 million workers who lack access to an employer-based retirement account.
While you can set up an IRA outside of employment, people are 15 times more likely to save if they can do so through a workplace plan, according to AARP.
Large companies are more likely to offer 401(k) plans. Among employers with 500 or more employees, 90% offer a plan, according to the U.S. Bureau of Labor Statistics. That compares with 56% at firms with under 100 workers.

The auto-IRA programs address that disparity: All but the smallest firms — say, under 10 workers or those that don’t use an automated payroll system — face the mandate to participate or offer their own plan.

Some companies choose 401(k) over the state program

It appears some companies are choosing a 401(k) instead: In the one year after the first three auto-IRA programs launched — Oregon (2017), Illinois (2018) and California (2019) — there was a 35% higher growth rate among new 401(k) plans at private businesses in those states versus other states, according to recent research from Pew Charitable Trusts.
“We’ve seen a growth of new 401(k) plans in those states that have adopted auto-IRAs,” said John Scott, director of Pew’s retirement savings project. “A lot of employers are saying they’d rather have a 401(k), so in a lot of ways I think the state programs are nudging employers toward offering 401(k) plans.”

Federal rules encourage businesses to offer 401(k)s

Changes at the federal level, enacted as part of the 2019 Secure Act, also are intended to help small businesses offer 401(k) plans. Instead of sponsoring their own plan and taking on the administrative and fiduciary responsibilities that go with that, they can join a so-called pooled employer plan with other businesses — a sort of shared 401(k).
Legislation known as Secure 2.0, which was enacted last month, includes provisions to further enhance the appeal of a pooled plan.
“The idea is to try to fill in the [access] gaps as much as possible,” Scott said.

While Congress has appeared loath thus far to require companies to offer a 401(k), lawmakers did include a mandate in Secure 2.0: 401(k) plans will have to automatically enroll their employees. However, it excludes existing plans, businesses with 10 or fewer workers and companies less than three years old.

Limitations to the state programs

There are limitations to the state programs. For example, they do not provide a matching contribution as many 401(k) plans do.
Contribution limits also are lower than in 401(k) plans. You can put up to $6,500 in a Roth IRA in 2023, although higher earners are limited in what they can contribute, if at all. Also, anyone age 50 or older is allowed an additional $1,000 “catch-up” contribution.

For 401(k) plans, the contribution limit is $22,500 in 2023, with the 50-and-over crowd allowed an extra $7,500.
However, Roth IRAs — unlike traditional IRAs or 401(k) plans — also come with no penalty if you withdraw your contributions before age 59½. To withdraw earnings early, however, there could be a tax and/or penalty.
The programs also are partly borne out of necessity. Essentially, states have recognized that doing nothing means risking increased pressure on state-funded social services for retirees who are struggling financially.
“States took the lead to begin to close the access gap,” Antonelli said. “The cost of doing nothing is too great, with significant multibillion dollars in estimated budget and fiscal impacts for many states over the next 20 years due to an aging population that will have little or nothing saved for retirement.”

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The logo of Alphabet Inc’s Google outside the company’s office in Beijing, China, August 8, 2018.
Thomas Peter | Reuters

Last week, December’s consumer price index reading showed that prices are cooling.
The index dropped 0.1% on a monthly basis, but the metric gained 6.5% from the prior year. Investors seemed to appreciate the news, as the three major indexes closed higher on Friday.

Nevertheless, investing in this uncertain environment can be tricky.
To help the process, here are five stocks chosen by Wall Street’s top pros, according to TipRanks, a platform that ranks analysts based on their track records. 

Alphabet

Google-parent Alphabet (GOOGL) is a frontrunner in every major trend in technology, including the growth of mobile engagement, online activities, digital advertising and cloud computing. Additionally, its focus on artificial intelligence is driving the development of better and more functional products.
Tigress Financial Partners analyst Ivan Feinseth recently reiterated a buy rating on the stock. His bullishness is attributed to robust trends in cloud and search, which “continues to highlight the resiliency of its core business lines.” (See Alphabet Blogger Opinions & Sentiment on TipRanks)
AI-focused investments and efforts to achieve cost and operating efficiencies should continue to drive Alphabet’s growth. Feinseth said that any weakness in the near term is a great buying opportunity.

The analyst is also upbeat about Alphabet’s financial health. “GOOGL’s strong balance sheet and cash flow enable the ongoing funding of key growth initiatives, strategic acquisitions, and the further enhancement of shareholder returns through ongoing share repurchases,” said Feinseth, who is ranked No. 229 among more than 8,000 analysts on TipRanks.
The analyst’s ratings have been profitable 60% of the time and each rating has generated average returns of 11.1%.

Hims & Hers

Another stock that Feinseth has recently reiterated as a buy is the multi-specialty telehealth company, Hims & Hers (HIMS). The analyst also raised his 12-month price target on the stock from $11 to $12.
Feinseth is confident in HIMS’s strong brand equity and customer loyalty, which he expects will continue to drive business performance. Moreover, new product innovations are supporting the company’s highly scalable business model, and they are expected to boost this year’s profits. (See Hims & Hers Health Hedge Fund Trading Activity on TipRanks)
The massive health-care market is always evolving and requires strong players with flexible business models to serve the growing demand. The analyst thinks that HIMS is well positioned in this area to be one of the top beneficiaries.
“HIMS’s scalable business model, expanding services, and rapidly growing customer base will drive significant revenue growth. Its asset-light business model of connecting patients to service providers and providing access to high-quality branded healthcare products will eventually drive a significant Return on Capital (ROC), grow Economic Profit, and increase shareholder value creation,” said Feinseth.

OrthoPediatrics Corp.

As the name suggests, OrthoPediatrics (KIDS) deals in the design, manufacture, and commercialization of products that are used in the treatment of orthopedic conditions in children. The company operates in more than 35 countries worldwide.
The pediatric orthopedic market is a niche market that is relatively underserved, which has worked to the company’s advantage. OrthoPediatrics has dominance in this market, giving it a competitive edge in the medical equipment industry. BTIG analyst Ryan Zimmerman notes that the company stands to benefit from this space as larger players have mostly overlooked the opportunity. (See OrthoPediatrics Financial Statements on TipRanks)
Last week, Zimmerman reiterated his buy rating and $62 price target on KIDS stock. In addition to the market opportunity, the analyst said that “with a leading brand among pediatric orthopedic surgeons and a concentrated customer base that performs the majority of cases at a limited number of hospitals, the model is scalable and defendable.”
Zimmerman has the 660th ranking among more than 8,000 analysts tracked on TipRanks. Moreover, 47% of his ratings have been successful, generating 9% average returns per rating.

Intuitive Surgical

Medical technology company Intuitive Surgical (ISRG) is a pioneer in robotic-assisted, minimally invasive surgery. The company is also one of Zimmerman’s favorite stocks for the year.
Recently, Intuitive Surgical announced preliminary 4Q22 results and growth guidance for procedures in FY23, which were as Zimmerman expected. Following the results, the analyst reiterated his bullish stance on the company with a buy rating and $316 price target. (See Intuitive Surgical Stock Investors on TipRanks)
“There continue to be headwinds entering FY23, but we think ISRG is poised to continue to see improving market dynamics coupled with the potential for the launch of a next-generation system. We would be buyers on today’s weakness,” said Zimmerman, justifying his bullishness.
The analyst is bullish on the company’s long-term growth potential in the area of robotic surgery, and sees ISRG as a “clear leader in the space.” Zimmerman said that the pandemic has increased the importance of computer-aided surgery, thanks to accurate clinical outcomes. This is expected to drive the adoption of Intuitive Surgical’s products over time.

The Chefs’ Warehouse

Another BTIG analyst, Peter Saleh, who has the 491st ranking in the TipRanks database, has recently reiterated his bullish stance on food distributor Chef’s Warehouse (CHEF). The company is a premier distributor of food to high-end restaurants and other expensive establishments. 
Saleh sees several upsides to share growth thanks to its “compelling business model as a niche foodservice distributor, more upscale and differentiated customer base, and unfolding sales recovery in key markets.” (See The Chefs’ Warehouse Stock Chart on TipRanks)
The analyst is upbeat about the reopening of markets in key regions and gradual recovery in serviceable areas like hospitality. These upsides are expected to drive sales this year. Saleh said that these upsides, combined with CHEF’s long-term opportunity to enhance market share, underpin his bullish stance on the company.
The analyst gave a “Top Pick” designation to CHEF stock, with a buy rating and $48 price target. “While the capital structure has changed and the technical overhang from the recent convertible issuance seems to remain, we view shares as simply too cheap given fundamentals,” said Saleh.
The analyst has delivered profitable ratings 61% of the time, and each of his ratings has generated returns of 10.9% on average.

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A masked family walks past Cinderella Castle in the Magic Kingdom, at Walt Disney World in Lake Buena Vista, Fla.
Orlando Sentinel | Tribune News Service | Getty Images

Activist investor Nelson Peltz plans to mount a proxy fight for a seat on Disney’s board.
Disney offered Peltz, founding partner of Trian Fund Management, a role as a board observer and asked him to sign a standstill agreement, which Peltz declined. Here are our thoughts on the situation.

Offer of a board observer position

Sometimes a board observer position can be beneficial, particularly for investors who do not have a lot of board experience and are less likely to be a regular contributor to board discussions. But offering Peltz a position as a board observer is like saying to Whitney Houston, “You can join the band, but you are not allowed to sing.” There is no way that Disney thought for a second that Peltz would accept this offer, and there is no way he should have accepted it.

Why is this happening?

It is curious as to why Peltz started this proxy fight in the first place and why Disney is resisting it. Peltz acquired his position when Bob Chapek was CEO and likely had a plan to replace him with someone Peltz had already identified. That would have been a great activist plan, but it went awry a week later when Disney announced that it had replaced him with former CEO Bob Iger. Knowing Trian’s history and process, the firm had probably been working on that plan for many months and was waiting for the perfect time to build its position. It is unfortunate that all of Trian’s hard work developing its plan somewhat went to naught, but at that time the firm should have regrouped and developed a different approach taking into account the new circumstances. That plan should not have included opposition to Iger. While Trian says it is not opposing Iger as CEO now, the firm initially opposed him and that made it very hard for the board to agree to a settlement for a board seat for Peltz. Having said that, a strong board with a strong CEO – who is admittedly a short-term CEO – should not have a problem with an experienced shareholder in the room who might have an unpopular opinion. In fact, the board should welcome it.

Trian’s claims

Trian put out a presentation making its case. In proxy fight presentations, each side uses the facts and data to paint a picture that benefits them and often those claims do not withstand scrutiny. For example, Trian takes issue with Disney’s total shareholder return under Iger: 270% versus 330% for the S&P 500 over the same time. I am not sure how that compares to the industry, but I expect if the industry returns were more favorable to Trian, they would have used those. As the British economist Ronald Coase had said: “If you torture the data long enough, it will confess to anything.” In this case, we can get it to say that Bob Iger was a bad CEO for Disney. Trian also takes issue with Iger’s decision to acquire Fox, and he should – it was a terrible decision in retrospect. But he should also include in that analysis, Iger’s decisions to acquire Pixar, Marvel and Lucasfilm, which have grossed Disney more than $33.8 billion at the global box office, and billions more in merchandise and theme park extensions.

Nelson Peltz as a director

All this criticism of proxy fight tactics and strategy aside, and regardless of how we torture the data of Peltz’s record as a director, of course he should be on the board of Disney. He is a large shareholder with a strong track record of creating value through operational, strategic and capital allocation decisions. No, Peltz is not going to be the most valuable director when it comes to deciding who should star in the next blockbuster Disney movie or which rides should be built at the entertainment parks – the board relies on management for those insights. But he will be the most prepared and valuable board member when it comes to doing the financial analysis on the various strategic and capital allocation opportunities available to Disney and advising the board on which decisions would be best for shareholders. Peltz also has proven to be a valuable director in helping management teams cut operating costs and improve margins, something Disney could use. And if his past is any indication, at the end of his term he will probably be good friends with Bob Iger.

Chance of winning

Unfortunately, I think the deck is stacked against Peltz here. It is a herculean effort to get large institutional investors to vote against the board of an iconic company like Disney. That task becomes even harder when the company has just removed its CEO and replaced him with a respected prior CEO and replaced its chairperson. Adding to that, Disney recently settled with another top-tier activist, Third Point, which had a lot of the same suggestions Trian is making. I believe that Institutional Shareholder Services and large institutional shareholders are going to want to give this new team at least a year to work on their plan before supporting more change at the company. And I do not think the universal proxy is going to make that much of a difference in a proxy fight for one director on a unitary board. However, having said that, while I do not own any Disney shares in my fund, my 10 year old and 12 year old have a small amount of shares and when their ballots come in the mail, we will be voting for Nelson.    
Ken Squire is the founder and president of 13D Monitor, an institutional research service on shareholder activism, and he is the founder and portfolio manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist 13D investments. Squire is also the creator of the AESG™ investment category, an activist investment style focused on improving ESG practices of portfolio companies. 

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The founder of a college planning platform allegedly lied to Chase to convince the bank to acquire it.
Consumers who used the platform may have also been deceived.
Before JPMorgan acquired the startup in 2021, lawmakers and a consumer watchdog expressed concerns over Frank’s marketing claims.

The JP Morgan Chase & Co. headquarters, The JP Morgan Chase Tower in Park Avenue, Midtown, Manhattan, New York.
Tim Clayton – Corbis | Corbis Sport | Getty Images

Earlier this week, JPMorgan Chase shut down college financial aid platform, Frank, which it acquired in September 2021 for $175 million, alleging it was misled about the scale of the startup.
Consumers who used the platform may have also been deceived.

related investing news

According to JPMorgan, Frank founder Charlie Javice told the bank that over 4 million students had signed up with the company, which promised to ease the student loan and financial aid application process. But when the bank sent out marketing emails to a batch of 400,000 Frank customers, around 70% of the messages bounced back, the bank said in a lawsuit filed last month in federal court.
Earlier, JPMorgan spokesman Pablo Rodriguez referred a CNBC reporter to its lawsuit against Javice, saying that “any dispute will be resolved through the legal process.” Javice’s lawyer, Alex Spiro, did not respond to an email requesting comment.
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‘If it’s too good to be true, it probably is’

Before JPMorgan acquired the startup in 2021, lawmakers and a consumer watchdog expressed concerns over Frank’s marketing claims.
Bipartisan members of Congress wrote a letter to the Federal Trade Commission in July 2020, saying that Frank was “creating false hope and confusion for students” by advertising an application for pandemic-era relief funds, including the newly available emergency grants to students.

“These funds are distributed by and at discretion of individual institutions and, thus, it is impossible to provide a legitimate, uniform application for this funding,” the lawmakers wrote, adding they suspected the company of exploiting students’ data for profit.

In response, the FTC sent a warning letter to Frank, pointing out a number of claims on its website could be “unlawfully misleading consumers.” For example, it said consumers could obtain a cash advance of up to $5,000 on their student loans without being charged any interest or fees, although Frank charged a fee of $19.90 a month.
Besides the problems flagged by government officials, higher education expert Mark Kantrowitz said he noticed other questionable claims made by Frank. At one point, the company said it could complete people’s Free Application for Federal Student Aid, or FAFSA, in just four minutes.
According to the U.S. Department of Education, he noted, it takes about an hour for new applicants to complete the form, which is the main way students request financial aid to help them pay for college.
“If it’s too good to be true, it probably is,” Kantrowitz said.

Student loan, financial aid help is available for free

There are plenty of free resources families can turn to for help with financial aid, said Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit.
“The simplest thing to keep in mind is that nobody should ever have to pay for student loan or financial aid help,” Mayotte said. “Doing so will never get you access to a program that you wouldn’t normally be eligible for.”
The best place to start looking for that aid is at the Department of Education’s site, studentaid.gov, Mayotte said.
In addition, the nonprofit mappingyourfuture.org and TISLA’s freestudentloanadvice.org also don’t charge for comprehensive financial aid advice, she said.

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