More on Related Themes
2015-10-09 00:00:00 Investing versus Flipping by Chris Brightman of Research Affiliates
Newport Beach may be known as home to PIMCO (and, of course, Research Affiliates). Locally, however, the business of Newport Beach is real estate finance. Many of my local friends have made a bundle in recent years flipping houses in Orange County (the OC). I have also purchased some houses over recent years, but as an investment rather than as a flip. In this article, I explain the difference between investing and speculating by sharing my personal experience investing in residential real estate.
2015-10-07 00:00:00 On My Radar: Defaults Will Breach the Historical High Next Year – The Fed is the “Wild Card” by Steve Blumenthal of CMG Capital Management Group
“The Fed is the “wild card” that has the power to determine how quickly the current credit cycle ends.” – Ed Altman
2015-10-06 00:00:00 Equity Outlook Fourth Quarter 2015 by Neuberger Berman Asset Allocation Committee of Neuberger Berman
The Committee upgraded our view on U.S. large cap equities following the recent correction, and maintained a slightly overweight view on European equities. Our view on MLPs has also improved following a challenging year.
2015-10-05 00:00:00 The Looming Risk in the Bond Market by Robert Huebscher (Article)
Lack of bond-market liquidity has been the focus of recent reporting in the financial media. But one of the first to warn about that danger was Michael Aronstein, who said last week that the risks are clearer than ever. Mutual fund investors face the greatest peril.
2015-10-05 00:00:00 Does Wells Fargo Add Value for Investors? by Larry Swedroe (Article)
Assets in actively managed mutual funds have been a consistent source of revenue growth for Wall Street banks. But would investors have been better off in passively managed funds? I’ll answer that question for Wells Fargo and then for the group consisting of the four largest banks.
2015-10-02 00:00:00 Master Limited Partnerships: Where To Next? by Investment Strategy Group of Neuberger Berman
Master Limited Partnerships (MLPs) have seen sharp declines this year, underperforming not only broad equity markets but also other income-producing assets such as utility stocks and real estate investment trusts.
2015-10-02 00:00:00 Market Valuation, Inflation and Treasury Yields: Clues from the Past by Doug Short (Article)
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.
2015-10-02 00:00:00 Crestmont Market Valuation Update by Doug Short (Article)
Quick take: Based on the September S&P 500 average of daily closes, the Crestmont P/E is 80% above its arithmetic mean and at the 96th percentile of this fourteen-plus-decade monthly metric.
2015-10-01 00:00:00 Recent Volatility Signals a Market in Transition by Chuck Royce, Francis Gannon of The Royce Funds
CEO Chuck Royce and Co-CIO Francis Gannon talk about why they believe the decline for equities in 3Q15 is part of the market transitioning back to more historically typical performance patterns, why a rate hike could be positive for small-caps and stocks as a whole, how history reveals the importance of discipline, the necessity of diversification within the small-cap asset class, and more.
2015-09-30 00:00:00 Liquid Alternatives: Considerations for Portfolio Implementation by Justin Blesy, Ashish Tiwari of PIMCO
Since the financial crisis, investors have poured nearly half a trillion dollars into liquid alternative strategies – typically mutual funds and ETFs that deploy non-traditional strategies once reserved for large institutional investors.i These vehicles offer the potential for diversification, downside risk mitigation and attractive risk-adjusted returns with the transparency and daily liquidity many investors desire. Liquid alternatives have been a democratizing force for investors, and we believe today’s market environment arguably has only made them more attractive.
2015-09-30 00:00:00 Choose Wisely: Six Tips for Selecting Alternative Managers by Marc Gamsin, Greg Outcalt of AllianceBernstein
Alternative investments have delivered over the long term, but individual strategies can be as different as the day is long. We have some ideas on how to cut through the clutter.
2015-09-28 00:00:00 Equities May Remain Trendless Until More Clarity Emerges by Robert Doll of Nuveen Asset Management
Sentiment was negative for most of last week, as investors focused on continued uncertainty over Federal Reserve policy, slowing growth in China and emerging markets and ongoing weakness in commodities. Stock prices bounced on Friday following comments from Fed Chair Janet Yellen that a rate increase was looking more likely in 2015. Nevertheless, equities finished in negative territory, with the S&P 500 Index falling 1.4%. The health care, materials and industrials sectors came under pressure, while utilities, consumer staples and financials finished higher.
2015-09-26 00:00:00 Balloons in Search of Needles by John Mauldin of Mauldin Economics
It would be hard to miss an analogy to the stock market. Everything’s peaceful and calm, you’re drinking some fabulous wine, eating some fantastic fresh game and fish, looking at all the beautiful animals as you drift easily with the current. Anybody can steer the boat in a bull market. Until the rapids hit and the bottom falls out.
2015-09-25 00:00:00 Goals-Based Asset Allocation in an Era of Financial Repression by Thomas Shively of Eaton Vance
Goals-based asset allocation seeks to align our total portfolio, including financial and nonfinancial assets, with our personal goals and our human way of thinking about risk.
2015-09-25 00:00:00 Mutually Inclusive by Fred Ingham, Ian Haas, of Neuberger Berman
A quiet revolution is happening in hedge funds. Investors continue to allocate to the asset class, but the way they are allocating is changing, while its investor base is growing broader and becoming more inclusive.
2015-09-24 00:00:00 One Year, Three Lessons by David Katz of Larch Lane Advisors
As the category of liquid alts funds has exploded this year with numerous launches, there has been a healthy dose of skepticism about the products and the true ability to perform well in down markets. The following article from David Katz, who is President and COO of Larch Lane Advisors LLC, which is a leader in early stage hedge fund investing. The firm formed a joint venture with Rothschild Asset Management to manage the Rothschild Larch Lane Alternatives Fund.
2015-09-23 00:00:00 Logical Song: What to Make of Record Buybacks by Liz Ann Sonders of Charles Schwab
A common question I’ve been getting at client events lately is about stock buybacks and the effect they’re having on earnings-per-share (EPS); as well as what they say about the economy overall and investor/business psychology.
2015-09-22 00:00:00 On My Radar: “Dammit Janet” by Steve Blumenthal of CMG Capital Management Group
Whatever you can do, or dream you can… begin it; boldness has genius, power and magic in it.” – Johann Wolfgang von Goethe
2015-09-21 00:00:00 When an Easy Fed Doesn't Help Stocks (and When It Does) by John Hussman of Hussman Funds
Investors who wonder why the stock market failed to advance on the Fed’s decision to leave interest rates unchanged would do well to understand that the market is following a script that has played out repeatedly across a century of market history. The short explanation is straightforward. When investors are risk-seeking (which we infer from the behavior of market internals), Fed easing tends to be very favorable for the stock market, because risk-free, low-interest liquidity is a hot potato to risk-seeking speculators.
2015-09-18 00:00:00 The China Syndrome: Lessons from the A-Shares Bubble by Jason Hsu of Research Affiliates
The rapid rise and sharp decline of the A-shares market represents a massive redistribution of wealth, especially painful to uninformed investors who bought hot stocks near the peak. What should the Chinese government do now?
2015-09-18 00:00:00 Municipal High Yield: Do Outflows Indicate Increased Opportunity? by James Iselin, S. Blake Miller of Neuberger Berman
It may seem counterintuitive, but recent investment outflows may have contributed to return potential within the municipal high yield marketplace.
2015-09-16 00:00:00 Stock Market Indicator Alert by Jerry Wagner of Flexible Plan Investments
On Friday our Classic strategy’s timing signal switched to a sell. This is the first time in two years that both its high risk and timing components have aligned to create a sell signal.
2015-09-15 00:00:00 Weighing the Week Ahead: To Hike, or not to Hike? by Jeff Miller of NewArc Investments, Inc.
After many years of standing pat on interest rates, there is finally a genuine chance of a shift in Fed policy. The punditry will be asking: To hike, or not to hike?
2015-09-14 00:00:00 Investing for Income: Meeting the Challenges of a Low Yield Environment by Paul Reisz, Tina Adatia, Tanya Sanwal of PIMCO
For many investors, generating a high and sustainable income stream is challenging in the current secular landscape, which PIMCO calls The New Neutral. Over the next three to five years, we expect to see global economies converging to modest trend growth rates as central banks are constrained to set policy rates at levels well below those that prevailed before the financial crisis.
2015-09-10 00:00:00 Uncertainty = Opportunity® by Richard Bernstein of Richard Bernstein Advisors
While market volatility is currently making front-page headlines in the media, we argue that investors must look past the noise and objectively focus on the fundamentals. Before you decide on a drastic asset allocation shift, learn what opportunities we see in these uncertain markets.
2015-09-09 00:00:00 Dividend & Income Builder Celebrates 3-Year with 5 Stars by (Article)
Ben Lofthouse, Co-Portfolio Manager of the Dividend & Income Builder Fund, provides an update on the Fund’s performance and positioning and notes its recent 5-star Morningstar rating. Ben comments that the biggest driver of the Fund’s performance has been stock selection; they have seen improving economic growth from a low base in the US, UK and Europe. Ben notes they’ve seen good dividend growth; the team continues to focus on dividend growth and cash flow generation. The team believes they are well-positioned for medium term capital growth and importantly, income growth.
2015-09-09 00:00:00 Newsletter - September 2015 by Harold Evensky, of Evensky & Katz / Foldes Financial Wealth Management
Harold Evensky's quarterly letter to his readers.
2015-09-08 00:00:00 Making Sense of Market Volatility by Sponsored Content from Invesco (Article)
• On Aug. 21, the Dow Jones Industrial Average entered a correction and reminded investors what volatility looks like. • Several Invesco senior investment leaders discuss their views of market volatility. • They share how it affects, or doesn’t affect, the opportunities they see.
2015-09-08 00:00:00 ETFs: “Like Handing an Arsonist a Match” by Mark Oelschlager of Oak Associates
The popularity of ETFs has grown among market participants who, in the aftermath of the financial crisis, want to be able to reduce market exposure or shift between sectors when they sense danger/opportunity. The recent correction has brought to light the role of ETFs in the market, and the volume statistics are mind-boggling. Innovation is generally good, but like many things in life, there is a downside, and we would argue the downside to using ETFs to engage in frequent portfolio repositioning is particularly steep.
2015-09-08 00:00:00 CEF Investors by (Article)
Longtime investment analyst Maury Fertig of Relative Value Partners describes what he sees as three types of closed-end fund investors.
2015-09-06 00:00:00 Muddling Through Shanghai by John Mauldin of Mauldin Economics
China is in transition, a transition that was clearly telegraphed if you have been paying attention. Our recent book on China (A Great Leap Forward?) clearly laid out this new path. Today we are going to talk about this precarious, difficult transition, which may impose profound impacts on much of the rest of the world. This transition is going to change the way global trade has worked in the past. There will be winners and losers.
2015-09-04 00:00:00 Here’s Your Guide to What the Influencers Are Saying about Commodities by Frank Holmes of U.S. Global Investors
A few legendary influencers in investing are making huge bets right now on commodities, an area that’s faced—and continues to face—some pretty strong headwinds. What are we to make of this?
2015-09-04 00:00:00 Unfazed by the Turmoil by Byron Wien of Blackstone
Overall, my sense of this year’s lunches is that the participants were still basically optimistic, as they generally are. I wonder if there were something big and negative brewing out there, whether the group would be able to anticipate it.
2015-09-03 00:00:00 Weight of the Evidence Argues for Caution by William Delwiche of Robert W. Baird & Co.
At this point, cycle lows for the popular averages may well be in place. This is not yet supported by the weight of the evidence, however. Simply put, risks remain elevated and it is too early to sound an all clear.
2015-08-31 00:00:00 Making Sense of Market Volatility by Karen Dunn Kelley of Invesco Blog
On Aug. 21, the Dow Jones Industrial Average entered a correction, falling 10% from its most recent peak, and reminded investors what volatility looks like after almost four correction-free years. While volatility exposes weaknesses in the market, in my opinion it also reveals the strength of high conviction managers who are skillfully navigating the market. Active management and smart beta strategies seek to surpass the “market averages” offered by traditional benchmarks, providing the potential not only for higher returns, but also for a smoother ride.
2015-08-31 00:00:00 The Active-Passive Debate Revisited by Bob Veres (Article)
Asset flows to passively managed funds are surging. But, as often happens, advisors are embracing a trend just as debunking information is arriving in the marketplace. New research is showing that selecting above-average active funds may not be the impossible task that the academic research has suggested.
2015-08-28 00:00:00 Doodles from an Eventful Summer by Niels Jensen of Absolute Return Partners
This month's Absolute Return Letter is a little different. It was a very eventful summer with many incidents impacting financial markets and we have compiled all these topics into one letter. China is, not surprisingly, a core subject. If the Chinese economy is slowing (and it is), we don't think China is in for a hard landing. If anyone is in the near term - and this may surprise you - we think the U.S. and the euro zone are far more likely candidates.
2015-08-28 00:00:00 Feeling Old Yet? Incoming College Freshmen Have Always Known Google by Frank Holmes of U.S. Global Investors
I use Google every day, and yet I still marvel at how amazing a tool it is. Part of this amazement stems from the fact that most of my life was spent in the dark ages before the search giant changed human knowledge forever. I appreciate it in a way 19th-century, transcontinental travelers must have appreciated steam locomotives’ ability to shave days and weeks from their covered-wagon travel time. Except Google is more like a rocket ship than a locomotive.
2015-08-28 00:00:00 12 Attractive Fast-Growing Dividend Growth Stocks for High Total Return by Chuck Carnevale of F.A.S.T. Graphs
The current market environment is presenting many challenges to the conservative retired investor in need of current income. Interest rates are near all-time lows and the valuations of many blue-chip dividend growth stocks have become extended. Consequently, it is becoming very difficult to find quality investment opportunities that can provide safety through sound valuation, attractive yield and the potential to fight inflation.
2015-08-27 00:00:00 Solidifying a Case for Liquid Alternatives by David Saunders of Franklin Templeton Investments
Skeptics may be surprised to learn that the majority of hedge fund managers focus on providing capital appreciation with lower volatility than the broad markets.
2015-08-26 00:00:00 Earnings Voids and the Emergence of Plausible Risk by Doug MacKay, Bill Hoover of Broadleaf Partners
We had put the finishing touches on a market update celebrating our first ten years in business, but were rudely interrupted by the first violence in the markets we’ve seen in nearly a year. Yes, a year.
2015-08-26 00:00:00 Turning an Oxymoron into an Opportunity by François Sicart of Tocqueville Asset Management
For my part, I feel in total harmony with the contrarian and value disciplines that have guided my investments for 40 years. At the same time, I also claim (and aim) to be a long-term investor. Yet, almost from the start of my career, I have had the somewhat uncomfortable feeling that, in practice, these claims may be contradictory.
2015-08-25 00:00:00 The Fed Is Spooking the Markets Not China by Peter Schiff of Euro Pacific Capital
Fasten your seat belts, this ride is getting interesting. Last week the Dow Jones Industrial Average was down more than 1,000 points, notching its worst weekly performance in four years. The sell-off took the Dow Jones down more than 10% from its peak valuations, thereby constituting the first official correction in four years. One third of all S&P 500 companies are already in bear market territory, having declined more than 20% from their peaks. Scarier still, the selling intensified as the week drew to a close, with the Dow losing 530 points on Friday, after falling 350 points on Thursday.
2015-08-24 00:00:00 Equities: Enhancing Your Small Cap Allocation by Laura Schlockman, Steve Jones of PIMCO
Our New Neutral outlook is generally supportive of equities: Low discount rates, recovering but muted inflation and a drawn-out business cycle argue for positive equity performance. However, full valuations and uneven growth suggest returns may be significantly lower than long-term averages. This means that capturing equity alpha will be critical for investors to meet their return objectives.
2015-08-24 00:00:00 Recent Market Volatility by Lane Jones of Evensky & Katz / Foldes Financial Wealth Management
Given the recent volatility in world stock markets, you are no doubt concerned and wondering whether we're entering a period of extended declines. We don't know the answer to this question; no one does. We do know that making investment decisions based upon short-term news is rarely a winning strategy. In times like this it's important to remember your investments are designed to carry you through decades not days. It's important to stay focused on the long-term.
2015-08-24 00:00:00 How an “Abundance Mentality” Drives Top Advisors by Dan Richards (Article)
Hard work, talent and luck drive top advisors. But research from Wharton’s top-rated faculty member shows there’s another quality high on the list.
2015-08-21 00:00:00 The Paradox of Chasing Returns, Part 2 by Kyle Vogel of AdvisorShares
In part one, we looked at the statistics of how difficult it was for hedge fund managers to consistently outperform the universe average. In part two, we wanted to examine the consistency of a hedge fund’s1 performance as its assets grow. We took the HFRI Equity Hedge Fund universe and looked at individual managers’ assets and returns during a recent period. The dataset includes funds reporting at any point between August 2008 to March 2015.
2015-08-21 00:00:00 Gold Glimmers as Global Market Fear Grips Investors by Frank Holmes of U.S. Global Investors
Gold this week broke above its 50-day moving average as a fresh round of negative news from around the globe rekindled investors’ interest in the yellow metal as a safe haven. The Fear Trade, it seems, is in full force.
2015-08-20 00:00:00 The Paradox of Chasing Returns, Part 1 by Kurt Voldeng of AdvisorShares
Our firm often cites a paradox in the hedge fund industry: hedge fund of funds lag the mean hedge fund return. Represented below, the HFRI Fund Weighted Composite Index is composed of individual hedge funds of all types that are equally weighted while the HFRI Fund of Funds Composite Index is a separate index composed of equally weighted funds of hedge funds.
2015-08-17 00:00:00 Charts for the Beach 2015 by Richard Bernstein of Richard Bernstein Advisors
We’ve put together five of our favorite non-consensus charts that are perfect reading material for a sunny day at the beach.
2015-08-13 00:00:00 Exit from Wonderland: Change Is Now on the Horizon by Ed Easterling of Crestmont Research
Many investors and advisors are unsure about the current financial market environment. They have been wrestling with how to weight equities and whether to include alternative investments. Although equities have performed well in recent years, many alternatives have lagged expectations. This should not be surprising: the financial world is operating just as the Fed has intended.
2015-08-10 00:00:00 An Alternative Asset Class You May Take for Granted, Part 2 by Darin Turner of Invesco Blog
Infrastructure is an integral part of your daily life. You drive on it, depend on it for electricity and water, and use it to communicate on your cell phone. But have you considered investing in it? Infrastructure investment can offer several potential benefits to an overall portfolio.
2015-08-07 00:00:00 Gold Holds Its Own Against These Media Darlings by Frank Holmes of U.S. Global Investors
A recent Bloomberg article points out that the gold rout has cost China and Russia $5.4 billion, an amount that would sound colossal were it not for the fact that U.S. media companies such as Disney and Viacom collectively lost over $60 billion for shareholders in as little as two days this week. Below are the weekly losses for just a handful of those companies. Compared to many other asset classes, gold has held up well, even after factoring in its price decline.
2015-08-06 00:00:00 Do Your Alternative Investments Have the Right Fit? by Richard Brink, Christine Johnson of AllianceBernstein
Investors who chose alternatives for downside protection in recent years have been frustrated with their performance. We think the problems were an unfavorable market environment and the unique challenges of manager selection for alternatives.
2015-08-05 00:00:00 The Case for Hedge Fund Strategies in a Rising-Rate Environment by Dr. Sudhir Krishnamurthi, Ronald van der Wouden, Kenneth LaPlace of Wells Fargo Asset Management
Dr. Sudhir Krishnamurthi, Ronald van der Wouden, and Kenneth LaPlace from The Rock Creek Group, LP explain why hedge funds may outperform traditional fixed-income investments in a rising-rate environment.
2015-08-04 00:00:00 Update on Puerto Rico as Aug. 1 Debt Deadline Missed by Rafael Costas, Sheila Amoroso of Franklin Templeton Investments
In our opinion, the governor’s wishes to restructure Puerto Rico’s debt will likely be very difficult—and expensive—to realize.
2015-08-02 00:00:00 Is Now the Time to be Bearish on China? by Andy Rothman of Matthews Asia
One of the world’s largest hedge funds has turned bearish on China, arguing that the recent stock market correction means ‘‘there are now no safe places to invest’’ in that country. I disagree. I respect Bridgewater as an investment house and their views require serious attention. But I think it worthwhile to explain some areas where my views differ.
2015-08-02 00:00:00 When China Stopped Acting Chinese by John Mauldin of Mauldin Economics
Much of the world is focused on what is happening in Greece and Europe. A lot of people are paying attention to the Middle East and geopolitics. These are significant concerns, for sure; but what has been happening in China the past few months has more far-reaching global investment implications than Europe or the Middle East do. Most people are aware of the amazing run-up in the Shanghai stock index and the recent “crash.” The government intervened and for a time has halted the rapid drop in the markets.
2015-08-01 00:00:00 Gold on Sale, Says the Rational Investor by Frank Holmes of U.S. Global Investors
The leveraged gold futures derivatives market is knocking down the precious metal, yet in massive contrast, this drop has ignited a shopping frenzy according to gold coin dealers. I spoke with several friends and industry experts this week who confirmed the record sales numbers for the month. In fact, American Gold Eagle sales reached 161,500 ounces in July, the highest monthly figure since April 2013. What gives?
2015-07-31 00:00:00 The Danger in "Debalancing" by John West, Brandon Kunz, Amie Ko of Research Affiliates
Eat a balanced diet. Drilled into our brains since preschool, this advice falls squarely in the “duh, everybody knows that” camp. But it’s not just kids who need reminding. Parents and grandparents, as role models and dietary enforcers, do too. Common sense alone tells us this universally applicable dictum is the right way to eat. Different foods have different nutritional and caloric values. If we eat a wide variety of food groups, or as a five-year-old child is taught, “Eat a rainbow,” good nutrition is likely to take care of itself.
2015-07-31 00:00:00 3 Questions to Check Yourself Before You Wreck Yourself by Adam Butler, Michael Philbrick, Rodrigo Gordillo of BPG & Associates
A few simple questions one should ask oneself before making any decisions in public markets.
2015-07-29 00:00:00 Inflation Deniers Emboldened by Gold's Struggles by Clint Siegner of Money Metals Exchange
The vultures are circling. Precious metals bulls, laid flat by gold and silver prices dropping for the 5th week in a row, are watching deflationists such as Harry Dent and the financial media squawk about the imminent demise of precious metals.
2015-07-29 00:00:00 Ten Quick Topics to Ruin Your Summer by Jeremy Grantham of GMO
Chief investment strategist Jeremy Grantham reviews "10 topics that really matter, at least in my opinion. They can all be viewed as problems: potential threats to our well-being"
2015-07-28 00:00:00 When Will We Ever Learn? by Lance Roberts of Streettalk Live
Life is full of irony. When I was in school, I hated history. It was boring. It was pointless. How was reading about a bunch of dead people ever going to be useful in life? Today, I consume everything I can find on history. Particularly, financial history. Ironic.
2015-07-27 00:00:00 Screens vs. Windows: Why Choosing a Fund Manager Requires Both by Tracy Fielder of Invesco Blog
Choosing the right fund manager is an important decision for investors, and many rely on data screens to help them sift through mountains of performance numbers. But screens alone don’t tell you the whole story. To get a clear view of how a fund might fit into your portfolio, you also need a window into the mind of the manager.
2015-07-27 00:00:00 CEF Product Perspective by (Article)
With a look at time horizons, active management and alternative investments, Kimberly Flynn of Nuveen shares a CEF product perspective.
2015-07-25 00:00:00 3 Reasons Why Gold Isn’t Behaving Like Gold Right Now by Frank Holmes of U.S. Global Investors
The last time the metal descended this quickly was 18 months ago, on January 6, 2014, when someone brought a massive gold sell order on the market before retracting it in a high-frequency trading tactic called “quote stuffing.”
2015-07-25 00:00:00 Asia Insight: Online to Offline—The Great Technology Migration by Michael Oh of Matthews Asia
Asia has demonstrated an uncanny ability to leapfrog certain technological developments, making much quicker transitions to new technologies than Western countries: jumping from fixed line to wireless communications and moving away from desktop devices to mobile devices. Now, the latest interesting instance of technology leapfrogging that is happening in Asia is dubbed “Online-to-Offline,” commerce, or O2—an e-commerce model that combines offline opportunities with online platforms. Asia Insight explores.
2015-07-24 00:00:00 Sector Insights-Financial Services by Mark Dawson of Rainier Investment Management
The financial services sector is unique. Unlike other sectors, it is essentially the lifeblood of the economy. When it’s healthy, it provides businesses and consumers with access to the credit, capital and investments that are vital to a healthy and growing U.S. economy. But when it’s sick, as we saw during the financial crisis in 2008, it can weaken the whole system. Severely damaged in 2008, the U.S. financial system - in particular banks - have been healing. Now is a good time to seek out investment opportunities in financial stocks.
2015-07-23 00:00:00 Tocqueville Gold Strategy Investor Letter: Q2 2015 by John Hathaway of Tocqueville Asset Management
What is required to restore investor interest in gold? In our opinion, a prolonged bout of financial-market adversity would suffice. After all, the cornerstone of coordinated central-bank policy since 2008 has been the levitation of financial assets via Zero Interest-Rate Policy (ZIRP) and Quantitative Easing (QE) by forcing investors into risky assets. We believe that nothing would serve better to undermine confidence in central bankers than a bear market in bonds and equities. The roof above the dollar gold price has been built brick by brick from confidence in central bankers.
2015-07-23 00:00:00 Summer Quarterly Commentary by John Prichard, Miles Yourman of Knightsbridge Asset Management
Greece is much in the headlines again. As we stated in our Spring 2013 letter, “The European debt crisis will not be over until either: 1) the debt goes away (read: default or substantial inflation) or 2) these governments start producing actual surpluses with which to pay the debt down.” So far, every subsequent deal has failed to produce either of these two scenarios, and so each time news media builds up another weekend summit or referendum, the running joke around here is, “Don’t worry, it will all be resolved this weekend.”
2015-07-21 00:00:00 Secular Outlook: Implications for Asia-Pacific Investors? by Eric Mogelof, Alan Isenberg of PIMCO
We hope you have had the opportunity to review the summary from our secular forum in May: “The New Neutral Revisited,” written by PIMCO’s Group CIO Dan Ivascyn, Global Fixed Income CIO Andrew Balls an?d Global Strategic Advisor Rich Clarida. In this analysis, the authors identify the six key themes that emerged from our discussion, as well as six risks.
2015-07-20 00:00:00 Understanding “Liquidity” by Payson Swaffield of Eaton Vance
In the U.S., the consumer economy is strengthening, while the industrial economy continues to struggle. What does it mean for equities?
2015-07-17 00:00:00 Productivity and Modern-Day Horse Manure by John Mauldin of Mauldin Economics
What exactly do we mean by this “productivity” word? I’ve given this a good deal of thought lately, and I plan to explore it in my newsletters over the next few months. As you will see, productivity growth has both a positive side and a very negative side.
2015-07-16 00:00:00 Five Portfolio Moves for the Second Half by Russ Koesterich of BlackRock
After a relatively calm few months, market volatility is back. In recent weeks, stocks have swung between ups and downs, as investors have attempted to digest the latest news out of Greece, the recent bear market in China and the growing likelihood that the Federal Reserve (Fed) will hold off on raising rates until after its September meeting.
2015-07-14 00:00:00 Innovation – Too Much, or Too Little of a Good Thing? by Michael Lebowitz (Article)
New innovations save us a lot of time and effort but, believe it or not, they do little to generate sustainable economic growth. Sustainable economic growth depends on productivity. Despite these new innovations, domestic productivity is flat lining.
2015-07-14 00:00:00 How Likely is Hyperinflation in the U.S? Part Two by Seaborn Hall (Article)
My previous article covered hyperinflation's history, process, effects, definition, types and causes. Part Two answers the questions of how to gauge the likelihood of hyperinflation in the U.S., what the emerging dangers are, how it might happen here and how to prepare if it does.
2015-07-13 00:00:00 The Black Widow Returns by Richard Bernstein of Richard Bernstein Advisors
Strategies based on stretching for yield have a long history of surprising investors with unanticipated risks.
2015-07-11 00:00:00 It’s Not Over Till the Fat Lady Goes on a P/E Diet by John Mauldin of Mauldin Economics
The answer to the seemingly arcane question of whether we are in a secular bull or bear market makes a great difference in the proper positioning of your portfolios. And getting it wrong can have serious consequences.
2015-07-11 00:00:00 Global Investors: You Should Be Paying Attention to this Economic Indicator by Frank Holmes of U.S. Global Investors
In addition to our own macro models, BCA Research , a highly respected independent research company, pointed out that PMIs in developing economies have plunged to new lows. The International Monetary Fund also revised downward its global growth forecast for 2015. On this account, bad news is good news, as central bankers are scrambling to stimulate economic growth.
2015-07-08 00:00:00 Shareholder Activism Continues to Attract Assets and Boost Activity by Francis Gallagher, Peter Drippé of Visium Funds
While shareholder activism has been maligned in the past by the corporate world as a way to reap short-term gains at the expense of long-term shareholders, the practice is now enjoying an increasingly positive reputation. This change in perception is based on the beneficial long-term results of activist campaigns and the current view of activists as champions of shareholder value. Accordingly, the recent performance of activist-related investments, as well as their role in providing low-correlated returns has drawn significant interest from the institutional investment world.
2015-07-07 00:00:00 Earning an Illiquidity Premium in Private Credit by Joshua Anderson, Tom Collier of PIMCO
With low yields and tight spreads prevalent in traditional liquid fixed income markets, many institutional investors are considering whether higher returns are available by assuming credit risk in private or illiquid form. We believe this type of alternative credit strategy may enhance portfolio returns, but investors should be extremely judicious when giving up liquidity, particularly today.
2015-07-07 00:00:00 A Greek Play by Dr. Richard Michaud of New Frontier Advisors
The second quarter of 2015 experienced heightened bond market volatility in anticipation of the Fed’s first rate increase as well as international equity volatility involving Greek debt and Chinese equities. Despite whipsawed volatility, the major domestic and international equity indices ended close to where they started.
2015-07-06 00:00:00 Judging the Future at a Speculative Peak by John Hussman of Hussman Funds
With valuations still extreme and deterioration in market action continuing to indicate a shift toward risk-aversion among investors, we are less concerned about specific factors such as Greece than about much more general pressures that threaten to force an upward spike in compressed risk-premiums. We’ve often noted that a market collapse is nothing other than that phenomenon: razor-thin risk premiums that are then pressed abruptly to higher levels.
2015-07-04 00:00:00 A Week of Unseen Things by John Mauldin of Mauldin Economics
We Americans are celebrating our Independence Day this weekend. The news our ancestors read on this day in 1776 wasn’t so great – but the US survived its rough start. China, Puerto Rico, and Greece will survive, too. But the decisions their government make, just like the ones our fledgling government made all those years ago, will make a great deal of difference. Let’s get past the gloom and doom to see if we can find some good news.
2015-07-02 00:00:00 Looking for Income in All the Right Places by Morgan Harting, Martin Atkin of AllianceBernstein
Investors and advisors know they can’t depend solely on the old standbys—bonds, high-dividend stocks and cash—to produce income today, and they’re ready to try a new approach. But which one?
2015-07-02 00:00:00 The Business Cycle—Middle-Aged or Elderly? by Erik Knutzen of Neuberger Berman
When it comes to the duration of the business cycle, 50 is the new 40. Much the way that better diet, health care and exercise have helped double life expectancy over the past century, central banks have prolonged the current expansion using new elixirs such as zero interest rates and quantitative easing. At 72 months, the business cycle has well surpassed the 58.4-month average of the modern era and is now more than twice the length of the pre-WWII average.
2015-07-01 00:00:00 Investing in Lake Wobegon: Where all the returns are above average by David Robertson of Arete Asset Management
The implicit assumption of many funds is that returns will be attractive over the investor's time horizon. Increasingly, this assumption appears to be invalid and many long term investors would be better served by taking an "absolute return" approach to investing.
2015-07-01 00:00:00 A Return to Fundamentals? by Niels Jensen of Absolute Return Partners
June was a very eventful month, in particular here in Europe. Greece went from bad to worse, and the Greek people have now been asked to vote on their own destiny in a referendum scheduled for Sunday 5 July, which we expect to return in a 'Yes' vote. However, Greece is not the only subject in the July Absolute Return Letter. Financial markets have in many ways behaved oddly since the near meltdown in 2008. The objective of this month's letter is to look at whether we are finally beginning to see some sort of normalisation - as in a return to the conditions we had prior to 2008...
2015-07-01 00:00:00 More Volatility: A Positive Environment for Active Managers by Chuck Royce, Francis Gannon of The Royce Funds
Dating from the year-to-date low for the 10-Year Treasury on January 30 through the end of the first half, we have observed promising signs that the market may be taking greater strides toward normalization. CEO Chuck Royce and Co-CIO Francis Gannon discuss how higher rates might benefit bottom-up stock pickers, the potential for quality companies to regain leadership as volatility increases, the possible consequences of global economic recovery for both domestic and non-U.S. small-cap stocks, and the favorable landscape for consumers and its effect on our portfolio positioning.
2015-06-30 00:00:00 It Never Rains in California by Bill Gross of Janus Capital Group
Ted Cruz recently suggested praying for rain in Texas, and apparently someone did a few weeks ago, producing a deluge resembling a modern day Noah’s Ark of sorts. California’s Governor Brown on the other hand, has taken a more secular approach. He believes that Mammon, not God, bears responsibility for the Golden State’s record drought and that I, we, all of us simple folk should cut back water usage by a minimum of 25%.
2015-06-23 00:00:00 In Investing, Have You Learned How to Let Her Go? by Jerry Wagner of Flexible Plan Investments
Whenever I’m in the car nowadays I’m always listening to satellite radio. I, like probably you, vowed I’d never pay for radio … but the constant barrage of commercials on free radio, plus the fact that Sirius comes free the first year I own my car, helped to overcome my resistance.
2015-06-23 00:00:00 Why VBINX is the Wrong Benchmark For Global Tactical Asset Allocation Strategies by Adam Butler, Michael Philbrick, Rodrigo Gordillo of BPG & Associates
We recently came across a couple of articles making the sensational claim that TAA is nothing more than a repackaged and dressed-up version of market timing. Both articles – and others, we’ve subsequently learned – point to a Morningstar study showing that TAA has underperformed the Vanguard U.S. 60/40 balanced fund over the past few years.
2015-06-20 00:00:00 Public Pensions: Live and Let Die by John Mauldin of Mauldin Economics
I am not sure if my heart was ever that much of an open book, but I like to think I’m still relatively young. Nevertheless, I must admit that sometimes I want to “give in and cry.” This is especially so when I look at our nation’s public pension funds.
2015-06-19 00:00:00 Gold and Health Care Stocks Get a Clean Bill of Health by Frank Holmes of U.S. Global Investors
Even though the Federal Reserve announced this week that it would wait a little longer to raise rates, spooked investors fled to gold bullion, helping to drive prices above $1,200 an ounce. It was the greatest single-session surge by percentage in nearly a month and a half for the yellow metal, widely seen as a safe-haven investment. As I told MarketWatch yesterday, $1,200 is an important threshold for gold miners because it helps increase profitability and spur production.
2015-06-18 00:00:00 Concerned About Rising Interest Rates? Consider These Four Alternative Investments by Walter Davis of Invesco Blog
As I travel across the country meeting with financial advisors and their clients, a common concern I hear voiced is “how can I position my portfolio for when the inevitable happens and interest rates start to rise?” In response, I state that certain types of alternative investments are well suited to help prepare portfolios for rising interest rates in the future, while also potentially adding value in the present.
2015-06-17 00:00:00 Managing Risk by Investing in Dividend-Paying Stocks by (Article)
Small-cap is an asset class that has historically been associated with increased volatility. We have always believed that dividends, plentiful in the small-cap space, can help mitigate some of that risk. But what are we looking for in the dividend-paying companies in which we invest? Portfolio Manager Jay Kaplan and Co-CIO Francis Gannon discuss.
2015-06-17 00:00:00 Concentrated Funds: Benefits of a Focused Approach by Stephen Grant, Cindy Starke of Value Line Funds
Since Value Line Funds launched its first mutual fund in 1950, the investment industry has evolved considerably. To meet the needs of today’s investor, the fund family line-up has retooled in recent years, including re-branding two equity funds as concentrated portfolios of 30-50 positions. In this paper, we highlight research demonstrating the benefits of the focused approach provided by concentrated funds.
2015-06-16 00:00:00 Gundlach: Rising Rates and Summer Insects by Robert Huebscher (Article)
You should never ask summer insects about ice, according to the Chinese philosopher Chuang Zhu, because they are bound by a single season. In the same way, many investors have never experienced a period of increasing rates. One who has, however, is Jeffrey Gundlach, who offered his forecast for rates and the one sector of the bond market that is most vulnerable.
2015-06-16 00:00:00 The Seven Dumbest Mistakes I Made as an Advisor by Robert J. Martorana (Article)
After 30 years in the advisory business, I’ve made plenty of mistakes. It is my hope that this article will help others avoid following in my errant footsteps.
2015-06-15 00:00:00 Is the European Insurance Sector in a State of Emergency? by Matthieu Louanges of PIMCO
Europe’s insurance industry has responded to profound challenges with a high degree of agility and innovation on both sides of their balance sheets.
2015-06-12 00:00:00 Alternative Investing: Two Ways to Mitigate Manager Risk by Walter Davis of Invesco Blog
Mitigating manager risk involves two things: 1. Conducting due diligence on the manager before investing. This helps increase an investor’s chances of selecting a successful manager. 2. Diversifying across multiple managers. This step helps reduce manager risk by diversifying across multiple managers.
2015-06-09 00:00:00 Developments in the Reform of China’s State-Owned Enterprises by Mark Mobius of Franklin Templeton Investments
Investors’ interest in China’s SOEs has no doubt been piqued by guidance from sources close to the government that reform plans foreshadowed in the government’s November 2013 program could soon begin to assume more concrete shape, helping drive the recent gains in the Shanghai and Hong Kong share markets.
2015-06-02 00:00:00 Why Emotions and Bias Trump Facts by Daniel Solin (Article)
This interesting article on the role emotions play in making sales revealed some fascinating insights that savvy advisors can utilize.
2015-05-29 00:00:00 Evolving Infrastructure Investing – Broader, Deeper, Global by Shundrawn Thomas, Northern Trust Asset Management, Head of Funds and Managed Accounts (Article)
Infrastructure offers an attractive combination of potential inflation hedging, income generation and long-term capital growth. In this video, Shundrawn Thomas, Global Head of ETFs, outlines the distinctive approach of FlexShares NFRA ETF.
2015-05-28 00:00:00 Half Full or Half Empty by Herbert Abramson, Randall Abramson of Trapeze Asset Management
The ultimate question for investors. Is the glass half full, that is to say are economic backdrops improving to support attractive valuations, or to the contrary, half empty, deteriorating and threatening full valuations?
2015-05-23 00:00:00 Rate Hike Ahead? Here’s How to Get Your Portfolio Ready by Frank Holmes of U.S. Global Investors
Many experts and analysts believe a June rate hike seems very unlikely, but today, Federal Reserve Chairwoman Janet Yellen hinted that one might happen as soon as the end of this year.
2015-05-23 00:00:00 The Affordable Care Act and Low Interest Rates: A One-Two Punch for Health Insurance Portfolios by Chitrang K. Purani and Georgi Popov of PIMCO
Two common themes emerged from a recent PIMCO survey of U.S. health insurers: Underwriting performance will be a larger factor in asset allocation, and there will be more emphasis on liquidity and income. For now, health insurers generally expect increased premium volumes and shifts in insured profiles as a result of the Affordable Care Act. Re-examining investment policies and tiering liquid assets can help investment portfolios maintain flexibility while potentially contributing more to the bottom line.
2015-05-19 00:00:00 Do Goldman Sachs' Funds Add Value for Investors? by Larry Swedroe (Article)
Over the last few years, an expanding line of mutual funds created by commercial banks such as Goldman Sachs and JPMorgan Chase have been drawing billions of dollars from investors looking to earn a good return. While the fees these funds have generated are among the few consistent bright spots of growth on Wall Street, the question for investors is whether or not the active mutual funds managed by these banks actually have been good investment choices.
2015-05-19 00:00:00 On the Road to Normal by Charlie Dreifus of The Royce Funds
While conflicting signs of economic strength are, for the time being, stalling a rise in rates, Portfolio Manager Charlie Dreifus continues to believe that active stock picking remains an attractive approach in the current environment.
2015-05-18 00:00:00 Weighing the Week Ahead: Will the Interest Rate Spike Threaten Stock Prices? by Jeff Miller of New Arc Investments
This week’s economic calendar includes the most important housing data, but the market context will prove irresistible to the pundits. Stocks continue at the top of the trading range, and even broke through for a few minutes. Even more interesting is the bond market. Interest rates decisively broke their trading range and also showed a lot of volatility.
2015-05-15 00:00:00 The Discovery of Ignorance by Francois Sicart of Tocqueville Asset Management
Eleanor Roosevelt reportedly said that small minds discuss people, average minds discuss events, and great minds discuss ideas. If she was right, my own mind took a huge leap toward greatness in the last few weeks.
2015-05-12 00:00:00 The Future of Investing ESG Portfolios: Changing Beliefs, Perceptions and Goals by Sponsored Content by ClearBridge Investments (Article)
Investing consistent with environmental, social and governance (ESG) principles can no longer be dismissed as a short-term fad. Assets under management are growing steadily, accompanied by a rise in the number and type of investment options across asset classes. Clearbridge's research explores how institutions are investing with impact today.
2015-05-08 00:00:00 MLPs: Providing Growth and Income Potential Despite Low Oil Prices by Joe Rodriguez, Darin Turner, Walt Stabell III of Invesco Blog
With oil prices down around approximately 50% since June 2014, investors are increasingly wary of the entire energy sector. Even given this environment, master limited partnerships (MLPs) represent an energy investment that we believe may weather short-term volatility in energy prices, benefit from the US’s long-term infrastructure needs, and provide attractive income potential for investors.
2015-05-05 00:00:00 How to Dress for a Rainy Day by Niels Jensen of Absolute Return Partners
The answer is the Lollapalooza effect. The question you may recall from last month’s Absolute Return Letter - what’s the opposite of a perfect storm, or put another way, what do you call it when an unusual combination of constructive factors creates an outcome which is extraordinarily positive? A reader was kind enough to provide the answer, which was coined by Charles Munger years ago. As a non-American, the answer was at first complete gobbledygook to me, but a quick Google search convinced me that the answer is absolutely legitimate. Thank you.
2015-05-04 00:00:00 On My Radar: “The Rodney Dangerfield Expansion” by Steve Blumenthal of CMG Capital Management Group
"Earnings don't move the overall market; it’s the Federal Reserve board. And whatever you do, focus on the central banks and focus on the movement of liquidity. Most people in the market are looking for earnings and conventional measures. It's liquidity that moves markets." - Stan Druckenmiller
2015-04-30 00:00:00 Breaking Out of Bondage by Ben Inker of GMO
In a new quarterly letter to GMO's institutional clients, co-head of asset allocation Ben Inker provides the basis for future bond returns: "For while it is unlikely that stock investors are going to achieve anything like as strong a return over the next 30 years as they did over the last, it is basically impossible for bond investors to duplicate their feat." ("Breaking Out of Bondage").
2015-04-29 00:00:00 Why It’s Good to Be Young in Japan by Christopher Gannatti of WisdomTree
At the Japan Society event “The Sun Also Rises?: Japan’s Potential in the Post-Crisis Global Economy,” we heard panelists talk about how they thought that Japan could incentivize growth in productivity. One area of note was that Japan’s largest industrial employer shifting from seniority-based pay to pay for performance was a very big step.
2015-04-29 00:00:00 Risk Marches On by Burt White of LPL Financial
The latest data releases pointing to weak U.S. new home sales and manufacturing Purchasing Managers’ Index (PMI) have investors guessing about the possible messaging coming out of this week’s Federal Open Market Committee (FOMC) meeting.
2015-04-29 00:00:00 Newsletter by Harold Evensky of Evensky & Katz
Harold Evensky presents his quarterly newsletter.
2015-04-28 00:00:00 Reasonable Expectations, Warren Buffett and Active Management by Michael Crook (Article)
According to the ongoing SPIVA analyses, most equity mutual fund managers have failed to keep up with their respective benchmarks recently. In fact, roughly 60% of domestic managers and 65-70% of international managers underperformed in 2014 - a phenomenon that most investors observed in their own portfolios. But that is not a reason to abandon active management, assuming you own active managers for the right reasons.
2015-04-28 00:00:00 M&A: Bubble Trouble Ahead? by Milton Ezrati of Lord Abbett
Talk of an unsustainable surge in mergers and acquisitions is premature. The current level of activity suggests that corporate managers will continue to buy rather than build.
2015-04-20 00:00:00 Alternative Investing: Why Manager Skill is Crucial to Results by Walter Davis of Invesco
A key attribute of alternative investments is that alternative managers are typically given considerable freedom in how they invest. This freedom means that manager selection, an important consideration for all investors, becomes particularly crucial when investing in alternatives.
2015-04-20 00:00:00 Picking Stocks in the Tech Sector by Chaitanya Yaramada of Robert W. Baird & Co.
Technology is an important sector for growth portfolios - it carries a significant weight in major growth benchmarks, and more importantly, tends to be a ripe area for stock picking. The technology sector represents nearly 15% of the Russell Midcap Growth benchmark and 24% of the Russell 3000 Growth benchmark. The percentage is even higher when including Internet stocks that are categorized into the Consumer Discretionary sector.
2015-04-20 00:00:00 Thoughts from the Frontline: Half a Bubble Off Dead Center by John Mauldin of Mauldin Economics
Central banks, in their valiant, unceasing efforts to restore liquidity and growth, have unleashed numerous unintended consequences that are beginning to show up in earnest. Today we are going to review the well-meaning behavior of central banks for clues about our near future.
2015-04-17 00:00:00 Who will get caught skinny-dipping? by Edward Perkin of Eaton Vance
More than six years into a bull market for all major asset classes, are there any true investment bargains left?
2015-04-14 00:00:00 Why Women Advisors are Judged Differently by Daniel Solin (Article)
Are women advisors perceived differently than their male counterparts? If so, what can we do about it?
2015-04-14 00:00:00 Tocqueville Gold Strategy Investor Letter by John Hathaway of Tocqueville Asset Management
John Hathaway, manager of the Tocqueville Gold Fund (TGLDX), looks back at the performance of gold over the first quarter, noting that "Gold and gold mining shares appear to be as contrarian today as in 1999, before a decade?plus run in which bullion rose nearly seven?fold in US dollar terms."
2015-04-13 00:00:00 Liquid Alternative Strategies as Mutual Funds by Michael Winchell of Larkin Point Investment Advisors LLC
The recent growth of mutual funds offering a wide array of liquid alternative strategies has raised questions among many advisors about the possible drawbacks of attempting alternative strategies within a 1940 Act vehicle.
2015-04-13 00:00:00 Top 10 Considerations for June to September Liftoff by Bradley Krom of WisdomTree
One of the top stories of 2015 so far has been the anticipated liftoff from the zero bound interest rate target of the U.S. Federal Reserve (Fed). As market forecasters continue to debate June vs. September, we share some observations from previous hiking cycles to guide your views.
2015-04-08 00:00:00 The 'Perfect Storm' by Niels Jensen of Absolute Return Partners
This month's Absolute Return Letter is about the highly unusual set of circumstances which have underpinned the equity bull market of the last 35 years. Not one of the factors we identify did exceptionally well - they all did and, between them, they created the perfect breeding ground for exceptional equity performance. So far so good. Unfortunately a reality check is required as it is exceedingly unlikely that those circumstances will be repeated in our lifetime. We should prepare for more modest returns ahead.
2015-04-02 00:00:00 The Perfect Storm for Risk-Conscious Active Managers by (Article)
Principal and Portfolio Manager Steve Lipper discusses three specific conditions that have shaped the current small-cap market and how, after five years, these developments all showed signs of reversing in the latter part of 2014.
2015-04-01 00:00:00 In the Know: Europe’s Capital Markets Union by Norm Boersma of Franklin Templeton Investments
Templeton Global Equity Group’s Norm Boersma discusses the European Commission’s newly unveiled proposals for Capital Markets Union.
2015-03-31 00:00:00 The Final Say on Spending Rules by Laurence B. Siegel (Article)
After decades of focused research, why can't finance experts decide on a safe withdrawal rate for retirement? It is time to refocus this debate by asking a slightly different question: Is there a spending rule that retirees can use over a fixed time horizon? There is and I call it "the only spending rule you will ever need."
2015-03-31 00:00:00 Should Liquid Alts Be Part of the Core Allocation? by Michael Winchell of Larkin Point Investment Advisors LLC
Many advisors may view alternative investments as diversifiers in portfolios: satellite investments added to a portfolio of stocks and bonds in an attempt to “hedge,” or counterbalance a specific risk the advisor believes is not completely addressed by the stock/bond core. For example, real assets such as gold and real estate are alternatives that may be added to portfolios for inflation protection because advisors expect real assets to rise in value with any overall increase in wages and prices.
2015-03-30 00:00:00 Should Liquid Alts Be Part of the Core Allocation? by Michael Winchell of Larkin Point Investment Advisors LLC
Many advisors may view alternative investments as diversifiers in portfolios: satellite investments added to a portfolio of stocks and bonds in an attempt to “hedge,” or counterbalance a specific risk the advisor believes is not completely addressed by the stock/bond core. For example, real assets such as gold and real estate are alternatives that may be added to portfolios for inflation protection because advisors expect real assets to rise in value with any overall increase in wages and prices.
2015-03-27 00:00:00 Liquidity by Howard Marks of Oaktree Capital Management
My wife Nancy’s accusations of repetitiveness notwithstanding, once in a while I think of something about which I haven’t written much. Liquidity is one of those things. I’m not sure it’s a profound topic, and perhaps my observations won’t be either. But I think it’s worth a memo.
2015-03-27 00:00:00 REITs in a Rising Interest-Rate Environment by Wilson Magee of Franklin Templeton Investments
Wilson Magee, director of global real estate and infrastructure securities, Franklin Real Asset Advisors®, believes this environment is causing many investors to search for alternative investments that can add an income-oriented asset to their portfolio as well as gain exposure to global economic growth potential. He outlines why he thinks it’s an opportune time for many investors to consider diversifying into global real estate through an actively managed investment vehicle.
2015-03-25 00:00:00 The Dollar Isn't the Peso Anymore (Part II) by Richard Bernstein of Eaton Vance
In May 2013, Richard wrote a report titled “The Dollar isn’t the Peso anymore.” He rebutted the argument that the U.S. dollar (USD) was weak. The data showed that the USD had actually troughed in the spring of 2008. For seven years now, the USD has been gaining strength and is today a standout among the world’s currencies.
2015-03-23 00:00:00 How Should Advisors Evaluate Alternative Strategies? by Michael Winchell of Larkin Point Investment Advisors LLC
Because modern portfolio theory emphasizes the value of holding instruments having low cross-correlations, we’ve heard many advisors describe the search for alternative investments as a search for assets with low correlations to either equities or bonds. This leads advisors too often to consider nontraditional assets over alternative strategies. We believe that perspective is too narrow and misses the larger point. It is our opinion that clients primarily desire reasonable returns with low volatility, and that there are many ways to achieve that goal.
2015-03-23 00:00:00 Time to Ratchet Up Risk Management? Volatility is Back in Vogue by Patty Quinn McAuley of Clark Capital Management Group
Considering the full spectrum of risk management tools available when building asset allocations can help ensure that clients make the right decisions about their money regardless of market conditions. A personalized risk management approach will adjust and adapt to the changing markets based upon the desired outcome or goal of the client.
2015-03-17 00:00:00 How Advisors Are Positioning Fixed-Income Portfolios by Bob Veres (Article)
I asked the readers of my Inside Information newsletter service to tell me how they're preparing for an impending Fed rate hike. To date, I've received 178 pages of responses from advisors all over the country and across the spectrum, from indexers to fervent believers in active management, representing large and small firms investing on behalf of wealthy or middle-income clients.
2015-03-17 00:00:00 Do Liquid Alts Justify Their Costs? by Robert J. Martorana, CFA (Article)
Liquid alts are complex and expensive, so it is natural for advisors to ask if they worth the time and trouble. In this article, I answer this question. I evaluate returns with special emphasis on 2014, when managed futures (notably the AQR Managed Futures Strategy Fund - AQMIX) soared and the largest global macro fund, MainStay Marketfield (MFLDX), stumbled.
2015-03-17 00:00:00 Should You Buy in to Oil’s Secular Bear Market? by William Smead of Smead Capital Management
March 10th is one of my favorite days of the year. The tech bubble of the late 1990's burst on March 10th of 2000 and the biggest bear market of my career (2007 peak to 2009 low) bottomed on March 10th of 2009. There is a great deal to learn from those two dates in history as it pertains to the way secular bear markets work and how long it takes to move from the most popular investment in the world to being completely out of favor.
2015-03-16 00:00:00 An Overview of Nontraditional Assets by Michael Winchell of Larkin Point Investment Advisors LLC
We review a collection of nontraditional assets and acknowledge the growing attempts to offer more liquid instruments with market exposure to these assets. However, it is our opinion that these assets will ultimately represent a small portion of the overall allocation to alternative investments.
2015-03-13 00:00:00 Could the Search for Income Lead to Instability? by Daniel Loewy, Morgan Harting of AllianceBernstein
Years of quantitative easing has pushed yields on government bonds down to record lows, and income-starved investors are being pushed out the risk spectrum, forced to choose between more volatile assets to find income. Finding acceptable levels of income exposes portfolios to greater instability ahead—we believe a multi-asset approach can help.
2015-03-11 00:00:00 Optimal Diversification Portfolio for Upcoming Interest Rate Environment by Chuck Self of iSectors
Historical patterns in interest rates leading to the current trend; Macroeconomic activity supporting future rising interest rates; Recommendations for optimizing client portfolios in such an environment
2015-03-10 00:00:00 President Obama's 2016 Federal Budget Proposal by Tim Steffen (Article)
Both parties are focused on passing some type of tax reform this year, and in order to do that Republicans will likely have to concede on at least some of the president's wishes. Which of those may survive remains to be seen, but it's now up to the Republicans in Congress to respond with a proposal of their own.
2015-03-10 00:00:00 Q&A with Jeff Knight: What’s in store for 2015? by Jeff Knight of Columbia Management
I believe we are still going through a process that is flattering to financial market returns. But after six years and a tripling of the stock market, recognize that we're getting late in the game. Does Europe hang together? Do events in the Ukraine or Greece disrupt the economic recovery in Europe? Is the Fed’s tightening appropriate, or does it represent a threat to financial markets? Will those who come out on the short end of oil’s dramatic repricing emerge as a threat to capital markets either through default and bankruptcies, or worse through geopolitical tensions?
2015-03-10 00:00:00 Never Smile at a Crocodile by John Mauldin of Mauldin Economics
We will briefly survey my worry closet today before resuming our series on debt, in which we’ll encounter Paul Krugman’s lament that “Nobody understands debt.”
2015-03-09 00:00:00 An Overview of Alternative Investments by Michael Winchell of Larkin Point Investment Advisors LLC
If you have been thinking about adding alternative investments to your clients’ portfolios, it’s important to step back and analyze the various types of investments available to you—which, despite being lumped together in the same category, have become increasingly varied.
2015-03-09 00:00:00 The Dollar isn’t the Peso anymore (Part II) by Richard Bernstein of Richard Bernstein Advisors
The US dollar rally is in its seventh year and we expect this trend to continue. Many observers, including the Fed, continue to worry about inflation. However, we think a strong USD and disinflation/deflation seem more likely than inflation so long as global overcapacity forces nations to fight for market share and depreciate their currencies.
2015-03-06 00:00:00 Opportunities in Global Financial Disintermediation by Dave Gallagher of Calamos Investments
Increasing financial disintermediation is a strong secular theme providing tailwinds in several financial industries, but a likely arduous and complicated process warrants the need for a disciplined focus on both risk and reward. The financial system essentially performs one basic function—the direct or indirect movement of funds from savers to borrowers or investors. Although financial disintermediation is formally defined as the shifting of funds from indirect to direct financing, the term is more commonly used to describe the increasing role of non-bank intermediaries.
2015-03-05 00:00:00 Another Bubble? by Burt White of LPL Financial
The Nasdaq Composite just hit 5000 today as this report was going to press and is nearing its all-time record closing high of 5048. Even with the Nasdaq at 5000, we do not believe stocks have reached bubble territory. The Nasdaq has a much stronger foundation today of valuations, profits, and sentiment.
2015-03-05 00:00:00 Don’t Audit It: Reign It In by Brian Wesbury of First Trust Advisors
Some in Congress want to “Audit the Fed.” But an audit, unless the word is used in a very broad sense, would be redundant and basically irrelevant. The Fed is already audited, by Deloitte & Touche LLP and it releases an annual report that includes the auditor’s opinion, each year.
2015-03-03 00:00:00 Howard Marks on Luck and Skill in Investing by Justin Kermond (Article)
When Howard Marks graduated from the Booth School of Business of the University of Chicago, he was turned down for the one job he really wanted. That, he said, was the luckiest moment of his career. The firm that turned him down was Lehman Brothers.
2015-03-03 00:00:00 How to Tell If a Prospect Is Interested by Daniel Solin (Article)
Your presentation materials may be eminently persuasive and your delivery equally flawless, but your prospect's mind may be on an entirely different topic. Here's how to tell if your prospect is listening and - more importantly - interested in what you are saying.
2015-02-26 00:00:00 Hedge Funds on the Comeback? by Roger Nusbaum of AdvisorShares
A few days ago I stumbled across a post from CIO titled Reports Of My Death Have Been Greatly Exaggerated that chronicles the outflows from hedge funds last year and posits whether a comeback might be around the corner but with generally lower fees. The lower fee angle of the article seemed to focus on negotiating a lower fee with the manager. Of course lower fees are available through the various exchange traded products that one way or another replicate the exposure but doing so without the so called ‘2 and 20’ fee structure.
2015-02-23 00:00:00 When Volatility Rises, So Have Active Management Results by Team of The Royce Funds
For many investors, volatility is often synonymous with risk. We as value investors (and risk managers), on the other hand, have always viewed volatility as a crucial component of active stock selection. In our latest Royce Research piece, we explore the relationship between low- and high-volatility environments and the relative performance of active managers versus their respective benchmarks during these periods. This deep dive is especially important in a market that has recently seen more volatility and its largest correction in almost three years.
2015-02-18 00:00:00 On My Radar: Schumpeter’s Creative Destruction by Steve Blumenthal of CMG Capital Management Group
This week let’s take a look at debt around the globe. I share a great piece from McKinsey & Company that shows just how much more debt, county by country, has been piled on since the 2007 debt induced financial crisis. Evidence is apparent in the commodity market and I also share a few ideas how you may risk manage those allocations.
2015-02-17 00:00:00 Gary Shilling - Why You Should Own Bonds by Robert Huebscher (Article)
If you followed Gary Shilling's advice for the last 30 years, you would be very wealthy. Since 1981, Shilling has consistently advocated owning long-dated Treasury securities. In a talk last week, he reiterated that advice as one piece of his three-part asset-allocation strategy for the coming year.
2015-02-17 00:00:00 Robo-Advisors Are Not New But They Foretell the Future of Financial Advice by Joe Tomlinson (Article)
So-called robo-advisors have been heralded as the next generation of technology that will transform the financial advice industry. Underneath the considerable debate that has emerged over their potential impact, an obvious fact has been overlooked: Much of what they offer is distinctively "old school."
2015-02-17 00:00:00 Keynesian Contrarianism: Where is the Minority Today? by William Smead of Smead Capital Management
To get a good feel for where the largest pools of money are invested around the world and to identify the minority, we draw from the NACUBO-Commonfund Study of Endowments in North America. This year’s survey included $516 billion in investable assets. The results for the fiscal year ended June 30th of 2014 are listed below. Pay particular attention to the largest endowments, because we believe they represent the asset allocation of the largest worldwide institutions.
2015-02-15 00:00:00 Weighing the Week Ahead: Will Energy Stocks Support the Market Breakout? by Jeff Miller of New Arc Investments
I do not know whether we have reached a bottom in energy prices, but I have identified two important themes.
2015-02-15 00:00:00 Mamas, Don’t Let Your Babies Grow Up to Be Pension Fund Managers by John Mauldin of Mauldin Economics
We do not have to look to Greece to find massively underfunded obligations. Here in the US we can find hundreds of examples, willingly created by politicians and businessmen who proclaim they are working for the public good. We call them pension funds, but they’re just another form of unfunded debt. A sovereign bond is a promise to pay a certain amount of money over time.
2015-02-14 00:00:00 Alternate Current: The Power of Diverse Return Sources by Christine Johnson of AllianceBernstein
After a long period of calm, global markets now face tumbling oil prices, geopolitical risks and monetary policy changes. Investors looking for new ways to diversify in this uncertain environment should take a long look at investments that don’t take their cues from stock or bond market movements.
2015-02-10 00:00:00 Evensky & Katz Newsletter by Harold Evensky of Evensky & Katz
Harold Evensky presents his quarterly newsletter.
2015-02-08 00:00:00 The Eurozone: Collateral Damage by John Mauldin of Mauldin Economics
Now we're watching another Greek drama that could have significant unintended consequences – far beyond anything the market has priced in today. Then again, maybe not. Maybe the market is right this time. When we enter unknown territory, who knows what we will find? Fertile valleys and treasure, or deserts and devastation? Today we look at the situation in Europe and ponder what we don't know. Greece provides a wonderful learning opportunity.
2015-02-05 00:00:00 Your Alpha is My Beta by Adam Butler, Mike Philbrick and Rodrigo Gordillo of Butler|Philbrick|Gordillo & Associates
A couple of weeks ago, I had the pleasure of a short correspondence with Lars Kestner, a well known quant and derivatives trader, and creator of the thoughtful K-ratio as a measure of risk adjusted performance. We connected on the definition of alpha, and how the term has been so abused in media and marketing as to become almost meaningless.
2015-02-03 00:00:00 PIMCO Introduces the PIMCO Multi-Strategy Alternative Strategy by of PIMCO
In a New Neutral environment that anticipates muted returns and heightened volatility, many investors have looked to liquid alternatives in an effort to boost returns and lower overall portfolio risks. Our approach seeks to efficiently combine a range of complementary liquid alternative strategies, offering the potential for diversification and higher return per unit of risk than a single strategy could achieve on its own. This strategy can play a central role in liquid alternatives allocations or be used as a stand-alone complement to traditional stock and bond allocations.
2015-02-02 00:00:00 Portfolio Strategies 2015: Investing in an Age of Divergence by John Mauldin of Mauldin Economics
Everyone is worried about being blindsided by a significant downdraft in the markets when maybe we should be thinking about making sure we don’t miss a bull market somewhere. These and several dozen other topics were on the table when the Mauldin Economics writing team gathered here in Dallas for 3½ days of intensive talk, interviews, and planning. Today we’ll go over a few of the highlights of this last week, and I’ll share a few reasons to be optimistic about 2015.
2015-01-29 00:00:00 The Unintended Consequences of "Sophisticated" Performance Measurement by Francois Sicart of Tocqueville Asset Management
Sicart believes a measure of investment success should encompass "several cycles, with bull and bear markets as well as many fads and fashions and their aftermaths." He notes that "economic events really progress at a near-tectonic pace," so "a quarter or even a year is almost always a totally irrelevant period."
2015-01-29 00:00:00 The Strange Case of the Current Small-Cap Cycle by Team of The Royce Funds
For much of the past five years, small-cap stocks have generated returns well above their monthly rolling five-year averages. In addition, lower-than-usual volatility within the asset class and a decline in the cost of capital spurred by the Fed?s monetary stimulus programs have created an unfriendly environment for active stock pickers such as ourselves. Our latest research, however, suggests that some of these conditions were abating late in 2014, which might benefit those investors who focus on fundamentals and try to use volatility to create longer-term opportunities.
2015-01-29 00:00:00 A Very, Very, Very, Very Black Swan? by Jay Leopold of Columbia Management
Nassim Taleb’s book "The Black Swan" effectively demonstrates that seemingly highly improbable events are much more common than expected, often with significant consequences. In fact, experts are often blind to these occurrences because past data is not necessarily a good predictor of the future. Most investors are aware a black swan event hit the Swiss franc earlier this month.
2015-01-28 00:00:00 Black Cypress: Ignore the Bears; The Force(s) are with Us by Alan Hartley of Black Cypress Capital Management
The U.S. economy should continue to expand and that bodes well for stocks. The next bear market will likely start due to a recession or geo-political conflict and not from the start of Fed interest rate increases or time elapsed. The current economic landscape is favorable to growth. Stock markets are priced for low returns.
2015-01-27 00:00:00 Looking Back at James Montier's "Perfect" Value Investors by Larry Swedroe (Article)
Is there such a thing as a "perfect" value investor? And if so, what does that investor's fund look like? James Montier thought he knew the answers when he penned his 2006 article "The Perfect Value Investor." Let's look back and see how that portfolio did.
2015-01-27 00:00:00 What Happened to the Secular Bear Market in Equities? by Martin Pring of Pring Turner Capital Group
History shows that US equity prices have consistently alternated between secular bull and bear trends. These price movements typically average 15-20 years in length and embrace several different business cycles. In April 2003 we published an article posing the question, ?Whither the Secular Trend of Equities?? which laid out the case for the year 2000 being a secular or very long-term peak for the US stock market. Since the three previous secular bears averaged just over 18-years, our working hypothesis was for a weak market until sometime around 2018.
2015-01-26 00:00:00 How Global Interest Rates Deceive Markets by John Mauldin of Mauldin Economics
When it comes to interpreting what current interest rates are telling us about the markets in various countries, I have to say that I do not think they mean what the market seems to think they mean. In fact, buried in that list of bond yields is ?false information? ? information so distorted and yet so readily misunderstood that it leads to wrong conclusions and decisions ? and to bad investments.
2015-01-23 00:00:00 ECB Review: Blowing on the Embers of a Reflationary Fire by Andrew Bosomworth of PIMCO
?Not to pursue our mandate would be illegal? is how Mario Draghi ended his last press conference of 2014. Mr. Draghi?s first press conference of 2015 began with the announcement of a quantitative easing (QE) programme that pursues the European Central Bank?s (ECB) inflation mandate with a vengeance. And rightly so, for the disinflationary trends in the eurozone had become all the more precarious as economic output and the price of oil continued to fall.
2015-01-21 00:00:00 What We Are Hearing From Asia-Pacific Investors: Five Themes for 2015 by Eric Mogelof of PIMCO
Amid lower forward-looking returns, investors are focusing on multi-asset solutions, enhanced beta, income and alternatives in Asia-Pacific. PIMCO is prepared to address these themes, drawing upon our time-tested investment process that combines high-level macroeconomic views with thorough on-the-ground research.
2015-01-20 00:00:00 The Swiss Release the Kraken! by John Mauldin of Mauldin Economics
In an era when central bankers are supposed to be more open, collaborative, and communicative, what would make the Swiss National Bank decide to turn on a dime and shock the markets ? to release the Kraken, as it were? Note that in fact all hell did break loose. Rather than delivering hints accompanied by a few well-placed leaks, the Swiss decided it would be best to completely surprise the markets. It will be a long time before we get the full story on what must have been going through their heads as they reached the decision.
2015-01-20 00:00:00 What is a Deep Value Investor? by (Article)
Deep value investors have a long-term focus and are not fixated on quarterly earnings. They're looking for companies with the ability to compound wealth over time.
2015-01-18 00:00:00 Weighing the Week Ahead: The Message from Fourth Quarter Earnings by Jeff Miller of New Arc Investments
I do not know how earnings season will play out this week. My list of things to watch is good, but the market seems to be demanding a parlay of positive indications: Beating the whisper number for earnings; Beating the revenue expectations; Business growth ?organic, not from mergers or purchases; Solid ?quality of earnings? with no gimmicks or accounting moves; A credible, positive outlook.
2015-01-17 00:00:00 Palladium Was the Winner in 2014 by Frank Holmes of U.S. Global Investors
Palladium, 2014?s top commodity, performed relatively according to script. For the year it was up 11.35 percent, compared to its 10-year annualized returns of 14 percent. Much like nickel, palladium was spurred by extenuating circumstances. Between January and June, a labor strike in South Africa, the world?s second-largest producer of the metal following Russia, halted production, which depleted reserves and sent palladium to a three-year high of $850 an ounce.
2015-01-13 00:00:00 Is the Commercial Office Market Recovery a Mirage? by Keith Jurow (Article)
I will focus on an important question few analysts are raising: Is the so-called recovery in commercial office markets real or a mirage?
2015-01-10 00:00:00 Bad News Is Good News: A Contrarian View of China Investing by Frank Holmes of U.S. Global Investors
I asked Xian Liang, portfolio manager of our China Region Fund (USCOX), to outline a few of the most compelling cases to remain bullish on the Asian giant.
2015-01-06 00:00:00 Evaluating the Arguments for the Dollar's Demise by Seaborn Hall (Article)
From the great financial crisis and the massive escalation of sovereign debt and QE to the threat of currency wars to cries from pundits to exit the dollar and buy gold, it requires a discerning advisor to sift through the din and decide whether the dollar's reserve status is slipping. Could the dollar look strong and still be in danger? Several recent books, and papers from the BIS, IMF and Fed delineate the noise from the reality.
2015-01-06 00:00:00 Ben Graham's Mr. Market 2015 by William Smead of Smead Capital Management
As we enter 2015, we at Smead Capital Management would like to separate how unsuccessful investors use Mr. Market and how successful investors use his "voluntary" participation in the stock market.
2015-01-06 00:00:00 Oil, Currencies, and the Fed by Richard Michaud of New Frontier Advisors
Fourth quarter headlines included volatility spikes, dramatic declines in oil prices, and positive views of the economy by the Fed. Oil declined 41% this quarter and 46% for the year. The dollar continued to gain against some major developed global currencies. For the year, the dollar gained 13.6% against the euro and 13.8% against the yen while gold was down 2%.
2015-01-05 00:00:00 Tips for Navigating The Market in 2015 by Russ Koesterich of BlackRock
As the calendar turns to 2015, its time to assess the investing landscape and your investment portfolio to ensure youre well positioned for the New Year. The BlackRock List can help.
2015-01-04 00:00:00 Why the World Needs the US Economy to Struggle by John Mauldin of Mauldin Economics
In this weeks letter, my associate Worth Wray explores what a rising dollar means for emerging markets and what central banks are likely to do in response. Can they smooth the ride, or will it be the worlds scariest roller coaster? This letter will print long because of the number of fabulous charts Worth provides. I might make a brief comment or two at the end. Heres Worth.
2014-12-30 00:00:00 Qualified Charitable Distributions by Tim Steffen (Article)
The Qualified Charitable Distribution rules allow taxpayers to make IRA distributions payable directly to a qualified charity without treating the distribution as taxable income. The QCD rules have expired and then extended periodically over the years, and were recently extended again through 2014 with the passage of the Tax Increase Prevention Act of 2014. These rules do expire again after 2014, meaning taxpayers will enter 2015 with the same uncertainty they had throughout the prior year.
2014-12-28 00:00:00 The Line Between Rational Speculation and Market Collapse by John Hussman of Hussman Funds
Current equity valuations provide no margin of safety for long-term investors. One might as well be investing on a dare. If we observe an improvement in market internals and credit spreads, it would not make valuations any less obscene, but it would significantly ease our immediate concerns about market losses. A safety net would be required in any event, but there is a range of possible outlooks between hard-negative and constructive with a safety net.
2014-12-24 00:00:00 Credit Spreads: Relative vs. Absolute Levels by Bob Andres of Andres Capital Management
Following a yearlong environment of relatively stable corporate bond spreads, we are beginning to see increased market volatility and a widening of these credit spreads. The plunge in oil prices, the rise in the U.S. dollar, and geopolitical uncertainty all contribute to wider spreads as they represent a proxy for market risk.
2014-12-23 00:00:00 Convertible Bonds: The Rodney Dangerfield of Liquid Alts by Robert Martorana (Article)
Historical returns have been outstanding for convertible-bond strategies. Moreover, low drawdowns during bear markets give these products an attractive risk-return profile, especially when compared to other liquid alternatives.
2014-12-23 00:00:00 Tax Increase Prevention Act of 2014 by Tim Steffen (Article)
In the waning days of the Congressional year, the House and Senate gave new life to more than 50 tax provisions that had expired at the end of 2013, giving them all a one-year extension through 2014. Included in this extension were popular individual tax breaks, including the ability to make charitable gifts directly from an IRA, an option to deduct state sales tax rather than income tax and an above-the-line deduction for tuition costs. The bill also created a new tax-favored savings account for those with disabilities.
2014-12-23 00:00:00 Could an Energy Bust Trigger QE4? by Peter Schiff of Euro Pacific Capital
In a normal economic times falling energy costs would be considered unadulterated good news. The facts are simple. No one buys a barrel of oil to display above the mantle. No one derives happiness from a lump of coal. Energy is simply a means to do or get the things that we want
2014-12-23 00:00:00 Canary in a Coal Mine? by Dennis Rhee of AdvisorShares
With the collapse of oil, market participants are logically discussing which assets are vulnerable to more selling and which are value buys.
2014-12-22 00:00:00 Could an Energy Bust Trigger QE4? by Peter Schiff of Euro Pacific Capital
In a normal economic times falling energy costs would be considered unadulterated good news. The facts are simple. No one buys a barrel of oil to display above the mantle.
2014-12-22 00:00:00 Completing the Alternative Investments Puzzle: Putting the Pieces Together by Walter Davis of Invesco Blog
In my previous blog, I discussed why I believe advisors and investors should approach alternative investments much like a jigsaw puzzle and offered an organizing framework that can help. When putting together a puzzle, the first step is to sort and organize all the pieces. For alternatives, the first step is to organize and align the various alternative strategies with specific investment objectives. This step is critical because it helps investors decide whether alternatives can help them meet their needs, and, therefore, whether they should invest in them.
2014-12-21 00:00:00 2014 In Review: A Good Year to Avoid Performance Envy by Robert Isbitts of Sungarden Investment Research
2014 has been an odd year in many ways. Easy money has continued to be the rule for central governments across the world, and this has created false sense of security that is going on six years (following the end of the financial crisis-induced stock market decline that ended in March, 2009). To us, it was a year of waiting: for an end to the suppression of interest rates to aid retirees, for the U.S. Congress to do something productive, and for investors to start taking risk more seriously and stop falling for Wall Street come-ons.
2014-12-17 00:00:00 Where Did The New Middle Class Citizens Go? by William Smead of Smead Capital Management
The "well known fact" with regards to oil over the last decade read like this: because of huge GDP growth in emerging markets like China, there were going to be 400 million new middle class citizens born of uninterrupted prosperity; they were going to want all the autos, consumer goods, $10,000 watches and food that Americans have.
2014-12-16 00:00:00 Allocating to Alternative Investment Strategies by Nathan Rowader of Forward
Following the market declines in 2008 and 2009, many investors have shown interest in alternative investment strategies such as hedge funds and mutual funds that employ hedge fund-like strategies. These types of strategies have been around a long time, but until recently their use among individual investors has been somewhat limited.
2014-12-15 00:00:00 How to Approach the Alternative Investments Puzzle: Putting the Pieces Together by Walter Davis of Invesco Blog
Every summer my family and I go on a vacation to the beach. While there, my wife buys a big jigsaw puzzle for us to work on. Every year, we feel overwhelmed immediately after she dumps out all 1,000 pieces.
2014-12-15 00:00:00 A Sensible Proposal and a New Adjective by John Hussman of Hussman Funds
The FOMC is well-served by Richard Fishers proposal to consider terminating the current policy of reinvesting proceeds from Fed balance sheet holdings as those securities mature. That shift would not imply any rush to raise the federal funds rate or otherwise normalize policy rates.
2014-12-10 00:00:00 2015 Year Ahead: Continuing to Deflate the Global Credit Bubble by Richard Bernstein of Richard Bernstein Advisors
Stock market leadership virtually always changes when volatility significantly spikes, and the 2008 bear market was no exception. Credit-related asset classes led the markets for the decade prior to 2008 as the global credit bubble inflated. Since 2008?s bear market, however, leadership has significantly changed and credit-related asset classes have generally underperformed plain, old-fashioned stocks.
2014-12-09 00:00:00 Germany and France: Looking for Quality in the Eurozone by Jim Harvey, Dilip Badlani of The Royce Funds
While concerns over economic growth in Europe have been escalating, Royce International Micro-Cap Fund Portfolio Managers Jim Harvey and Dilip Badlani are finding small-cap opportunities with long-term benefits.
2014-12-03 00:00:00 A Brave New World by Niels Jensen of Absolute Return Partners
In the the last two Absolute Return Letters I have argued why one should expect global GDP growth to be below average over the next decade or so, why interest rates should, as a consequence, remain low and why equity returns should also disappoint. Not as in negative returns but below the levels we have grown accustomed to over the past 30 years. If you have read those two letters, none of this should come as a surprise.
2014-12-02 00:00:00 Strangers Passing in the Night by William Smead of Smead Capital Management
The economies of China and the United States appear to be headed in the opposite direction. Chinas economy is decelerating fast and the U.S. looks right on the cusp of having its economic growth accelerate, as evidenced by the revised quarterly GDP number of 3.9% released on November 25th, 2014.
2014-12-02 00:00:00 Learning From Mistakes Made By Pension Funds by Roger Nusbaum of AdvisorShares
Forbes took a look at How Pension Funds Make Investing Too Complex. The issue was hedge funds and private equity funds that tend to be expensive, opaque or both. These types of direct investments also tend to be illiquid in terms of having long waiting periods before investors can get their money out.
2014-12-02 00:00:00 The Worlds Dumbest Idea by James Montier of GMO
In a new white paper today, James Montier of GMO's asset allocation team "explor(es) the evidence that shareholder value maximization (SVM) has been an unmitigated failure and contributed to some very undesirable economic outcomes."
2014-12-01 00:00:00 Is Bitcoin the Future? by John Mauldin of Mauldin Economics
Worth Wray has written this weeks letter as a summary of what we know about Bitcoin. Delving into its history and bringing us up to date, he also offers a glimpse of the future. At the end of the letter I offer a few of my own thoughts on the relationships among gold, fiat money, Bitcoin, and financial transactions. If nothing else, Bitcoin offers a provocative way to think of the future of money.
2014-12-01 00:00:00 Monetary Tectonics by John Hathaway of Tocqueville Asset Management
John Hathaway, manager of the Tocqueville Gold Fund (TGLDX), examines in his latest piece "the very meaningful difference between the dollars relative and absolute strength, and look(s) at the widening fissures beneath the faade of strength fissures that, as yet, appear to have had little impact upon the investment consensus."
2014-12-01 00:00:00 Hard-Won Lessons and the Bird in the Hand by John Hussman of Hussman Funds
The S&P 500 is more than double its historical valuation norms on reliable measures (with about 90% correlation with actual subsequent 10-year market returns), sentiment is lopsided, and we observe dispersion across market internals, along with widening credit spreads. These and similar considerations present a coherent pattern that has been informative in market cycles across a century of history including the period since 2009. None of those considerations inform us that the U.S. stock market currently presents a desirable opportunity to accept risk.
2014-11-25 00:00:00 The Dangers of Euphoria in Real Estate Investments by Keith Jurow (Article)
There is widespread consensus that the real estate crisis is over. Because of this complacency, wealth management firms and RIAs widely believe that you do not need to talk about risks at all.
2014-11-23 00:00:00 Weighing the Week Ahead: Are Investors Too Complacent? by Jeff Miller of New Arc Investments
There is no investment edge from repeating what you read in the morning paper. Here was my list still worth watching: Geo-political that is not on the current radar a true black swan. An increase in the PCE index that was not accompanied by strong economic growth. Wage increases that were not accompanied by strong economic growth. Declining profit margins that were not accompanied by strong economic growth and increased revenues. An increase in the chances for a business cycle peak (the official definition of a recession). Remote at this point. An increase in financial stress t
2014-11-22 00:00:00 Solar Energy Powers Record Silver Demand by Frank Holmes of U.S. Global Investors
Silver demand in the fabrication of solar panels is set to outpace photography, if it hasn?t already done so.
2014-11-21 00:00:00 Asia's Deepening Capital Markets by Robert Horrocks of Matthews Asia
The drivers of economic growth, the region's small- and medium-sized enterprises, are finally gaining access to capital through alternative funding sources outside of just banks. Retail investors are accessing increasingly diverse products in which to store their savings and build wealth. Institutions are demanding long-dated assets to match their liabilities? Are we finally seeing more stable local demand in Asia's local capital markets?
2014-11-18 00:00:00 Is This Purgatory, Or Is It Hell? by Ben Inker of GMO
GMO is often accused of being a glass half empty investor, and I admit that in a year that has seen the S&P 500 rise 8.3%, MSCI All-Country World rise 3.7%, and the Barclays U.S. Aggregate rise 4.1% through the third quarter, the words Purgatory and Hell are unlikely to come to mind to most investors when opening their brokerage statements. It has been a dull year, perhaps, but certainly not a hellish one. So what is bringing Danteesque visions of damnation into our slightly warped minds?
2014-11-18 00:00:00 Bubble Watch Update by Jeremy Grantham of GMO
As you may remember, the January Rule serves as a kind of barometer for the behavior of the market in the coming year. Historically, when January was down, the rest of the year had over twice the declines than one would expect randomly, far more mediocre months, and a very sub average return. But it is far from perfect and it had the unusual problem this year of bumping into the positive signal from the Presidential third year, which started for us on October 1.
2014-11-18 00:00:00 How AQR's New Fund Adds Value - An Alternative Approach to Alternatives: Investing with Style by Larry Swedroe (Article)
The conventional justification for alternative investments has been their ability to effectively diversify against core equity and fixed-income allocations. But, in many cases, the empirical data doesn't support that view. A new fund provides a different way to obtain returns from sources that have low to negative correlation to stocks and bonds, as well as each other - an alternative to alternative investment vehicles.
2014-11-12 00:00:00 Four Questions on Investors Minds Today by Chris Engelman of Cedar Hill Associates
From the strengthening U.S. dollar to Bill Gross departure from Pimco, a few common questions have been coming up in Cedar Hills meetings with clients during the past few months. In this article, Managing Director Chris Engelman shares the firms thoughts on these timely issues.
2014-11-11 00:00:00 Factors: An Essential Part of Any Nutritious Portfolio by Adam Butler, Mike Philbrick, Rodrigo Gordillo of Dundee Goodman Private Wealth
We recently posted a piece on factor investing so we were thrilled to have an opportunity to see Dr. Andrew Ang and Don Raymond discuss factor investing at a seminar in Toronto last week.
2014-11-07 00:00:00 Quarterly Letter by Ron Muhlenkamp of Muhlenkamp & Company
My first draft of this letter, which I wrote three weeks ago began with: Europe has not solved its problems; Nor has Japan; Nor has China; Nor has the U.S. The rest of that draft is now obsolete. Since mid-September, several items have changed-some economic, some market-related, some psychological.
2014-11-04 00:00:00 Outrunning the Bear: An Active Managers Survival Guide by William Smead of Smead Capital Management
Two long-time friends go up in the mountains on a hunting trip. At 4:30 A.M. of the second day, one of the men wakes up at one end of the tent to find his buddy dressing and putting on his running shoes at the other end. He asks him what he is doing. His friend says, There is a bear outside our tent. The other guy exclaims, You cant outrun a bear! His friend replies, I dont have to outrun the bear, I just have to outrun you.
2014-11-03 00:00:00 Digging Deep for Value in Volatility by Grace Hoefig of Franklin Templeton Investments
Selloffs like those seen recently in US equities have provided a respite from soaring share prices for deep value investors, and they have been out in force, scouring the markets for quality stocks at bargain prices. Grace Hoefig, research analyst and portfolio manager for Franklin Equity Groups US Value Equity team, says that recent stock market dips have presented value opportunities in some market sectors, but, as through all market conditions, a little patience and a lot of research and flexibility are required to uncover them.
2014-10-31 00:00:00 Trick or Treat? Slow Global Growth Hits Cyclical Sectors Hardest by Francis Gannon of The Royce Funds
As of October 13, the small-cap Russell 2000 Index was down 12.9% from its 2014 high on July 3a double-digit correction not seen in more than three years. With the U.S. economy slowly improving and Fed tapering winding down as scheduled, what is driving this pullback? Co-Chief Investment Officer Francis Gannon talks about economic growth beyond our borders and how it has been playing a role in shifting investor sentiment.
2014-10-30 00:00:00 Got Loans? by Mark R. Kiesel, Elizabeth (Beth) MacLean, Rudy Pimentel of PIMCO
?We believe select investors looking to reposition portfolios may benefit from a move to senior secured floating rate loans. CLOs have been an important source of demand in the market, and even with more strict risk retention rules just announced under Dodd Frank, we think demand will remain strong. While the Fed has criticized some banks for not following their leveraged lending guidelines, Fed members themselves, in our view, do not appear concerned about loans having a major impact on financial stability.
2014-10-30 00:00:00 How In-Depth Accounting Analysis Helps Find Good Investments by Charlie Dreifus and Dave Gruber (Article)
Principal Dave Gruber talks with Portfolio Manager Charlie Dreifus about his 40+ year investment process and the importance of Abe Briloff's tutelage on his discipline.
2014-10-23 00:00:00 Quarterly Letter by Ron Muhlenkamp of Muhlenkamp & Company
Since mid-September, several items have changedsome economic, some market-related, some psychological.
2014-10-23 00:00:00 How Consensus Thinking Works Against Investors by Bob Andres of Andres Capital Management
Over the past several years we have used this newsletter to voice our concerns regarding the macro-economic landscape, while attempting to provide practical solutions for investors. Since our venture into financial commentary, we have questioned the veracity of consensus opinion and how it tends to be wrong, especially in regards to interest rates.
2014-10-21 00:00:00 How to Compete with Online Advice: The Historical Lessons by Dan Richards (Article)
Online start-ups offering low-cost investment advice have received lots of attention, not to mention over $200 million dollars in venture capital. What lessons does history offer on the likely impact of online advice? And based on what's happened in the past, how can advisors respond to this new threat?
2014-10-21 00:00:00 Attractive Stocks in a Bifurcated Market by William Smead of Smead Capital Management
As value stock picking managers, we assume we will be operating in a bifurcated equity environment. We think the bifurcation will be between sectors of the stock market which appear over-capitalized due to rear-view mirror success and those which look undervalued when considering the present value of their future income stream. The combination of numerous forces, both positive and negative, will most likely create this bifurcation.
2014-10-19 00:00:00 What the Strong Dollar Does to Yellow and Black Gold and Why We're Seeing Green by Frank Holmes of U.S. Global Investors
The United States is doing better than it has in years. Jobs growth is up, unemployment is down, our manufacturing sector carries the rest of the world on its shoulders like a wounded soldier and the World Economic Forum named the U.S. the third-most competitive nation, our highest ranking since before the recession.
2014-10-14 00:00:00 Bill Sharpe on Retirement Planning by Robert Huebscher (Article)
Bill Sharpe discusses topics at the forefront of financial-planning research: The role of annuities in a retirement portfolio, the proper glidepath for target-date funds, if investors should anticipate mean reversion in market returns and whether ESG- and SRI-oriented portfolios make sense.
2014-10-14 00:00:00 Sea Change by John Mauldin of Mauldin Economics
The final chapter and conclusion pretty much end as you would expect: the demise of monetary policys ability to soothe the soul of the markets and the return of volatility. We hopefully get a full-fledged restructuring of the sovereign debt markets. The Fed and sister central banks will try the same tired tools they have been using. Except they have already been to the zero rate boundary and have wasted the opportunity they had to increase rates so that they could lower them later. Another round of quantitative easing?
2014-10-14 00:00:00 You Ain't Seen Nothin Yet by William Smead of Smead Capital Management
Someone recently asked a group of us which band we saw at our first rock concert. My answer was the Canadian band, The Guess Who, in 1975. With hits like No Time, Undun and These Eyes, The Guess Who hit the perfect balance between my 17-year old testosterone driven aggressiveness and my urge to romance the woman of my dreams. The key members of the band in the 1960s and 1970s were Burton Cummings and Randy Bachman.
2014-10-13 00:00:00 Air-Pockets, Free-Falls, and Crashes by John Hussman of Hussman Funds
Once overvalued, overbought, overbullish extremes are joined by deterioration in market internals and trend-uniformity, one finds a narrow set comprising less than 5% of history that contains little but abrupt air-pockets, free-falls, and crashes.
2014-10-10 00:00:00 Are Hedge Funds the Great Diversifier? by Team of Milliman Financial Risk Management
The California Public Employees Retirement System (CalPERS) announced on September 15th that it would divest its entire $4.5 billion hedge fund investment. With a market value of $298 billion, a move by Calpers may be a bellwether for the industry. The decision comes at a time when many pensions are reconsidering hedge fund investments as a risk management tool.
2014-10-09 00:00:00 Warren Buffett on Buying Businesses by William Smead of Smead Capital Management
Wed like to ask a self serving and much nuanced question: is your active equity portfolio manager buying businesses for you or are they trying to guess what the stock market will do in the next month or few years? Much like Samuel L. Jackson asks, Whats in your wallet? in television commercials, wed like to ask, Whats in your portfolio?
2014-10-08 00:00:00 Nervous Investors, Choppy Markets by Richard Michaud of New Frontier Advisors
It was a choppy third quarter for global asset classes. Domestically, Large Cap equities rose slightly but Small Cap US stocks fell.
2014-10-07 00:00:00 How M&A Resurgence May Unlock Value by Francis Gallagher, Peter Drippe of Visium Funds
Growth is a strong motivator for initiating mergers and acquisitions (M&A). For years, businesses created progressively more complex organizations, acquiring or expanding into unrelated business lines, consequently often suppressing overall company valuations. The complexity of melding disparate corporations appeared to make it exceedingly difficult for investors to evaluate companies true worth. In the present period of slow U.S. economic growth, a new trend in M&A has emerged, as many companies are reversing these moves, benefiting stock prices, investors and, potentially, the
2014-10-06 00:00:00 New Updates at Crestmont Research by Doug Short (Article)
Note from dshort: My friend Ed Easterling, whose Crestmont Research P/E valuation is a regular feature on this website, has published collection of periodic updates to his ongoing analysis. The commentary below is based on his latest distribution email to subscribers.
2014-10-04 00:00:00 The Wayback Machine Birthday Tour by John Mauldin of Mauldin Economics
Ive been writing this letter for some 15 birthdays now, well over 10,000 pages of collected work. Every word is still at my website a history, if you will, of what I was thinking at the time. I asked my longtime (and long-suffering) editor, Charley Sweet, to go back over this past decade and a half and give us a review of what I was saying my birthday week.
2014-10-03 00:00:00 Metastability? by Jeffrey Bronchick of Cove Street Capital
We remain cheerfully bearish on fixed income and slightly less so on equity markets. The combination of volatility and confusion produces opportunities and since we have had a lot less of the former, we have seen a lot fewer of the latter. Not much of this has changed this year...but things do change-sometimes for reasons we can "see" and sometimes due to factors we can't. We remain utterly convinced that Federal Reserve policy is our greatest known unknown and we remain extraordinarily skeptical that the Great Monetary Experiment will end with a purely beneficial outcome. This quart
2014-10-02 00:00:00 Will Risk Parity Performance Persist? by Chris Maxey, Brian Payne of Fortigent
With risk parity portfolios on the whole having outperformed traditional 60/40 allocations since the trough of the financial crisis, one must be mindful of the risks that lie ahead when determining the efficacy of such an approach.
2014-09-30 00:00:00 Asset Allocation in a Time of Complacency by Dimitri Balatsos of Tesseract Partners
Complacency is a dangerous mindset, especially for investors. Having been generously rewarded beyond their expectations, investors were coddled in the arms of complacency as 2013 drew to a close.
2014-09-30 00:00:00 Microcap as an Alternative to Private Equity by Chris Meredith, Patrick O'Shaughnessy of O'Shaughnessey Asset management
Private equity has become a central component of many institutional and high-net-worth investment portfolios over the past decade. While private equity offers potential advantages, it also requires taking distinct risks. This paper highlights an alternative to private equitymicrocap equitieswhich mitigates several of these particular risks.
2014-09-29 00:00:00 Short Equity ETFs: An Imperfect Market Hedging Strategy by Bob Andres of Andres Capital Management
So the Wizard unfastened his head and emptied out the straw. Then he entered the back room and took up a measure of bran, which he mixed with a great many pins and needles. Having shaken them together thoroughly, he filled the top of the Scarecrow's head with the mixture and stuffed the rest of the space with straw, to hold it in place. L. Frank Baum, The Wonderful Wizard of Oz
2014-09-28 00:00:00 The End of Monetary Policy by John Mauldin of Mauldin Economics
Lets explore the limits of monetary policy and think about the evolution and then the endgame of economic history. Not the end of monetary policy per se, but its emasculation.
2014-09-27 00:00:00 The Elephant Leaves the Room by Robert Isbitts of Sungarden Investment Research
The news was greeted with shock by some, while others wondered what took so long. In perhaps the first of many shoes to drop on the hedge fund industry, the largest U.S. pension fund, Calpers announced it will sell all of its hedge fund investments within 12 months. Media stories on this announcement were quick to cite lagging performance of these funds over the past year, but it appears Calpers was more concerned with the level of fees and lack of transparencythat is, they did not know what the heck was going on inside of many of the funds.
2014-09-25 00:00:00 Europe’s Commercial Real Estate Deleveraging: ‘Not Too Fast, Not Too Slow’? by Tareck Safi, Tom Collier of PIMCO
As European bank deleveraging accelerates, we expect that commercial real estate (CRE) will continue to constitute a significant proportion of bank assets to be sold, albeit with a shifting geographical mix. We believe CRE opportunities remain in the form of single assets and complex structured transactions in particular; but a disciplined approach will be key given competition in specific types of assets and in certain jurisdictions. This will require flexible capital, local investment expertise and hands-on asset management, in addition to strategic sourcing capabilities.
2014-09-22 00:00:00 Yellen to the Markets: Come to Me by Bradley Harper of WisdomTree
By most accounts, the Federal Open Market Committee (FOMC) statement released September 17 failed to break much new ground in terms of changes to policy or language. The Federal Reserve Board (Fed) met expectations with another measured step in its tapering process, by trimming $5 billion of Treasury and $5 billion of mortgage-backed securities purchases from its asset purchase program.
2014-09-19 00:00:00 Panic in Bermuda: When Your Business Turns into an “Interesting New Asset Class” by Krishna Mohanraj of Diamond Hill Capital Management, Inc.
All else equal, we prefer to invest in strong franchises in stable industries. However, even within industries undergoing turmoil, understanding the differing prospects of individual firms can present us with attractive investment opportunities, both long and short.
2014-09-18 00:00:00 “You’re Going to Need a Bigger Boat”: Alpha and Interest Rates by Brooks Ritchey of Franklin Templeton Investments
Caution has been the dominant sentiment among investors in recent times even as equities have continued to march along. But as the prospect of rising US interest rates becomes ever more real, Brooks Ritchey, senior managing director at K2 Advisors, Franklin Templeton Solutions, takes a look at how some individuals and institutions are changing their guarded approach. He says alternative investments could find increased interest among savvy investors as interest rates start to tick higher.
2014-09-17 00:00:00 Abenomics 2.0 by Kenichi Amaki of Matthews Asia
The reversal of Japan's equity markets so far this year, have led investors to wonder, "Is Abenomics working?" There are hundreds of components that comprise this economic plan, and among the recent successes has been job creation. However, macroeconomic statistics point to some emerging near-term challenges, including still-muted wage growth. This month Kenichi Amaki takes a look at both current pressures and progress in Japan.
2014-09-17 00:00:00 America in the Driver’s Seat – Enjoy the Ride by Doug MacKay, Bill Hoover of Broadleaf Partners
Like clockwork, earnings season has drawn to a close, creating an information vacuum for the stock market, one in which the media spends more time "making" the news than perhaps reporting it. The marginal dollar at trade - or the price maker in a high frequency dominated trading world - is one more likely to be concerned about the Fed's words over the next two days than the stream of earnings produced by corporate America over the next few quarters.
2014-09-16 00:00:00 Stocks Slip on Quiet Data Week by Chris Maxey, Ryan Davis of Fortigent
A modest number of economic indicators were released last week, with the majority suggesting that the domestic economy remains on solid footing. Consumer sentiment and retail sales were the bright spots, after concerns about what impact the weak labor report would have on the consumer.
2014-09-15 00:00:00 CEF News Update featuring Maury Fertig by (Article)
Patient investing is advised with closed-end funds, says Maury Fertig, in a roundup of recent CEF news reports and commentary.
2014-09-15 00:00:00 Understanding the Potential Risks and Rewards of Alternative Investments by Bob Andres of Andres Capital Management
Today, Investors are confronted with constructing or restructuring an asset allocation model in an environment where traditional equity and fixed income securities are fully valued. As a result, investors may be facing a period of nominal or negative returns from both of these traditional asset classes. In this environment, alternative investments may play a pivotal role in providing investors with broad diversification, lower correlations, and as a result, enhanced downside protection.
2014-09-14 00:00:00 Whats on Your Radar Screen? by John Mauldin of Mauldin Economics
So lets look at whats on my radar screen today. First up (but probably not the most important in the long term), I would have to say, is Scotland. What has not been widely discussed is that the voting age was changed in Scotland just a few years ago. For this election, anyone in Scotland over 16 years old is eligible. Think about that for a second. Have you ever asked 16-year-olds whether they would like to be more free and independent and gotten a no answer? They dont think with their economic brains, or at least most of them dont.
2014-09-09 00:00:00 How Rare are Housing Bubbles? Understanding the Case-Shiller Index and its Counterparts by Cesar A. Orosco and Laurence B. Siegel (Article)
Do house prices experience periodic bull and bear markets like the stock market? Or are they stable in real (inflation-adjusted) terms most of the time, with big disruptions once or twice in a century? Two popular house price series tell these very different stories. Knowing which is better will lead to superior investment outcomes and improved policy decisions.
2014-09-09 00:00:00 Growing Income and Wealth with High-Dividend Equities by C. Thomas Howard, PhD (Article)
High-dividend equities have significant advantages for growing income and wealth: getting sufficient yield, keeping up with inflation and outliving available funds. Such a portfolio produces higher income per dollar invested, growing income and principal over time, higher total returns, lower volatility and a reduced risk of outliving savings.
2014-09-09 00:00:00 Market Perspective by The CCR Wealth Management Investment Committee of CCR Wealth Management
In our office we frequently make sport of the countless headlines we encounter on a daily basis from various media outlets across the web. These headlines are often splashed across the home pages of market or financial sitesthough often across mainstream news outlets, or the business sections of Sunday newspapers as well.
2014-09-09 00:00:00 Hiring Flounders in August and Extreme Seasonal Distortions by Chris Maxey, Ryan Davis of Fortigent
With expectations high, the August labor report landed with a reasonably loud thud. Economists expected recent improvements in labor markets to continue aplenty, but that proved not to be the case during the oftentimes-volatile month of August. It is never wise to read too much into a singular month, and the details of this report support that notion.
2014-09-09 00:00:00 The Risk of Permanent Loss by William Smead of Smead Capital Management
Since the stock market has done extremely well from its abyss-like low in March of 2009, many investors are worried about the risks associated with owning U.S. large-cap stocks. A cacophony of articles have been written which not only look for the stock market to correct, but also have an expectation of the kind of bear market decline which would set investors back for five years, like the declines in 2000-02 and 2007-09. Those declines each hit the S&P 500 Index for a loss of 40% or more.
2014-09-08 00:00:00 Are Municipals Allergic to Basel? by Bob Andres of Andres Capital Management
One of the bogeys of the Basel Accords calls for dramatic improvements in bank liquidity. The most recent changes to the Liquidity Coverage Ratio (LCR) test changed the numerator in the equation to ease the strictness of qualifying assets. The formula divides a banking institutions stock of high quality liquid assets (HQLA)the numeratorby estimated total net cash outflow over a 30-day period in a stressed environment. The calculation must be at least equal to or greater than 100 percent at all times.
2014-09-03 00:00:00 S&P Hits the 2,000 Mark by Ryan Davis of Fortigent
Equity markets moved modestly higher last week, with the S&P 500 closing above the 2,000 level for the first time. The S&P 500 added 80 bps on the week and now stands up 9.9% on the year following a 4% gain in August. Bonds also rallied last week, rising in tandem with European sovereigns. The rate on the 10-year Treasury fell to 2.33% by weeks end.
2014-09-03 00:00:00 The Peritus Process Managing Risk by Tim Gramatovich of AdvisorShares
What is risk and how is it defined? To us, risk is about losing money and managing risk is what portfolio management is all about. Lets begin with credit risk, which is something we take on and expect to get paid for. First of all, credit investing is a negative art. What you dont buy is more important than what you do buy. Investors will not appreciate this until the cycle turns, which will inevitably happen at some point.
2014-09-02 00:00:00 Ranking the Top 10 "Differentiators" for Advisory Firms by Bob Veres (Article)
If we have a clear idea of what foregrounds one advisory firm ahead of others, then we can deliberately cultivate those characteristics. The problem is, nobody has ever compiled a comprehensive list of differentiators, much less ranked them according to importance. So, to fill that obvious void, I've ranked the top 10 differentiators that I've personally seen advisors use in their positioning and marketing.
2014-08-26 00:00:00 Event Driven Managers Encounter a Short-Term Hiccup by Chris Maxey, Brian Payne of Fortigent
After a period of very strong deal activity during the first half of 2014, traders and investors were hit with arbageddon in early August. Arbageddon struck after a series of large deals fell apart, sparking concern that the pickup in activity from earlier in the year was coming to an abrupt halt. Activity since that time would suggest otherwise, and it appears that the M&A train is back on course.
2014-08-25 00:00:00 Correcting a Common Misconception about Alternative Investments by Walter Davis of Invesco Blog
A common misconception about alternative investments is that these investments have failed anytime they underperform the stock market. Investors need to know that alternative investments are designed to achieve returns that are more consistent and less volatile than those of the stock market on a long-term basis across multiple market cycles.
2014-08-21 00:00:00 Inspiring Economic Dynamism within Japan by Christopher Gannatti of WisdomTree
WisdomTree has been excited about Abenomics since its genesis in November of 2012. We believe that markets have responded well to the progress made on the first two arrowsnamely decisive monetary policy and increases in fiscal spending.
2014-08-20 00:00:00 What's Your Exit? by Axel Merk of Merk Investments
Are you prepared for an Exit? If the Fed pursues an exit from ultra low interest rate policy, are you be prepared for an exit from the stock market should things turn South? We discuss how investors prepare, noting the most common mistakes investors make along the way.
2014-08-19 00:00:00 Europe Taking a Negative Turn by Chris Maxey, Ryan Davis of Fortigent
Among the highlights of a busy calendar of economic data last week was the flash estimate of second quarter Eurozone GDP. The region has come under greater scrutiny in recent months amid a disinflationary trend and slowing economic data. As we discussed a few weeks ago, the high profile failure of Portuguese bank Banco Espirito Santo has also inflamed worries that Europes financial system remains vulnerable to a systemic shock.
2014-08-16 00:00:00 Weekly Economic Commentary by Carl Tannenbaum of Northern Trust
I have to digest a great deal of written material to keep up with the global economy. When I have free time to read, I often choose to decompress by enjoying the cartoons in The Authoritative Calvin and Hobbes Treasury or the food pictures in Bon Apptit. I know that sounds shallow, but it helps keep me sane.
2014-08-16 00:00:00 7 Phrases Investment Professionals Should Never Say by Robert Isbitts of Sungarden Investment Research
Robert Isbitts posted: "As a big Robin Williams fan, this was a tough week. Ironically, before this comedic genius's shocking death on Monday, my team and I planned for this week's blog to be a parody of the work of another comedian taken from us too soon, George Carlin.
2014-08-16 00:00:00 Managing Expectations - Part III by Frank Holmes of U.S. Global Investors
In the first of this three-part series on managing expectations, I discussed the role cycles play in the investment management process. At U.S. Global Investors, we actively monitor both short- and long-term cycles, from the annual seasonality of gold to four-year presidential elections, in order to manage expectations based on historical patterns.
2014-08-16 00:00:00 Bubbles, Bubbles Everywhere by John Mauldin of Mauldin Economics
You can almost feel it in the air. The froth and foam on markets of all shapes and sizes all over the world. Its exhilarating, and the pundits who populate the media outlets are bubbling over. Theres nothing like a rising market to lift our moods. Unless of course, as Prof. Kindleberger famously cautioned (see below), we are not participating in that rising market. Then we feel like losers. But what if the rising market is a bubble? Are we smart enough to ride it high and then bail out before it bursts? Research says we all think that we are, yet we rarely demonstrate th
2014-08-12 00:00:00 Flexible Income Strategies - Avoiding Side Effects from the Fed’s Medicine by Dave King of Columbia Management
The U.S. economy went into recession in 2008, and it looked serious. As our fiscal deficit piled up, the political appetite for high government spending waned, leaving monetary policy as the primary available weapon to prevent recession from becoming depression. By mid-2011, Treasury bond yields had reached all-time lows. This strong monetary medicine now seems to be working. Many economic statistics have rebounded to peak levels, while some forward-looking ones, like major stock market indices, have hit new highs.
2014-08-12 00:00:00 Long/Short Funds Go 'Unhedged' in Energy by Brian Payne of Fortigent
Over the course of 2014 investors have come to notice the increase in net exposures amongst long/short equity managers. Many investors have grown somewhat wary of this development. Given the markets relatively uninterrupted run-up since late 2012, it is rational to think that these types of strategies might naturally lower their overall net exposure.
2014-08-11 00:00:00 Low and Expanding Risk Premiums are the Root of Abrupt Market Losses by John Hussman of Hussman Funds
Compressed risk premiums normalize in spikes. Day-to-day news stories are merely opportunities for depressed risk premiums to shift up toward more normal levels, but the normalization itself is inevitable, and the spike in risk premiums (decline in prices) need not be proportional or justifiable by the news at all.
2014-08-08 00:00:00 Yellenization by Cliff Draughn of Excelsia Investment Advisors
On Thursday, July 31st, the market had a one-day sell-off of 2%, the most negative day since June, 2012. You heard the market pundits and the talking heads of CNBC opine that the reason for the selloff was the convergence of geopolitical risks.
2014-08-07 00:00:00 A Mid-Year Crossroads for US Equities? by Don Taylor of Franklin Templeton Investments
After a year when it seemed as if US equities could move only higher, vulnerabilities have begun to surface in 2014. Equities now seem to be at a mid-year crossroads, with many investors asking whether there is still potential upside to explore in the marketor at least, certain sectors. Don Taylor, chief investment officer, Franklin Equity Group, US Value, and portfolio manager of Franklin Rising Dividends Fund, thinks theres still value to be found in the US market over the long term. And, hes using setbacks to add stocks to his dividend-minded portfolio.
2014-08-06 00:00:00 Global Dividend Insights by Nathan Fischer, Louie Nguyen of Soledad Investment Management
For many foundations and individual investors, the usefulness of a portfolio lies in its ability to provide cash flow to support charitable activities or to cover living expenses. Like a wise orchard farmer, investors are looking to harvest apples from the branches without damaging the orchard. This article will explore how dividend is the key to managing wealth in terms of sustainable spending and how global dividend paying stocks, in particular, are a great equity investment for a sustainable spending strategy.
2014-08-05 00:00:00 The Alpha and the Beta of Investing by Adam Jared Apt (Article)
This article conveys two distinct practical lessons worth remembering and applying. One concerns the relationship between risk and return, and it will behoove you to keep this lesson in mind whenever you're inclined to throw caution to the wind in pursuit of better stock returns. The other concerns what counts as skill in selecting stocks.
2014-08-05 00:00:00 The Wealth-Builder Model by C. Thomas Howard, PhD (Article)
While the math of compounding is straightforward, building wealth is difficult. But if you use an approach based on the principles outlined in this article, the accumulation of real wealth is within reach.
2014-08-05 00:00:00 Banco Espirito Santo: Opportunity for the ECB? by Ryan Davis, Brian Payne of Fortigent
Over the weekend, it was announced that Portugals Banco Espirito Santo (BES) would be split into a good bank and bad bank. This came after the Bank of Portugal assured that BES could raise enough money from private investors to recover from the banks first-half loss of 3.58 billion.
2014-08-05 00:00:00 Avoiding the Unintended Migration from Investor to Speculator by Bob Andres of Andres Capital Management.
The identification of value/price in the allocation of capital is essential to successful investing. Assets purchased at levels above intrinsic value reflect an approach based on hope and momentum not sound risk/reward analysis and normally portend negative results.
2014-08-04 00:00:00 US Stocks Make 31 Record Highs in 2014, But Investors Panic During 3% Selloff by David Edwards of Heron Financial
US stocks as defined by the S&P 500 made 31 record highs in 2014, most recently on July24th. Through Friday afternoon, stocks declined 3.3%, which is to say less than the decline of 4.2% we saw in April of this year, and decline of 5.6% in January.
2014-08-04 00:00:00 Inflation Trumps Growth by Jim Nelson of Euro Pacific Capital
With the first half of 2014 now in the books, many investors are happy with the performance thus far, especially given the economic headwinds that few saw coming. The 26% rally in U.S. stocks in 2013 gave way to a more modest 7% gain in the first half of 2014. Most see this as a positive development in a maturing market. But beneath the surface, important trends are emerging that should give investors reasons to re-evaluate their assumptions.
2014-07-31 00:00:00 The Chinese Wall of Worry: Uncertainty Rhymes with Opportunity by Francois Sicart of Tocqueville Asset Management
In his latest piece, Francois Sicart, Founder and Chairman of Tocqueville Asset Management, looks at the over-valued global market environment and points out that "While we wait for the day of reckoningwe should not be oblivious to potential opportunities, wherever they may exist. China may be a case in point." Digging deeper, Sicart looks at the negative media perception of China and believes "Many of the problems invoked in the headlines are real. But they are neither new nor, I believe on investigation, as catastrophic as implied."
2014-07-29 00:00:00 How Much Tilt? What Kind of Tilt? by William Bernstein (Article)
The first question is whether tilting towards small and value stocks still carries a premium.
2014-07-29 00:00:00 Corporate Earnings Season Update by Ryan Davis, Brian Payne of Fortigent
As the so-called punchbowl provided by the Federal Reserve is slowly withdrawn, $10 billion at a time, investors are increasingly looking to corporate fundamentals to see what might drive equity markets higher in the quarters ahead. Now three weeks into second quarter earnings season, market participants have a better idea of just how the most recent cycle is shaping up.
2014-07-28 00:00:00 Yes, This Is An Equity Bubble by John Hussman of Hussman Funds
Make no mistake this is an equity bubble, and a highly advanced one. On the most historically reliable measures, it is easily beyond 1972 and 1987, beyond 1929 and 2007, and is now within about 15% of the 2000 extreme.
2014-07-26 00:00:00 Second Quarter Earnings: Marching Toward a Strong Recovery by Frank Holmes of U.S. Global Investors
It?s earnings season once again, and though only a quarter of the Russell 1000 has reported so far, the news is just north of positive. All signs indicate that the market has dusted itself off and is back to its cheerful self after a ho-hum first quarter, which was negatively affected by harsh winter weather.
2014-07-26 00:00:00 Weekly Economic Commentary by Carl Tannenbaum of Northern Trust
Re-regulation has diminished market liquidity. Updated U.S. budget projections are improved but not comforting. The EU searches for the right response to Russia.
2014-07-24 00:00:00 Instability is the New Normal? by Axel Merk of Merk Investments
Once upon a time, there were safe havens in this world, places where investors could hide when the going got rough. If you believe this fairy tale world will persist, pinch yourself. In our assessment, not only are there no safe havens left, but instability may be the new normal. Is your portfolio ready?
2014-07-23 00:00:00 U.S. Equities Continue to Look Attractive: Equity Investment Outlook by Team of Osterweis Capital Management
As we sit down to write this Outlook we are struck by two trends: the consistency of the economic recovery in the U.S. and the dramatic escalation of geopolitical turmoil. Whether these two trends will collide to derail the bull market is an open question, but usually geopolitical flare-ups have only short-term effects and do not overwhelm long-term economic trends. Thus, they tend to appear as hiccups in stock market progress.
2014-07-22 00:00:00 2014 Another Ho Hum Year from Hedge Funds by Ryan Davis, Brian Payne of Fortigent
Through the first six months of the year, hedge funds have generated a positive, albeit somewhat modest return. According to data compiled by Hedge Fund Research, the Fund Weighted Composite of hedge funds in their universe had generated a 3.2% return, compared to the S&P 500s 7.1% gain. While not terrible on a standalone basis, many investors had greater hopes for the asset class following five straight calendar years of underperformance versus the broad equity markets.
2014-07-21 00:00:00 A Farmland Investment Primer by Julie Koeninger of GMO
Farmland is a real asset that combines solid investment fundamentals with the potential for attractive cash yields, inflation hedging, and consistent returns from biological growth. Furthermore, farmland total returns tend to be uncorrelated with financial asset returns, offering genuine portfolio diversification for institutional investors.
2014-07-18 00:00:00 Lack of Corporate Hubris Means Elongated Cycle by Richard Bernstein of Richard Bernstein Advisors
When we started Richard Bernstein Advisors roughly five years ago, we thought the US was entering one of the biggest bull markets of our careers. Today, we are likely in the midst of this long bull market. Despite the general consensus that a bear market is on the horizon and investors ongoing interest in protecting potential downside risk, we do not think the Fed, investors, or corporations are yet sowing the seeds for the next recession.
2014-07-18 00:00:00 Physics Envy by Matthew Page of Guinness Atkinson Asset Management
Economists have long sought to identify a deterministic "natural law" of markets in the same way that physicists have discovered natural laws such as gravity and electromagnetism. This is sometimes referred to as "physics envy". If economists could identify a deterministic natural law of markets then we would be able to make useful and accurate predictions. Sadly no such law exists. Human actions are not governed by simple predictable laws.
2014-07-18 00:00:00 Free Lunches and the Food Truck Revolution by Ben Inker of GMO
Over the past year or so, there has been a welcome change to the culinary landscape of the Boston financial district. After two decades of wandering to largely the same old haunts for lunch, I am now faced with a whole new set of inexpensive and tasty choices literally outside our door, changing daily as the food trucks perform their mysterious nightly dance.
2014-07-17 00:00:00 Municipal Market Perspectives by Team of SMC Fixed Income Management
Financial market conditions were as good as could be expected during the first half of the year, as evidenced by positive investment performance across all asset classes.
2014-07-16 00:00:00 Analysis of Ayres and Curtis Critique of 401(k) Plans by Brian Donohue of October Three Consulting
In our previous article we reviewed [Professors Ayres and Curtis's paper Beyond Diversification: The Pervasive Problem of Excessive Fees and 'Dominated Funds' in 401(k) Plans] (John M. Olin Center for Studies in Law, Economics, and Public Policy Research Paper No. 493). Our purpose in that article was simply to describe what Professors Ayres and Curtis are saying. In this article we evaluate their findings and proposals, discussing the limits of and possible objections to their conclusions.
2014-07-15 00:00:00 The Fed Announces Its Intentions by Chris Maxey, Ryan Davis of Fortigent
Minutes from the mid-June FOMC meeting were released last week, offering keen insight to the Federal Reserves current thinking on the economy. While the Fed suggests that the economic outlook is benign, the minutes offered guidance on the Feds exit path, which is expected to arrive by the end of the year.
2014-07-15 00:00:00 The New Neutral: Investment Implications for Insurance Companies by David Braun of PIMCO
Low rates are unhelpful to an industry with legacy long-term liabilities containing rigid embedded credited rates; they exacerbate asset-liability mismatches and pressure earnings margins. Insurers may want to recalibrate their expectations of future interest rates, as well as broad bond and equity market returns. In The New Neutral, with beta from stocks and bonds likely to be relatively low, insurers should look to enhance buy-and-hold return potential via active management.
2014-07-15 00:00:00 2Q 2014 Newsletter: Avoiding Your Portfolios Enemies by William Smead of Smead Capital Management
Investors should remember that excitement and expenses are their enemies. And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy when others are fearful. We often hear the last part of this wonderful quote from Warren Buffett, but here at Smead Capital, we find the beginning just as instructive. We thought we would unpack the entirety of his thoughts and dissect it for our faithful investors.
2014-07-15 00:00:00 High-Yield and Bank Loan Outlook by Team of Guggenheim Partners
Certain areas of leveraged credit are overvalued, particularly CCC-rated bonds and bank loans, but often some of the best profits come in the final phase of a cycle. Low yields on U.S. Treasury bonds and European sovereign debt have kept the global search-for-yield theme alive and have lured more capital into U.S. credit markets, helping the ongoing rally in high-yield bonds and bank loans, which gained 2.4 percent and 1.2 percent (as represented by the Credit Suisse High Yield Index and Credit Suisse Institutional Leveraged Loan Index) in the second quarter of 2014, respectively.
2014-07-10 00:00:00 Are Prices Too High in U.S. Commercial Real Estate?? by John Murray of PIMCO
The recovery in commercial real estate (CRE) has been driven more by low rates than improvements in fundamentals. However, fundamentals are improving and capitalization rates should remain low amid low New Neutral policy rates. We expect capital flows in both debt and equity to CRE to continue to increase, and we see opportunities for investors resulting from capital flows, demographics, loan maturities and regulatory reforms. ?
2014-07-08 00:00:00 Slow but Steady Growth by Richard Michaud of New Frontier Advisors
In the second quarter of 2014 major asset class performance was positive. The Dow was up 2.4%, the S&P up 4.7%, and the NASDAQ up 5%. International equities nearly kept pace with US equities; the MSCI ACWI ex US was up 3.8%.
2014-07-08 00:00:00 Will Latest Jobs Report Force the Fed to Act? by Chris Maxey, Ryan Davis of Fortigent
After a reasonably bleak winter, labor markets are on the rebound, just in time for the Federal Reserve to decide when they should stop asset purchases. Recent figures suggest that labor markets are very near Fed targets, raising the possibility that interest rate hikes could begin sooner than expected.
2014-07-02 00:00:00 Alternative Investments: The Right Expectations by Roger Nusbaum of AdvisorShares
Every year around this time we hear about the fiscal year investment results for the various college endowments and typically there is much written about the endowments and 2014 is no exception but this year most of the attention seems to be on the extent to which various forms of alternative investments have been a drag on endowment results after years of their having provided outsized gains.
2014-07-01 00:00:00 Fixed Income Markets Cruise - What's Next? by Chris Maxey, Brian Payne of Fortigent
For the better part of twelve months, fixed income markets have been in a rather benign state. After receiving a scare in early summer 2013 during the taper tantrum, volatility subsided, and normalcy returned to the world of fixed income. As money continues to pour into fixed income markets, there is growing concern that the investment opportunity is stretched and the time to rebalance is now.
2014-06-30 00:00:00 The New Normal of Healthcare Spending by John Mauldin of Mauldin Economics
A rather interesting shockwave came across the newsfeeds this week. I was actually doing a TV interview when the host announced that GDP was down 2.9% for the first quarter. There was not much else I could do but note that that was a really bad, ugly, terrible, not very good number.
2014-06-25 00:00:00 Self Sufficiency and Resourcefulness Over Complaining by Roger Nusbaum of AdvisorShares
There were several interesting and related articles from the last few days that could make for an interesting discussion.
2014-06-24 00:00:00 Hexavest Viewpoint: Neutral on Japan by Frederic Imbeault of Eaton Vance
Macroeconomy: With little traction from fiscal policy and structural reforms, the pro-growth policies of Prime Minister Shinzo Abe known as Abenomics will continue to rely on the Bank of Japans loose monetary policy to maintain economic momentum. Valuation: Rising profits and the 2014 correction have pushed down P/E ratios on Japanese equities into more attractive territory. Investor sentiment: As contrarians and as the crowd has become less bullish on Japanese stocks, we have become more constructive about investor sentiment.
2014-06-24 00:00:00 Equities Rally on Surprise-Free Fed by Chris Maxey, Ryan Davis of Fortigent
The Federal Reserve held its regularly scheduled meeting last week, and equity markets raced to their strongest daily gain of the week after the announcement was released. There were few surprises, as the Fed chose to maintain its course, while painting a cautious economic picture.
2014-06-24 00:00:00 The Over-Capitalization Curse by William Smead of Smead Capital Management
At Smead Capital Management we are conscious of the few, but significant pitfalls which we believe exist for the long-duration common stock investor. One of the main pitfalls we want to avoid is the over-capitalization curse. This is a situation where investor enthusiasm gets very high, prices get historically high and investors drown the company, industry or sector with capital. In our experience, it pays to avoid the over-capitalized areas for as long as five to ten years as they work their way back to being hated and contentious.
2014-06-17 00:00:00 Oil Spikes on Iraqi Strife by Chris Maxey, Ryan Davis of Fortigent
Of the many global macroeconomic concerns of the past few years, oil has curiously fallen down the list in terms of major areas of investor focus. After recovering in the wake of the financial crisis, the commodity has generally been range bound between $100 and $120 a barrel. Newfound supply of natural gas in the United States has also eased concern about the domestic economys reliance on oil imports from the Middle East.
2014-06-10 00:00:00 How Hedge Funds Destroy Value by Robert Huebscher (Article)
All you really need to know about hedge fund performance is evident from the fact that Simon Lack could not produce the pie chart below in 2012. The chart shows how hedge-fund returns have been divided among manager fees, fund-of-funds fees and investor profits.
2014-06-10 00:00:00 The Orphaned Bull Market by William Smead of Smead Capital Management
Howard Gold is an inquisitive writer for Marketwatch.com and we think has done us all a great favor in his latest column titled, Not even a bull market can interest people in stocks. He points out via the chart below thatdespite a huge rebound the last five years in US common stocksequity holdings as a percentage of global investable assets just climbed to levels only seen at major stock market low points. Relative to the past 50 years, this stock market has been abandoned and orphaned even as it had made participants wealthy.
2014-06-09 00:00:00 Jobs return to pre-recession peak by Ryan Davis and Brian Payne of Fortigent
Global equity markets cheered the European Central Banks (ECB) decision to lower rates and provide further monetary stimulus last week, as the DJIA and S&P 500 gained 1.2% and 1.3%, respectively. As one might imagine, notable outperformance came from Europes peripheral countries with Italy (MSCI Italy) and Spain (MSCI Spain) gaining 3.4% and 2.6%, respectively.
2014-06-07 00:00:00 China Leads the World in Green Energy, Gaming and Gambling Markets by Frank Holmes of U.S. Global Investors
Last month, Xian Liang, co-portfolio manager of our China Region Fund (USCOX), attended the 19th CLSA China Forum in Beijing. There he and hundreds of other global attendees were given the opportunity to meet with representatives from Chinese corporations, some of which U.S. Global owns. Xian also managed to get a sense of how the nation?s recent changes in consumer behavior and governmental policy reforms might affect its investment outlook. Although China remains an emerging market, it has lately taken a number of considerable strides to position itself as one of the world?s most
2014-06-05 00:00:00 The Investor Screwtape Letters by William Smead of Smead Capital Management
We at Smead Capital Management have been discussing some of the follies common to human nature and what we see as some pervasive trends in the investing world. These conversations got us imagining what C.S. Lewiss, The Screwtape Letters, might sound like if they were applied to todays investment environment. The satirical letters are written by an advice-giving bureaucrat in Hell named Screwtape, to his nephew Wormwood, a young demon who is learning how to lead humans astray. Taking some liberty with Lewiss work, we present what we believe Screwtape might say if he were tr
2014-06-02 00:00:00 Corporate Activity Flourishes by Chris Maxey, Brian Payne of Fortigent
With the backdrop of low interest rates, and sluggish revenue growth, 2014 has been the year that M&A activity finally blossomed. Companies are growing more aggressive in their acquisition tactics, leading to many high profile mergers and numerous opportunities to improve profitability.
2014-05-31 00:00:00 Looking at the Middle Kingdom with Fresh Eyes by John Mauldin of Mauldin Economics
China has the potential to become a real problem. It seemed to me that almost everyone who addressed the topic was either seriously alarmed at the extent of Chinas troubles or merely very worried. Perhaps it was the particular group of speakers we had, but no one was sanguine. If you recall, a few weeks back I introduced my young colleague and protg Worth Wray to you; and his inaugural Thoughts from the Frontline focused on China, a topic on which he is well-versed, having lived and studied there. Our conversations often center on China and emerging markets (and we tend
2014-05-29 00:00:00 CEFs: The Present Featuring Cecilia Gondor by (Article)
The power of the Internet and the quest for income are driving the CEF industry today, says Cecilia Gondor of Thomas J. Herzfeld Advisors.
2014-05-28 00:00:00 Home Sales Gain: Now Where? by Chris Maxey, Brian Payne of Fortigent
This week is full of economic data with the Case-Shiller Home Price index coming out. Also coming out is data on durable goods orders and consumer confidence. On tap for later in the week is the second estimate of Q1 GDP, pending home sales, and personal income growth.
2014-05-24 00:00:00 In a Flash, China Looks Strong by Frank Holmes of U.S. Global Investors
If you want to know where the world economy is headed, there is one number that I believe investors should focus on: the HSBC China Manufacturing Purchasing Managers Index (PMI). On Thursday, the preliminary flash PMI for May came in at 49.7, beating Bloombergs consensus of 48.3.
2014-05-20 00:00:00 Inflation Becomes the Latest Topic du Jour by Chris Maxey, Brian Payne of Fortigent
Long discussed pricing pressure is beginning to show up in various domestic indices, leading some to believe the Fed will pull its foot off the brakes sooner than anticipated. While inflation is stabilizing, there are few signs that it is accelerating materially, leaving plenty of room for the Fed to maneuver. It will be important to keep an eye on prices going forward, though, as any acceleration could alter the investment and economic landscape quickly.
2014-05-20 00:00:00 Bonds Rally, But Stocks Still More Attractive Long Term by Russ Koesterich of BlackRock
Stocks have floundered, while bonds continue to rally. Markets are showing a sharp reversal from 2013, when stocks were up strongly while bonds struggled. We maintain our long-term preference for equities and suggest investors exercise caution before adding to positions in bonds.
2014-05-19 00:00:00 Three Questions Investors Need to Ask About Alternatives by Donna Chapman Wilson of Invesco Blog
The world of alternative investments includes a range of hedge fund-like strategies that typically consist of publicly traded equity and fixed income investments, but are unconventionally managed using a variety of exposures (long, short, market neutral) and financial instruments. These strategies have gained acceptance in recent years, and have become more widely available to individual investors through vehicles such as mutual funds. However, questions still remain about the best ways to incorporate them into an asset allocation strategy.
2014-05-15 00:00:00 Five Things Your Credit Manager Shouldnt Be Doing (But Probably Is) by Christian Stracke of PIMCO
Questionable behavior among credit managers is back, but the good news is that we believe the credit markets still offer plenty of opportunities to potentially generate attractive returns. Smart, rational credit investing that avoids some managers nave reach for yield, and sticks instead to a deep focus on the long-term sustainability of companies balance sheets, may still reap rewards.
2014-05-14 00:00:00 Worried about the Downside? by Richard Bernstein of Richard Bernstein Advisors
There have been numerous academic studies that suggest investors reactions to market risk are not symmetric. Investors consistently react more negatively to losses than positively to gains. At RBA, we incorporate this asymmetry in our sentiment work. Data clearly show that no group of investors is currently willing to take excessive US equity risk. Pension funds, endowments, foundations, hedge funds, individuals, Wall Street strategists, and even corporations themselves remain more fearful of downside risk than they are willing to accentuate upside potential.
2014-05-13 00:00:00 Dollar Bulls Drop Their Heads in Frustration by Chris Maxey, Ryan Davis of Fortigent
For some time, strategists have been bullishly positioned on the U.S. Dollar, anticipating a rally that failed to materialize. The arguments were straightforward the Federal Reserve is exiting its easing cycle, Europe is facing deflationary pressure and likely to ease further, and the economy in the U.S. is on improving footing. Those expectations, while true to some extent, are not translating into gains for the Dollar, leaving many frustrated. The Dollar is suffering from a bad case of dejection and could struggle to see a sustained breakout for some time.
2014-05-07 00:00:00 Does a Perfect Policy Portfolio Exist? by Jeff Knight of Columbia Management
The idea of a policy portfolio, the core strategic asset class weightings for an investment portfolio, has evolved significantly during the course of my career as an asset allocation specialist. From the humble beginnings of standard balanced investing (the good old 60/40), investors have searched for the best neutral asset allocation to serve their goals over the long term.
2014-05-07 00:00:00 First Quarter Letter by Team of Grey Owl Capital Management
The broad equity market displayed a fair amount of volatility during the quarter, but essentially went sideways. This pattern continued through April; 2013s losers became 2014s winners and vice versa. In the broadest sense, bonds narrowly beat stocks on the heels of 2013s thorough drubbing.
2014-05-06 00:00:00 Labor Markets Bounce Back from Winter Hibernation by Chris Maxey, Brian Payne of Fortigent
In a less than surprising development, U.S. non-farm payrolls grew by 288,000 in April. While some are loathe admitting the positive nature of Aprils report, there was plenty to be happy about in the latest release, suggesting the economy continues to move towards a more favorable footing. As always in the post-2008 world, caveats remain and the trend in the months ahead will provide a clearer picture into the pace of recovery.
2014-05-05 00:00:00 Big Pharma's Bitter Pills by Peter Nielsen of Saturna Capital
Price Pressure Becoming Pharmaceutical Industry's Bitter Pill as Breakthrough Drug Therapies Break the Bank
2014-05-02 00:00:00 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn
Earnings have been supportive and merger activity has skyrocketed these past couple weeks. Stock markets have remained firm as a result despite money coming out of the previous hot sectors of social media (Amazon) & the biotech industry (despite great fundamentals).
2014-04-30 00:00:00 Achoo! by William Gross of PIMCO
There?s nothing like a good sneeze; maybe a hot shower or an ice cream sandwich, but no ? nothing else even comes close. A sneeze is, to be candid, sort of half erotic, a release of pressure that feels oh so good either before or just after the Achoo! The air, along with 100,000 germs, comes shooting out of your nose faster than a race car at the Indy 500.
2014-04-29 00:00:00 How to Help Business Clients Unlock Wealth by Bob Veres (Article)
Is there a way to help your business clients diversify their holdings, take some risk off the table and create a side investment portfolio that will sustain them if their business runs into trouble? Is there a way you can help your clients find capital when they need it most?
2014-04-29 00:00:00 Why Are Hedge Funds Struggling in 2014? by Chris Maxey, Ryan Davis of Fortigent
2014 has been a year marked by shaky equity markets and relatively higher volatility than observed in 2013. With falling equity market correlations and increased stock dispersion, it was presumably a more favorable environment for hedge funds. Unfortunately, that has not been the case as most alternative investment approaches are posting less than stellar results so far this year.
2014-04-29 00:00:00 First Quarter Commentary by John Prichard of Knightsbridge Asset Management
In investing, certain things are viewed as worth paying a lot for, if you "know" you're going to get them. Akin to Socrates, we speculate that it may be wiser to admit that you do not know the future and therefore are unwilling to pay for these positive outcomes, than to falsely believe you can know the future with certainty and are justified in paying a high price...
2014-04-28 00:00:00 Resisting the Sirens by Mark Oelschlager of Oak Associates
There has been an interesting shift in the market over the past several weeks, as high-growth stocks (an area to which we have limited exposure, given our preference for more fairly-valued growth opportunities) have suffered a significant correction after being the darlings of the market since June of last year.
2014-04-25 00:00:00 "The 10 Plagues" of Retirement Investing by Robert Isbitts of Sungarden Investment Research
Last Tuesday marked the end of the Passover holiday, in which Jews around the world celebrate the exodus from Egypt in biblical times (see the classic movie ?The Ten Commandments? for a visual version of the story). One highlight of the ?Seder? dinner conducted on the first two nights of the holiday is for all gathered to recount a part of the story known as ?The 10 Plagues.? Biblical references aside, it got me thinking about 10 plagues that today?s retired and retiring investors must grapple with. Here they are, sans the Matzoh Ball soup.
2014-04-22 00:00:00 Taxes are the Pits, But Not for Everyone It Seems by Chris Maxey, Ryan Davis of Fortigent
A number of Americans breathed a joyful sigh of relief last week after closing the books on their 2013 income taxes. The annual rite of passage rarely elicits excitement when addressed in conversation, and this year was unlikely to be any different. But, the latest tax data suggests the economy is gaining speed, news bound to make even the most hardened filers crack a smile.
2014-04-17 00:00:00 Equity Outlook by Team of Osterweis Capital Management
Short term, we would not be surprised if the market took a breather after its strong gains last year. Additionally we may see volatility related to news coming out of the Middle East and Russia. But longer term, we remain very optimistic on the outlook for U.S. equities. In addition to the reasons we discussed above we believe U.S. equities are very attractive relative to the alternatives. The great bull market in bonds appears to be over. The great decades of emerging market growth appear to be behind us.
2014-04-16 00:00:00 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn
Stocks fell last week upset by the growth sectors of biotechnology and social media stocks. Energy issues and related infrastructure were largely unaffected. It is clear that hedge funds and others have become forced sellers as their macro bets on being long growth areas, but being short the bond market have blown up in their faces. Until this settles down the overall market is likely to continue its correction.
2014-04-16 00:00:00 Every Portfolio Has Faith by William Smead of Smead Capital Management
At Smead Capital Management, we believe that everyone who invests has faith in someone or something. We also believe that who and what you put your faith into is greatly influenced by the time period involved. As we look out into the rest of 2014 and beyond, we would like to consider the kind of faith required by the largest pools of investment dollars in the US. This includes looking at who they are trusting, what they are trusting in, and what time frames they are operating under.
2014-04-15 00:00:00 Credit Availability Underpins Recovery in Commercial Real Estate Prices, But Also Poses Risks to CMB by Bryan Tsu of PIMCO
Credit availability, low interest rates, limited new construction and improving economic conditions have contributed to the recovery in commercial real estate (CRE) prices. We expect a strong 2014 in the commercial mortgage-backed securities (CMBS) market, which has been a primary source of CRE credit expansion. Increasingly aggressive loan underwriting is a concern. CMBS investors need to speak with their wallets and push back on either valuations or underwriting standards if recent trends continue.
2014-04-15 00:00:00 Complacency Makes Volatility Markets a Dangerous Place by Chris Maxey, Ryan Davis of Fortigent
With a dissipation of economic stress in Europe, and a general strengthening of economic conditions in the U.S., equity market volatility has plunged to new lows. Some would argue that market intervention by central banks is acting as an unnatural dampener to market volatility, raising the question as to whether a gradual removal of those policies will cause volatility to resurface. So far, the answer is up for debate, but current positioning suggests many investors are becoming complacent and will be caught off sides if such a scenario emerges.
2014-04-14 00:00:00 US Stock Markets Surprisingly Steady - First Quarter Review by David Edwards of Heron Financial
Surprisingly steady! How can we say that? Because compared to the price swings of the last six years, the recent 3.9% decline in US Stocks (from a record set April 2) barely registers relative to the powerful uptrend since mid 2011.
2014-04-12 00:00:00 Every Central Bank for Itself by John Mauldin of Millennium Wave Advisors
Whether the FOMC can actually turn the taper into a true exit strategy ultimately depends on how much longer households and businesses must deleverage and how sharply our old-age dependency ratio rises, but markets seem to believe this is the beginning of the end. For now, that?s what matters most. Under Fed Chair Janet Yellen?s leadership, the Fed continues to send a clear message to the rest of the world: Now it really is every central bank for itself.
2014-04-11 00:00:00 Can You Have Your Cake and Eat It Too? by David Braun, David Holdreith of PIMCO
Many insurers would like to optimize both total return and book yield income, which may be seen as competing and divergent goals. In fact many insurers fall somewhere on the spectrum between these goals or shift their objective based on business and market conditions. While it has long been an accepted practice to track manager performance with regard to total return, tracking book income has been more elusive: PIMCO has an innovative and unique solution to help manager?s track alpha generated by active managers.
2014-04-10 00:00:00 The Russians Are Coming by Jeffrey Saut of Raymond James
The Russians Are Coming, The Russians Are Coming is a 1966 American comedy film directed by Norman Jewison and based on Nathaniel Benchley?s book The Off-Islanders. The movie tells the Cold War story of the comedic chaos that happens when a Soviet submarine runs aground closely offshore a small island town near New England and the crew is forced to come ashore. Last Friday, however, rumors that the ?Russians are coming? swirled down the canyons of Wall Street, causing a late Friday Fade that left the S&P 500 (SPX/1865.09) down an eye-popping 24 points.
2014-04-09 00:00:00 How High-Frequency Trading Benefits Most Investors by Gary Halbert of Halbert Wealth Management
A controversial new book came out in late March that lambastes so-called ?high-frequency trading? on the major stock exchanges and claims that such computerized trading robs retail investors of good executions and profits on their stock orders. The book, ?Flash Boys: A Wall Street Revolt,? was written by former bond salesman turned author, Michael Lewis, who appeared on CBS? 60 Minutes on March 30. Since then, his book has stirred up quite the controversy among stock market investors.
2014-04-08 00:00:00 Labor Markets Looking for a Spring Blossom by Chris Maxey, Ryan Davis of Fortigent
With an unusually harsh winter finally ending, economists were excited to see if labor markets would rebound in March. By many accounts, they were left wanting for more, but the underlying theme in the March report was consistent, steady job growth.
2014-04-08 00:00:00 Our Five Year Forecast Beginning February 20, 2014 by Kendall Anderson of Anderson Griggs
Late last month I took on the role of judge, not in a court of law, but in a university competition, the CFA Institute Research Challenge Southern Classic. My task was to choose one of fourteen teams from South Carolina, Georgia and Alabama universities to go on to represent their region in the Americas Regional bracket of the CFA Institute Research Challenge. The challenge gives university students from around the globe an opportunity to gain real-world experience as they assume the role of a research analyst
2014-04-01 00:00:00 Evolving Infrastructure Investing - Broader, Deeper, Global by (Article)
Infrastructure offers an attractive combination of potential inflation hedging, income generation and long-term capital growth. In this video, Northern Trust's Shundrawn Thomas, Global Head of ETFs, outlines the distinctive approach that FlexShares' NFRA ETF takes by starting from the bottom up in identifying companies with infrastructure ownership across traditional and new infrastructure sectors.
2014-04-01 00:00:00 A Look at First Quarter Market Performance by Chris Maxey, Ryan Davis of Fortigent
As the first quarter draws to a close, equity markets appear poised to finish in positive territory despite a somewhat tumultuous news environment. As noted by Bloomberg, save for a sharply negative Monday period, the S&P 500 will close out a fifth consecutive quarter in positive territory for the first time since 2007.
2014-04-01 00:00:00 Investing is Hard by David Wismer of Flexible Plan Investments
Or better put, successful investing is hard. So says author, speaker, and CIO Robert Seawright of Madison Avenue Securities in a recent series of ?Investment Belief? columns on his award-winning blog, Above the Market.
2014-04-01 00:00:00 Fundamental Tango by Scotty George of Alexander Capital
The economy and financial markets are forever sending out mixed, parallel, or confusing messages. Inflation or stagflation? Buy now, or take your profits? Proceed slowly, or go home? At this moment, the signals are hardly synchronized.
2014-03-28 00:00:00 Hotchkis & Wiley: Frequently Asked Questions by Team of Hotchkis & Wiley
In Hotchkis & Wiley's 2014 1Q Newsletter, Ray Kennedy, Mark Hudoff, and the rest of Hotchkis & Wiley's high yield team examines the high yield market and attempt to answer the questions it they get asked most frequently, or ones they believe to be particularly relevant in the current market environment.
2014-03-28 00:00:00 Four Areas Revved Up for a Resources Boom by Frank Holmes of U.S. Global Investors
Commodity returns vary wildly, as experienced resource investors can attest and our popular periodic table illustrates. This inherent volatility can spell opportunity for the nimble investor who can look past the mainstream headlines to identify hot spots. Our global resources expert, Brian Hicks, CFA, identified four we believe are revved up for a resources boom.
2014-03-25 00:00:00 Four Inevitable Changes that Threaten Your Business by Dan Richards (Article)
If you step back and look at the status quo in the advisory business and ask yourself what things simply don’t make sense and are unsustainable as a result, you will come up with a surprisingly long list. Today’s article focuses on inevitable changes in the investing environment.
2014-03-25 00:00:00 Janet Yellen Enters the Picture by Chris Maxey, Ryan Davis of Fortigent
After bursting onto the scene earlier this year, Janet Yellen held her first official FOMC meeting last week. Rather than upset the apple cart, she held a largely status quo stance, but several comments raised more than a few questions.
2014-03-24 00:00:00 Is the Fed Supporting the Equity Markets? by Tom Riegert of Hatteras Funds
The Federal Reserve?s unprecedented increase in reserves purchased through its quantitative easing programs has paralleled the performance of the equity markets to a startling degree. Has the Fed?s program been supporting the equity markets? We examine the strong correlation between the Fed?s balance sheet and the performance of the S&P 500 since end-2008, and ponder the effects the Fed?s long-awaited tapering will have on market volatility. Investors facing the uncertainty ahead could well find alternative investments a welcome addition to their portfolio.
2014-03-22 00:00:00 China's Minsky Moment? by John Mauldin of Millennium Wave Advisors
In speeches and presentations since the end of last year, I have been saying that I think the biggest macro problem in the world today is China. China has run up a huge debt, and the payments are coming due. They seem to be proactive, but will it be enough? How much risk do they pose for the global system?
2014-03-18 00:00:00 What's So Great About Private Equity? by Robert Kleinschmidt of Tocqueville Asset Management
In his latest piece, Robert Kleinschmidt, CEO and CIO of Tocqueville Asset Management, looks at how private equity has gained cachet among investors over the last few decades. He discusses the tendency of the investing public to view it as a "new" asset class, but notes many of its limitations can be seen as reasons the public equity markets were created.
2014-03-18 00:00:00 Currency Markets Heat Back Up, and Will Likely Remain that Way by Chris Maxey, Ryan Davis of Fortigent
Long dormant after the financial crisis, foreign exchange markets are beginning to heat up, offering ample trading opportunity for asset managers. The U.S. dollar was widely viewed as being the best long trading opportunity for 2014, but so far, that has not played out, with activity in the Euro, Chinese Yuan, and other currencies impeding dollar strength.
2014-03-18 00:00:00 Market Update by Team of Castleton Partners
With military tensions rising over the Ukraine saga and geopolitical posturing dominating the headlines, Treasury rates rallied across the yield curve last week, with 10 year yields falling 13 basis points to 2.66%. Though Cold War-era rhetoric remains high, there are indications that the threat of military action is becoming less likely. As such, we suspect markets will become more comfortable with the situation and expect it to become less of a focus. Nonetheless, we concede that headline risk remains and the primary influence on the Treasury market this week may well be external.
2014-03-15 00:00:00 Like Houdini, the Markets Escape Again and Again by Stephen C. Sexauer of Allianz Global Investors
Like the great escape artist Harry Houdini, the markets have repeatedly escaped a series of potential catastrophes. Central banks around the world have coordinated policy making these escapes possible, but the end result is another trap from which we need to escape - seemingly permanent low interest rates for savers ("financial repression"), slow growth, and high asset prices. Financial repression is better than an outright debt deflation, but it causes its own problems. The outlook is for low returns.
2014-03-12 00:00:00 The Importance of Beta Management by Richard Bernstein of Richard Bernstein Advisors
Morningstar recently released ?Mind the Gap-2014? which demonstrated that investors are generally very poor beta managers. The Morningstar data showed that investors? performance lagged that of their funds by about 250 basis points per year for the past ten years because of poor beta management, i.e., investors tend to be very poor allocators of capital.
2014-03-11 00:00:00 Why I Sold - Part 3 by Jim Whiddon (Article)
When I decided to sell my small wealth-advisory practice, my due diligence focused on the internal threats and weaknesses I faced. But I took an equally hard look at external threats - industry-wide issues that all firms, regardless of size or stature, will face in the coming years.
2014-03-10 00:00:00 Tech Bubble 2.0? by Chris Maxey, Ryan Davis of Fortigent
The $19 billion acquisition of WhatsApp by Facebook in late February put an exclamation point on several high profile takeovers in the technology space in recent months. Sizeable deals such as Google?s $3 billion acquisition of Nest and Facebook?s $3 billion offer for SnapChat have fueled the idea that an indiscriminate buying spree in the technology space a la 1999 could set up financial markets for another valuation bubble.
2014-03-07 00:00:00 Tensions between Russia and Ukraine Worry Investors by Gene Goldman of Cetera Financial Group
Over the weekend, tensions escalated between Russia and Ukraine as Russian forces invaded and took complete operational control of the Crimean peninsula.
2014-03-06 00:00:00 The Dollar's Long Term Decline by Axel Merk of Merk Investments
The cleanest of the dirty shirts doesn?t necessarily preserve your purchasing power. Sure, the U.S. dollar has beaten the Russian Ruble and some others of late, but when it comes to real competition, the U.S. dollar has taken a back seat. The U.S. dollar?s long-term decline may be firmly in place and investors may want to buckle up to get ready for the ride.
2014-03-05 00:00:00 The Renminbi's New Normal by Teresa Kong of Matthews Asia
The gyrations in Chinese money markets in the last few weeks have caused much alarm in the financial press. The moves in these markets are not only inline, but healthy for an economy looking to increase the role of the market in allocating resources. Those who believe these moves indicate financial stress, or draw parallels between the recent volatility and that which preceded the subprime crisis in the U.S., might be looking through the wrong end of the telescope.
2014-03-05 00:00:00 The Renminbi's New Normal by Teresa Kong of Matthews Asia
The gyrations in Chinese money markets in the last few weeks have caused much alarm in the financial press. The moves in these markets are not only inline, but healthy for an economy looking to increase the role of the market in allocating resources. Those who believe these moves indicate financial stress, or draw parallels between the recent volatility and that which preceded the subprime crisis in the U.S., might be looking through the wrong end of the telescope.
2014-03-04 00:00:00 A Consumer Releveraging Renaissance? by Chris Maxey, Ryan Davis of Fortigent
After a long period of deleveraging, there are appearances that consumers are entering a stage of releveraging. The devil is always in the details, though, and this releveraging cycle is likely to play out vastly different than those of previous expansions.
2014-03-01 00:00:00 Black Swans and Endogenous Uncertainty by John Mauldin of Millennium Wave Advisors
John is in Florida and feeling a bit under the weather, so this week were bringing back one of his most popular letters, from December 2007. In the letter he discusses the work of Professor Graciela Chichilnisky of Columbia University, one of whose key insights is that the greater the number of connections within an economic network, the more the system is at risk. Given the current macroeconomic environment, it is important to remind ourselves of how complacent we were back in 2007 and how it all fell apart so quickly, just as John outlined in this rather prescient piece.
2014-02-28 00:00:00 Weekly Economic Commentary by Carl Tannenbaum of Northern Trust
The sensitivity of emerging markets complicates the Fed?s exit plans; Raising the minimum wage is not the only way to aid low-income workers; Brazil?s economy is faltering as the World Cup approaches.
2014-02-25 00:00:00 Why Our Firm Uses DFA Funds by Dougal Williams, CFA (Article)
Research shows that 80% of active fund managers underperform their benchmarks. Index funds virtually eliminate this risk of underperformance. DFA, however, has engineered an even better mutual fund. This article explains key tenets of DFA’s approach and why our firm chose it over both active and index mutual funds.
2014-02-25 00:00:00 Weekly Market Update by of Castleton Partners
Interest rates were relatively range-bound last week, despite a string of disappointing economic releases. With severe weather across the country having an outsized impact on the economy of late, market participants have been treating the weak data with a high degree of skepticism. We suspect there is further room for data to disappoint relative to expectations, believing a clear reading on the state of the economy cannot be determined until the spring.
2014-02-25 00:00:00 Time to Worry About Europe Again? by Chris Maxey, Ryan Davis of Fortigent
The European sovereign debt crisis has all but faded from investors? minds since ECB President Mario Draghi?s famous pronouncement on July 26, 2012 that he would do ?whatever it takes? to save the monetary union. Since that time, equity markets in Europe rallied sharply as accumulated risk aversion fell away.
2014-02-23 00:00:00 The Worst Ten-Letter Word by John Mauldin of Mauldin Economics
A new word is achieving ubiquity. The word has always been with us and at times has been a beacon to attract the friends of liberty and opportunity. But now I?m afraid it is beginning to be used as a justification for social and economic policies that will limit the expansion of both liberty and opportunity. The word? Inequality.
2014-02-19 00:00:00 Checking in on Earnings by Chris Maxey, Ryan Davis of Fortigent
Earnings season is nearing its finale, and the latest results show plenty of reason to be bullish, but the longer-term trend remains an outstanding question for markets.
2014-02-14 00:00:00 What Harvard Can Teach Us About Portfolio Management by Roger Nusbaum of AdvisorShares
The takeaway for advisors is the need to make sure clients truly understand their time horizons and that their portfolios are being navigated toward their time horizon versus responding to short term events like a Green Mountain Coffee (NASDAQ:GMCR) popping 30% on a deal with Coca Cola (NYSE:KO) or a stretch of poor returns for emerging markets.
2014-02-14 00:00:00 These Gold Charts Will Make Your Heart Beat Faster by Frank Holmes of U.S. Global Investors
So while gold may correct over the next several months as the metal enters its seasonally weak period of the year, this looks promising for gold investors.
2014-02-12 00:00:00 Was the labor report positive, or negative, anyone? by Chris Maxey and Ryan Davis of Fortigent
Stocks were modestly positive last week following three straight weeks of negative performance. Markets crawled back following an ugly Monday in which the S&P 500 suffered its worst loss in more than seven months. For the week, the S&P rose 0.9% while the Dow Jones Industrial Average added 0.7%.
2014-02-12 00:00:00 Harvard?s Endowment: Wise or Foolish? by William Smead of Smead Capital Management
Warren Buffett says, "What the wise man does in the beginning, the fool does in the end." In a Barron's feature over the weekend, writer Andrew Bary dug into the portfolio of Harvard's Endowment through an interview with their CIO, Jane Mendillo. After all, who could possibly be wiser than what many would argue is the most respected undergraduate and graduate university in the world? Using a combination of Bary?s article and our perspective, this missive will seek to determine whether the Harvard Endowment is wise or foolish.
2014-02-12 00:00:00 Grey Owl Capital?s Third Quarter Letter by of Grey Owl Capital Management
2013 was a banner year for the US stock market. Despite equities? meager fourteen-year record of accomplishment, investors, broadly speaking, are limited to short-term memory. Last year?s performance was enough to generate significant enthusiasm for stocks. We continue to believe, the current environment warrants a more balanced approach.
2014-02-11 00:00:00 Focus on Income: The Illiquidity Premium: Opportunities for Investing in Credit Today by Jack Rivkin of Altegris
At a time when many investors are seeking income for their portfolios, traditional sources of fixed income - principally government bonds and high-grade corporate bonds - look less than compelling. Yields are low and there is an increasing risk that interest rates will rise, which would cause the value of existing bonds to fall.
2014-02-08 00:00:00 Why Majority of IFAs Struggle to Scale-Up Their Practice by Rajat Dhar of Cogent Advisory
With SEBI, the regulatory body coming up with wealth service guidelines for IFAs, it is evident that only those having larger scale of operations can adapt swiftly to the changing regulations and market conditions. But, large number of IFAs in India are finding it hard to scale up. This commentary outlines the generic reasons as to what stops IFAs to scale up their practices.
2014-02-07 00:00:00 What's the Game Changer for Gold? by Frank Holmes of U.S. Global Investors
What will break gold of its losing streak? Will inflation, which is a lagging indicator, be stronger than expected? In one of my most popular posts last year, I said that based on the jobs market, the limited housing recovery and regulations slowing down the flow of money, the Fed would have no choice but to start tapering and raising rates very gradually to keep stimulating the economy.
2014-02-05 00:00:00 Emerald Economic Commentary by Team of Emerald Allocation Strategies
As Yogi Berra once said, "You got to be careful if you don?t know where you?re going, because you might not get there." As we look back on 2013 and look ahead to 2014,we want to share our thoughts on the road traveled and more importantly, the possible road ahead.
2014-02-04 00:00:00 The Albatross of MPT Thinking by Michael Edesess (Article)
The January/February issue of the Financial Analysts Journal includes an article titled "My Top 10 Peeves" by Clifford Asness, who was trained in modern portfolio theory (MPT) and its underlying assumptions. Many of Asness peeves are directed at people who depart from the MPT worldview. In discussing his peeves, I will offer counter-arguments and explain why I think the MPT perspective is flawed.
2014-02-04 00:00:00 Letters to the Editor by Various (Article)
A reader responds to Stephanie Keltons article, Code Red or Red Herring? Mauldin and Teppers Code Red Reviewed , and a reader responds to Justin Kermonds article, Harvards Post-Crisis Endowment Strategy, both of which appeared last week.
2014-02-04 00:00:00 Investors Should Focus on Wages, Not Jobs by Chris Maxey, Ryan Davis of Fortigent
This Friday investors receive the first official labor market report of 2014. Following a highly disappointing jobs figure in December, many market participants hope to see a rebound - particularly one that will help justify the Feds decision last week to continue tapering its asset purchases.
2014-02-04 00:00:00 Challenging the Consensus by Niels Jensen of Absolute Return Partners
Investors are overwhelmingly bearish on bonds going into 2014. In this months Absolute Return Letter we challenge that view and look at various reasons why the bond market may surprise most people and deliver a positive return this year.
2014-01-31 00:00:00 A Surprising Gift for Chinese New Year by Sherwood Zhang of Matthews Asia
Beijing-based China Credit Trust Company, a firm that operates as a non-banking financial institution in China, announced this week it reached an agreement to restructure a risky high-yield product that had earlier ignited worries over the health of Chinas trust industry. Just in time for the Lunar New Year, investors in the troubled trust may receive a big (metaphorical) red envelope-a monetary gift traditionally given during Chinese New Year or other special occasions-or at least avoid a financial hit.
2014-01-31 00:00:00 Do Portfolio Diversifiers Belong in Client Portfolios? by Roger Nusbaum of AdvisorShares
The big idea is that the stock market goes up more often than not but when it does go down it scares the hell out of clients. During these large declines some advisors will use tools like gold, hedge fund replicators, absolute return, market neutral, funds that sell short or any other products that tend to not look like the stock market to try to spare clients from the full effect of the decline.
2014-01-30 00:00:00 High Yield in 2014: Where Can You Look for Upside in a 'Medium Yield' Market? by Andrew Jessop, Hozef Arif of PIMCO
Default rates and credit losses in high yield markets remain below their long-term averages, and we believe default rates will remain low in 2014 and 2015 as well. Investors should consider positioning for better convexity via exposure to sectors with favorable industry dynamics and positive event risk from M&A or equity offerings, potential upside from price recovery in high quality bonds trading below par and exposure to select new supply from former investment grade companies.
2014-01-30 00:00:00 Getting Comfortable With Volatility by Mark Mobius of Franklin Templeton
Over the past few weeks, weve seen significant volatility in the markets, which has spooked some investors, but is also something we have become accustomed to. Markets generally (not only emerging markets) have become much more volatile during the last 20 years as a result of massive flows of money from not only institutional investors and long-only mutual funds but also hedge funds and high-frequency trading. We see such selloffs as potential opportunities to pick up bargains in select stocks if, in fact, the prices move low enough to draw our interest.
2014-01-28 00:00:00 Harvard’s Post-Crisis Endowment Strategy by Justin Kermond (Article)
Jane Mendillo took the helm as CEO and president of Harvard Management Company (HMC) in 2008, after the endowment suffered a devastating $10 billion loss, which depleted its worth by more than 27%. Under her leadership, HMC has emerged from the crisis with innovative changes in its policies and processes regarding asset allocation and risk management of alternative assets.
2014-01-28 00:00:00 Letters to the Editor by Various (Article)
A reader responds to Marianne Brunet’s article, Are Small Businesses the Engine of Job Growth?, which appeared last week, and a reader responds to Robert Huebscher’s article, The Verdict on Unconstrained Bond Funds, which was published on January 14.
2014-01-28 00:00:00 An Active Management Turning Point? by Chris Maxey, Ryan Davis of Fortigent
Active managers faced a difficult road in recent years, leading to many questions about the efficacy of active versus passive investment management. There are signs that the tide is once again changing in favor of active managers and the road ahead could offer happier times.
2014-01-28 00:00:00 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn
My caution last week unfolded into a market sell off related to both disappointing earnings and concern over emerging markets affecting the foreign exchange markets.
2014-01-23 00:00:00 Can Equities Continue Their Rise? Equity Investment Outlook: January 2014 by Matt Berler, John Osterweis of Osterweis Capital Management
2013 marked the fifth year of recovery following the near-death experience of the 2008 global financial system meltdown. From a low of 677 in 2009, the S&P 500 Index (S&P 500) finished 2013 at 1,848, delivering a stunning 203% total return from the low. Over the same period, the total return for the Dow Jones Industrial Average was 188%. The tech-heavy and arguably more speculative NASDAQ logged a 249% total return. These very large equity returns reflect both a strong recovery in corporate profits and a dramatic clean-up of our financial system.
2014-01-22 00:00:00 Commodities Remain a Source of Frustration by Chris Maxey, Ryan Davis of Fortigent
The environment following the global financial crisis has been a challenging one for asset allocators, as long held relationships shifted and traditional idioms were turned on their head. As we detailed last week in "The Diversification Obituary," investors have seen little work in their portfolios other than US stocks, while supposed diversifiers have offered little more than muted beta and unusually high correlations.
2014-01-22 00:00:00 The Virtualization of Everything by Francois Sicart of Tocqueville Asset Management
In his latest piece, Francois Sicart, Founder and Chairman of Tocqueville Asset Management, looks at the motivations of participants in capital markets, and how with the advent of synthetic investments and complicated derivatives products, he is concerned that "the stock market has lost its close link to the "real" economy and has become more of a gigantic casino."
2014-01-17 00:00:00 Getting Lucky by Howard Marks of Oaktree Capital
Sometimes these memos are inspired by a single event or just one thing I read. This one - like my first memo 24 years ago - grew out of the juxtaposition of two observations. Ill introduce one here and the other later on. Contrary to my wife Nancys observation that my memos are "all the same," the subject here is one Ive rarely touched on.
2014-01-14 00:00:00 What Have We Learned from the Financial Crisis? by Michael Edesess (Article)
Why do we need yet another discussion of the 2007-09 financial crisis and its aftermath? That question is asked and answered by Alan S. Blinder in his new book, After the Music Stopped: The Financial Crisis, the Response, and the Work Ahead. Blinder provides new details about this harrowing chapter in our financial history and valuable insights about the effectiveness of potential regulatory policies.
2014-01-14 00:00:00 The Diversification Obituary by Chris Maxey, Ryan Davis of Fortigent
According to some major media outlets, 2013 was the year diversification died. With the S&P 500 racing to a more than 30% gain (the largest since the late 90s), it seemed as though no other asset class truly mattered last year. While it is true domestic equities had a banner year, one-asset class portfolios will never be robust, and there is reason to believe 2013 is a prime example of why diversification is incredibly important.
2014-01-10 00:00:00 High Yield and Bank Loan Outlook- January 2014 by Team of Guggenheim Partners
Improving U.S. macroeconomic conditions should spur additional investor demand for high-yield bonds and bank loans, particularly with defaults exceptionally low. Still, investors should monitor trends pointing to an erosion of safety in leveraged credit.
2014-01-10 00:00:00 The Leverage Buyout Overhang by Heather Rupp of AdvisorShares
While we are not opposed to leveraged buyouts, as they can often produce very supportive private equity partners, what does concern us is when the capital structure is levered up to a potentially unsustainable level due to these buyouts or large dividends to equity sponsors.
2014-01-07 00:00:00 Ten Predictions for Advisors in 2014 by Bob Veres (Article)
Nobody can predict the markets. But it is possible to forecast the challenges that financial advisors and planners will face in the next 12 months, or at least provide a warning system for impending threats. Here are my top 10 issues to think about as we enter 2014 - offered with humility and respect for the world’s ability to surprise us.
2014-01-07 00:00:00 Is 2014 the Year That Alternatives Matter Again? by Chris Maxey, Ryan Davis of Fortigent
In the wake of the financial crisis of 2008, investors piled into alternative investments en masse to help insulate their portfolios from another dramatic market decline. For those who had not yet bought into the idea of improving portfolio risk-adjusted returns, the 50% drawdown in the S&P 500 provided all the convincing needed.
2014-01-07 00:00:00 Turn the Page: Outlook for Economy/Stocks in 2014 by Liz Ann Sonders of Charles Schwab
In this comprehensive (read: long...sorry!) 2014 outlook report, we assess the likelihood a correction is in the offing given the strong gains since 2009.
2014-01-06 00:00:00 And That's The Week That Was by Ron Brounes of Brounes & Associates
To say that 2013 was an interesting year would be a bit of an understatement. We learned a long time ago not to make predictions about the stock market because no matter what is predicted, it is likely to be wrong. Even if we get lucky one year, we are not likely to even get close the following year. We do try to give guidance, however. Last year we suggested that, given the late run in the market in 2012 and its 15% return, investors should be happy with a return of 8 to 10% in 2013. Obviously, investors enjoyed much better returns.
2014-01-06 00:00:00 2013: A Review of the Past, the Present and the Future by Ron Surz of PPCA Inc
This commentary is divided into three sections. I begin with a review of current U.S. and foreign stock markets, examining the year 2013 and the past six years, including the crash of 2008. This perspective serves as a launch point into the future, specifically 2014 and the remainder of this decade. I conclude with a review of the past 88 years of U.S. stock and bond markets.
2013-12-27 00:00:00 Gary Shilling: Review and Forecast by John Mauldin of Millennium Wave Advisors
Its that time of year again, when we begin to think of what the next one will bring. I will be doing my annual forecast issue next week, but my friend Gary Shilling has already done his and has graciously allowed me to use a shortened version of his letter as this weeks Thoughts from the Frontline. So without any further ado, lets jump right to Garys look at where we are and where were going.
2013-12-26 00:00:00 Newsletter by Harold Evensky of Evensky & Katz
I admit it, I do occasionally pick on Money Magazine and other consumer financial publications, but as Ive written in the past, for the most part, Money does a great job of educating consumers. Its story on Lessons from the Crash "Lehman Brothers collapse in September 2008 sent stocks on a terrifying ride. A year-by-year look back reveals five key takeaways you need to heed today" is an excellent example. Here are Moneys "Lessons."
2013-12-24 00:00:00 And That's The Week That Was by Ron Brounes of Brounes & Associates
vestors thanked Bernanke this week for what they perceived as an early holiday present. While no one knew how they would react once the Fed began to taper its bond purchases, many surprised analysts by lifting stocks to one of the best showings of the year (and a new record on the Dow). And now that that uncertainty is out of the way, let the vacations begin.
2013-12-20 00:00:00 Let's Get Physical: Gold Bullion and Bitcoin by John Hathaway of Tocqueville Asset Management
John Hathaway, manager of the Tocqueville Gold Fund (TGLDX), discusses in his latest insights piece the disparity in price direction between gold bullion and Bitcoin, in spite of the strikingly similar rationale for holding the two. He notes that the "Bitcoin-Gold incongruity is explained by the fact that financial engineers have not yet discovered a way to collateralize bitcoins for leveraged trades."
2013-12-17 00:00:00 Will 2014 Bring an End to Central Bank Intervention? by Chris Maxey, Ryan Davis of Fortigent
Nearing the final two weeks of the year, it is customary to look forward to the trends and events that will shape the coming year. A theme that may come to the fore in 2014 revolves around central bankers, specifically the diverging fates in various economies of the world.
2013-12-17 00:00:00 The Monster That Is Europe by John Mauldin of Millennium Wave Advisors
This week, Geert Wilders and his Party for Freedom in the Netherlands and Marine Le Pen of the Front National (FN) of France held a press conference in The Hague to announce that they will be cooperating in the elections for the European Parliament next spring and hope to form a new eurosceptic bloc.
2013-12-13 00:00:00 Hedged Dividend Investing: The Best Strategy You've Never Heard Of? by Robert Isbitts of Sungarden Investment Research
Our industrys challenge: How to deal with that via creation of intelligent investment strategies that allow advisors and their clients to follow through on their desire to skirt both the bond and stock bubbles of the future, while still striving for a competitive yield for their retirement portfolios.
2013-12-10 00:00:00 Christmas by Jeffrey Saut of Raymond James
Well it is official, Christmas has begun. For me it began with the private wine and dinner party at Morrell, arguably the finest wine store I have ever seen, and anyone that knows me knows I have seen a lot of wine stores! Morrell is located at 1 Rockefeller Center between 5th Avenue and 6th Avenue overlooking the Christmas tree at Rockefeller Center. I had done a gig on Bloomberg radio at Morrell last Tuesday with my friends Carol Massar and Pimm Fox and got invited to the party the next evening to watch the lighting of the Christmas tree.
2013-12-09 00:00:00 Fed Creating More Financial Market Uncertainty by John Browne of Euro Pacific Capital
Although the U.S. stock market continues to hit new nominal highs on a nearly daily basis, the U.S. economy bumps along at a lackluster pace. This disconnect has been achieved by a massive Fed experiment in monetary stimulation.
2013-12-09 00:00:00 Gauging Tapering Post November Jobs Report by Chris Maxey, Ryan Davis of Fortigent
With another month down in 2013, last week came time to dissect the latest report on employment. If the market reaction was indicative, the highly anticipated November labor report did not disappoint, sending stocks up more than 1% on Friday.
2013-12-06 00:00:00 Like a Shakespearean Script by Richard Bernstein of Richard Bernstein Advisors
Shakespearean plays follow a pattern. The underlying plots and storylines change from play to play, but the five-act construction is a common overlap. Market cycles tend to follow a similar pattern cycle after cycle. Like the different plots in various Shakespearean plays, the catalysts that begin and end each cycle, and the events during the cycle are always different. However, market cycles seem to follow a script and, so far, this cycle seems to be following the script almost perfectly.
2013-12-05 00:00:00 10 for '14 by Richard Bernstein of Richard Bernstein Advisors
Each December we publish a list of investment themes that we feel are critical for the coming year. We continue to believe the US stock market will continue its run through one of the largest bull markets of our careers. Our positive outlook extends to the following areas: US Equities, Japanese Equities, European small cap stocks, high yield municipals.
2013-12-05 00:00:00 No Silver Bullets in Investing by James Montier of GMO
In a new white paper today, James Montier of GMOs asset allocation team reviews recent "innovation in our industry." He argues, "one of the myths perpetuated by our industry is that there are lots of ways to generate good long-run real returns, but we believe there is really only one: buying cheap assets."
2013-12-03 00:00:00 Turning Over Rocks by Herbert Abramson, Randall Abramson of Trapeze Asset Management
The S&P 500 is at a record high and we believe the markets generally are fully valued. Corporate revenue growth is anemic, profit margins are stretched, and the prospect of earnings rising meaningfully is not high. And, the outlook for the U.S. and global economy is still uncertain. Market psychology is at a level suggesting the market is overbought. Margin debt is at record levels and the current popularity of stocks by retail investors at market highs is in itself a red flag.
2013-12-03 00:00:00 Fixed Income Markets Slog Forward by Chris Maxey, Ryan Davis of Fortigent
The past five years have seen a dramatic influx of investor capital into corporate credit markets. As investors jumped into the market, there is growing concern that credit markets are nearing stretched valuations. Those concerns are likely premature, particularly with central bank intervention in place.
2013-12-03 00:00:00 On the Wings of an Eagle by William Gross of PIMCO
Ive always liked Jack Bogle, although Ive never met him. Hes got heart, but as hes probably joked a thousand times by now, its someone elses; a 1996 transplant being the LOL explanation. Hes also got a lot of investment common sense, recognizing decades ago that investment managers in composite couldnt outperform the market; in fact, their alpha would be negative after fees and transaction costs were factored in.
2013-11-28 00:00:00 The Race is On by Howard Marks of Oaktree Capital
Theres a race to the bottom going on, reflecting a widespread reduction in the level of prudence on the part of investors and capital providers. No one can prove at this point that those who participate will be punished, or that their long-run performance wont exceed that of the naysayers. But that is the usual pattern.
2013-11-26 00:00:00 While You Were Sleeping: Asian Developments Loom for Financial Markets by Chris Maxey, Ryan Davis of Fortigent
Amid all the Fed talk dominating airwaves and headlines, a few key developments occurred overseas last week that could shape financial markets significantly in the quarters ahead.
2013-11-22 00:00:00 Dividend Season Scorecard by Don Taylor of Franklin Templeton
As consumers gear up for the upcoming holiday shopping season, many investors in individual equities are eagerly anticipating another season that, instead of draining their wallets, might actually fatten them-dividend season. Don Taylor, portfolio manager of Franklin Rising Dividends Fund, is on the lookout for companies which not only have a track record of paying regular dividends, but increasing them. Here are some of Taylors thoughts on the early dividend season scorecard.
2013-11-20 00:00:00 Entrepreneurship in Asia by Jerry Shih of Matthews Asia
Using Silicon Valley as a yardstick to measure the success of Asias entrepreneurs is an interesting exercise. But it offers little insight into the development of more creative processes in Asia. Many policymakers in the region have declared innovation to be a national, strategic prioritycreating policies aimed at spurring growth to increase R&D expenditure, attract knowledge-intensive foreign direct investment and building more skilled labor pools. This month, Jerry Shih, CFA, takes a look at what changes are occurring around Asia to build more robust start-up ecosystems.
2013-11-20 00:00:00 No Madness and No Crowds by Pamela Rosenau of HighTower Advisors
Charles Mackays book Extraordinary Popular Delusions and the Madness of Crowds, chronicles some of historys greatest financial manias, including the South Sea bubble and the Dutch tulip mania, among many others. As the stock market continues to make new highs, discussion of a market bubble has been capturing many of the recent headlines. For those that suggest this is the case, they may need to refresh themselves with Mackays book, which highlights the mania phase a phase that we have yet to encounter.
2013-11-19 00:00:00 Asset Class Allocation and Portfolios: Critique and Complication by Adam Jared Apt (Article)
In Part 1 of this essay, I explained that for asset class allocation to become an investment practice, it required a foundation of theory. And Modern Portfolio Theory was that foundation. But today, most financial journalists and investment advisors who proffer advice centered on asset class allocation are?if I may judge from their writings?oblivious of this. And why shouldn’t they be? Theory is abstract and difficult to apprehend.
2013-11-19 00:00:00 Howard Marks: Equities are Under-owned and Un-loved by Robert Huebscher (Article)
According to Oaktrees Howard Marks, U.S. equities are under-owned and un-loved, and I like to buy assets like that.
2013-11-19 00:00:00 Where Will the Holiday Shopping Season Lead Us This Year? by Chris Maxey, Ryan Davis of Fortigent
The unofficial start to the holiday shopping season kicks off in a few short days. Economic uncertainty abounds, raising fears that consumers will pull back from spending, but some positive developments suggest consumers will be just fine.
2013-11-19 00:00:00 Levitate: Dismiss Bubble Talk for Now by Liz Ann Sonders of Charles Schwab
Its premature to be calling this market a bubble. Rolling 10 year returns havent even reached a long-term mean. Valuation still well below prior bull market peaks.
2013-11-15 00:00:00 Dressed to the Nines with Gold by Frank Holmes of U.S. Global Investors
While paper gold is getting the cold shoulder in the West, the Love Trade buyers in the East are wrapping their arms around all the physical gold they can get their hands on.
2013-11-14 00:00:00 This May Sting Just a Bit: Global Diversification by Jeff Hussey of Russell Investments
Russell Investments global chief investment officer argues that times when global diversification falls out of favor might provide opportunities for investors.
2013-11-13 00:00:00 Twenty Five by Doug MacKay, Bill Hoover, Mike Czekaj of Broadleaf Partners
I am not a particularly good salesman. From the time I first meet a prospect to when they become a full-fledged client, it can often take two years even when they initiate the first meeting. Fortunately, growing the firm isnt one of my primary roles, a responsibility that does fall to Bill Hoover, my business partner. The beauty of our relationship is that while Bill devotes his time to our firms outside efforts, I am able to spend almost all of my attention tending to the portfolios of those who have already hired us. (View a printable version of this Economic
2013-11-12 00:00:00 Currency Markets Show Signs of Reversal by Chris Maxey, Ryan Davis of Fortigent
A mixture of surprising economic data and changing central bank policy led to sharp moves in currency markets last week. This came after several gyrations in FX markets earlier this year. Looking forward, volatility is likely to remain, but many signs point towards a strengthening U.S. dollar.
2013-11-08 00:00:00 Big Ideas in the Big Easy by Frank Holmes of U.S. Global Investors
This is likely a contrarian view to the folks in the White House, but I think investors benefit from being contrarian and thinking differently. In preparation for my presentations in New Orleans as well as for the Metals & Minerals Investment Conference in San Francisco and the Mines and Money in London in a few weeks, I?ve been pulling together this kind of research that we can all put to use now.
2013-11-07 00:00:00 EM: The Growth Story That Isn't by Richard Bernstein of Richard Bernstein Advisors
We remain very concerned about emerging market stocks and bonds. The recent outperformance of EM stocks is again luring investors to once again touch the hot stove. Emerging markets seem to have some significant structural and cyclical issues about which investors seem unaware or seem to be ignoring.
2013-11-05 00:00:00 Ex-US Property Bubble Peaking? by Chris Maxey, Ryan Davis of Fortigent
For several years now, a common storyline on China was the immense overcapacity in the countrys housing market. A mixture of easy credit policies and officials explicit economic growth plans based on capital investment yielded construction on a massive scale across the countryside. So-called ghost towns emerged as the pace of building and the migration of rural citizens into these cities fell out of sync.
2013-10-29 00:00:00 Can Financial Engineering Cure Cancer? by Robert Huebscher (Article)
Securitization and the collateralized obligations it produced led to the financial crisis and the near-collapse of the financial markets. But financial engineering’s bad reputation could turn around. Andrew Lo, a professor at the MIT Sloan School of Management and director of its Laboratory for Financial Engineering, thinks financial engineering can cure cancer.
2013-10-24 00:00:00 The Pillars of Commodities Investing by Miguel Perez-Santalla of BullionVault
As an advisor your job is to know the most secure places to invest ones money. This difficult task only becomes more difficult when confronted with demands for an alternative investment.
2013-10-24 00:00:00 Trying to Stop a Bull Market Has Risks by Frank Holmes of U.S. Global Investors
U.S. stocks have been on a tear. The S&P 500 Index has climbed a surprising 20 percent so far this year, as a global synchronized recovery takes shape and funds flow back to equities. As I often say, investors take risks when they try to stop a bull run, and plenty of data suggest you might regret taking that action this year.
2013-10-24 00:00:00 Putting Tax-Deferred Accounts to Best Use by Kathleen Fisher, Tara Thompson Popernik of AllianceBernstein
The common wisdom about retirement planning is to fund tax-deferred vehicles such as 401(k) plans and IRAs to the maxand we agree. But how to put these accounts to best use is more complicated.
2013-10-24 00:00:00 Glory Days: Could They Come Back for US Equities? by Liz Ann Sonders of Charles Schwab
A "great rotation" may not be underway by individual investors; even amid record-breaking outflows from bond funds this summer. But fund flow data do show some shift in preferences and highlight the sensitivity of investors to any rise in longer-term interest rates. A more interesting place to look is at the fiduciary community; that has decidedly shifted its attention away from traditional equities (and fixed income) over the past decade.
2013-10-22 00:00:00 How Many Monkeys Does it Take to Find a Successful Strategy? by Michael Edesess and Kwok L. Tsui (Article)
Give a monkey enough darts and she will eventually hit the bulls-eye on a dartboard. We wouldn’t dare consider that monkey an expert dart thrower, but investment professionals have been using essentially that same logic to assert that their strategies ? often called “smart betas” ? will outperform the market. New research exposes the faulty mathematics upon which such claims are based.
2013-10-18 00:00:00 Just Like Yesterday by Francois Sicart of Tocqueville Asset Management
In his latest essay, Francois Sicart, Founder and Chairman of Tocqueville Asset Management, with help from Chetan Parikh, of Indias Capital Ideas Online, provides excerpts from and commentary on a 1971 speech by iconic investor David L. Babson. He begins by noting: "It is eerie how timely this speech, delivered 42 years ago, remains today."
2013-10-18 00:00:00 Despite Uncertainty, the Market Still Looks Strong by Charlie Dreifus of The Royce Funds
Although it was an ugly battle, on Thursday morning October 17 President Obama signed a bill that reopened the government into January 2014 and raised the debt ceiling until early February of next year.
2013-10-18 00:00:00 Trying To Beat The Market Is A Fool's Errand by Chuck Carnevale of F.A.S.T. Graphs
Proponents of indexing as the best investment strategy seemed to take great delight in reporting how the vast majority of professionally managed portfolios (mutual funds, separately managed accounts, hedge funds, ETFs, etc.) fail to outperform the S&P 500. Therefore, they argue, it is best not to even try. Investors should simply invest in index funds and forget about it.
2013-10-18 00:00:00 Trying to Stop a Bull Market Has Risks by Frank Holmes of U.S. Global Investors
U.S. stocks have been on a tear. The S&P 500 Index has climbed a surprising 20 percent so far this year, as a global synchronized recovery takes shape and funds flow back to equities. As I often say, investors take risks when they try to stop a bull run, and plenty of data suggest you might regret taking that action this year.
2013-10-17 00:00:00 Investing in Retirement: Bonds Aren't Enough by Kathleen Fisher, Tara Thompson Popernik of AllianceBernstein
What should you invest in after the spigot of earned income is turned off? Its a vexing question, especially since we expect lower stock and bond returns going forward.
2013-10-17 00:00:00 Huey Lewis and the News! by Jeffrey Saut of Raymond James
Thirty years ago Huey Lewis and the News released their smash hit album titled Sports. It was an instant hit with every song on the album a winner. And last week Huey was playing on the Street of Dreams as participants danced to his hit tune This Is It. Of course, the It in question is a potential deal between the House of Representatives and the President on the debt ceiling and the government shutdown.
2013-10-15 00:00:00 Letters to the Editor by Various (Article)
Readers respond to Robert Huebscher’s article, The Futility of the Endowment Model, which appeared last week.
2013-10-09 00:00:00 Getting Serious About Investing Responsibly by Luke Spajic, Josh Olazabal of PIMCO
To date, much of ESG-related investing has focused on negative screening, but we believe there is a better approach. This approach rests on three pillars: identifying and analyzing key ESG issues facing a given investment sector, engaging with the issuers of securities, and supporting the development of markets for ESG investments.
2013-10-08 00:00:00 The Futility of the Endowment Model by Robert Huebscher (Article)
In the past two decades, the so-called endowment model has been adopted by hundreds of endowments, foundations and advisors ? particularly those serving ultra-high-net-worth clients. By aggressively allocating to illiquid alternative asset classes, those investors hoped to duplicate the results of Yale and other top-tier institutions. New research exposes the futility of those efforts.
2013-10-08 00:00:00 The Death of Fixed Income? Not so Fast . . . by Giordano Lombardo of Pioneer Investments
Recent market movements have reminded investors that the fixed income market is facing a secular change, after a 30-year-long bull market driven by a continuous decline in interest rates. I believe the announcements of the death of fixed income as an asset class are greatly exaggerated, and in order to face the new reality, fixed income investors and asset allocators need to adopt a significant change of approach.
2013-10-07 00:00:00 Ted Williams, Ford F-150's, and Market Valuations by Robert Mark of Castle Investment Management
In late 2008 Lehman Brothers had just collapsed, AIG needed help from the US government and markets around the world were in a tailspin. Today, five short years later, we find it strange how the strength of the stock market defies a climate of declining earnings. With another quarter of corporate results behind us, equities continue to rally despite corporate earnings offering no material support, with many companies actually talking down their future growth prospects.
2013-10-05 00:00:00 Pinch Yourself. U.S. Stock Markets Have Grown 145% in Four-Plus Years by Ron Surz of PPCA
Thankfully, 2008 has become a distant memory. Weve made back its 37% loss and a lot more. Things are good, but are they going to stay that way? We still face anemic economic growth, burgeoning debt, global social unrest and more. The S&P 500 has returned 145% in the past 55 months (4.5 years).
2013-10-04 00:00:00 The Fire Fueling Gold by Frank Holmes of U.S. Global Investors
For patient, long-term investors looking for a great portfolio diversifier, a moderate weighting in gold and gold stocks may be just the answer. And, today, when looking across the gold mining industry, you?ll find plenty of companies that have paid attractive dividends, many higher than the 5-year government yield.
2013-10-02 00:00:00 ProVise Bullets by Ray Ferrara of ProVise Management Group
Effective October 1st, the health exchanges are open for business and enrollment can occur over the next 90 days. It will be interesting to see just how many people feel compelled to sign up under the individual mandate. While the premiums are not inexpensive for most of the eligible people, many will receive tax credits to help offset the cost. Nonetheless, others will find it a significant burden to the budget, and there is great debate over just how this will affect the economy long-term.
2013-09-30 00:00:00 The Global Sea Change Continues by Richard Bernstein of Richard Bernstein Advisors
Most investors will readily admit the global credit bubble is deflating, yet continue to favor credit-based asset classes within their portfolios. Whereas many investors still believe that the emerging markets are a growth story, the data tell us that U.S. investors can find growth in their own backyard.
2013-09-27 00:00:00 Achievement Awards Announced at the 2013 Insiders Forum Conference and Leadership Forum by Bob Veres (Article)
The first annual Insiders Forum conference attracted more than its share of industry leaders. But two of its more prominent attendees received special recognition for their contributions to the financial planning/investment advisory profession.
2013-09-21 00:00:00 The Best, Brightest, and Least Productive? by Robert Shiller of Project Syndicate
In the US, 7.4% of total compensation of employees in 2012 went to people working in the finance and insurance industries. Whether or not that percentage is too high, the real issue is that the share is even higher among the most educated and accomplished people, whose activities may be economically useless, if not harmful.
2013-09-14 00:00:00 Nothing But Bad Choices by John Mauldin of Mauldin Economics
Crises in government funding dont simply arrive on the doorstep unannounced. Their progress toward the eventual Bang! moment is there for all the world to see. The root cause is almost always the same: debt. And whether that debt is actually borrowed or is merely promised to the populace, when the market becomes worried that the ability of the government to fund its promises is suspect, then the end is near. Last week we began a series on what I think is an impending crisis in the unfunded pension liabilities of state and local governments in the United States.
2013-09-13 00:00:00 What's Happening to Bonds and Why? by Mohamed El-Erian of PIMCO
To say that bonds are under pressure would be an understatement. Over the last few months, sentiment about fixed income has flipped dramatically: from a favored investment destination that is deemed to benefit from exceptional support from central banks, to an asset class experiencing large outflows, negative returns and reduced standing as an anchor of a well-diversified asset allocation.
2013-09-11 00:00:00 Underwriters Lose No Time Pumping Out New Shares after Labor Day by Minyi Chen of AdvisorShares
The monthly flows of Mutual Fund and ETF volatility continued as a roller coaster trend was apparent in the last three months. Read this investor insight by Minyi Chen, CFA, Chief Operating Officer of TrimTabs Investment Research and Portfolio Manager of AdvisorShares TrimTabs Float Shrink ETF (NYSE Arca: TTFS) to learn about the variable trend flows.
2013-09-10 00:00:00 Letters to the Editor by Various (Article)
Several readers responded to Michael Edesess article, Did Steve Jobs Really Build That?, which appeared last week. A reader responded to Stephen Roachs commentary, The Global QE Exit Crisis, which appeared on August 26.
2013-09-10 00:00:00 Did Steve Jobs Really Build That? by Michael Edesess (Article)
The conventional wisdom is that only the private sector can marshal the entrepreneurial energy to create innovation and growth, while government can do little more than shift around the wealth that the private sector creates. But is that really true?
2013-09-10 00:00:00 Oil Has Too Many Plumbers by Bill Smead of Smead Capital Management
Weve never quite understood why most sensible people dont apply the same economic logic to investing that they do to any other business. Take plumbing for example. If your town has 10 main plumbing companies and 10 more move into town, your economic mind tells you that the added competition will drive down profits. On the other hand, if five of the plumbing companies go out of business, profits should rise over time.
2013-09-10 00:00:00 Check or Checkmate... by Blaine Rollins of 361 Capital
The White Houses goal is to persuade Congress to authorize a limited military strike against Syria to punish it for a deadly chemical weapons attack. But after a frenetic week of wall-to-wall intelligence briefings, dozens of phone calls, and hours of hearings with senior members of Mr. Obamas war council, more and more lawmakers, Republican and Democrat, are lining up to vote against the president.
2013-09-06 00:00:00 Float Research: Fund Flows Swing Wildly for Third Consecutive Month by Minyi Chen of AdvisorShares
The monthly flows of Mutual Fund and ETF volatility continued as a roller coaster trend was apparent in the last three months. Read this investor insight by Minyi Chen, CFA, Chief Operating Officer of TrimTabs Investment Research and Portfolio Manager of AdvisorShares TrimTabs Float Shrink ETF (NYSE Arca: TTFS) to learn about the variable trend flows.
2013-09-04 00:00:00 Fixed Income - Where to Now? by Chris Maxey, Ryan Davis of Fortigent
Since the end of the Global Financial Crisis (GFC), investors moved aggressively into fixed income asset classes. They were quickly rewarded in the years following the crisis with a combination of falling interest rates and tighter credit spreads, which led to positive absolute returns. The easy money in fixed income is gone, however, and now is the time for careful asset class selection.
2013-09-04 00:00:00 Weekly Market Review Notes by Team of Tuttle Tactical Management
In August the US Stock Market had its worst month since May 2012 and there are a bunch of interesting issues going into September, including Syria, Problems in Emerging Markets,and Fed tapering.
2013-09-03 00:00:00 Did Steve Jobs Really Build That? by Michael Edesess (Article)
The conventional wisdom is that only the private sector can marshal the entrepreneurial energy to create innovation and growth, while government can do little more than shift around the wealth that the private sector creates. But is that really true?
2013-09-03 00:00:00 So Step Right Up, Pick Your Favorites... by Blaine Rollins of 361 Capital
So with the backing of The White House, the State Department, the Senate & The Economist, the United States is going to launch Tomahawks on Syrian targets. The President did say that he will let Congress vote on a strike, but both he, Secretary Kerry and Senator Reid let it be known that they will be lighting fuses soon. So as a refresher as to who is supporting whom in Syria, the chart below will both assist and thoroughly confuse you...
2013-08-30 00:00:00 Beware the Dangerous Stretch for Yield by Ashish Shah of AllianceBernstein
The US Federal Reserve talked in early summer about tapering its quantitative easing plan and raising interest ratesin part to stop investors from chasing yield into the arms of riskier loans. In the high-yield market, however, the conversation had exactly the opposite effect.
2013-08-28 00:00:00 Forrest Gump Stock Market by Bill Smead of Smead Capital Management
After watching "Forrest Gump" for about the thirtieth time recently, I realized that the US economy and US stock market share a great deal in common with Forrest. In this missive, we will be reminded of the journey of a true American folk hero and of the journey back from the abyss the US economy and stock market have made since early in 2009.
2013-08-28 00:00:00 ING Fixed Income Perspectives August 2013 by Christine Hurtsellers, Matt Toms, Mike Mata of ING Investment Management
While it?s been said that a picture is worth a thousand words, some pictures are just not that complicated. Take the current U.S. yield curve, for example, our interpretation of which can be boiled down to just a handful of syllables: ?zero interest rate policy? and ?taper?.
2013-08-27 00:00:00 Choose Your Door Wisely.. by Blaine Rollins of 361 Capital
If I was being forced to choose a side for year end 2013 performance, I would have to agree with Mr. Plant. While September is historically a difficult month for the markets, we also know that the Q4 tends to reward the equity markets.
2013-08-23 00:00:00 What Does an Improving Economy Mean for Stocks and Bonds? by Charlie Dreifus of The Royce Funds
With the economy improving, inflation tame, and a Federal Reserve meeting approaching in September, Portfolio Manager and Principal Charlie Dreifus believes that small-caps remain an attractive option within the equities market.
2013-08-23 00:00:00 Float Research: Fund Outflows Surge Amid Bond Market Anxieties by Minyi Chen of AdvisorShares
Stock and bond funds have given up a net $32.4 billion in August thanks to strong outflows from ETFs and mutual finds alike. Read this investor insight by Minyi Chen, CFA, Chief Operating Officer of TrimTabs Investment Research and Portfolio Manager of AdvisorShares TrimTabs Float Shrink ETF (NYSE Arca: TTFS) to learn about the recent fund flow trends.
2013-08-22 00:00:00 Summer Whale Watching by David Wismer of Flexible Plan Investments
One of our familys most memorable and pleasant vacations took place years ago when we visited Cape Cod, Massachusetts for the first time. I thought of this trip in pondering some of the market news this week, where Wall Street was practicing its very own version of whale watching.
2013-08-20 00:00:00 Target-Date Funds: Why Higher Equity Allocations Work by Joe Tomlinson (Article)
Following the 2008 financial crisis, target-date funds (TDFs) were criticized for exposing investors nearing retirement to excessive equity allocations. Were those criticisms justified? How well do TDFs stack up against the venerable strategy of matching one’s bond allocation to one’s age? My research has yielded surprising answers to those questions and to the proper role of single-premium immediate annuities (SPIAs) alongside TDFs.
2013-08-20 00:00:00 Who Are You Going to Believe-These Non-GAAP Numbers or Your Lying Eyes? by Jeffrey Bronchick of Cove Street Capital
Great performance in the short-run-either absolute or relative-is a mixed blessing. If an investor owns a portfolio of stocks that is embedding 30% undervaluation, and voila, finds himself up 30% (this is a hypothetical number for the purposes of this example but its not far from recent reality) in six months, without a concurrent upward improvement in underlying fundamentals, you have to be a regular on CNBC to expect another 30% return over the next six months.
2013-08-15 00:00:00 Correlation and Portfolio Construction by Dean Curnutt of Macro Risk Advisors
We review recent periods of financial market stress, which bring about elevated levels of asset volatility and during which investors are vulnerable to incurring substantial loss of capital. We illustrate that risk is determined both by the volatility of individual investments in a portfolio and the degree to which they are correlated. Often overlooked, correlation is a critical factor. Because assets become more correlated at the same time they become more volatile, we argue that the benefits of diversification often are difficult to achieve when they are most needed.
2013-08-13 00:00:00 Envisioning the Planning Firm of the Future by Bob Veres (Article)
Virtually all advisors operate with a value proposition built on bettering their clients financial future through management of their assets. But trends in the workforce and capital markets will force advisors to rethink those assumptions and, if Richie Lee is right, the planning firm of the future will adapt a four-factor service model that places much greater emphasis on helping clients maximize their human capital.
2013-08-09 00:00:00 A Surprising Way to Play a Europe Rally by Frank Holmes of U.S. Global Investors
After a lengthy period of stagnant growth and lackluster results, the gradual crescendo of improving economic data that?s been coming out of Europe lately certainly commands attention.
2013-08-08 00:00:00 Absolute Strategies Fund Portfolio Commentary by Jay Compson of Absolute Investment Advisers
In our last quarter commentary we posed a simple question: "Why does the economy need so much stimulus and quantitative easing for so little growth?" Over the last two years or so, we feel that we have identified and explained the structural issues and risks very clearly. But in the second quarter, the equity and credit markets may have done a better job offering investors a true glimpse of the realities facing global markets.
2013-08-08 00:00:00 What is Risk? by Chris Engelman of Cedar Hill Associates
There are no rewards from investing without some measure of risk. Risk management, a process for recognizing, assessing and prioritizing a variety of risks, is an essential part of managing a portfolio successfully. Cedar Hill takes a holistic approach to risk management by identifying each clients objectives, preferences and constraints, then creating specific asset allocation and implementation strategies to minimize the effects of negative events.
2013-08-08 00:00:00 The Role of Confidence by Howard Marks of Oaktree Capital
The so-called wealth effect plays an important and well recognized part in the functioning of an economy. When assets appreciate in value, the owners translate their increased wealth into increased spending. While at first glance this is unsurprising, it should be noted that this is true even if the appreciation is unrealized, and thus the increased wealth exists solely on paper. The relationship can be stated as follows: the richer people feel, the more they spend. Changes in confidence have an impact on behavior similar to the wealth effect. Thats what this memo is about.
2013-08-07 00:00:00 Adapt or Die... by Blaine Rollins of 361 Capital
Bond king Bill Grosss $261.7 billion Total Return Fund at Pacific Investment Management Co. suffered a $7.5 billion net outflow last month, according to data from fund tracker Morningstar Inc. on Friday. It is the third straight monthly outflow for the Fund, on the heels of nearly $10 billion in redemptions in June. Clients have yanked $15.6 billion from Grosss Fund in 2013 through July. Jeffrey Gundlachs $37.9 billion DoubleLine Total Return Bond Fund suffered $580 million net outflow in July, according to Morningstar.
2013-08-07 00:00:00 Thoughts on the Long/Short Space by Kurt Voldeng of AdvisorShares
This insight from Kurt Voldeng highlights performance in the long/short fund universe.
2013-08-06 00:00:00 What Doesn't Kill Gold Makes it Stronger by Peter Schiff of Euro Pacific Precious Metals
Ive been emphasizing for months that the current correction in the gold price is a result of speculative money fleeing the market and not any reflection of golds long-term fundamentals. Unfortunately, there is so much money to be made (and lost) by day trading that my cautions have once again fallen on deaf ears.
2013-08-05 00:00:00 Two Charts Illustrate How to ?Follow the Money? by Frank Holmes of U.S. Global Investors
Too often investors get caught up in their political allegiance or parties, focus on the negative and lose confidence in stocks. As a result, they can miss great bull markets. I believe when it comes to finding investment opportunities, it?s not about the political party, it?s about the policies, both monetary and fiscal.
2013-08-01 00:00:00 Weekly Commentary & Outlook by Scotty George of du Pasquier Asset Management
Throughout the 1980s, we heard talk from the investment community to go global, invest worldwide, perhaps driven by true globalization of corporate exchange and balance sheets, and perhaps also by the need by firms to create new products for their consumers to devour. Mutual funds, brokerages, and private equity companies alike saturated the media with product offerings from every corner of the globe and every possible market sector, including telecom, basic materials, energy and industrial development.
2013-08-01 00:00:00 Alternatives for Today's and Tomorrow's Market Challenges by Jennifer Bridwell, Sabrina Callin of PIMCO
Investors should consider alternative investment strategies, which could enhance diversification and the potential for alpha, or risk-adjusted returns, because returns from traditional asset classes in coming years may be lower and more volatile than those realized historically.
2013-07-30 00:00:00 Economic & Capital Market Summary by Gregory Hahn of Winthrop Capital Management
We are approaching the five year anniversary of the beginning of the Financial Crisis. By this time in 2008 we had already experienced the complete seizure of the Auction Rate Preferred securities market and the takeover of Bear Stearns by JP Morgan Chase. In August of 2008, we would see the collapse of Lehman Brothers and the government takeover of AIG. We stand here today, shoulders slumped, and heads bowed mourning the lack of real progress in addressing the structural problems that are impeding sustained economic growth and private credit expansion.
2013-07-23 00:00:00 Risk Communicates Signals that Something Important is at Stake by Robert Mark of Castle Investment Management
The equity markets hit new all-time highs again this past quarter. However, we believe this rally is largely due to Ben Bernanke?s policy of Quantitative Easing (QE) which presently equates to the purchase of $85 billion in U.S. government debt every month. Through the Federal Reserve?s policies our government has effectively printed trillions of dollars since the financial crisis began, arguably inflating a host of asset prices including the stock market.
2013-07-19 00:00:00 Asia's Startup Incubators by Jerry Shih of Matthews Asia
As some of our readers may already know, Matthews Asia is headquartered in San Francisco and just north of Silicon Valley, home to some of the worlds largest technology corporations as well as a hotbed for tech startups. The rise of Silicon Valley has been bolstered by its connections to nearby Stanford University as well as to the emergence of the areas venture capital industry on Sand Hill Road since the 1970s. This energy and entrepreneurial culture has helped create many innovative ventures that have disrupted traditional businesses.
2013-07-17 00:00:00 Canadian Secular View: Into Darkness? by Ed Devlin of PIMCO
Many investors are buying Canadian federal government bonds, shorting Canadian bank stocks and selling Canadian dollars in anticipation of a prolonged downturn. While significant risks are clearly facing the Canadian economy, our baseline forecast does not justify positioning our portfolios for a prolonged Canadian downturn.
2013-07-16 00:00:00 Hedge Funds Can Advertise...But Should They? by Chris Maxey, Ryan Davis of Fortigent
In April 2012, the Jumpstart Our Business Startups (JOBS) Act was signed into law. The legislation eased a number of regulatory burdens on small businesses and private industry in a bid to boost job growth. The bill made additional headlines for lifting an 80-year ban on solicitation for private placements, the restriction that prevented hedge funds from advertising their wares to the general public.
2013-07-16 00:00:00 The Great Rotation Continues Forward... by Blaine Rollins of 361 Capital
Fed Chairman Ben Bernanke grabbed the mic on Wednesday and gave a performance that garnered a standing ovation from Stock, Bond, and Commodity investors. Only U.S. Dollar longs went home dragging their programs and spilling their popcorn. As a result, U.S. equity markets ended the week at all-time highs as stocks remained the darlings of the asset classes.
2013-07-12 00:00:00 Making Sense of the Bond Market by Phelps McIlvaine of Saturna Capital
The great challenge for investors and advisers today is to forecast where interest rates and bond prices will be once the influence of radical central bank intervention dissipates. Measures of inflation expectations are declining, and deflation remains the dominant influence on interest rates. In assessing whether to trim bond allocations, it is important to revisit the reasons for selecting a particular asset allocation before modifying or abandoning it.
2013-07-10 00:00:00 What is Happening to Gold? by John Hathaway of Tocqueville Asset Management
John Hathaway, manager of the Tocqueville Gold Fund (TGLDX), examines in his latest Tocqueville Gold Strategy Investor Letter the dramatic developments in the gold market over the last six months. The letter goes on to discuss the impact the Fed continues to have, and suggests that todays valuations represent a compelling entry point.
2013-07-09 00:00:00 The Five Best New Investment Ideas: New Age Paradigms for the Post-MPT World by Bob Veres (Article)
Over the past four years, Ive been collecting the most tangible, concrete post-Modern Portfolio Theory insights offered by professional investors.
2013-07-08 00:00:00 Widening the Search for Income: Beyond Traditional Bonds by Team of Forward Management
Multisector bond market strategies may provide an opportunity to capitalize on differences in relative value. A more refined and global approach may generate yield with dividend-paying stocks. Emerging market (EM) corporate bonds feature attractive fundamentals and have increased in popularity as an asset class.
2013-07-02 00:00:00 The Practical Application of Behavioral Finance by Mitchell D. Eichen and John M. Longo (Article)
From the Dot-Com bubble onward, traditional investment models have repeatedly disappointed those who relied on them. When compared to mathematically based models, behavioral finance provides a superior foundation. Here is an alternative investment paradigm, grounded in behavioral finance, that is practical and effective over time periods that are relevant for a significant portion of investors.
2013-06-27 00:00:00 Welcome Back, Mr. Bond by Jeffrey Saut of Raymond James
Weve been expecting you Mr. Bond. The phrase is itself a variant and joins the phrase Play it again Sam as a phrase attributed to a film or TV series. I have used said quip over the past few years, having been wrong-footedly expecting a backup in interest rates. While I did finally target the yield low of last July, the ensuing rate rise has been far slower than I would have thought, that is until the past few weeks.
2013-06-26 00:00:00 Sock Puppet Kabuki; Nikkei Today Parallels Dot-Com Bust by Peter Schiff of Euro Pacific Capital
The Japanese stereotype of excessive courtesy is being confirmed by the actions of prime minster Shinzo Abe who is giving the world a free and timely lesson on the dangers of overly accommodative monetary policy. Whether or not we benefit from the tutorial (Japan will surely not) depends on our ability to understand what is currently happening there.
2013-06-25 00:00:00 Rates, Dividends and The Laws of Gravity by Don Taylor of Franklin Templeton Investments
The laws of gravity may dictate that what goes up must come down, but interest rates seem to have their own converse course of action what goes down eventually will go up. Although it seems like interest rates can stay stuck in low gear for years, (decades even, in the case of Japan) eventually they will creep higher, and talk is heating up about the timing and magnitude of such creep in the US. As the portfolio manager of Franklin Rising Dividends Fund, Don Taylor was quick to comment that higher interest rates dont mean all dividend-paying stocks are doomed.
2013-06-21 00:00:00 Tapering the Taper Talk by Peter Schiff of Euro Pacific Capital
As usual the Federal Reserve media reaction machine has fallen for a poorly executed head fake. It has been fooled by this move many times in the past and for its efforts it has tackled nothing but air. Yet right on cue, it took the bait once more. Somehow the takeaway from Wednesdays release of the June Fed statement and the Bernanke press conference is that the Central bank is likely to begin scaling back, or "tapering," its $85 billion per month quantitative easing program sometime later this year, and that the program may be completely wound down by the middle of next year.
2013-06-21 00:00:00 Austerity is a Four-Letter French Word by John Mauldin of Millennium Wave Advisors
The France that I see as I look out from the bullet train today is far different from the France I see when I survey the economic data. Going from Marseilles to Paris, the countryside is magnificent. The farms are laid out as if by a landscape artist this is not the hurly-burly no-nonsense look of the Texas landscape. The mountains and forests that we glide through are glorious. It is a weekend of special music all over France, and last night in Marseilles the stages were alive and the crowds out in force.
2013-06-19 00:00:00 Efficient Pension Investing by Jared Gross of PIMCO
Adapting the Sharpe ratio to pension portfolios can help plan sponsors choose among a multitude of investment options designed to achieve the same goal. In our experience, the most significant efficiency gains have come from shifting from intermediate bonds to long-term bonds and introducing lower-volatility substitutes to equities.
2013-06-18 00:00:00 Newsletter June 2013 by Harold Evensky of Evensky & Katz
Do you remember hiding under the sheets listening to radio when your parents thought you were asleep? If so, I have an unbelievable collection of all the old-time radio shows we listened to when we were kids, if you have about six months? spare time. Find your favorite, click on it, and it lists literally hundreds of episodes you can re-live.
2013-06-18 00:00:00 Fed Zombification by Cliff Draughn of Excelsia Investment Advisors
The enthusiasm of our culture for Zombies is estimated to contribute a tidy $5 billion dollar a year to GDP, and that doesnt even include the too-big-to-die zombie banks. In my opinion, the acute interest in zombies and horror (and escapism in general) says something about our countrys mental health.
2013-06-14 00:00:00 The Evolution of Emerging Market Corporate Bonds for U.S. High-Grade Fixed-Income Investors by Todd Kurisu, Thomas Brennan of William Blair
Emerging market (EM) investment-grade corporate bonds are an important and growing segment of the core ?xed-income universe. These bonds have evolved to be more like U.S. investment-grade corporate bonds than high-yield or traditional emerging market debt (EMD) securities. This sector has demonstrated favorable risk, return, and diversi?cation bene?ts in the context of a broad market ?xed-income portfolio. Todays ?xed-income investors must have a framework for evaluating new opportunities subject to prudent risk management
2013-06-14 00:00:00 Global Small Cap Investing: Unconstrained Opportunities by Blake Pontius of William Blair
Equity asset allocations have become more global in recent years as investors have sought to reduce the long standing home country bias in their portfolios. Further propelling this trend has been the growing aversion to traditional asset class structures and indeed, conventional asset class definitions, in the aftermath of the 2008-2009 global fi nancial crisis. Against this backdrop, global equity strategies have continued to garner asset fl ows in Europe and have slowly begun to gain traction in the U.S. after years of tepid demand.
2013-06-12 00:00:00 Bond Realities: The Changing Landscape for Fixed Income and the Death of the Agg' by Andrew Johnson of Neuberger Berman
Earlier this year Andrew A. Johnson, Neuberger Berman?s Chief Investment Officer for Investment Grade Fixed Income, led a series of discussions with institutional clients about the state of the fixed income market and key ideas in approaching opportunistic fixed income investing in the current environment. Here, Mr. Johnson has adapted, and elaborated on, the concepts described at those meetings.
2013-06-11 00:00:00 Risk Parity - New Thinking or New Packaging? by Chris Maxey, Ryan Davis of Fortigent
Ever since Harry Markowitz brought forth the notion of mean-variance optimization in 1952, academics and practitioners alike have sought ways to build more robust asset allocation methodologies. Recently, the most talked about approach in the institutional world is risk parity, which seeks to focus on risk as its primary input. Risk parity is intuitively appealing, but suffers many pitfalls that investors need to consider.
2013-06-11 00:00:00 And Like Clockwork... by Blaine Rollins of 361 Capital
And like clockwork, stocks bounced both from their very short term oversold point and off the 50 day moving average on Wednesday...
2013-06-05 00:00:00 Certainty, Rates and the Year Ahead by Peritus Asset Management of AdvisorShares
The government tells us not to worry, as the Federal Reserve comes to rescue with QE-Forever. Certainty with fiscal policy doesnt seem to change the demand equation and cheapened money doesnt do anything if demand isnt present. Treasury rates remain at 0% for the foreseeable future making yield hard to find. Read this position paper by Peritus Asset Management scrutinizing how all this has come to pass and what indicators are foretelling the near future effects on the high yield asset class.
2013-06-04 00:00:00 Wounded Heart by Bill Gross of PIMCO
Joseph Schumpeter, the originator of the phrase creative destruction, authored a less well-known corollary at some point in the 1930s. Profit, he wrote, is temporary by nature: It will vanish in the subsequent process of competition and adaptation. And so it has, certainly at the micro level for which his remark was obviously intended. Once proud, seemingly indestructible capitalistic giants have seen their profits fall short of everlasting and exhibited a far more ephemeral character.
2013-06-03 00:00:00 Does Sector Shift Spell A Continued Rally? by Chris Maxey, Ryan Davis of Fortigent
Unlike most robust equity rallies, however, 2013 performance was initially led by traditionally defensive sectors, such as health care, utilities, and consumer staples. Through the first quarter, those three sectors posted an average return of 14.5%, while traditional cyclicals averaged just 9%. While some speculated this trend was due to investors reach for yield amid a frothy fixed income environment, the magnitude of this sector leadership (in an up move) was certainly unusual.
2013-05-31 00:00:00 The Great Reflation by Peter Schiff of Euro Pacific Capital
This week economists, investors and politicians were treated to some of the "best" home price data since the frothy days of 2006 when home loans were given out like cotton candy and condo flipping was a national pastime. The Case-Shiller 20 City Composite Home price index was up a startling 10.9% for the 12 month period ending in March. Prices in all 20 cities were up, with some (Las Vegas, Phoenix, and San Francisco) notching gains of more than 20%. Meanwhile the National Association of Realtors announced that April pending home sales volume reached the highest level in nearly three years.
2013-05-31 00:00:00 What's the Answer to Unprecedented Policies and Ultralow Rates? by Frank Holmes of U.S. Global Investors
So what?s the answer to unprecedented central bank policies that have been driving stocks higher and ultralow rates? I believe investors need to stick to a strategy that includes dividend-paying stocks that offer the opportunity for both income and growth.
2013-05-30 00:00:00 Understanding Gold Market Dynamics by John Browne of Euro Pacific Capital
To an extent that reveals a thorough misunderstanding of the market forces, the financial media has failed to consider the different motivations and beliefs that drive the different types of investors who are active in the gold market. By treating the gold market as if it were comprised of just one type of investor, analysts have drawn false conclusions about the recent volatility.
2013-05-29 00:00:00 Is the Fed in the Home Stretch? by Chris Maxey, Ryan Davis of Fortigent
Global equity markets stammered through a choppy environment last week following increased fears that certain central banks were considering the possibility of pulling stimulus sooner than anticipated. Markets have long been dependent on central banks, but the notion that policymakers could head for the exits leaves investors unsure how to react.
2013-05-28 00:00:00 Solving the Public Pension Plan Funding Crisis by John T. Hausladen (Article)
Current proposals to address public pension underfunding will not provide any significant relief because of the continued assumption of investment and longevity risk by plan sponsors. I propose a combination of liability-driven investing and a risk-transfer mechanism to gradually eliminate plan liabilities.
2013-05-28 00:00:00 You Now Have All of Our Attention by Blaine Rollins of 361 Capital
Mr. Bernankes opening statement was just what the market wanted to hear... "Premature tightening of monetary policy could lead interest rates to rise temporarily but would also carry a substantial risk of slowing or ending this economic recovery and causing inflation to fall further".
2013-05-24 00:00:00 After the Sell Off in Japan: 2 Reasons Not to Panic by Russ Koesterich of iShares Blog
Russ explains why Thursdays market correction in Japan hasnt changed his view that investors should consider a market weight to Japanese stocks.
2013-05-23 00:00:00 Investing in Gold: Does It Stack Up? by Team of Knowledge@Wharton
Gold has a timeless allure -- especially if you worry about stock market volatility, inflation, a decay of ordinary currency or the collapse of civilization. Yet not everyone agrees that gold offers the safe haven its promoters describe. How reliable can demand be for a commodity that very few people actually need? What is the proper role for gold in an investment portfolio? Why has its price been falling?
2013-05-22 00:00:00 If You Didn't Buy That Powerball Ticket... by Blaine Rollins of 361 Capital
So onward and upward. What signals should Bulls be on the lookout for? Change in breadth (Up v. Down Volumes, Advancers v. Decliners), Signs of distribution (Sharp down days accompanied by large % increases in trading volumes), Change in leadership away from RISKON sectors (dont want SmallCaps, Financials, Industrials, Transports or Housing to lag)...
2013-05-22 00:00:00 The Benefits of Diversifying the Funding of a Gold Position by Team of AdvisorShares
The recent sell off in gold has sharpened the focus of even the most committed gold bugs, and has highlighted one of the key risks that many investors face when they access the gold market. Do you purchase Gold in dollar terms or something else? How do you look at Gold, as a currency or something else? For the purposes of this analysis, Treesdale Partners took a look at a gold transaction in foreign exchange terms.
2013-05-22 00:00:00 China's IPO Drought: Will it Lift? by Eddie Chow of Franklin Templeton Investments
Following a flood of initial public offerings (IPOs) that lasted several years, Chinas local A-share market has been in an IPO drought since late last year. There is some speculation Chinas regulatory body, the China Securities Regulatory Commission (CSRC), may allow some IPOs to trickle back into the market this year, but we dont yet know exactly when or at what volume. Ive invited my colleague Eddie Chow to share his perspective on why IPO issuance has been halted in Chinas local market, and where we see potential opportunities in the current environment.
2013-05-21 00:00:00 Why the Lack of Inflation Is a Problem by Chris Maxey, Ryan Davis of Fortigent
Given the outsized role central banks are playing in todays financial markets, inflation watching has taken on increased significance.It is widely assumed that continued easy money policies are only possible as long as price increases remain under control.At the same time, for a global economy trying to escape an extended period of weak growth and burdensome debt loads, low inflation is a double-edged sword.
2013-05-18 00:00:00 All Japan, All the Time by John Mauldin of Millennium Wave Advisors
This week we again focus on Japan. Their stock market has been on a tear, and their economy grew 3.5% last quarter. Is Abenomics really the answer to all their problems? Is it just a matter of turning the monetary dial a little higher and voila, there is growth? Why doesnt everyone try that? And what would happen if they did?
2013-05-17 00:00:00 Opportunistic Investing: Making the Most of Your Cash in Today's Market by Chris Engelman of Cedar Hill Associates
With the Standard and Poors 500 Index rising more than 20% since last June, some people are reluctant to invest now, fearful that stocks are poised to tumble again. By focusing on their long-term investment objectives rather than short-term market fluctuations, however, investors can plan for a sound financial future. Here, Cedar Hill Managing Director Chris Engelman offers strategies for building a portfolio that helps to limit market risks and increases the likelihood of achieving your long-term goals.
2013-05-17 00:00:00 Finding Opportunity Far and Near by Frank Holmes of U.S. Global Investors
Would it surprise you to learn that a vast majority of equity valuation models state that stocks should head much higher over the next five years?
2013-05-14 00:00:00 It's Not That Bad Out There by Brian Wesbury, Bob Stein of First Trust Advisors
Certain things, like the sun rising, or the tides shifting, can be counted on. Its also true that when government shrinks as a share of GDP, things start to pick up.
2013-05-14 00:00:00 Housing Finally Breaks Free by Chris Maxey, Ryan Davis of Fortigent
Housing, which for so many years represented everything bad about the credit crisis, is finally beginning to have its day back in the sun. Trends in housing markets around the country are improving, to the benefit of the overall economy. It appears that trend is set to continue.
2013-05-10 00:00:00 Weekly Research Briefing by Blaine Rollins of 361 Capital
This weeks focus was squarely on central bank policy decisions and the U.S. April payrolls data. Mid-week the FOMC reinforced the "Bernanke put" by stating explicitly that quantitative easing can be increased if conditions worsen.
2013-05-07 00:00:00 Niall Ferguson: Four Reasons Why the U.S. is Failing by Robert Huebscher (Article)
Niall Ferguson is the champion of anti-Keynesian economists. Last week, he explained why America’s pursuit of Keynesian policies is leading to disastrous consequences.
2013-05-07 00:00:00 Central Banks Steal the Spotlight Once Again by Chris Maxey, Brian Payne of Fortigent
Central banks around the world continue to provide increased stimulus to their respective economies. Increased conviction over pro-stimulus policies comes in light of recent flaws found in the Reinhart, Rogoff January 2010 paper, which suggested that government debt of more than 90% of GDP is detrimental to economic growth. The latest week brought another round of news in the world of central banking, although it seems the number of options left on the table is running short. What central bankers hope for now is that economies will finally enter recovery mode.
2013-04-30 00:00:00 Implementing Behavioral Portfolio Management by C. Thomas Howard, PhD (Article)
Behavioral portfolio management is based on the notion that if the advisor can redirect his or her emotions and mitigate the impact of client emotions, it is possible to build superior portfolios by harnessing market emotions. This article describes how this can be done and presents evidence of the superiority of focusing on investor behavior when constructing and managing portfolios.
2013-04-30 00:00:00 Stockman to America: Sinners, Repent! by Laurence B. Siegel (Article)
In a massive volume that melds economic history and social criticism, the former Reagan administration budget director David Stockman has documented countless ways in which America went astray over the last century. Most notably, he decried the corruption of free-market capitalism by those seeking effortless profits at the public?s expense. This is the source of his book?s title, The Great Deformation.
2013-04-30 00:00:00 Is May Really the Time to Go Away? by Chris Maxey, Ryan Davis of Fortigent
As investors near the witching hour of May, the oft-asked question once again comes to the foreground is it best to sell in May and walk away? This year could prove the exception to recent history, but a number of trends are beginning to take shape inside the markets inner workings.
2013-04-30 00:00:00 ProVise Bullets by Ray Ferrara of ProVise Management Group
With the passage of the American Taxpayer Relief Act of 2012, a lot of people felt that things were set as it related to estate taxes. Apparently everyone believed that except the President, who has proposed several changes to estate tax law in his fiscal 2014 budget.
2013-04-30 00:00:00 Beware of the New Systemic Risk by Ashwin Alankar, Michael DePalma of AllianceBernstein
It felt like there was nowhere to hide from the market declines last Monday, April 15, when stocks, bonds and commodities fell in unison across the world, well before the Boston bombings that day. We believe that this failure of diversification was instigated by increasingly powerful multi-asset funds, many of which use leverage, which may have become a new source of systemic risk for investors.
2013-04-26 00:00:00 A Funny Thing Happened on the Way to Equilibrium by Ben Inker of GMO
The bedrock of GMOs investment philosophy is reversion to the mean. We believe that capitalism should cause the return on capital to be in line with the cost of capital, and that assets that embody similar risks should offer similar long-term returns. These beliefs, in turn, guide our assumptions that equities should trade at replacement cost, that the long-term return to equities should be approximately the same as their normalized earnings yield, and that assets without long return histories should have similar valuations and equilibrium returns as related assets with longer histories
2013-04-26 00:00:00 Many Of My Dividend Growth Stocks Have Become Overvalued, What Do I Do Now? by Chuck Carnevale of F.A.S.T. Graphs
To me, theres almost nothing better than finding a great company that I truly want to own at a fair valuation, or better yet, undervalued. In the long run, it has been my experience that this usually leads to outsized future returns, especially if you buy stocks when they are undervalued at the time. But there is quite often a side effect that can prove very disconcerting. Once an undervalued stock starts moving to the upside, momentum will often carry it above what prudent fair valuation would dictate.
2013-04-26 00:00:00 Like Baseball in the Snow by Doug MacKay, Bill Hoover, Mike Czekaj of Broadleaf Partners
As has occurred in each of the last three years, the economy should continue to plug along, not as we might like it to be, but as we can reasonably expect. Growth scare or not, we suspect that the end of 2013 will show that continued progress lies ahead, but perhaps not exactly in the same pattern as it has thus far.
2013-04-25 00:00:00 Living in Lake Wobegon by Jim Goff of Janus Capital Group
Are we normal? For many quarters, I have counseled investors that we are going through extreme market conditions and that patience was the best strategy. As the panic fades in the rear-view mirror and the road ahead looks less bumpy, I stand by the advice. But I dont need to repeat it.
2013-04-23 00:00:00 Q1 Earnings Leave Much To Be Desired by Chris Maxey, Ryan Davis of Fortigent
Following the strongest first quarter in 15 years, it is not surprising to see equity markets faltering in April. Last weeks decline of 2.1%, however, may reflect deeper concerns about corporate fundamentals amid a mixed earnings season.
2013-04-22 00:00:00 The Endgame is Forced Liquidation by John Hussman of Hussman Funds
Rule o Thumb: When the cover of a major financial magazine features a cartoon of a bull leaping through the air on a pogo stick, its probably about time to cash in the chips.
2013-04-19 00:00:00 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn
Stocks moved up nicely last week despite poor economic data and a huge decline in precious metals and other commodities.
2013-04-18 00:00:00 The Lure of Hedge Funds by John West of Research Affiliates
Investors often buy what they think is exciting, sophisticated, and complex with the embedded assumption that all of these attributes will lead to greater returns. We see this today where we witness the continued explosive growth of hedge funds. But, a careful examination of the data reveals that these fancy lures fail to hook as much in excess, after-fee returns as more time tested strategies.
2013-04-17 00:00:00 The Interest Rate Environment: Comparing High Yield Bonds and Bank Loans by Team of Hotchkis & Wiley
In its first quarter 2013 newsletter, "The Interest Rate Environment: Comparing High Yield Bonds and Bank Loans," Hotchkis & Wileys high yield team analyzes the behavior of the high yield market and the bank loan market in different interest rate environments to determine whether they can make sensible assumptions about the future.
2013-04-16 00:00:00 Using Behavioral Data to Earn Superior Returns by C. Thomas Howard, PhD (Article)
Emotional crowds dominate pricing; that was the first basic principle, which I demonstrated last week. This would seem to indicate that BDIs earn superior returns by taking positions opposite the crowds. But this is not necessarily the case.
2013-04-16 00:00:00 Tax Day as Polarizing as Ever by Chris Maxey, Ryan Davis of Fortigent
Tax season is once again upon the American population, and this year, just as in years past, people are less than enthusiastic. It is estimated that the average taxpayer contributed slightly more than $11,000 dollars to federal taxes in 2012 and those figures are on the rise. As might be expected in the current backdrop, however, not everyone shares the same opinion on taxes.
2013-04-15 00:00:00 The Counter-Inflation Playbook Part 1 by Jeffrey Jones of Cornice Capital
One of the most important lessons I learned during my days at UCLA came from my freshman philosophy professor. He told us that should you find yourself engaged in a debate, the surest way to defeat your opponent is to attack his base principles. If those base principles arent fundamentally sound, any case built on top of it, no matter how convincing, is at risk of crumbling all at once.
2013-04-09 00:00:00 Labor Markets Stumble in March by Ryan Davis, Chris Maxey of Fortigent
In an unexpected development, labor markets fell flat during March. Following several months of healthy job growth, the economy was only able to muster 88,000 new jobs in March, well below economists expectations for nearly 200,000 jobs.
2013-04-08 00:00:00 The Theology of Inflation by John Mauldin of Millennium Wave Advisors
We begin this week with a simple pop quiz. Is inflation good or bad? Answer quickly. I?m sorry your answer is wrong. Or rather, we can?t know if your answer is right or wrong because we are not sure what is meant by the question. We may think we know and we may be right but we can?t be sure, because the word inflation has different meanings for different people in different places and different times. In fact, even the same people in the same place and time can?t agree on a precise definition.
2013-04-03 00:00:00 Hello 2nd Quarter and Hello Baseball by Blaine Rollins of 361 Capital
Hello 2nd Quarter and Hello Baseball. Its Go time for both players and stat geeks... It was a very good First Quarter for U.S. Equities. As you can see from the Year to Date charts below, risky sectors did well, but so did many lower risk sectors like Health Care, Consumer Staples, Utilities and MLPs. The Q1 goal as an asset allocator was to be fully invested, but not in Gold, Long Bonds, Emerging Markets and Apple.
2013-04-03 00:00:00 A Man in the Mirror by Bill Gross of PIMCO
Am I a great investor? No, not yet. To paraphrase Ernest Hemingways Jake in The Sun Also Rises, wouldnt it be pretty to think so? But the thinking so and the reality are often miles apart. When looking in the mirror, the average human sees a six-plus or a seven reflection on a scale of one to ten. The big nose or weak chin is masked by brighter eyes or near picture perfect teeth. And when the public is consulted, the vocal compliments as opposed to the near silent/ whispered critiques are taken as a supermajority vote for good looks.
2013-04-02 00:00:00 The Most Important Practice Management Challenge by Bob Veres (Article)
The future of the advisory business is all about people, according to Philip Palaveev. No matter what happens with consolidation and pricing, he says, no matter what role technology plays, the most successful firms of the future will be those which excel at retaining, motivating and organizing their people.
2013-04-02 00:00:00 Is the Vix Still an Adequate Measure of Risk? by Chris Maxey, Ryan Davis of Fortigent
The 30-day implied volatility index for the S&P 500 calculated by the Chicago Board of Options Exchange (CBOE), known as VIX, has long been used as an indicator of market sentiment. Commonly referred to as the fear index, the VIX often portends periods of stress in equity markets, as options traders price in higher volatility in the future. The shape of the VIX futures curve, in particular, has historically been used as an indicator of future volatility levels.
2013-04-01 00:00:00 Buffett's Advice for Apple Inc. by Sean Bonner, William Bonner Jr. of Carne Capital
During a recent interview on February, 27th on CNBC Warren Buffett described a phone call he got from the late Apple CEO Steve Jobs. Mr. Buffett gave this account, "It was an interesting conversation because I hadnt talked to him in a long time. He said, Weve got all this cash. What should we do with it? So we went over the alternatives. It was kind of interesting." Mr. Buffett often comments in his annual letters about the options for deploying cash and he did again in this interview.
2013-04-01 00:00:00 U.S. Stock Market: Too Good to Be True? by Dawn Bennett of Bennett Funds
There is nothing worse than buying at the top of the market. Think back to the last two economic cycles. If you bought the US stock market or real estate in late 2007, you are way under on those purchases and that is after sweating it out for the last 5 years. Even with the 2009-2012 rebound, we have not seen real estate values or the Dow Index back to even. You have to ask yourself, how can this be?
2013-03-26 00:00:00 Adapting the Yale Model for Clients by C. Thomas Howard, PhD and Lambert Bunker (Article)
The Yale University endowment fund is one of the most successful in the country, with a 10-year return besting the endowment universe average return by 300 basis points and the Wilshire 5000 return by 400 basis points. David Swensen is the architect of this program, and his guiding principles are widely used to manage large endowments. They are equally useful for client portfolios.
2013-03-26 00:00:00 Reacting to All Time Highs by Jeff Knight of Columbia Management
The financial press has been all a-flutter, of late, with talk of new highs across U.S. stock markets. Indeed, the Dow Jones Industrial Average set a new all time closing high in March. Meanwhile, the S&P 500, as of this writing, sits less than one percent below its all time high. The surge in these well known market bellwethers in recent months feels good, and no doubt tempts investors to bask in their portfolio gains, and to ease back in their fussing over the nuances of investment strategy.
2013-03-26 00:00:00 Throw the Book at Him by Jerry Wagner of Flexible Plan Investments
On February 2, Ground Hog Day, Punxsutawney Phil failed to see his shadow forecasting, and as legend has it an early spring. Yet on the first day of spring, I looked out my back window at a lake still more than half frozen with my view partially obscured by a wicked little snow flurry. So much for forecasts!
2013-03-22 00:00:00 In Gold We Trust by Frank Holmes of U.S. Global Investors
Poorly thought out government policies hurt the formation of capital and destroy people?s trust in paper money. Leaders may have good intentions, but some of their actions show disrespect for private property and individualism. This only reemphasizes gold as an important asset class.
2013-03-20 00:00:00 Investors Need to Pivot by William Benz of PIMCO
Fixed income investors need to think differently in the current environment. Investors may want to consider pivoting to strategies that are less focused on traditional benchmarks and more oriented to generating income and providing greater flexibility to hedge against rising rates, widening credit spreads or higher inflation.
2013-03-19 00:00:00 Why Are Emerging Markets Struggling in 2013? by Ryan Davis of Fortigent
Despite one of the sharpest rallies in US equities in recent memory, emerging market equities have been left curiously behind in 2013. Through last Friday, the market segment was down 1.0%, compared to an S&P 500 index that was up 10.0%. This seems to violate the regime that investors have gotten used to over the past 10 years, whereby the emerging markets equity index served as a high beta proxy for the US equity market.
2013-03-15 00:00:00 Reducing the Risk from Adding Stock Exposure by Seth Masters of AllianceBernstein
Adding other sources of diversification could significantly reduce the risk from increasing stock exposure, our research suggests.
2013-03-15 00:00:00 Chinas Next Stop by Frank Holmes of U.S. Global Investors
Would it surprise you to discover that China is planning to add 800 miles to its subway system over the next two years? Thats the distance equivalent to building a network from Dallas to Chicago in less time than the U.S. Congress can resolve a budget!
2013-03-14 00:00:00 Newsletter by Harold Evensky of Evensky & Katz
In the latest edition of his client newsletter, Harold Evensky highlights a number of interesting bits of news, including a must-see destination for your friends, your kids and your grandkids, some advice from Warren Buffett, a tip from Albert Einstein and the latest data on hedge fund performance.
2013-03-13 00:00:00 What's Your Advantage? by Bill Smead of Smead Capital Management
In the March 9, 2013 issue of Barrons, writer Jonathon Laing wrote an excellent piece about Howard Marks. This article provides the base from which we can discuss the main components of investment portfolio composition. These components are information, analysis of information, and decisions made from information and analysis. In doing so, we will bring to light why we believe todays best opportunity is in long-duration common stock investing.
2013-03-12 00:00:00 Bill Ackman on What Makes a Great Investment by John Heins (Article)
In addition to commenting on his high-profile current investments, Pershing Square Capital's Bill Ackman in a recent interview with Value Investor Insight describes the general company traits he looks for in both active and passive investments, why a high public profile is an important element of his strategy, whether his thesis on J.C. Penney has evolved, what lessons he's learned from a few prominent mistakes, and why his short conviction on Herbalife is as high as ever.
2013-03-12 00:00:00 Finally, a Jobs Report Worth Reading by Chris Maxey, Ryan Davis of Fortigent
Surprisingly, the February employment report showed a labor market growing at a reasonably healthy rate. Concerns that the sequester would spill into the broader economy have yet to materialize and if recent trends hold, the economy may finally be approaching a point of robust and sustainable job growth.
2013-03-12 00:00:00 We Made It. Now What? by Christian Thwaites of Sentinel Investments
What looks like a fairly settled policy in Europe is fast becoming a very dangerous situation, according to Christian Thwaites in his latest "Thought of the Week" -- "We Made It. Now What?" -- adding that the outlook for the world's second largest economic bloc is pretty week.
2013-03-08 00:00:00 Our Five Year Forecast by Kendall Anderson of Anderson Griggs
We believe that predicting short term swings in the market is an exercise in humility. Longer-term market predictions can have some value, but they should be based on a form of valuation methodology of the underlying securities which make up the market of choice, and a consideration of the current mood of the market participants should also be included.
2013-03-06 00:00:00 Smooth Returns by Bill Smead of Smead Capital Management
Harry Markopolos was working for a hedge fund of funds and attempting to put a portfolio together that would "smooth" long-term returns. In the process of marketing what his company was doing, he ran into a client who already had a money manager doing that for him. The money manager the client used was Bernie Madoff. When Markopolous looked at the long-term track record of Madoff's client, he instantly knew that it was mathematically impossible to have a return that high with as little year-to-year variance in the return. We at Smead Capital Management would like to ask a few questions.
2013-03-05 00:00:00 You?re The Cream of the Crop: Key Findings from the 2012 Advisor Perspectives Reader Survey by Jeff Briskin (Article)
Experienced. Results oriented. Focused on serving the needs of individuals and families. Confident in your abilities. Eager to expand your knowledge. If this sounds like you, you're not alone. These are the traits that stand out among Advisor Perspectives readers, based on the findings of our 2012 Reader Survey.
2013-03-05 00:00:00 Is Now the Time to Diversify? by Chris Maxey, Ryan Davis of Fortigent
The use of global diversification in constructing client portfolios has come under fire in recent years due to the underperformance of many risk assets. Traditionalists who stuck to their familiar S&P 500 and BarCap Aggregate Bond index blends generally outperformed their diversified peers in 2011 and 2012, as historic risk premiums failed to materialize and various alternative investment strategies faced headwinds.
2013-03-05 00:00:00 Absolute Return Letter: Expect the Unexpected by Niels Jensen, Nick Rees,Tricia Ward of Absolute Return Partners
With real interest rates being negative in many countries we expect low returns on both equities and bonds going forward. Many investors have responded to that by allocating more and more of their assets to passive strategies such as ETFs. We believe it is the wrong approach for this type of environment.
2013-03-01 00:00:00 ProVise Bullets by Ray Ferrara of ProVise Management Group
With the battle over sequestration going on in Washington, the President has made it clear he wants to raise more revenue. Just what does he have in mind? First, he would like to limit itemized deductions beginning at the 28% tax bracket. This means that taxpayers in the top three brackets would lose some of the benefit of their itemized deductions. Of course, these deductions have a phase out, so the effect may not be as great as is perceived.
2013-02-27 00:00:00 Potential Threats to Equity Rally by Chris Maxey, Ryan Davis of Fortigent
Equity markets started a third consecutive year in rather impressive fashion, gaining more than 6% to date. With so much optimism in the investment community, it is always worth keeping an eye open for risks possibly overlooked. By now, it is apparent that investors are increasing their exposure towards equities with arms wide open. Data from the Investment Company Institute (ICI) estimates $39 billion flowed into equity mutual funds this year through February 13. Following outflows of $153 billion in 2012, the sudden reversal has been impressive.
2013-02-27 00:00:00 The Healthcare Blues by John Mauldin of Millennium Wave Advisors
It has been some time since we peeked into my worry closet. A few questions this weekend prompted me to think about things I am paying attention to but have not written about, and one thing that I am not worried about at all, despite the apparent media hysteria.
2013-02-27 00:00:00 The Great Migration by Herbert Abramson, Randall Abramson of Trapeze Asset Management
We are value investors dedicated to creating portfolios for clients, whether growth (equities), income or a balanced blend of both, of undervalued securities with meaningful upside potential and a margin of safety to guard against permanent loss. For us, the bottom-up factors are the most compelling, but we are also mindful that we need to take account of the top-down macro factors. We know how the Crash of ?08 and the accompanying recession created havoc for investors, including us, no matter how undervalued stocks were.
2013-02-26 00:00:00 Five Ways to Improve Your Investing Decision Making by Robert Huebscher (Article)
Successful investing requires a contrarian mindset; anything else is, at best, a recipe for mediocrity. This is especially true for an investment committee, the core of an advisory firm's decision-making process. Five prominent advisors ? Harold Evensky, John Hill, Steve Cassaday, Steve Kaye and Berk Nowak ? are embracing unconventional approaches to ensure that their investment committees operate in the most effective ways possible.
2013-02-20 00:00:00 And That's the Week That Was by Ron Brounes of Brounes & Associates
Tick Tick Tick. The President has plans for improving life in America. Tick Tick Tick. Republicans want to fix the middle class (and restricting taxes on the upper class may help). Tick Tick Tick. Earnings reports look good, but forecasts for the current quarter have been lowered. Tick Tick Tick. Weekly jobless claims keep falling, but major corporations are announcing layoffs. Tick Tick Tick. Sales figures show growth, but Wal-Mart and others are worried. Tick Tick Tick.
2013-02-20 00:00:00 Event Driven Investors Receive Their Wish by Chris Maxey, Ryan Davis of Fortigent
For several years, investors have wondered why M&A activity has been so benign.Corporate management teams cited uncertainty about the economic outlook as a primary reason for the depressed activity.With the latest round of tax increases and revenue cuts determined, companies finally appear willing to free their animal spirits and embark on the path of acquisition.
2013-02-19 00:00:00 Kyle Bass on Inflation and How to Protect Against It by Mark Quam (Article)
Kyle Bass, the founder of Hayman Capital, foresaw the collapse of the sub-prime mortgage bond market in 2008 and the foreign sovereign debt crisis in Greece. Bass' latest warning is about looming Inflation ? and he advises how to protect against it.
2013-02-19 00:00:00 Asset Class Allocation and Portfolios by Adam Jared Apt (Article)
Asset class allocation has been so thoroughly absorbed into the culture of investing that today, most investment guidance is built around it, and you may even have heard that it is the foundation of an investment plan. And like nearly all respectable investment ideas, it is misunderstood and abused. One misconception is that asset class allocation and portfolio management are the same thing. I'll explain why they aren't later, but let's start by considering another misconception.
2013-02-19 00:00:00 Jesse Livermore by Jeffrey Saut of Raymond James
"There were times when my plans went wrong and my stocks did not run true to form, but did the opposite of what they should have done if they had kept regard for precedent." So said Jesse Livermore, as chronicled in the brilliant book Reminiscence of a Stock Operator by Edwin Lefever; and, stock market historians will recall that Jesse Livermore is still considered one of the most colorful market speculators of all time.
2013-02-16 00:00:00 When It Comes to Gold, Stick to the Facts by Frank Holmes of U.S. Global Investors
During short-term gold corrections, its much more important to focus on the facts, including the fact that gold is increasingly viewed as a currency. Rather than buying real estate, lumber or diamonds, central banks around the world are buying gold. According to the World Gold Council (WGC), over 2012, central bank demand totaled 534 tons, a level we have not seen in nearly 50 years.
2013-02-14 00:00:00 Pressure Points: Where Tax Reform Can Be Most Effective by Team of Knowledge @ Wharton
The deficit deal that averted the fiscal cliff crisis at the start of the year raised taxes on the wealthiest and postponed -- for two months -- government spending cuts that threatened to derail the economic recovery. But the problem remains: Spending far exceeds revenue. So what's to be done? Five Wharton faculty members offer their views.
2013-02-14 00:00:00 Understanding Derivative Overlays, in All Their Forms by Markus Aakko, Rene Martel of PIMCO
Passively managed overlays are typically based on a simple formula, while active approaches involve more complex algorithms or decision-making. Overlay examples include portable alpha, LDI, currency, completion, rebalancing, and tactical asset allocation overlays -- as well as tail-risk hedging and hedge fund replication. Potential benefits include the ability to effectively manage cash, reduce costs and risk exposure, simplify manager transitions and express tactical views.
2013-02-12 00:00:00 Consumers Less Enthused to Bail Out the Economy by Chris Maxey, Ryan Davis of Fortigent
Following recent recessions, it was commonplace to rely on American consumers to bail out the economy. The reliance on the American consumer was widely understood as the best remedy for an ailing economy. We are not as fortunate this time around and our dependence on consumers is one reason for the sluggish rate of recovery since 2008.
2013-02-12 00:00:00 High Yield Opportunity in a Crowded Space? by Mike Temple of Pioneer Investments
We have seen something interesting unfold over the last month in the markets signs of what we believe are the beginning of a Treasury breakout. Yields are starting to push through levels that have been fairly stable and steady over the last year. Our observation would be that we are starting to see a more secular move out of U.S. Treasuries and other high quality fixed income assets.
2013-02-11 00:00:00 Brazil: Infrastructure Push Creating New Opportunities Across Sectors by Team of Thomas White International
Both corporates and the federal government have started investing heavily on overhauling Brazil's infrastructure.
2013-02-07 00:00:00 Investing in a Low-Growth World by Jeremy Grantham of GMO
This quarter I will review any new data that has come out on the topic of likely lower GDP growth. Then I will consider any investment implications that might come with lower GDP growth: counter intuitively, we find that investment returns are likely to be more or less unchanged a little lower only if lower growth brings with it less instability, hence less risk. Finally I will take a look at the reaction to last quarter's letter, specifically about my outlook for lower GDP growth.
2013-02-07 00:00:00 We Have Met the Enemy, and He Is Us by Ben Inker of GMO
If modern portfolio management has a single defining urge, it is almost certainly diversification. We look for diversifying assets, strategies, and managers. A thoughtful investor can argue against almost any asset class stocks, bonds, hedge funds, private equity, commodities, you name it but arguing against diversification is like arguing against indoor plumbing. I dont want to sound like I'm calling for a return to chamber pots and outhouses, so I'm not actually going to argue against diversification.
2013-02-06 00:00:00 Too Active, Too Passive: Too Little Understanding by Bill Smead of Smead Capital Management
The wealth management and institutional consulting communities have allowed indexing to be called "passive" investing and stock-picking disciplines to be called active management. This implies a mindless approach to indexing and a great deal of busyness to stock picking. We at Smead Capital Management believe these labels are at the heart of a great deal of confusion about what works and what doesn't work in both equity mutual funds and separately managed accounts.
2013-02-06 00:00:00 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn
Earnings have come in pretty well, but the news on the economy remains dreary despite the cheerleaders in the financial media.
2013-02-05 00:00:00 In Uncertain Environment, Jobs Grow Tepidly by Chris Maxey, Ryan Davis of Fortigent
For the 35th consecutive month, private payrolls registered positive growth. It was hardly the robust report economists would prefer, but the labor market continues to mend. However, there are still plenty of reasons to be concerned, especially with sequestration on the horizon.
2013-02-05 00:00:00 Ditto by Howard Marks of Oaktree Capital Management
Anyone who reads my memos of the last 23 years will see I return often to a few topics. This is due to the frequency with which themes tend to recur in the investment world. Humans often fail to learn. They forget the lessons of history, repeat patterns of behavior and make the same mistakes. As a result, certain themes arise over and over. Mark Twain had it right: "History doesn't repeat itself, but it does rhyme." The details of the events may vary greatly from occurrence to occurrence, but the themes giving rise to the events tend not to change.
2013-02-01 00:00:00 Fiscal Cliff: Making Decisions in Crisis Part III by Brian Singer of William Blair
The December 31 fiscal cliff was averted, but by the narrowest of conceivable margins. The resolution is consistent with our November analysis, but the narrowness leaves much to be resolved and prolongs uncertainty through March.
2013-02-01 00:00:00 2013 Economic & Capital Market Outlook by Gregory Hahn of Winthrop Capital Management
It took our country 229 years to accumulate $8 trillion in federal debt. It only took the next eight years to double it to $16 trillion. History shows that when a country accumulates debt at this rapid pace, economic growth languishes. Not surprisingly, Congress is pursuing policies that attempt to inflate the economy. Five years after the Financial Crisis, we really havent fixed much. Instead, we've issued more debt in order to pay our bills and sustain a quality of life society cannot afford long term.
2013-01-31 00:00:00 Fiscal Cliff: Making Decisions in Crisis Part II by Brian Singer of William Blair
Having set a framework using strategic decision theory to interpret the choices of US politicians in response to their incentives around the "?scal cliff," we now similarly turn our attention to the incentives (or disincentives) around the choices facing investors. While the general rise of uncertainty around changes to the rules of a game slow down the decision making process of investors, we consider the implications of a shifting tax burden on longer run equity valuations.
2013-01-31 00:00:00 Elliott's Paul Singer On How Money Is Created ... And How It Dies by Team of TimeCapital
When we launched our series into the US Shadow Banking system in the summer of 2010 we had one simple objective: to demonstrate just how little the process of modern (and by modern we mean circa 2004 not 1981) money creation was understood.
2013-01-30 00:00:00 Fiscal Cliff: Making Decisions in Crisis Part I by Brian Singer of William Blair
Having lost touch with mainstream America, neither the Republican nor the Democratic Party enjoys much governing ability. Second, politicians struggle to function as leaders, regardless of competence, as a result of party disengagement. Third, left to their own devices, politicians will respond to their individual incentives. Bringing these observations together, neither party platform nor leadership vision will provide as much guiding force as the incentives of each politician, sometimes individually and other times in coalition.
2013-01-29 00:00:00 And That's the Week That Was by Ron Brounes of Brounes & Associates
The trend is your friend...so hopefully it will continue for a little (lot) longer. With the uncertainty of the fiscal cliff on the backburner (for now), investors seem to like what they are seeing from earnings season and in the economy. They continued to take stocks higher as the S&P 500 settled above 1500 for the first time in five years and is currently riding a eight session winning streak.
2013-01-29 00:00:00 In Japan We Trust by Chris Maxey, Ryan Davis of Fortigent
In fewer than 60 days, one country has made a splash larger than all the others. No, we are not referring to the US, where Barack Obama was re-elected to a second term. Nor are we referring to China's recent transition of power. Instead, the country we reference is Japan. After decades of malaise, Japanese officials moved to embrace policies previously only accepted by Western officials.
2013-01-28 00:00:00 A Few Things to Consider. Plus a Look at Maine and Illinois by Gregg L. Bienstock of Lumesis
This week's commentary is a slight departure from our standard format. It's been a few weeks since we mentioned the fiscal cliff, sequestration and the like. This is due to our collective saturation and the perspective of so many that the problem was solved. Well, we want to provide a reminder or two and throw a few thoughts at you to kick around. We conclude with a quick look at Maine and Illinois.
2013-01-25 00:00:00 Truth vs. IgnoranceThe Impactful Investment Manager of Tomorrow by Katy Sherrerd of Research Affiliates
Ignorance in investing can have devastating consequences for individual portfolios and personal wealth. Too often, capital market participants have little knowledge of how markets work, how to make investment decisions, or how to manage their portfolios. This month's Fundamentals explains how investment managers can add value for their clients through insight and education combined with the quest for alpha.
2013-01-25 00:00:00 Prisoner of the Bureaucracy by John Mauldin of Millennium Wave Advisors
I wrote some time ago that Greece had a choice between Disaster A: staying in the euro; and Disaster B: leaving the euro. I have recently come back from four days in Greece, meeting with lots of people at all levels of society, and will share with you in this letter my analysis of their choices and the results. I'll also have a few things to say about what the developments in Greece might mean for the rest of Europe and the developed world.
2013-01-23 00:00:00 Is the European Crisis Over? by Chris Maxey, Ryan Davis of Fortigent
The European sovereign debt crisis that first erupted in 2010 and stoked almost three years of intense market volatility has all but faded from the front pages. Overshadowed by domestic policy issues and European Central Bank (ECB) President Mario Draghi's pledge to do "whatever it takes" to save the Eurozone, fears that the monetary union would crumble and unleash a maelstrom of financial distress appear to have dissipated.
2013-01-23 00:00:00 Avoid Disappointment, Aim Low by Christian Thwaites of Sentinel Investments
No, it's not a life aspiration. But it can work when it comes to investing. We had a rush of gains coming into the end of the year with the S&P up 22% over the year. But it's also one of the more relaxed markets and start we've had in years. The political agenda is still front and clear and we're in a lull until the debt ceiling arguments gain steam. The markets know this but seem comfortably complacent. They're probably right to be.
2013-01-22 00:00:00 Keep Your Eye On The Ball - 2012 Year End Letter by Team of Sloan Wealth Management
The members of the Portfolio Management Team at Sloan Wealth Management (SWM) coach two baseball teams, two soccer teams, one T-ball team and one basketball team for our collective young children. Thus, we find ourselves stressing the basics. Learning the fundamentals of how to catch a pop-up will eliminate some of the fear of getting hit in the face. In 2012, we found many parallels to the capital markets as our portfolios posted high double digit returns in the face of fear.
2013-01-18 00:00:00 4 Sensational Facts About Gold Investing That You Might Not Know by Frank Holmes of U.S. Global Investors
1. Gold has been a consistent performer over the decades. 2. Gold should remain a hot commodity in 2013. 3. Gold is the least volatile commodity on the table. 4. The last four years were better than you thought.
2013-01-16 00:00:00 ProVise Bullets by Ray Ferrara of ProVise Management Group
By now you may have read more than you care to about the changes to income taxes. We avoided rushing to get you something as so many others did, so that we could provide you with some comprehensive and practical information. It is a long read, but we hope you find it to be worth your time.
2013-01-16 00:00:00 Tax-Deferral Becomes More Urgent As Congress Seeks Fiscal Solutions by Mitchell Caplan of Jefferson National
Many Americans began the New Year relieved that the "fiscal cliff" had been averted, if only temporarily. But there is no escaping their biggest fearthat an increase in their federal tax bill is inevitable. Congress continues to hammer out the final details, but one thing is certain: anyone drawing a salary or receiving other income will be hit with more taxes. And the higher their income, the bigger the bite.
2013-01-15 00:00:00 Forecast 2013: Unsustainability and Transition by John Mauldin of Millennium Wave Advisors
As we begin a new year, we again indulge ourselves in the annual rite of forecasting the year ahead. This year I want to look out a little further than just one year in order to think about the changes that are soon going to be forced on the developed world. We are all going to have to make a very agile adaptation to a new economic environment (and it is one that I will welcome). The transition will offer both crisis and loss for those mired in the current system, which must evolve or perish, and opportunity for those who can see the necessity for change and take advantage of the evolution.
2013-01-15 00:00:00 Are Investors Buying into the Equity Story? by Chris Maxey, Ryan Davis of Fortigent
Last week we discussed the debate over active versus passive management. We believe active managers can add tremendous value in particular segments of the market, despite recent challenges. Outside of the active management discussion, many investors are deciding whether equities are a prudent place to allocate capital at this point in the market cycle. The first week of the year answered investors' opinions on that question loud and clear.
2013-01-15 00:00:00 It's Not What Happens That Matters by Bill Smead of Smead Capital Management
Late in 2008 and in early 2009, a group of what we like to call "brilliant pessimists" hit the airwaves with their economic theories. The prognosticators' vision of the future was and is predicated on the history of similar situations and the mathematical realities of the huge debt overhang from the prior ten years of profligate economic behavior. They put very effective names on their visions like "new normal" and "seven lean years". They marketed their visions incredibly well to the point of shaming anyone who might disagree with their theories.
2013-01-14 00:00:00 The 'Dark Continent' is Shining Bright by Team of Thomas White International
From a recipient of aid, Africa has transformed itself into a magnet attracting capital and investment.
2013-01-11 00:00:00 Invest In Equities: Your Future Self May Thank You by Frank Holmes of U.S. Global Investors
Investors have had an illusion about the stock market since the financial crisis. With the barrage of negative headlines and abhorrence toward risk, investors seemed to feel that equities would not improve going forward. This turned out to be a mistaken belief.
2013-01-10 00:00:00 Market Perspectives Q4 2012: Politics vs. Economics by Richard Michaud of New Frontier Advisors
The major news of the quarter was that a fiscal cliff deal passed in the final hours of the 112th Congress and was signed by President Obama. The deal averts tax increases on most Americans and prevents large indiscriminate cuts in spending in many government programs. It also averted, by nearly universal consensus among macroeconomists, tipping the American economy into recession with attendant global implications.
2013-01-08 00:00:00 Another Lost Year for Active Management by Chris Maxey, Ryan Davis of Fortigent
There is no doubt that 2012 will be remembered by many investors, for reasons both good and otherwise. One group less likely to remember the good of 2012 is active managers. Across the universe of hedge funds and mutual funds, relatively few were able to outperform their comparative benchmarks. This continues a long running trend of active managers lagging their less active counterparts and raises many questions about the efficacy of active management.
2013-01-02 00:00:00 Somewhere Over the Rainbow by John Mauldin of Millennium Wave Advisors
We are 13 years into a secular bear market in the United States. The Nasdaq is still down 40% from its high, and the Dow and S&P 500 are essentially flat. European and Japanese equities have generally fared worse. The average secular bear market in the US has been about 11 years, with the shortest to date being four years and the longest 20. Are we at the beginning of a new bull market or another seven years of famine? What sorts of returns should we expect over the coming years from US equities?
2013-01-02 00:00:00 How Much Hedge Fund Exposure Makes Sense? by Daniel Eagan of AllianceBernstein
Our research suggests that a well-diversified allocation to hedge funds might improve portfolio returns, but their greatest benefit is the risk reduction that comes from their low correlation to stocks. Here's why.
2012-12-28 00:00:00 Readers' Golden Nuggets Focused on Gold, Resources and Overcoming Negativity by Frank Holmes of U.S. Global Investors
The past few days Ive been counting down the most popular commentaries over the past year. China, commodities and bond fund popularity were big hits; so were the Surprises in Gasoline, Oil and Resources Stock Prices. Here are the top four.
2012-12-20 00:00:00 Hedge Funds: Identifying Alpha and Mitigating Risk by Daniel Eagan of AllianceBernstein
Hedge funds have historically generated higher returns than stocks with less volatility, but they also pose several significant risks that volatility alone doesn't capture, our research suggests. That makes careful due diligence and diversification of managers crucial.
2012-12-15 00:00:00 Rooting Out Biases in Hedge-Fund Data by Daniel Eagan of AllianceBernstein
In a recent article, I discussed the conclusions about hedge funds historical returns and risk we reached after rooting out biases in the data available. Heres how we sought to eliminate those biases.
2012-12-13 00:00:00 Hedge Funds: Separating Fact from Hype by Daniel Eagan of AllianceBernstein
It's easy to understand the allure of hedge funds and the fear they inspire. After conducting rigorous research aimed at separating fact from hype, we have concluded that hedge funds historically have had an attractive risk/return profile.
2012-12-11 00:00:00 Fine Wine - Why it's for More than Just Drinking by Mark E. Ricardo, JD, LLM, AAMS (Article)
For many investors, an ideal asset class would combine superior long-term absolute and risk-adjusted returns with a hedge against inflation and stock market volatility. There's a way to get all of that, in an asset class you might never have thought of until now: fine wine. Investment-grade wine deserves careful consideration, particularly now that - unlike other collectibles, such as art and rare books - it can be traded on a regulated exchange.
2012-12-04 00:00:00 Surprising Choices in the Search for Safety Near-Certain Loss of Purchasing Power versus Short-Term by Jason Petitte, CFA (Article)
Risk, in its many guises, is unavoidable, and investors today are taking on significant amounts of credit risk, duration, and leverage to obtain high yields from many presumably safe bonds. But certain types of risk are often mispriced. By overweighting one's portfolio to those sectors that currently offer attractive risk-adjusted returns, investors will be better positioned to meet their long-term goals.
2012-12-04 00:00:00 Cliff Diving by Michael Lewitt (Article)
While there may be compromise to avoid the self-inflicted crisis of the fiscal cliff, the course of fiscal policy is unlikely to alter significantly. There is a great deal of bold talk about tax reform, but the odds of our current leaders replacing our profoundly flawed tax regime with one that would breed economic growth and productivity are low. Congress will be lucky to avoid the fiscal cliff; asking it to alter the economy's DNA is unrealistic.
2012-11-13 00:00:00 David Rosenberg on Obama's Victory by David Rosenberg (Article)
The election is behind us. The Fed has spent its last bullet. We are at an inflection point of the earnings and sales cycle. The fiscal cliff, the Chinese political transition and the spread of the euro zone recession to the north lie ahead.
2012-11-13 00:00:00 Voyages by Michael Lewitt (Article)
Anything short of drastic entitlement reform, serious cutbacks in defense spending, and serious tax reform that alters incentives away from speculation in favor of production will leave this country stuck on the dangerous path it is on today.
2012-11-13 00:00:00 Bank Loans: Looking Beyond Interest Rate Expectations by John Bell and Kevin Perry (Article)
Portfolio managers of Bank Loan Strategies, John Bell and Kevin Perry, outline the major advantages and risks of bank loan investing and the roles that a bank loan allocation can play in a fixed income portfolio.
2012-11-06 00:00:00 Asset Location: Nine Tips to Create ?Tax Alpha? by Glenn Frank (Article)
With campaign season finally over, taxes are going to dominate the debate in Washington in the months ahead ? however things shake out at the polls today. It's going to be confusing; it's going to be uncertain. But many of the most critical questions advisors will ask can be answered with an analytical approach to deciding where to 'house' assets ? in taxable or tax-sheltered accounts.
2012-10-30 00:00:00 The Yield Hunt by Michael Lewitt (Article)
The high-yield market is not in danger of imminent collapse as some have argued. As long as defaults remain relatively low, and interest rates remain invisible, investors will continue to chase yield. But a few things could cause a sharp sell-off in the near future.
2012-10-24 00:00:00 Voluntary Exile by Bill Smead of Smead Capital Management
We at Smead Capital Management (SCM) believe that institutional and individual investors have moved their asset allocation away from large cap US stocks. Institutions are in exile in private equity, hedge funds and all things commodity and BRIC-trade related.
2012-10-11 00:00:00 Alternative Investments Offer Strategies to Avoid Fed-Inflated Bond Bubble by Team of Emerald Asset Advisors
Over the past several years, investors have shifted hundreds of billions of dollars out of stocks and into investment grade corporate bonds and U.S. Treasuries. To date, this strategy has delivered solid results for many investors, as bond prices have generally continued to rally while bond yields have continued to fall.
2012-10-09 00:00:00 High-Dividend Yield Strategy under the Microscope by Michael Nairne (Article)
High-dividend yield stocks have become the favorite recommendation of a host of advisors, but an undue focus on income alone obscures the irreducible fact that long-term investment success is based on the total return of a portfolio including both income and capital growth. This raises two questions. How has the total return of a high-dividend yield strategy fared relative to the market? How does its total-return performance compare to the returns of other possible stock-selection strategies?
2012-10-02 00:00:00 Confronting the Unemployment Crisis by Robert Huebscher (Article)
Policymakers seeking a path to economic recovery must first answer one crucial question: Is our persistently high unemployment structural or cyclical? If it's cyclical, then monetary and fiscal measures designed to boost consumer spending will restore the US to full employment in due course. But if we face a structural problem, then quick fixes won't work until we correct deeper imbalances that have left 12.5 million Americans without jobs.
2012-09-25 00:00:00 How to Build a Portfolio by Adams Jared Apt (Article)
This is the first of a set of three articles intended for the educated layman, in which I will combine the core ideas presented in my preceding articles into a comprehensive description of how to put together a portfolio. In this one, I'll explain what is often called Modern Portfolio Theory.
2012-09-11 00:00:00 Can Our Retirement System be Fixed? by Robert Huebscher (Article)
Google 'Teresa Ghilarducci' and you'll find countless references to her as the most dangerous woman in America. That dubious distinction stems from her 2008 book, When I'm Sixty-Four, in which she advocated replacing voluntary 401(k) plans with government-mandated savings accounts. Ghilarducci was attempting to address a problem that thus far has eluded solution, so it's important to consider her arguments, which have drawn praise from some quarters, too.
2012-09-05 00:00:00 The Lending Lindy by Bill Gross of PIMCO
Our entire finance-based monetary system led by banks but typified by insurance companies, investment management firms and hedge funds as well is based on an acceptable level of carry and the expectation of earning it. In a New Normal economy where lenders dance to the Blue Danube instead of the Lindy, how should we move our own feet? Carefully, I suppose, and with recognition that historic returns are just that historic.
2012-08-28 00:00:00 Who?s Fooling Whom? by Michael Lewitt (Article)
Equity markets are exhibiting a remarkable degree of complacency. The VIX is currently at extremely low levels and it can maintain those levels for a long period of time. The worse things get in terms of the economic data, the higher the market goes on hopes of central bank stimulus. At this rate, the Dow will peak just as the world is coming to an end!
2012-08-21 00:00:00 Letters to the Editor by Various (Article)
A reader responds to the commentary, Maybe This Time is Different, by Andrew Redleaf of Whitebox Advisors, which was published on August 14, and a reader responds to Michael Edesess' article, Why Hedge Funds Destroy Investor Wealth, which was published last week.
2012-08-14 00:00:00 Blind Faith by Michael Lewitt (Article)
Central banks are facing political and practical obstacles that will render it very difficult for them to deliver anything more than anodyne words and actions as summer moves into the always dangerous August holiday season. IPhones should be kept on alert at the beach through Labor Day.
2012-08-07 00:00:00 Why Hedge Funds Destroy Investor Wealth by Michael Edesess (Article)
If all the money that's ever been invested in hedge funds had been put in Treasury bills instead, the results would have been twice as good. So claims Simon Lack - a former JPMorgan executive whose job was once to help steer billions into hedge funds - in his recent book, The Hedge Fund Mirage: The Illusion of Big Money and Why It's Too Good to Be True. You'd think hedge fund advocates would immediately pounce on this and refute it; but it's irrefutable.
2012-08-03 00:00:00 Real Assets Replication: Solving the Capital Call Conundrum by Andrew Hoffmann, Niels Pedersen, Mihir Worah of PIMCO
Risk factors help to identify the fundamental value drivers of real assets and explain differences in the reported returns of public and private equity investments that hold substantially similar assets. By combining the fundamentals of real asset valuations with the statistical tools required to unlock the component risk factors of asset classes, it is possible to replicate the returns of private real asset investments using liquid publicly traded instruments.
2012-07-24 00:00:00 High Yield and Low Risk: Finding the Best Closed-End Funds by Geoff Considine (Article)
Yield-starved investors have ventured into exotic - and often risky - assets, including hedge funds, non-traded REITs and private placements. But an asset class that has been around since 1893 offers a compelling combination of low risk and high income. A carefully selected portfolio of closed-end funds (CEFs) will yield 8% with less volatility than the S&P 500.
2012-07-24 00:00:00 Optimal Strategies for Secular Market Cycles by Michael Kitces (Article)
With alternative investments and active management strategies growing ever more popular, an advisor recently told me, 'It's just a fad and will end with heartache as all investment fads do. I've watched it play out over and over during my 30-year career.' But I am not persuaded. The secular market cycle today is different from the bear market 30 years ago, and not all market cycles favor the same investment strategies.
2012-07-12 00:00:00 Fed Intervention and the Market: Historic 30-Year Mortgage Low by Doug Short (Article)
Note from dshort: I've updated the charts in this commentary in commemoration of yet another all-time low in the 30-year fixed-rate mortgage as tracked by Freddie Mac. Note also that the last chart now reflects the July WSJ forecasts for the 10-year note yield. Today's closing yield of 1.50% is just three basis points off the record low of June 1st, and the 30-year is just four basis points off its June 1st low.
2012-07-10 00:00:00 Benchmarking Your Retirement Portfolio With a Risk-Free Strategy by Laurence B. Siegel (Article)
Making the savings from 35 or 40 years of work pay for a retirement of the same length is a real challenge. At a zero real rate of return, you would have to save half of your income to enjoy a retirement that long without taking a cut in your living standard. There is, of course, a better way - judicious use of TIPS and annuities. A riskless strategy using those asset classes can safeguard one's retirement assets and can serve as a benchmark against which riskier portfolios can be measured.
2012-06-12 00:00:00 The Problems with Trying to Benchmark Unconstrained Portfolios by Ken Solow (Article)
Benchmarking unconstrained, 'go-anywhere' managers is difficult. Common methods to determine an appropriate benchmark - such as an ex-post regression of how the fund was invested - can obscure the actions of the manager. Is the only solution to simply select an arbitrary benchmark and proceed accordingly?
2012-06-12 00:00:00 Kingdoms of the Blind by Michael Lewitt (Article)
Recent events offer a rare illustration of the combined effects of the failure of monetary, fiscal and regulatory policy to coordinate a meaningful response. Rising budget deficits, record low interest rates, J.P. Morgan's proprietary trading blunder and the botched Facebook IPO process speak to abject policy failures in virtually every aspect of finance. It's not even a question of not having learned our lessons; our collective policy intelligence actually appears to have diminished.
2012-05-29 00:00:00 The Bargains in Europe's Great Oversell by Bob Veres (Article)
When was the last time we saw negative headlines drive valuations as low as they have in Europe? Evermore's David Marcus, who succeeded Michael Price as manager of the Mutual European Fund, says this period of obsession with Greek debt, bank restructuring and single-digit P/Es may be known as The Great Oversell.
2012-05-10 00:00:00 Diversification 301: Tailored Solutions for Your Portfolio by Team of American Century Investments
We continue our discussion of diversification and its application to investor portfolios. We explain how there is no single universal diversified portfolio suited to all investors and occasions. Instead, diversification is a highly customizable framework that can and should be uniquely tailored to suit each individual investors goals and risk tolerances. Earlier articles in the series discussed the basic benefits and rationale for diversification and a discussion of alternative investments that can be used to diversify a traditional balanced portfolio of stocks and bonds.
2012-05-08 00:00:00 Richard Bernstein: US Assets will Outperform over the Next Decade by Robert Huebscher (Article)
Prior to founding the firm that now bears his name, Richard Bernstein was the chief investment strategist at Merrill Lynch & Co. In this interview, he discusses why he expects US assets - both equities and fixed income - to be the outperformers among global markets over the next decade.
2012-04-24 00:00:00 Is 2012 the Year for Hedge Funds? by Chris Maxey of Fortigent
Prior to the financial crisis, hedge funds were largely viewed as alpha generating, high return seeking, portfolio diversifiers. In 2008, that model came under attack from multiple angles fraud, illiquidity, and poor returns being the primary culprit. Ever since that time, the value proposition of hedge funds and alternative investments remains in question, causing some to wonder if this is a make or break year for the space. There is reason to think the environment for hedge funds and active managers is improving.
2012-04-17 00:00:00 Muppet Capers by Michael Lewitt (Article)
Investors enjoyed strong stock market and credit market gains during the first quarter of the year, but storm clouds may be forming on the horizon. Corporate profits have likely peaked. Stocks may be the best house in a bad neighborhood, but houses in that neighborhood appear to be fully priced for now. There are also some troubling signs in the bond markets, particularly the long end.
2012-04-10 00:00:00 HBS Research: The Role of Business in Society by Michael Edesess (Article)
Many people believe that society needs to change for market capitalism to be sustainable - and it turns out a surprising number of business leaders are among them. That's the finding of a recent series of forums, organized by three Harvard Business School professors. Based on these discussions, the HBS professors advance a bold proposal - that business itself - not government, or even public-spirited nonprofits - should lead the charge to make the necessary changes to our capitalist system.
2012-03-20 00:00:00 The Wages of Denial by Michael Lewitt (Article)
Europe is insolvent, and hopelessly so. Her procurer - the European Central Bank (ECB) - can front her some money for a while, but in the end she is either going to have to repay him or suffer a very rough consequence. In the meantime, however, she can continue to entertain her customers, in this case those willing to extend her credit in one form or another. Sooner rather than later, however, these creditors are going to grow tired of her tricks and turn their attention otherwise. At that point, she will be left to deal with the ECB because nobody else will have her.
2012-03-13 00:00:00 The Gutenberg Economy by Michael Lewitt (Article)
As commentators near and far speculate on what 2012 will bring to the global economy and markets, there is little question that one factor will be decisive: the central banks' printing presses. Both the Federal Reserve and the European Central Bank (ECB) will keep printing dollars and euros around the clock until their presses run out of ink.
2012-03-09 00:00:00 Long-Short Funds Lead Greenwich Indices in February by Clint Binkley of Greenwich Alternative Investments
Hedge funds turned in another month of gains across all major strategies, notes Clint Binkley, Senior Vice President. Results from Long-Short Equity funds show that managers are increasing net exposures as they become more confident about economic conditions. Although some managers continue to expect a market correction, most believe it will be mild as institutional investors are still waiting for opportunities to add to their positions.
2012-03-07 00:00:00 The Labors of Hercules Were Never This Tough by Neil Dwane of Allianz Global Investors
Theres no shortage of insight on the ever-expanding debt drama in Europe. Despite the deluge of information, there are still a few key points to consider. Banks and hedge funds could file lawsuits against Greeces government. Protection against the ISDA declaring a default on Greeces debt could prove to be inadequate. This could mean that things may be worse than we imagine. Markets have rallied this year on positive sentiment that Greeces default has been contained. Are we being too complacent? Still, with solutions being drafted, now might be a good time to buy European equities.
2012-03-06 00:00:00 Why Invest? - Part 2 by Adam Jared Apt (Article)
Risk tolerance is a quality inherent in an individual or an institution. Whether quantified or not, risk tolerance is the amount of return the investor requires as compensation for the extra risk that comes with investing. It's a concept that is essential for making investment decisions, yet it is elusive and maddeningly difficult to specify. Even so, many investment advisors like to give the public the impression that they're proficient at determining it.
2012-02-16 00:00:00 Weekly Market Update: Introduction to Alternative Investments by Team of American Century Investments
Alternative investments (or alts as they are commonly known) have exploded in popularity in recent years. What began as specialty investment strategies utilized by only the most sophisticated institutional investorssuch as pension plans and university endowmentsare now readily available to retail investors through a number of mutual funds and exchange-traded funds. Here we try to explain alts appeal in broad terms, discussing how these strategies are used and what role alts may play in an individual investors portfolio.
2012-02-10 00:00:00 Indices Show Hedge Funds Off to Strong Start in January by Clint Binkley of Greenwich Alternative Investments
"US equities rallied significantly to begin 2012 and Long-Short managers are the best performers thus far. Hedge funds focused on Market Neutral strategies were also surprisingly strong as both Arbitrage and Event-Driven managers posted their best results in months. Despite investors being drawn into risk-on sectors of the market, most funds remain cautious with the economic situation in Europe still unresolved, notes Clint Binkley, Senior Vice President.
2012-02-09 00:00:00 Private Equity: Fact, Fiction and What Lies in Between by Team of Knowledge @ Wharton
What good is private equity, anyway? Critics say these investment pools make money the wrong way -- buying "target companies," slashing jobs, piling on debt and selling the remnants, which by then are doomed to fail. Defenders say PE is a strong creator of jobs and value, and a vital source of outsized returns for pension funds, university endowments and other investment pools that serve ordinary people. Who's right?
2012-02-07 00:00:00 Jeremy Siegel, Rob Arnott and Other Experts Forecast Equity Returns by Laurence B. Siegel (Article)
A forecast of the equity risk premium (ERP) tells you how much to save, how to allocate assets between equities and fixed income, and how much you can consume. Given its great importance, the CFA Institute recently convened a group of top-level academics and practitioners to forecast future ERPs - and to reflect on similar predictions they had made a decade ago.
2012-01-31 00:00:00 Lacy Hunt on the Roadblock to Recovery by Robert Huebscher (Article)
'The fundamental key to prosperity is not governmental financial transactions, or even private sector financial transactions,' according to Lacy Hunt, the widely respected economist at Hoisington Investment Management, with whom we spoke last week. 'The key to prosperity is the hard work and creativity of our individuals in businesses.'
2012-01-27 00:00:00 Eager to Move Home by Sherwood Zhang of Matthews Asia
Going public has long been viewed as a great milestone for entrepreneurs as the status of a public listing offers firms not only better access to capital, but also creditability. However, an increasing number of Chinese companies listed on U.S. exchanges have recently given up this privilege and been taken private again. Whether these firms are delisting from U.S. exchanges via their own management teams, strategic buyers or private equity investors, the value of these firms reportedly surpassed the total capital raised by Chinese firms in the U.S. from initial public offerings in 2011.
2012-01-11 00:00:00 Greenwich Global Hedge Fund Index Slips 15 Points in December by Clint Binkley of Greenwich Alternative Investments
US equities ended 2011 essentially unchanged but endured significant volatility throughout the year. Hedge funds focused on market neutral strategies were above average performers for the month and the year as they were able to withstand the market uncertainty. Looking forward, we expect Directional and Long-Short strategies to have better performance as the global economy continues to stabilize
2012-01-04 00:00:00 Defending Our Optimism by John Burns of John Burns Real Estate
Since our client webinar last January, we have been defending our realism, which was viewed as optimism by most of our clients, whether they are builders, developers, product manufacturers, private equity investors or public markets investors. We called for home prices to fall slightly, a tough three years selling homes, and a construction recovery that is exactly the time for patient money (5-10 year money) to invest wisely. Most money is not that patient, so the challenge for each of our clients continues to be when to increase their investments.
2011-12-20 00:00:00 Dennis Gartman Explains His Call on Gold by Robert Huebscher (Article)
Dennis Gartman has been publishing his daily commentary, The Gartman Letter, since 1987. He's been in the news lately because of a call he made last week on the price of gold. In this interview, he discusses the reasons behind that forecast.
2011-12-19 00:00:00 The Volcker RuleAn Exercise in Confusion by Milton Ezrati of Lord Abbett
This past October, a group of four regulatory bodies jointly released draft proposals of the so-called Volcker Rule. Part of the Dodd-Frank financial reform legislation set to go into effect this coming July 2012, this rule would forbid banks any substantial interest in either hedge funds or private equity firms and also prohibit banks from doing any proprietary trading on their own account in securities of any kind. Apart from the legitimate concerns and arguments on both sides, the most threatening and dangerous aspect is the debilitating lack of clarity.
2011-12-13 00:00:00 Letter to the Editor by Various (Article)
A reader responds to Michael Edesess' article, The Unspoken Truth about Hedge Funds, which appeared last week.
2011-12-09 00:00:00 Greenwich Hedge Fund Indices Post Modest Losses in November by Clint Binkley of Greenwich Alternative Investments
Hedge funds as measured by the Greenwich Global Hedge Fund Index posted losses in November, losing ground during the latter half of the month on weak fundamentals in European markets. The GGHFI shed 1.05% compared to global equity returns in the S&P 500 Total Return (-0.22%), MSCI World Equity (-2.69%), and FTSE 100 (-0.70%) equity indices. European headlines continue to dictate the mood of global markets and cause increased volatility in equities. Hedge fund managers have decreased leverage and exposure to mitigate market risk but are still exposed to broader moves
2011-12-06 00:00:00 Why Shiller and Soros May Be Wrong about Farmland Investing by Robert Huebscher (Article)
Earlier this year, Yale's Robert Shiller identified farmland as an asset class in the early stage of bubble formation. George Soros, Jim Grant and Jim Rogers have espoused similarly bullish views. But advisors - even those managing the assets of very wealthy clients - shouldn't bet the farm on these expert forecasts just yet.
2011-12-06 00:00:00 The Unspoken Truth about Hedge Funds by Michael Edesess (Article)
The popularity of the endowment model among advisors has been driven by the belief that hedge funds have produced positive risk-adjusted returns. But the basis for that notion has been statistics gleaned from hedge fund databases, and new research shows returns from those databases are even more upwardly biased than previously thought; the supposed alpha never really existed.
2011-11-29 00:00:00 Do You Really Understand Rates of Return? Using them to look backward - and forward by Michael Edesess (Article)
The basic quantitative building block for professional judgments about investment performance is the rate of return. How well do we really understand it? And how can we use past rates to assess the prospects for future performance? You may be surprised to learn that 'expected return' may not be what you think.
2011-11-22 00:00:00 Investment Trends in the Financial Advisory Profession by Robert Huebscher (Article)
Advisors are optimistic about the returns Treasury bonds will provide over the next decade, but they are less sanguine about the projected performance of US equities. Their inflation expectations are consistent with the historical data. These findings and many others arise from our study, Investment Trends in the Financial Advisory Space: Key Implications for the Investment Management Industry, a research report now available from Advisor Perspectives.
2011-11-22 00:00:00 A Bond-Based Financial Planning Framework by Stan and Hildy Richelson (Article)
Plain vanilla bonds have proven themselves to be the best investments available, and we wholeheartedly agree with Andrew Mellon's prescient late-1920s observation that 'gentlemen prefer bonds.' We believe that ladies should, too.
2011-11-16 00:00:00 As Alternative Investments Move into the Mainstream, Advisors and Investors Need to Choose Wisely by Team of Emerald Asset Advisors
We believe that having a piece of an overall portfolio that is committed to liquid alternatives is a critical component to long-term portfolio stability, capital preservation and growth. No one wants a repeat of 2008, or anything close to it. There are an abundance of liquid alternative choices available, some of which have proven themselves through various market cycles and environments. They have gone from Wall Street to Main Street for good reason. Embrace the opportunity, and you and your clients may just sleep a bit better at night during these volatile times.
2011-11-10 00:00:00 Alternative Investments in Focus by Team of American Century Investments
We recently conducted a survey of financial professionals to better understand their view and use of alternative investments. Alternative investments are defined as those outside the traditional big three of cash, bonds, and stocks. These alternatives include commodities, real estate, and inflation-linked securities, among many others. Alternatives have surged in popularity in recent years, as investors and their advisors seek out new and potentially more effective ways to diversify and reduce risk in traditional balanced stock, bond, and cash portfolios.
2011-11-09 00:00:00 Greenwich Global Index Hedge Funds Bounce Back in October by Clint Binkley of Greenwich Alternative Investments
Hedge funds as measured by the GGHFI posted strong results in October, benefitting from a rebound in equity prices during the month. The GGHFI gained 2.27% compared to global equity returns in the S&P 500 Total Return +10.93%, MSCI World Equity +10.26%, and FTSE 100 +8.10% equity indices. 67% of constituent funds in the GGHFI ended the month with gains. Concerns over Europe began to lift in October and hedge funds were able to benefit from the rise in equity prices. Long-Short managers performed well given their cautious stance entering the month.
2011-11-08 00:00:00 Is One Better than Three? by Dave Loeper, CIMA, CIMC (Article)
One way to 'juice' a portfolio is by increasing allocations to small- and mid-caps, as one recently published paper contends. But a careful analysis - properly adjusting for risk - shows how that seemingly appealing approach can destroy client wealth.
2011-11-01 00:00:00 Regulatory Armageddon by Bob Veres (Article)
Suppose you were somehow able to convince 40 advisors, who are all well-known thought leaders in the profession, to gather in the same room for a six-hour brainstorming session. The goal: to identify the single most important thing that the financial planning profession should be thinking about now. What do you think they'd come up with? Fasten your seat belts, because this may be the most important report you'll read all year.
2011-11-01 00:00:00 Why Invest? by Adam Jared Apt (Article)
Investing has its rational justifications, but like any human activity, it's contingent upon history. American society has come to regard investing in stocks and bonds as a matter of personal responsibility and even an obligation, which in part explains why we invest.
2011-10-11 00:00:00 Managed Futures are not a New Asset Class by Michael Kitces (Article)
The focus on finding investments that have a low correlation to equities has grown to such an obsession that we're willing to name anything that has a low correlation as 'a new asset class.' While some alternatives truly have their own investment characteristics unique from stocks and bonds, other alternatives - like managed futures - simply represent an active manager buying and selling existing asset classes.
2011-10-04 00:00:00 Value Investing Lessons from Moneyball by Laurence B. Siegel (Article)
Is baseball a metaphor for life, as many literati have suggested, or for value investing? Michael Lewis' 2003 bestseller Moneyball argues the latter. More recently, the book has been adapted to make a thoughtful movie that will be of special interest to investors who believe in trying to find hidden bargains.
2011-09-22 00:00:00 Talking Our Way to Recession! by David Edwards of Heron Financial Group
The Europeans do not yet have a political structure for engineering a rescue, and that will be the over-hang in Europe. They will figure it out - eventually. The risk remains whether Italy, Spain, Portugal, Ireland will require equivalent rescues. The largest unknown risk is: of all the banks and hedge funds that sold Credit Default Swaps on Greek bonds, do any have enough capital to pay off their exposure. Remember that the US Treasury directed $62 billion to AIG to cover CDS exposure at that firm in 2009. We doubt that the European central banks are prepared to do the same.
2011-09-20 00:00:00 The Irrational Optimist by Michael Lewitt (Article)
'Most past bursts of human prosperity have come to naught because they allocated too little money to innovation and too much to asset price inflation or to war, corruption, luxury and theft,' writes Matt Ridley. These words hit the proverbial nail on the head. The misallocation of capital in today's economy is a severe threat to future prosperity and perhaps survival itself.
2011-09-13 00:00:00 The Handicap of Experienced Investors by J.J. Abodeely, CFA, CAIA (Article)
In the investment business, assets under management are concentrated with the largest and most established firms. Understandably, investors tend to allocate capital to managers after they've established a good track record. Unfortunately, for many, the analysis stops there. By failing to separate good results from identification of what makes a great investment manager, investors are primed for disappointment.
2011-09-13 00:00:00 An Uncritical Glorification of Hedge Funds by Michael Edesess (Article)
Sebastian Mallaby's book, More Money than God, sheds some light on interesting events in hedge fund history and is strewn with a few valuable insights. Mostly, though, it is a work of serial hagiography. It seems designed to attract worshipers like those who drive by celebrity homes in Beverly Hills.
2011-09-13 00:00:00 The Risks of Exchange-Traded Products by Dennis Gibb (Article)
Every major financial crisis has been foretold by timely but ultimately ignored warnings. At the end of mania, the rush to secure more fees, investment performance and status trumps common sense. In the last few months, the drumbeats of warnings from financial journals and regulators about exchange-traded funds have been sounding. Few seem to be listening.
2011-09-09 00:00:00 Hedge Funds Minimize Losses in August by Team of Greenwich Alternative Investments
Hedge funds turned in an excellent month of relative performance when compared to equity market benchmarks, notes Clint Binkley, Senior Vice President. Macro, Futures and Short Biased managers produced positive returns in spite of severe market declines. We continue to expect hedge funds to outperform long only strategies in this volatile market environment. Hedge Fund Strategy Highlights: Directional Trading funds are the best performing group of funds in August, gaining 0.3%. Market Neutral funds provide protection from market swings, declining only 2.9% on average for the month.
2011-09-08 00:00:00 Bleak Outlook? MLPs May Help Cushion Against Market Volatility by Team of Emerald Asset Advisors
Professional investors spend a lot of time studying probabilities. That is because, just as the direction of the recent Hurricane Irene featured a "cone of uncertainty," the financial markets often change course without warning and can wreak havoc on investor portfolios. Alternative investments, including Master Limited Partnerships, may help limit damage from the inevitable financial storms that investors may face. In today's uncertain economy and volatile markets, MLPs - while not immune - can provide attractive yields and relatively low correlation to the stock and bond markets.
2011-09-06 00:00:00 No Way Out by Michael Lewitt (Article)
There aren't enough Steve Jobs and Mark Zuckerbergs to innovate our way out of the Everest of debt we have built for ourselves (and will continue to build for the foreseeable future). The good news (a purely relative evaluation) is that astute investors will find enormous opportunities in today's markets as they increasingly reflect unsustainable fiscal and monetary imbalances.
2011-08-11 00:00:00 Ron Muhlenkamps Market Commentary by Ron Muhlenkamp of Muhlenkamp & Co.
Sovereign debt problems and the possibility of a European-led banking crisis are the focus of the markets, because effective action isnt being taken. You see this in the velocity of money, which has fallen dramatically, and the move into U.S. Treasury bills, bidding their prices up and creating the negative yield mentioned earlier. Banks are having difficulty making money on depositors funds so they are passing those costs along to their depositors. Yesterdays decline was accelerated by some margin calls on leveraged hedge funds, but the market is primarily concerned about Europe.
2011-08-09 00:00:00 New Insights on the Role of Alternative Investments in High-Net-Worth Portfolios by Scott Welch, CIMA (Article)
Trends and developments over the past five years allow greater access to alternative strategies and dictate a different conversation with investors about the purpose and trade-offs of such strategies, as well as appropriate ways to incorporate them into well-diversified portfolios.
2011-07-26 00:00:00 Income Opportunities in Municipal Bonds and Stocks by Robert Huebscher (Article)
In this interview, Brian McMahon and Chris Ryon of Thornburg Investment Management assess the opportunities for income-oriented investors, particularly in the municipal bond market. They answer questions such as when a separate account is better than a fund, and why a barbell is inferior to a laddered portfolio.
2011-07-12 00:00:00 The Titanic Has Sailed by Michael Lewitt (Article)
It was entirely predictable that the U.S. equity market would rally on the news that Greek would not default this month, but it does little to convince me that the long-term outlook for European sovereign debt or the global economy has improved. Markets - particularly the equity markets - are trying to pretend that the global economy is experiencing a self-sustaining recovery. A hard look at the economic numbers would tell an objective observer that no such recovery is occurring.
2011-07-11 00:00:00 Hedge Funds Outperform Equity Benchmarks in Turbulent Markets by Clint Binkley of Greenwich Alternative Investments
Hedge funds navigated volatile markets to finish the month with a slight loss. ?Market Neutral and Long-Short Equity funds both outperformed broad equity market indices for the month,? notes Clint Binkley, Senior Vice President. ?Managers were fully occupied in negotiating the risk trade as investor sentiment changed dramatically over the course of the month. We continue to believe that in volatile markets actively managed hedge fund portfolios will provide superior results to index investing.?
2011-06-28 00:00:00 Reducing Risk through Value-Oriented Tactical Strategies by Mark E. Ricardo, JD, LLM, AAMS (Article)
Conventional wisdom was that the best way to reduce portfolio risk is to adopt a diversified long-term strategic asset allocation. That paradigm was challenged - deservedly so - following the 2008 financial crisis. Fortunately, an improved paradigm has emerged: Investors should combine long-term strategic allocations with a value-oriented tactical rebalancing strategy.
2011-06-21 00:00:00 The ?Great Recalibration? by Team of Columbia Management
Investors who have participated in the municipal market over the last several years are keenly aware of the volatility that the market has experienced. Increased market volatility has resulted from the reaction to subprime exposure; downgrades and eventual disappearance of monoline insurers; the exit of hedge funds and arbitragers from the municipal market; fiscal strains on state governments; and changes in demand dynamics with the intro and eventual elimination of Build America Bonds. As each of these issues came to bear, they were often the subject of sensational headlines.
2011-06-14 00:00:00 The Consequences of Policy Failure by Michael Lewitt (Article)
Investment performance for the rest of the year will be determined by the macro-economic views of investment managers. While microeconomic factors are always extremely important in charting investment strategies, they are particularly important today as the U.S. and global economies continue to fight their way through the detritus of the global debt crisis. A compelling case can be made for weaker 2Q112 growth based on a combination of factors.
2011-06-10 00:00:00 Why Bill Gross Doesn?t Like Stocks (or Treasury Bonds) by Sam Parl (Article)
Stocks have come to the end of a ?wonderful journey,? according to PIMCO's Bill Gross, and are now on their own, like ?a baby bird just released from the nest.? The journey Gross spoke of is the multi-decade decline in real interest rates, which have fueled bull markets across ?risk assets,? especially in equities and bonds.
2011-06-07 00:00:00 New Challenges for the Endowment Model by Robert Huebscher (Article)
The multi-billion dollar endowments of elite institutions like Harvard, Yale, and Princeton are supposed to never be strapped for cash, but that's not how things played out during the financial crisis, when all those schools and many others were forced to raise liquidity under adverse market conditions. The endowment model, despite those failures, is still basically sound, according to Luis Viceira, but it needs several key improvements before institutions and individuals can rely on it.
2011-05-24 00:00:00 Ownership in an Operating Business by David L. Blain (Article)
There was a time when the three legs of the retirement stool were Social Security, pensions, and personal savings, but those days are gone for good, and the stool needs new legs. Paper assets and real estate are classic asset classes that can help fill the void, but where else can investors turn for the stable income they need?
2011-05-17 00:00:00 Pippa Malmgren on Inflation and its Geopolitical Impact by Robert Huebscher (Article)
The Cold War may have been over for a quarter century, but the inflation-driven challenges that characterized that historical era are heating back up. Today, global volatility is back, according to Pippa Malmgren, who says that commodity-driven inflation will lead to political instability in emerging markets.
2011-05-17 00:00:00 The Smooth Illusion by Michael Lewitt (Article)
In retrospect, the Federal Reserve's interminable zero-interest policy and its quantitative easing programs are likely to be seen not only as ineffective but damaging to the prospects for sustainable long-term economic growth. A number of asset classes are beginning to exhibit bubble-like behavior, something that would be far less likely to occur were interest rates normalized.
2011-05-10 00:00:00 Hedge Funds Led by Managed Futures Funds in April by Clint Binkley of Greenwich Alternative Investments
Hedge funds, as measured by the Greenwich Global Hedge Fund Index (?GGHFI?), gained across all major strategies in April. The GGHFI gained 1.69% compared to global equity returns in the S&P 500 Total Return +2.96%, MSCI World Equity +4.02%, and FTSE 100 +2.73% equity indices. 78% of constituent funds in the GGHFI ended the month with gains. ?Hedge funds continued to move higher in April driven by strength in equities and commodities,? notes Clint Binkley ?Nearly all hedge fund strategies are at new highs for the year and continue to be successful in a market dominated by headline risk.?
2011-05-10 00:00:00 Howard Marks on the Human Side of Investing-Q & A by Robert Huebscher (Article)
Howard Marks is widely regarded for his thought-provoking essays on the discipline and process of value investing. He is the chairman and co-founder of California-based Oaktree Capital, and he delivered the keynote address at the Value Investing Congress in Pasadena last week. Here are excerpts from the Q&A.
2011-05-03 00:00:00 P/E: Future on the Horizon by Ed Easterling (Article)
Most people expect P/E to measure current valuation and to show historical patterns. But more features are available from some versions of P/E. The methodology behind the Crestmont P/E enables investors to anticipate the future. It may not precisely predict the market ten years away, but it frames within a relatively tight range the likely outcome. One component from determining the Crestmont P/E is a means to assess the future trend line for EPS using estimates of future economic growth (GDP).
2011-04-19 00:00:00 Gangs of New York by Jeffrey Saut of Raymond James Equity Research
I love New York City! Still, as I walked from the airplane into the terminal last Monday, I got the feeling I was traveling back in time, La Guardia is in need of a refresh. All in all, I felt like I was in a third-world country, not the greatest city in the world. Nonetheless, my trip started with a couple of hedge funds. At noon a segment on Breakout." From there, it was off to see some PMs before the next media hit at Fox Business with, Brian Sullivan. While I am kindred spirits with these media anchors, by far the highlight of last Monday was dinner with President Bill Clinton.
2011-04-12 00:00:00 Ten Trends that will Reshape the Fund Industry by Robert Huebscher (Article)
For advisors scouring among thousands of mutual funds, bargains and inefficiencies will be harder to find in coming years. Intense competition among funds for shelf space will not translate to lower fees, and the new class of broad asset allocation funds is unlikely to live up to its marketing promises. Those were among the surprising forecasts from Geoff Bobroff, with whom I met last week.
2011-04-12 00:00:00 Been Down So Long It Looks Like Up To Me by Michael Lewitt (Article)
"The budget crisis is a crisis of leadership," writes Michael Lewitt in the latest issue of the HCM Market letter. "There is no intellectual mystery involved in cutting the budget - entitlement spending must be reduced through the adoption of tighter eligibility standards... The markets will also have to evaluate whether Congress and the Obama administration can make any meaningful progress on budget reform, which will mean tackling the entitlement issue. The failure to rein in federal deficits remains a profound threat to the dollar and interest rates."
2011-04-08 00:00:00 Hedge Funds Show Mixed Results Among Strategies in March by Clint Binkley of Greenwich Alternative Investments
Most hedge funds advanced in March, but losses in Directional funds dragged down the group. The Greenwich Global Hedge Fund Index shed 10 basis points compared to global returns in the S&P 500 Total Return +0.04%, MSCI World Equity -1.24%, and Barclays Aggregate Bond +0.06% indices. 58% of constituent funds in the GGHFI ended the month with gains. ?The whipsaw action in the market during March led many trend following funds to suffer losses latter in the month,? notes the Sr VP ?The outlook for managers is positive as increased volatility tends to work in favor of most hedge fund strategies.?
2011-03-22 00:00:00 Consensus: Groundhog Decade for Stocks by Ed Easterling (Article)
Just as Bill Murray woke up to the same thing day after day in the movie 'Groundhog Day,' it's likely that your outlook foretells a groundhog decade for the stock market that will repeat its near-breakeven returns from the past decade.
2011-02-23 00:00:00 2011 Outlook: Private Equity by NB Alternatives private equity team of Neuberger Berman
As a result of the financial crisis, for the latter part of 2008 and all of 2009, very few new private equity transactions were completed and portfolio company monetization was minimal. However, the operating performance of existing private-equity portfolio companies was better than generally expected and investment returns were superior to public equity benchmarks. Although some of this outperformance can be attributed to the resistance of some private equity firms, we believe the majority of the outperformance was the result of effective cost cutting, cash conservation and debt reduction.
2011-02-22 00:00:00 Bruce Berkowitz on the Exceptional Value in the Financial Sector by Robert Huebscher (Article)
Fairholme's Bruce Berkowtiz, US stock-fund manager of the decade, discusses his large position in the financial sector and why he believes the big bets he is making do not amount to Russian roulette. He also comments on his recent nomination of former Florida Governor Charlie Crist to the board of St. Joes.
2011-02-22 00:00:00 Stop Wasting Time and Money on Client Communication by Dan Richards (Article)
The world has changed in all kinds of ways. What worked in terms of client communication as recently as five years ago doesn't work nearly as well today. As a result, you need to fundamentally change how you communicate with clients.
2011-02-15 00:00:00 The Stuxnet Paradigm by Michael Lewitt (Article)
Michael Lewitt discusses the situation in Egypt, the economy, rising risk appetites in the market, sovereign debt and municipal bonds. 'It might be very easy,' he writes, 'to be impressed by the 'two years and thousands of man hours' that Ms. Whitney spent researching the fiscal condition of the 15 largest states. What in the world required so much time and effort? It shouldn't have taken nearly so long to determine that these states are in severe financial trouble and that their options for dealing with it are limited.
2011-02-11 00:00:00 Reiterating Our Investment Thesis for 2011 by David A. Rosenberg of Gluskin Sheff
For 2011, not only do I still favor credit, especially the spread compression left in the high-yield space, but relative value portfolios, hybrids with a decent running yield and exposure to Canadian dollars. The resource sector is also attractive, especially oil, with a long-term view towards buying these companies on dips and not just for the commodity price uptrend. Corporate bonds, especially BB-rated product. Hedge funds, with low correlations with the direction of the market or the economy. And precious metals as a hedge against periodic bouts of currency and monetary instability.
2011-02-08 00:00:00 The Downside to Venture Investing (like Facebook?) by Dan Richards (Article)
In this interview, Harvard Business School professor Josh Lerner discusses the dangers of venture capital investing and the basis behind Facebook's valuation. This is a transcript of the interview.
2011-02-08 00:00:00 The Downside to Venture Investing - Video by Dan Richards (Article)
In this interview, Harvard Business School professor Josh Lerner discusses the dangers of venture capital investing and the basis behind Facebook's valuation. This is a video of the interview.
2011-02-01 00:00:00 Why Public Funding of Venture Capital Has Failed by Dan Richards (Article)
Josh Lerner is a professor at the Harvard Business School, with a joint appointment in finance and entrepreneurial management. In this interview, he discusses his research on why public-funded venture capital sometimes succeeds but other times fails. This is a transcript of the interview.
2011-02-01 00:00:00 Why Public Funding of Venture Capital Has Failed - Video by Dan Richards (Article)
Josh Lerner is a professor at the Harvard Business School, with a joint appointment in finance and entrepreneurial management. In this interview, he discusses his research on why public-funded venture capital sometimes succeeds but other times fails. This is a video of the interview.
2011-01-11 00:00:00 The Two Elephants Facing the US Economy by Michael Lewitt (Article)
The consensus has reached the conclusion that financial markets will enjoy a strong start to 2011. This is reason enough to approach the markets with caution as the year begins. When everybody is leaning to one side of the boat, the vessel is far more likely to tip over, particularly if it hits an unexpected wave.
2010-12-14 00:00:00 Looking Back at a Year of Policy Mistakes by Michael Lewitt (Article)
As we approach the end of 2010, the global economy remains captive to a boom-and-bust cycle resulting from years of pro-cyclical monetary, fiscal and regulatory policies. With very limited exceptions, the same policies that contributed to the 2008 financial crisis remain in place. The only difference is that government balance sheets are far more leveraged than they were heading into that crisis.
2010-11-30 00:00:00 Why Bubbles Inflate and How to Avoid Them by Robert Huebscher (Article)
In this interview, Meir Statman discusses the psychological underpinnings behind the creation of bubbles in the financial markets, why some bubbles are good and others are not, and how investors should frame their decisions when facing a potential bubble.
2010-11-23 00:00:00 Five Words that Get Emails Opened by Dan Richards (Article)
The escalating volume of email means that fewer and fewer emails are being opened. A key challenge is creating a sense of urgency around opening your emails - something that can be achieved with five key words in the subject line.
2010-11-23 00:00:00 Why Diversify? by Adam Jared Apt (Article)
Although diversification is commonly regarded as a good thing, there are nonetheless those who regard it as a guarantee of mediocrity. It isn't, but there are right ways and wrong ways to go about diversifying a portfolio. Let's explore how diversification works.
2010-11-16 00:00:00 Through the Looking Glass with Steven Rattner by Jack Falvey (Article)
Steven Rattner, the one-time 'Car Czar' and author of Overhaul, has been busy redefining terms while trying to put his considerable spin on history. He wants to convince us that the auto industry was magically transformed from a cash-bleeding rusting hulk to a paradigm of corporate profitability. The auto industry was not overhauled. In fact, Dismembered would have been a far more accurate title.
2010-11-09 00:00:00 New Strategies in Alternative Investments by Robert Huebscher (Article)
Alternative investments, broadly speaking, and hedge funds, more specifically, have performed as intended over the last 20 years, modestly increasing returns and significantly reducing risk when added to a traditional stock-bond portfolio. Selecting the appropriate vehicle is the challenge, and that task has been made easier by the introduction of new exchange-traded strategies.
2010-11-02 00:00:00 The SEC?s 12b-1 Proposal is Based on Misguided History, Flawed Economics by John H. Robinson (Article)
The SEC's stated aims of its proposed Rule 12b-1 reform are laudable: increasing transparency, reducing investor fees, and increasing competition among mutual funds. However, John Robinson's review of its 278-page proposal found major flaws, including a misinformed historical pretext and naïve economic analysis.
2010-10-29 00:00:00 Asset Allocation in an Uncertain Economy by Robert Huebscher (Article)
Advisors should not bet on whether the recession will be L-, V-, or W-shaped. Instead, Ron Albahary said they should use strategic asset allocation and overweight or underweight those asset classes that have historically done well at certain points in the economic cycle. Albahary is the CIO of Convergent Wealth Advisors, a Washington, DC-based wealth manager.
2010-10-27 00:00:00 Reflections: Venturing into a New Frontier by Mark Mobius of Franklin Templeton
Frontier markets are the next emerging markets. These economies are more domestic-oriented, with a limited number of publicly listed companies; hence, frontier market investments tend to be primarily limited to private equity. Quality of company management is a frequent concern. Frontier market investing therefore often requires additional time and due diligence to assess the quality of corporate management teams, including more frequent on site visits to evaluate businesses effectively.
2010-10-26 00:00:00 What Drives High-Yield Bonds (and Why You Should Listen to the Ratings Agencies) by Robert Huebscher (Article)
High-yield bonds are attractively priced - or they aren't - depending on how likely you think a double-dip recession is and how severe you think it might be. What drives the high-yield market was the subject of a talk last week by Martin Fridson, a global credit strategist with BNP Paribas Asset Management who is a highly regarded expert on distressed debt.
2010-10-14 00:00:00 Who's Doing the Buying? by David A. Rosenberg of Gluskin Sheff
So who's buying equities right now? Good question. We know it's not the retail investor and private clients - they have been selling into this entire bear market rally and rebalancing their asset mix in favor of income. It's not the mutual funds, because institutional private managers already have cycle-low cash ratios. There would seem to be three principal buyers right now: pension funds struggling to reach their 8 percent assumed annual returns, hedge funds, and the proprietary trading desks at big commercial banks.
2010-10-01 00:00:00 Insolvency Too by Niels C. Jensen, Nick Rees and Patricia Ward of Absolute Return Partners
On 1st January 2013, Solvency II, a new directive governing capital adequacy rules in the European insurance and life insurance industry, will come into effect. Going forward, European insurers will have to be able to pass a 1-in-200 years' event stress test, which has been designed to give the industry enough of a cushion to withstand even the most severe of bear markets without being forced to sell. Risky asset classes such as equities, commodities and other alternative investments will be assigned much higher reserve requirements than less risky asset classes such as bonds.
2010-09-28 00:00:00 The Future of Oil by Robert Huebscher (Article)
No commodity impacts the global economy more than oil. When geopolitical threats loom, two questions often dominate discussion: Will the price of oil rise? And what will be the economic consequences? We review the key drivers of recent, current, and forecast oil prices, including a template for the necessary eventual alignment of supply and demand.
2010-09-14 00:00:00 The Centre Cannot Hold by Michael Lewitt (Article)
"A refusal to shed discredited monetary and fiscal policies and embrace creative and politically bold solutions is keeping our economy mired in high levels of structural unemployment and below-trend growth," writes Michael Lewitt in the latest edition of the HCM Market Letter. He also believes that "misguided faith in Keynesian solutions to debt crises, a near-religious belief that mild deflation must be avoided... and uninformed media hype about the alleged benefits of mergers and acquisitions" should be added to the list of bad ideas that lead economic policy and markets astray.
2010-08-31 00:00:00 The Riskiest Pension Assets (and the Implications for Muni Bonds) by Robert Huebscher (Article)
State finances are in trouble, in large part due to unfunded pension liabilities. To assess the depth of those problems, one can look at what is likely the riskiest component of states' pension assets - their exposure to alternative investments and, in particular, to private equity. We assess those risks and look at the larger question of whether unfunded liabilities can trigger municipal defaults.
2010-08-24 00:00:00 What Investors Really Want by Robert Huebscher (Article)
Using a mean-variance optimizer to construct a retirement portfolio that sits on the efficient frontier is tantamount to dining on a well-prepared meal that was pureed in a blender, believes Meir Statman, a professor of finance at Santa Clara University. Statman's research focuses on behavioral finance, and how advisors can help investors make smarter decisions.
2010-08-24 00:00:00 This is No Way to Run a Railroad by Michael Lewitt (Article)
In the latest edition of the HCM Market Letter, This is No Way to Run a Railroad, Michael Lewitt says the railroad known as the United States economy is chasing its own tail these days. Driven by misbegotten fiscal and monetary policies that ignore the lessons of history in favor of discredited financial and economic theories, the economy is trapped in a cycle of boom and bust. Lewitt also comments on the bond market, the European stress tests, GM, and the private equity industry.
2010-08-17 00:00:00 Cerulli Survey Results: New Themes in Advisors? Portfolio Strategies by Bing Waldert (Article)
New ideas, such as tactical asset allocation and the use of alternatives, have seen some uptake even before the market crisis, particularly within large institutions, but they are receiving increased attention as solutions for risk-averse clients. This article examines some of the evolutions, using data from a Cerulli Associates survey of Advisor Perspectives readers conducted in June and July of 2010.
2010-08-17 00:00:00 Economic, Investment and Asset Allocation Overview ? July 2010 by Jeff Spitzmiller, Jim Worden and Alan Chauhan of Iron Point Capital Management
A buy-and-hold U.S. stock portfolio alone can't be expected to provide attractive returns over the coming years. Alternative asset classes and certain segments of the stock and bond markets are current areas of focus for Iron Point Capital Management. The firm currently favors high-yield bonds, floating rate securities, alternative investments and emerging market debt and equity, amongst other investments that can provide excess return, risk reduction or the ability to capitalize on long-term trends.
2010-08-10 00:00:00 When Active Management Matters by Kenneth R. Solow, CFP and Michael E. Kitces, MSFS, MTAX, CFP (Article)
Financial planners have eagerly awaited any research that could finally, definitively prove - or disprove - the pesky notion that active management is effective. Though no one has yet risen to that challenge, past academic studies have been improperly interpreted to show that portfolio policy, or asset allocation affects portfolio returns far more than active management. As Ken Solow and Michael Kitces write in this guest contribution, the most recent study to tackle the active management debate, by Yale professor Roger Ibbotson, shares two weaknesses with previous research.
2010-08-10 00:00:00 Is the Market Efficient? by Adam Jared Apt (Article)
After Marxism, no economic theory today may be as derided and despised as the hypothesis of market efficiency. The idea is often misunderstood, sometimes willfully. So what does "market efficiency" mean? In the latest installment of his series for the educated layman, Adam Jared Apt provides some answers.
2010-08-03 00:00:00 Woody Brock: How to Achieve Growth without 'Bad' Deficits by Robert Huebscher (Article)
Of all the challenges facing our nation, none is as daunting as trying to achieve economic growth and reduce unemployment without adding layers of debt to our already bloated deficit. Legislators and economists have debated the merits of stimulus measures, changes in tax rates, and monetary policies, but they are no closer to a consensus than they were at the onset of the financial crisis. H. 'Woody' Brock, however, says a genuine solution is possible.
2010-07-20 00:00:00 Martin Leibowitz? Failed Defense of the Endowment Model by Michael Edesess (Article)
The latest book from Martin Leibowitz, one of the most respected thinkers in the investment industry, attempts to justify the endowment model of investing. As Michael Edesess writes in this review, Leibowitz's defense is highly problematic, and that should concern any advisor utilizing a Yale-like strategy.
2010-07-13 00:00:00 Deficits Monetary and Moral by Michael Lewitt (Article)
"The word 'deficit' has come to epitomize not only our economic dilemmas but also our moral and intellectual failures to address them in an era that should be boasting of new breakthroughs in the social and physical sciences," writes Michael Lewitt in the latest installment of his HCM Market Letter, Deficits Monetary and Moral. "Instead, our ability to solve complex problems is weighed down by flawed and corrupted government processes and the lack of courage to forthrightly change them."
2010-06-29 00:00:00 Timber as an Asset Class: If a Tree Falls in the Forest, Should you Buy It? by Charlie Curnow (Article)
"If the sun shines and it rains, the trees grow about on schedule," wrote Jeremy Grantham, chairman of Boston-based investment firm GMO, in his quarterly newsletter in April 2007. Grantham's enthusiasm for timber, which remains true to this day, may be excessive, despite the fact that, on the surface, historical data seems to support his optimism. If a tree falls in the forest, should you buy it?
2010-06-15 00:00:00 Asset Allocation Matters, But Not as Much as You Think by Robert Huebscher (Article)
The market downturn has caused a rethinking of many core principles underpinning investment advice, chief among them the role of asset allocation. We talk with Yale's Roger Ibbotson about the impact of market returns and active management in explaining return variance and the role of asset allocation going forward.
2010-06-08 00:00:00 Why Wall Street Won't be Reformed by Robert Huebscher (Article)
Michael Lewitt, author of the highly respected HCM Market Letter, has just released a new book, The Death of Capital. In this interview, he identifies the challenges facing those who seek to regulate Wall Street, and why most of the proposed reforms are likely to fail.
2010-06-08 00:00:00 The First Thing We Do, Let?s Kill All the Quants by Michael Lewitt (Article)
In the latest issue of the HCM Market Letter, Michael Lewitt draws the parallels between the Gulf of Mexico oil spill and financial reform - both, he says, demonstrate our inability to learn from our mistakes. Lewitt also comments on quantitative trading strategies, economic recovery and the capital markets.
2010-06-04 00:00:00 The Parable of the Lifeboat by David Edwards of Heron Financial Group
Many investors are hesitant to add to their stock allocations due to negative returns over the past decade. The problem is that alternative investments have performed just as badly, if not worse. Ten thousand appears to be a hard floor for the Dow, despite investors' fears. Markets are thinner and more easily manipulated during the summer time, but July earnings reports should paint a rosy picture. NASDAQ is implementing expanded 'circuit breakers' to sideline stocks with unusually large moves - anything to reduce volatility and get investors interested in stocks again.
2010-05-18 00:00:00 Jeremy Grantham Guarantees Gold will Crash by Robert Huebscher (Article)
Jeremy Grantham, the investor celebrated for his ability to spot and exploit bubbles in asset classes, guaranteed yesterday that the current bull market in gold will end. His proof? He bought some - for his own account - at the end of last week. That comment was tongue-in-cheek, but he went on to identify two asset classes likely to go into bubble territory.
2010-05-11 00:00:00 Why Some Hedge Funds Made Money in 2008 by Robert Huebscher (Article)
Steven Drobny is the co-founder of Drobny Global, an international macroeconomic research and advisory firm that counts many of the leading global hedge funds and money managers as clients. He is also author of a recently released book that identifies why some hedge funds made money in the 2008 crisis, while the majority did not. In this interview, he discusses the common themes among successful strategies.
2010-05-11 00:00:00 God Is Dead: The Implications of the Goldman Sachs Case by Michael Lewitt (Article)
Michael Lewitt provides us with the most recent issue of the HCM Market Letter, where his discusses the implications of the Goldman Sachs case. Lewitt says Goldman faces a terrible dilemma, and should heed the lessons of the downfall of Drexel Burnham two decades ago. Lewitt also comments on the private equity industry, public pension funds, and bank capital requirements and the ratings agencies.
2010-05-11 00:00:00 A Coming Wave of M&A? by Seth P. Hieken, CFA (Article)
In this guest contribution, Seth Hieken of The Colony Group says to expect M&A transactions to accelerate over the course of the year. If correct, there are several important guidelines investors may wish to follow.
2010-04-20 00:00:00 Lessons from Yale?s Endowment Model and the Financial Crisis by Geoff Considine, Ph.D. (Article)
The Yale endowment's performance during the financial crisis was worse than what would be mathematically expected, but not significantly enough to question the endowment model's tenets. Moreover, Yale's performance and philosophy suggest two very important lessons for advisors and investors- to diversify beyond equities and fixed income, and that some illiquid asset classes can be an important source of alpha.
2010-04-13 00:00:00 Are Public Employees Bankrupting the Nation? by Charlie Curnow (Article)
While markets may be recovering, public debts are still mounting. Charlie Curnow reviews Plunder, the new book by Steven Greenhut, which blames public sector unions for a large portion of these debts. To Greenhut, we the taxpayers are helpless villagers, while corrupt public employee unions are barbarians at the gate, raiding government treasuries and leaving us with nothing but unfunded liabilities.
2010-04-13 00:00:00 Shameless by Michael Lewitt (Article)
The fiscal train wreck in the United States has not been set back on the tracks, and the global imbalances that led to the financial crisis have not gone away. Quite to the contrary, writes Michael Lewittin Shameless, the latest edition of his HCM newsletter. In fact, if progress isn't made with respect to these issues, and if intelligent financial reform is not enacted, future instability is guaranteed.
2010-04-09 00:00:00 Reform We Can Believe In by John Mauldin of Millennium Wave Advisors
Appointments to positions of power in the Federal Reserve system should be independent of the political process and party politics. Credit default swaps should be regulated by requiring that they be traded on an exchange. Commercial and investment banking should be separated, so that commercial banks cannot engage in speculative activity such as running hedge funds. Leverage use by large banks should be restricted. "Fix the big things. Credit default swaps. Too big to fail. Leverage. Then worry about the details. And leave the Fed alone."
2010-03-23 00:00:00 The Best Books on Passive Investing by Indudeep Chhachhi & Edward R. Wolfe (Article)
Two finance professors, Edward Wolfe and Indu Chhachhi, survey the literature on passive investing and offer their recommendations for authors and books. Whichever side of the active-passive debate you take, these books should be required reading. The evolution through which the literature on passive investing has gone is striking. Early writers started out with a point to prove: that passive investing is the only way to invest that makes sense. Today, the writing in this area has moved beyond "proving a point" to expanding on what is a settled issue.
2010-03-18 00:00:00 Dollar: Beleaguered No More? by Komal Sri-Kumar of TCW Asset Management
After weakening for most of the past decade, the dollar has appreciated significantly against the euro and the pound sterling, the two major European currencies, over the past three months. This is due more to the weakness of European currencies than to the strength of the dollar. Fears of stagnation in Europe, uncertainties over upcoming U.K. elections, and concerns that Portuguese and Spanish debt sovereign may come under attack by hedge funds have all dragged on European currencies. Compared to this turbulence, the U.S. economy seems like a safe haven.
2010-03-16 00:00:00 The New Investment Paradigm: Graham Meets Markowitz by Bob Veres (Article)
Broadly speaking, the financial services industry has been divided into two competing paradigms since roughly 1950. One, articulated by Harry Markowitz, suggests advisors add value through diversified portfolios optimized along the efficient frontier. The other, advocated by Benjamin Graham, says advisors add value by purchasing assets at prices less than their fair value. Bob Veres reconciles those views and describes the New Paradigm that has emerged.
2010-03-16 00:00:00 Greeks Bearing Gifts by Michael Lewitt (Article)
We are again privileged to publish the most recent edition of Michael Lewitt's HCM Market Letter, Greeks Bearing Gifts. Lewitt comments on Goldman Sachs' derivative transactions that helped Greece hide its debt and its larger implications for the financial system, for the European periphery and for Spain in particular. Lewitt also addresses the state of decline of the US economy and other topics.
2010-03-11 00:00:00 going active by Tom Brakke of the research puzzle
A study by Martijn Cremers and Antii Petajitso makes a persuasive case for using active share as a benchmark for determining how active a fund manager is. It concludes that the most active managers, as measured by active share, deliver the best performance. In a way, this comes as no surprise. The popularity of hedge funds derives from their tendency to hold positions regardless of their presence in an index, and a less scientific view of mutual funds holds that good performance over time tends to come from managers who stand apart from what the rest of the market is doing.
2010-03-02 00:00:00 Robert Pozen on the Financial Crisis, Social Security, and the Mutual Fund Industry by Dan Richards (Article)
Robert Pozen is the chairman of MFS Investment Management and a senior lecturer at the Harvard Business School. In this interview with Dan Richards, he discusses the financial crisis, Social Security, and the mutual fund Industry. We provide a transcript and a video replay of the interview.
2010-02-26 00:00:00 The Multiplication of Money by John Mauldin of Millennium Wave Advisors
Mauldin begins with a review of the situation in Greece, highlighting recent social unrest, and concluding that the most likely resolution will be relief from the IMF. Next, he rejects recent reports that hedge funds will short the euro and cause it to decline relative to the dollar. He then argues that the reported expansion of M0, M1 and M2 money supply is inconsequential (for inflation), because it is more than offset by a decrease in the velocity of money.
2010-02-16 00:00:00 Boom and Bust by Michael Lewitt (Article)
The US and global economies are "trapped in a cycle of boom and bust as a result of fiscal and monetary policies from which there is no easy escape," says Michael Lewitt of Harch Capital Management. Lewitt believes the S&P will rally to 1,200-1,250, but says the long-term prognosis is "somewhere between grave and terminal." We are privileged to provide this excerpt from Lewitt's monthly newsletter and encourage our readers to subscribe to it directly.
2010-02-16 00:00:00 How Professionals Select Investments by Adam Jared Apt (Article)
In this guest contribution intended for the educated layman, advisor Adam Apt discusses the process by which investment managers select individual securities, contrasting the disciplines of fundamental and technical analysis.
2010-01-26 00:00:00 Using Alternative Investments to Build a Stronger Portfolio by Robert M. Hussey (Article)
Traditional asset classes may no longer provide sufficient portfolio diversification, but there's a new wave of mutual funds that offer alternatives strategies previously available only to large institutions. Robert Hussey of Natixis Global Associates describes how alternative strategies can be used in a mutual fund package. We thank them for their sponsorship.
2010-01-25 00:00:00 The Volcker Rule & AIG: Hedge Funds and Prop Desks Are Not the Problem by Christopher Whalen of Institutional Risk Analyst
?Neither prop trading nor the size of the largest banks are the causes of the financial crisis. Instead, opaque over-the-counter (OTC) markets, deliberately deceptive structured financial instruments
2009-12-15 00:00:00 The Next Black Swan? Underfunded Public Pensions by Robert Huebscher (Article)
The plights of California and other states reveal an ominous threat our economy faces: underfunded public pension liabilities. We examine the size and scope of this problem, focusing on whether the underlying assumptions used to calculate liabilities are realistic.
2009-11-24 00:00:00 Interview: Brian McMahon of Thornburg Investments by Robert Huebscher (Article)
We speak with Brian McMahon, CEO and CIO of Thornburg Investment Management about the Thornburg Income Builder Fund (TIBAX) and the challenges of finding income-producing securities in today's markets.
2009-11-10 00:00:00 Roubini: Fed Policies are Destabilizing the Financial System by Robert Huebscher (Article)
Nouriel Roubini, the once-obscure economist who gained celebrity and the title "Dr. Doom" after correctly forecasting the financial crisis, believes that current Fed policies are destabilizing the markets and pushing the economy toward another collapse.
2009-11-10 00:00:00 Not by Return Alone: Judging Investment Performance by Adam Jared Apt (Article)
In the latest installment of his articles intended for an educated layman, Adam Apt addresses the relationship between risk and return, and shows that the connection between them is neither rigid nor obvious, and that we can be cheated of our money by disregarding risk and fixating only on return.
2009-11-03 00:00:00 Absolutely ? Maybe by Robert Huebscher (Article)
Since Putnam introduced its absolute return funds earlier this year, over 4,200 advisors and $650 million in assets have flocked to the new financial products. Putnam's four funds seek to beat inflation by 100, 300, 500 and 700 basis points, and their performance over their first nine months (3.1%, 6.4%, 8.4% and 12.2%, respectively) was encouraging for their investors. Impressive as those results may be, the question is whether they are sustainable.
2009-10-20 00:00:00 Finance After Auschwitz by Michael Lewitt (Article)
We are again privileged to provide an excerpt from Michael Lewitt's HCM Market Letter. In this installment, Finance After Auschwitz, Lewitt examines the dangers posed by Iran, whether the market is overvalued, the future of securitization, and what should be done about the private equity industry.
2009-09-22 00:00:00 The Financial Market Solution to Carbon Emissions by Robert Huebscher (Article)
While health care remains the hot topic on Capitol Hill, another piece of legislation is poised to gain similar attention. Regulating carbon emissions to address the threat of global warning is a top priority of the Obama administration, and its favored approach is to create a "cap-and-trade" market. John Parsons, an expert in the field, explains how this financial market solution might work.
2009-09-15 00:00:00 The 'Cash For Clunkers' Economy by Michael Lewitt (Article)
We are once again privileged to offer the latest edition of the HCM Market Letter, edited by Michael Lewitt, titled The 'Cash for Clunkers' Economy. Lewitt examines the drivers behind the current market rally, the health of the banking system and the housing industry, the the future for derivatives regulation. If you enjoy this newsletter, we encourage you to subscribe directly though the link provided with our article.
2009-09-08 00:00:00 Infrastructure Investing by Michael D. Underhill (Article)
With global markets improving, liquidity returning to the credit markets, and valuations improving, the infrastructure market looks promising. In this guest contribution, Michael Underhill argues that infrastructure assets,when chosen correctly, can diversify an investor's portfolio because of their low correlation with other asset groups, their consistent returns coupled with lowered levels of risk, and their potential for inflation-linked returns.
2009-08-18 00:00:00 A Crash Course in Investing Six Lessons from the Market Meltdown by Dougal Williams, CFA (Article)
The market decline from October 2007 to early March 2009 was the worst since the late 1930's. Stocks dropped 60%, investor uncertainty skyrocketed, and trust and confidence were shattered. The age-old rules for personal investing are now being questioned: Is Buy-and-Hold dead? Has Asset Allocation outlived its usefulness? Does Diversification still work? In this guest contribution, Dougal Williams provides answers to these questions that can serve as a guide for long-term investment success.
2009-08-18 00:00:00 Turbulence Can Improve Portfolio Diversification by Susan B. Weiner, CFA (Article)
Classic diversification has failed, Mark Kritzman says, because traditional, independent measures of volatility and correlation don't provide enough information to indicate which portfolios will deliver the lower risk or higher returns that, at least theoretically, should come with investing in imperfectly correlated asset classes. Kritzman offers the concept of turbulence as an alternative way to approach diversification, and provides his latest research on the subject.
2009-08-11 00:00:00 At the Risk of Repeating Ourselves by Michael Lewitt (Article)
We have said before that Michael Lewitt's newsletter is a must-read, and this edition is no exception. Lewitt questions whether we are witnessing a summer calm before the storm, comments on the secured and unsecured debt asset classes, and opines on the abuses of unregulated dark pools of capital. We encourage you to subscribe to this valuable publication through the link we provide.
2009-08-04 00:00:00 Uncovering the Mayhem in 2008 in the TIPS Market by Robert Huebscher (Article)
In an interview two weeks ago, Yale Endowment manager David Swensen singled out TIPS as the best way to protect against inflationary and deflationary scenarios. We review a comprehensive study of the history of the inflation-indexed bond market, including an explanation for the extreme volatility in TIPS last year.
2009-07-28 00:00:00 Moving Average: Holy Grail or Fairy Tale - Part 3 by Theodore Wang (Article)
Buy-and-hold remains deeply entrenched in the financial planning community, despite many of the flaws Ted Wong's previous articles have illustrated. Although many financial advisors suffer dearly from their buy-and-hold practices, they are reluctant to change their approach. Who dares to challenge investment sages like Bogle, Siegel, and Malkiel who emphatically support this long-standing investment principle? Academic research studies overwhelmingly endorse buy-and-hold. How can they all be wrong?
2009-07-28 00:00:00 Flaws in the Case Shiller Methodology by Robert Huebscher (Article)
To forecast economic growth, it's essential to understand the trajectory of the housing market. Most observers rely on widely publicized data like the Case Shiller index, but those metrics can be very misleading if you don't understand how they are calculated. If you don't understand that there are factors beyond Case and Shiller's control that impact the data, according to John Burns, the founder and CEO of John Burns Real Estate Consulting, a 20-person firm based in Irvine, California.
2009-07-14 00:00:00 Behavioral Finance ? A Three-Part Model for Client Relationships by Susan B. Weiner, CFA (Article)
Behavioral finance can improve your client relationships during market turmoil, if you recognize your clients' emotional right-brained reactions before you offer insights based on your analytical left-brained analysis. By applying a three-pronged process of Recognize-Reflect-Respond, you can adapt to new information in a thoughtful and effective framework.
2009-07-07 00:00:00 Marty Whitman: The Outlook for Distressed Securities by Robert Huebscher (Article)
Marty Whitman is the founder, Co-Chief Investment Officer, and Portfolio Manager of the Third Avenue Value Fund and a veteran value investor with a long, distinguished history as a control investor. In our interview, he discusses the opportunities in distressed securities created by the financial crisis.
2009-06-30 00:00:00 Moving Average: Holy Grail or Fairy Tale - Part 2 by Theodore Wong (Article)
Many renowned financial experts declare that passive investing in a diversified index like the S&P500 is the only sensible way to manage money. In a follow-up to his article two weeks ago, Moving Average: Holy Grail or Fairy Tale - Part 1, Ted Wong says that he respects their opinions but is unable to verify their claims. By examining the evidence, he shows that the Moving Average Crossover (MAC) system offers a superior risk-return profile to a buy-and-hold strategy.
2009-06-16 00:00:00 Seth Klarman: Why Most Investment Managers Have It Backwards by Robert Huebscher (Article)
In his keynote speech last week to the Boston Security Analysts Society, Seth Klarman discussed how he repositioned his portfolio last fall to capture opportunities created in the wake of the financial crisis. Klarman is the lead editor of the sixth edition of Graham and Dodd's Securities Analysis, and his fund, The Baupost Group, is among the top performing hedge funds over its 27 year history.
2009-06-16 00:00:00 Moving Average: Holy Grail or Fairy Tale - Part 1 by Theodore Wang (Article)
Buying and holding a diversified portfolio works well during good times, but falls short when supposedly uncorrelated asset classes drop in unison in bear markets. Are there alternative investment strategies that work for all seasons? Ted Wong evaluates strategies using moving averages to determine their effectiveness.
2009-06-02 00:00:00 John Bogle and the Lantern on the Stern by Robert Huebscher (Article)
In his remarks at the Morningstar conference last week, Vanguard founder and index fund pioneer John Bogle criticized many aspects of the mutual fund industry. Bogle, who turned 80 this year, is primed to fight his next battle - reducing investor reliance on past returns - which he likens to a lantern on the stern of a ship.
2009-05-26 00:00:00 What the ?Missing Out? Argument Misses by Theodore Wang (Article)
Market timing is discredited by passive investment advisors as a voodoo ritual. Buy-and-hold proponents argue most compellingly by citing the "missing out" scenario - they show a dramatic drop in return, to Treasury Bill levels, if investors are out of the markets for only a few good days. In this guest contribution, Ted Wong debunks the missing out argument, using 137 years of market data.
2009-05-19 00:00:00 David Swensen's Ascent by Mebane Faber (Article)
Mebane Faber provides an excerpt from his new book, The Ivy Portfolio, on the ascent of David Swensen and the development of the tools employed to manage Yale's endowment. Faber shows the data Swensen used to determine Yale's aggressive allocation to alternative asset classes.
2008-03-20 00:00:00 An Introduction to Alternative Investments by Kabarec of Kabarec