ACTIONABLE ADVICE FOR FINANCIAL ADVISORS: Newsletters and Commentaries Focused on Investment Strategy

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The DOL’s Fiduciary Rule: What We Can Learn from the U.K.

by Joe Tomlinson

The DOL’s proposed fiduciary rule has led to a furious debate over whether low- and middle-income Americans will be deprived of financial advice. Three years ago the U.K. made similar changes affecting the delivery of financial advice, and those changes were studied in detail. I’ll assess what we can learn from the British studies and give my views on additional steps the U.S. should take to improve financial outcomes.

The Hidden Cost of Zero Interest Rate Policies

by Laurence B. Siegel and Thomas S. Coleman

Zero interest rates are a massive transfer of wealth from investors and savers to governments and other borrowers around the world. We’ll show how big the scale of the transfer is.

Staley Cates on Why Active Management Wins in the Long Term

by Robert Huebscher

Staley Cates is president and chief investment officer of Southeastern Asset Management, manager of the Longleaf funds. In this interview, he says, “the passive movement is not just a big trend. It is a bubble.” He explains why passive investing has made it hard for value investors to outperform.

How Charity Leadership Deepens Client Bonds

by Dan Richards

Many advisors volunteer in their communities, quietly and anonymously as a matter of personal choice. But recent conversations with advisors show that over a period of time, letting clients know about your involvement with the right charity sends a hugely positive message that deepens bonds.

The ‘It’s Not You, It’s Me’ Lesson for Advisors

by Dan Solin

In a classic Seinfeld episode, George attempts to end a relationship by telling his partner, “It’s not you; it’s me.” George thinks he invented that phrase, but the concept of whether to focus on yourself or the other person has been the subject of academic research, and those findings carry an important lesson for advisors.

The ABCs of Impact Investing

by John Appleby

Impact investing is a small but growing segment of the financial landscape. It is coming to the fore as individual investors seek to “do good while doing good.” Groups from wealthy entrepreneurs to the G8, the UN and the Pope are talking about the subject. Here’s what advisors need to know if they want to serve clients who strive for “impact” with their investing.

Career Center

by Various

Find career opportunities for firms that seek to add financial advisors and planners to their staff. Read more to find out how to post opportunities at your firm.

Helping Wholesalers Sell Effectively

by Beverly Flaxington

Wholesalers are supposed to be product pushers. Lately our firm is making us learn skills to build better relationships. How can I push back professionally on this idea? Spending time learning something that isn’t going to help me is a waste.

How to Generate Alpha without Selecting Superior Funds

by Bob Veres

In Part I of my series on active investment management, I described two types of research that attempted to help advisors uncover above-average talent: identifying conditions where you are more likely to find outperformers, and better ways to identify above-average managers. As it turns out, there’s a third possibility. Instead of identifying superior funds, you identify superior combinations of funds – which, of course, includes a fund-selection process, but then takes it one step further.

Do Your Marketing Materials Pass the 10-Second Test?

by Dan Richards

A conversation with a successful advisor highlighted the biggest pothole in developing marketing materials; whether a brochure, a website or a presentation to prospects, focusing on similarities rather than differences will make you fail to stand out.

Recent Commentaries

Better Times are Ahead

by Byron Wien of Blackstone

The best recent period for investing in equities may have been 1982–1999, but I still think reasonable risk-adjusted returns for equities are likely in the years ahead, and that Treasurys and high-quality corporate bonds are less attractive.

The U.S. Starts a Challenging Fiscal Year

by Carl Tannenbaum of Northern Trust

The budget battles that rage at this point on the calendar illustrate the myopia and dysfunction of the American legislative process.

The 10 Most Competitive Countries in the World

by Frank Holmes of U.S. Global Investors

No new countries have entered or exited this exalted list, and there was very little rank-shuffling. For the seventh consecutive year, Switzerland is the most competitive country. For the fifth straight year, Singapore is number two. The U.S. comes in at number three for the second year. And so on.

International Economic Week in Review for Sept. 28-Oct.2; Japan Flashing Yellow, Edition

by Urban Carmel of Hale Stewart

Overall, the tone of news continues to lean negative. China continues to slow. Japan is clearly having problems regaining momentum after last year’s sales tax increase and Canada just missed being in a technical recession. The EU and UK are growing moderately, but not impressively. And it appears even the US is starting to import some of the global weakness.

The Trans-Pacific Free-Trade Charade

by Joseph Stiglitz of Project Syndicate

As negotiators and ministers from the US and 11 other Pacific Rim countries meet in Atlanta in an effort to finalize the details of the sweeping new Trans-Pacific Partnership, some sober analysis is warranted. The biggest regional trade and investment agreement in history is not what it seems.

Postcard from Huallywood

by Sharat Shroff of Matthews Asia

First came Hollywood, then India’s Bollywood. Now, China’s Jiangsu province is hoping Huallywood will be the next film production site to make international waves. As a prime example of the China’s steady migration toward services-led growth, Wuxi studios—developed on the site of a former iron and steel factory—is trying to attract college students and independent artists.

The 80/20 Rule Is Crushing The Economy

by Lance Roberts of Streettalk Live

In business, the 80/20 rule states that 80% of your business will come from 20% of your customers. In an economy that is more than 2/3rds driven by consumption, such an imbalance of the "have" and "have not's" impedes real economic growth.

The Real Burden of Low Interest Rates

by Niels Jensen of Absolute Return Partners

Almost the entire world is concerned about the high levels of debt, should interest rates begin to rise again, but we are not. Don't get us wrong; a meaningful increase in debt service burdens could do substantial damage to a global economy so loaded with debt. We just don't think it is going to happen. Economic growth and inflation are likely to stay comparatively low for many years to come, and so are interest rates, but that raises another question. What damage can very low interest rates for an extended period of time actually be expected to do?

Designing a Dividend Growth Portfolio for a Specific Retirement Yield Objective: Part 1

by Chuck Carnevale of F.A.S.T. Graphs

Managing an investment portfolio is a very personal matter. Consequently, the most important consideration is to design a portfolio that meets your own unique goals, objectives and risk tolerances. Everyone is different, and consequently, every investment portfolio can and should be appropriately different as well. Stated more straightforwardly, I do not believe in cookie-cutter or one-size-fits-all approaches to portfolio design.

Recent dshort Posts

World Markets Weekend Update: A Mixed Bag

It was a mixed bag this week for major world stock markets with four of the eight indexes on our world watch list posting gains and four posting losses. How is 2015 stacking up for our gang of eight? From their respective 2015 highs, rounded to a percent: S&P 500 -8%, SENSEX -12%, FTSE -14%, Nikkei -15%, CAC 40 -15%, DAX -24%, Hang Seng - 24% and Shanghai -41%.

S&P 500 Snapshot: A Rally on the Disappointing Jobs Report

Of all the economic indicators, the monthly employment report probably has the biggest impact investor sentiment. But in recent years that impact has been complicated by monetary policy, and "the bad economic news is good market news" syndrome. Such appears to have been the case today. The S&P 500 initially tanked on the disappointing jobs report, plunging to its -1.57% in the opening minutes. It then reversed directions and rallied to close at its impressive 1.43% intraday high.

Market Remains Overvalued, But Off Its Interim High

Here is a summary of the four market valuation indicators we update on a monthly basis.

  • The Crestmont Research P/E Ratio
  • The cyclical P/E ratio using the trailing 10-year earnings as the divisor
  • The Q Ratio, which is the total price of the market divided by its replacement cost
  • The relationship of the S&P Composite price to a regression trendline

Market Valuation, Inflation and Treasury Yields: Clues from the Past

Our monthly market valuation updates have long had the same conclusion: US stock indexes are significantly overvalued, which suggests cautious expectations on investment returns. In a "normal" market environment -- one with conventional business cycles, Federal Reserve policy, interest rates and inflation -- current valuation levels would be a serious concern.

But these are different times.

The Big Four Economic Indicators: September Nonfarm Employment

Note: This commentary has been updated to include Nonfarm Employment for September. As the adjacent thumbnail of the past year illustrates, Nonfarm Employment remains in its upward trend despite today's disappointing report of only 142K new nonfarm jobs in September and the fact that the previous two months were revised downward. Nevertheless, the uptrend remains in play, if somewhat slower.

The Civilian Labor Force, Unemployment Claims and the Business Cycle

What does the ratio of unemployment claims tell us about where we are in the business cycle and our current recession risk? At present, the ratio for Continued Claims has been trending down. Excluding the 1981 recession, the Initial Claims trough lead time for a recession has ranged from 7 to 22 months with an average of 12 months if we include the 1981 recession and 14 months if we exclude it. Admittedly, the last recession is an extreme example, but the Initial Claims trough preceded its December 2007 onset by a whopping 22 months.

ECRI Weekly Leading Index: "Pursuing the Purple Squirrel"

ECRI's latest weekly data point shows a decline from the previous week, but more interesting is the company's latest publicly available commentary published yesterday: "Pursuing the Purple Squirrel". It features an additional dimension to the weak data in the September Employment report with a striking analysis of the trend in JOLTS Hires minus Openings.