More on Related Themes
2014-12-22 00:00:00 Come and Listen to a Story About a Man Named Jed by Ted Ake of Willingdon Wealth Management
For those that were around in the 1960s, the Beverly Hillbillies were a highlight of lowbrow humor. Lester Flatt and Earl Scruggs played the theme song that I still sing today. The story of a poor mountain family that strikes it rich when oil is found on their land, made millions of us laugh as they moved to a huge mansion in Beverly Hills.
2014-12-22 00:00:00 A Look Back at 2014 (and a 2015 Preview) by Robert Doll of Nuveen Asset Management
At the beginning of this year, we had three broad thoughts about what it would look like. First, we expected U.S. economic growth would accelerate moderately. Second, we believed Federal Reserve tapering would occur slowly and that global monetary policy would remain accommodative. And third, we forecasted that the U.S. equity market would grind higher due to central bank liquidity, modest economic acceleration, solid corporate earnings, contained inflation and an improving fiscal situation. These views formed the basis for the predictions we made in January. And at this point, we can offer a
2014-12-01 00:00:00 The Dow Jones: Beautiful Tree in the Desert by Wim Grommen of Transfer Solutions
The Dow Jones Industrial Average (DJIA) Index is the only stock market index that covers both the second and the third industrial revolution. Calculating share indexes such as the Dow Jones Industrial Average and showing this index in a historical graph is a useful way to show which phase the industrial revolution is in. Changes in the DJIA shares basket, changes in the formula and stock splits during the take-off phase and acceleration phase of industrial revolutions are perfect transition-indicators.
2014-11-11 00:00:00 A First Look at Morningstar's Analyst Ratings by Robert Huebscher (Article)
Overwhelming academic evidence documents the difficulty in distinguishing skill from luck among actively managed mutual funds. Despite this fact, many vendors have attempted to identify those that will beat their benchmarks and deliver excess risk-adjusted returns. Noteworthy among those vendors is Morningstar, which offers forward-looking "analyst ratings." We've evaluated the predictive ability of the first vintage of those ratings, which were published three years ago.
2014-11-10 00:00:00 Three Reasons Why Commodity-Related Debt May Hold Value Under Pressure by Kathleen Gaffney of Eaton Vance
In this timely Insight, Kathleen Gaffney discusses how a flexible multisector bond strategy can be a great way to gain exposure to, and take advantage of, potential value opportunities in hard-hit commodity related debt.
2014-10-29 00:00:00 Greenspan: Price of Gold Will Rise by Axel Merk of Merk Investments
Any doubts about why I own gold as an investment were dispelled last Saturday when I met the maestro himself: former Fed Chair Alan Greenspan. Its not because Greenspan said he thinks the price of gold will rise I dont need his investment advice; its that he shed light on how the Fed works in ways no other former Fed Chair has ever dared to articulate. All investors should pay attention to this. Let me explain.
2014-09-16 00:00:00 Is Profiting in the Stock Market Based on Illusions? by Jerry Wagner of Flexible Plan Investments
When I was a child, I was fascinated with magic and magicians. I read scores of books, learned loads of tricks, and put on magic shows (ten-cent admission) in our basement. My favorite part was the illusions (I once worked a part of a summer vacation mastering a very convincing floating wand).
2014-09-05 00:00:00 A Letter to My Grandson About Entering the Working Life by Francois Sicart of Tocqueville Asset Management
In his latest piece, Francois Sicart, Founder and Chairman of Tocqueville Asset Management, shares a letter he wrote to his 21-year-old grandson, who is entering his final year in college. "I then realized that some of this advice might also come in handy to several of my younger clients those who belong to the third generation of the families whose fortunes I manage on three continents."
2014-09-04 00:00:00 What's Next for the Dollar and Gold? by Axel Merk of Merk Investments
One reason markets tend to get a little nervous in September is that its time for investors to ponder about their asset allocation for the remainder of the year and beyond. With the markets at or near record highs and the US dollar on a roll, what could possibly go wrong? Lets look at whats next for the dollar, gold, and currencies.
2014-08-19 00:00:00 Do Moving Average Strategies Really Work? by Paul Allen (Article)
Moving-average-crossover strategies have worked out very well in recent years. They prevented their followers from being invested in equities during the tech bubble and the financial crisis. Nevertheless, most of those strategies have underperformed the broad equity market since 2009. In this article, I will analyze all possible moving-average-crossover signals for the S&P 500 since 1928, to see if these strategies provide any value for investors.
2014-08-14 00:00:00 Global Policy Divergence - Really?? by Axel Merk of Merk Investments
If you own dollars, the euro or gold, you might want to pay attention to this one.
2014-08-06 00:00:00 What Asset Class Rallied Last Week amid the Sell-Off? by Luciano Siracusano III of WisdomTree
Last Thursdays sell-off in U.S. stocks (the Dow was down 317 points, the S&P 500 Index was down nearly 2%) marked the biggest stock market decline in nearly four months. The S&P 500 Index closed at 1,930 after it broke its 50-day moving average for the first time since April.
2014-08-05 00:00:00 Always Wrong?! by Jeffrey Saut of Raymond James
s the public always wrong? This is probably the most frequently asked question about the Theory of Contrary Opinion. For a correct answer we need to change the words in the question. Let me put it this way: Is the public wrong all the time? The answer is decidedly, No.
2014-08-01 00:00:00 Gold Bullion Dont Jump the Gun by Mark Ungewitter of Charter Trust Company
The job of a trend follower is to identify long-term trends as early as possible and ride them as long as possible. After a 39% decline since September 2011, we suspect that gold has become undervalued versus stocks, bonds and cash. Its long-term trend, however, remains unhealthy or neutral at best.
2014-07-11 00:00:00 Why The Fed Needs You To Sell Your Bonds by Gary Halbert of Halbert Wealth Management
Today I will attempt to explain why longer-term interest rates have fallen significantly this year when almost everyone expected rates to rise. This discussion focuses on the fact that there is a shortage of Treasury securities in the marketplace today, especially in maturities of 10 years or longer. The shortage is due to a combination of factors that I will discuss below
2014-06-19 00:00:00 The Euro Goes Negative by Dickson Buchanan Jr. of Euro Pacific Precious Metals
The European Central Bank's (ECB) decision to charge a negative interest on overnight deposits is not going to lead to a higher targeted inflation rate, despite ECB President Mario Draghi's insistence that it will. Like all cases of central planning, this decision will have unintended and costly consequences - some of which are already starting to play out. In this particular case, instead of stimulating business lending or higher prices, the decision will only stimulate the increased buying of insolvent government debt - leading us all one step closer to the economy's eventual unravelling.
2014-06-06 00:00:00 In T-Ball as in Life by Robert Isbitts of Sungarden Investment Research
I cant help but notice a great number of similarities between peoples approach to their investment portfolios and the way baseball games are played. This is true, even at the T-ball level with four and five year olds, not major leaguers, running around.
2014-05-09 00:00:00 You Gotta Have Heart by Jeffrey Saut of Raymond James
Secretariat (3-30-70 10-4-89) is considered the greatest American racehorse of all time. In 1973 he became the first Triple Crown winner in 25 years, and in the process he set records in all three races that still stand today. In the Kentucky Derby his time was 1:59 2/5, in the Preakness it was 1:53, and in the Belmont Stakes 2:24.
2014-05-08 00:00:00 Gold and Portfolio Efficiency by Ade Odunsi of AdvisorShares
In previous commentaries we have discussed the benefits of using a diversified financing currency approach for investing in gold by which we mean using two or more currencies (rather than just the US dollar) to make gold purchases. The example we have used to demonstrate the approach was to construct a time series of the price of gold purchased with an equal weighted basket of dollars, euro, yen and pound.
2014-04-24 00:00:00 And That's The Week That Was by Ron Brounes of Brounes & Associates
After a week of panic, investors focused on the positives and went bargain hunting throughout. Thus far, earnings are not as bad as expected; Chinas woes could mean new stimulus; labor and manufacturing seem to be in full fledge thaw. Hope the holiday season brings more good news.
2014-04-23 00:00:00 Gold as a Defensive Asset by Ade Odunsi of AdvisorShares
In our previous commentary ?Gold and the US dollar ? a love hate relationship? we used a normalized time series of the price of gold expressed in US dollars and an index representative of the value of the US dollar on currency markets to show the inherent relationship between the price of gold and the financing currency. As the financing currency strengthens on currency markets, one would expect the price of gold expressed in that currency to fall.
2014-04-11 00:00:00 Gold - Managing the Downside by Ade Odunsi of AdvisorShares
We get a lot of questions regarding the impact on portfolio risk of having an allocation to gold. In particular given the status of gold as a safe haven asset, focus has centered on its performance during periods of extreme market stress ? what is the downside to gold during periods of high risk aversion? The high level answer to this question is that the financing currency used to make the gold purchase matters and as is often the case when discussing portfolio construction, ?you ask a simple question, you get a complex answer?.
2014-04-05 00:00:00 The Lions in the Grass, Revisited by John Mauldin of Millennium Wave Advisors
Today we explore a few things we can see and then try to foresee a few things that are not quite so obvious. The simple premise is that it is not the lions we can see lounging in plain view that are the most insidious threat, but rather that in trying to avoid those we may stumble upon lions hidden in the grass.
2014-03-26 00:00:00 Understanding Gold Cost of Carry in Various Currencies by Ade Odunsi of AdvisorShares
Under normal market conditions, the term structure for the price of gold for delivery at increasing maturities (the term structure) exhibits an upward sloping curve. In futures market terminology the term structure is said to be in contango and implies that the price of gold for spot delivery is lower than the price of gold for future delivery.
2014-02-28 00:00:00 Is an Avalanche Waiting to Hit the U.S. Stock Market? (The Slippery Slope of Stupidity) by Dawn Bennett of Bennett Group Financial Services
The U.S. economy as we know it is headed for a huge correction. The only questions remaining are when will it start and what will be the trigger that starts the cascade? Financial and economic implosion is always a slow and stealthy process that grows over time behind the scenes.
2014-02-20 00:00:00 February Flash Update by Clyde Kendzierski of Financial Solutions Group
It's too early to mean much, but so far out 2014 forecast is falling nicely into place. The market highs on Dec 31st have held, bonds are outperforming stocks, gold is outperforming both stocks and bonds, while gold mining shares are soaring! The anticipated volatility in emerging markets and Japan as well as the wild card of the Chinese economy continue to unfold, while bad weather has postponed the evidence of strong 2014 US growth.
2014-02-15 00:00:00 The Economic Singularity by John Mauldin of Millennium Wave Advisors
Today, let’s think about central banks and liquidity traps and see if we agree that central bankers are driving the car from the back seat based upon a fundamentally flawed theory of how the world works. That theory helped produce the wreck that was the Great Recession and will have its fingerprints all over the next one.
2014-02-05 00:00:00 2014 Market Outlook by Kevin Mahn of Hennion & Walsh
Some Bumps along the Road of Global Recovery
2014-02-03 00:00:00 Gold Momentum Study by Mark Ungewitter of Charter Trust Company
The Coppock curve is a price momentum indicator designed by Edwin Coppock in the 1960s to detect major equity bottoms while minimizing the risk of subsequent reversal. I recently applied this indicator to gold bullion, a beaten-up market which has fallen nearly 40% from its peak in August 2011.
2014-02-01 00:00:00 Central Banker Throwdown by John Mauldin of Millennium Wave Advisors
The Federal Reserve is signaling that it is going to end quantitative easing at some point in the future; therefore, investors are trying to find the exits before the end actually comes.
2014-01-31 00:00:00 Buy What You Know? Not So Fast by Russ Koesterich of iSharesBlog
Buy what you know. It’s an old admonition, and on the surface a sensible one. Focusing your investments on those companies that you’re most familiar with should help mitigate the risk of a bad investment choice. Unfortunately, like a lot of conventional wisdom, it’s wrong. Concentrating your portfolio to local investments, while comforting, is a mistake for two reasons.
2014-01-29 00:00:00 Watching the Polar Bear by Jerry Wagner of Flexible Plan Investments
With temperatures hovering around zero and wind chills in the negative teens, I cant think of any better label for Fridays stock market sell off than a "polar bear". Here in Michigan at the Detroit Zoo, one of the nations finest, we have a rather unique polar bear exhibit. Visitors to the zoo can actually walk through tunnels interspersed throughout the polar bear environment created in the exhibit. At one point you are underneath the big furry creatures as they swim about. It is a beautiful sight.
2014-01-28 00:00:00 Commodities In 2014: Supply Remains A Concern by Doug Ramsey of Leuthold Weeden Capital Management
If a reacceleration of EM demand for raw materials were imminent, one would think the MSCI BRIC Index would be the first to sniff it out. Yet that index remains among the poorest performing market composites in the world. Still, commodity demand will eventually right itself. Our worry is supply. Capital spending levels remain elevated, and are far above the levels seen just over a decade ago-on the eve of Chinas great commercial and residential construction boom. Commodity producers didnt anticipate that boom, which is precisely why it was so powerful.
2014-01-21 00:00:00 Digging for Natural Resource Opportunities in 2014 by Frederick Fromm, Stephen Land, Matthew Adams of Franklin Templeton
The natural resources sector has been through a period of transition in the past year, one which has pushed many companies toward cost reduction and greater capital discipline amid an environment of rather sluggish global economic growth. Franklin Equity Group Analysts Fred Fromm, Stephen Land and Matthew Adams think an improving economic outlook could set the stage for potentially stronger commodity demand going forward, and see healthy potential demand growth for energy in particular. They share their outlook for the natural resources sector in 2014, and where they are finding opportunities.
2014-01-17 00:00:00 Digging for Natural Resource Opportunities in 2014 by Frederick Fromm, Stephen Land, Matthew Adams of Franklin Templeton
The natural resources sector has been through a period of transition in the past year, one which has pushed many companies toward cost reduction and greater capital discipline amid an environment of rather sluggish global economic growth. Franklin Equity Group Analysts Fred Fromm, Stephen Land and Matthew Adams think an improving economic outlook could set the stage for potentially stronger commodity demand going forward, and see healthy potential demand growth for energy in particular. They share their outlook for the natural resources sector in 2014, and where they are finding opportunities.
2014-01-17 00:00:00 Continuing a Winning Formula for 2014 by Frank Holmes of U.S. Global Investors
In any competition, sports or investment management, there are lessons to learn to improve and better results.
2014-01-15 00:00:00 Investment Insights from a Road Warrior by Frank Holmes of U.S. Global Investors
As part of our investment process, we often take the explicit knowledge learned from our statistical models and overlay them with global travel.
2014-01-09 00:00:00 The Year Ahead - 2014 by Mark Ungewitter of Charter Trust Company
In the spirit of year-end prognostication, heres my annual review of secular trends and historic behaviors that are likely to influence key markets in 2014.
2013-12-18 00:00:00 Beware the Haunting of Stock Market Corrections Past! by Dawn Bennett of Bennett Group Financial Services
I do think the ghosts of stock market corrections past are haunting us. Those who forget the lessons that history teaches us are predestined to repeat them. As an apprentice of U.S. stock market history, Ive seen this maxim made true, time and time again. I believe I have seen the ghosts of the 1929, 1987, 2000 and 2008 U.S. Stock market crashes because they have materialized in 2013 and are appearing in front of everyone.
2013-12-17 00:00:00 Five Strategies for a Rising-Rate Environment Revisited by Kane Cotton, CFA and Jonathan Scheid, CFA (Article)
In June 2010, we recommended five strategies for a rising-rate environment, acknowledging that we had no idea when or how abruptly rates would rise. Indeed, rates fell since we wrote that article. But they are on the rise again. After reviewing how our original five strategies performed, we’ll now present our revised recommendations for investing as rates increase.
2013-12-07 00:00:00 Interview with Steve Forbes by John Mauldin of Millennium Wave Advisors
For whatever reason, Steve Forbes seems to bring out the passion in me. When I think about what central bank policies are doing to savers and investors, how we are screwing around with the pension system, circumventing rational market expectations because of an untested economic theory held by a relatively small number of academics, I get a little exercised. And Steve gives me the freedom to do it.
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.
2013-11-17 00:00:00 The Unintended Consequences of ZIRP by John Mauldin of Millennium Wave Advisors
Two recently released papers make an intellectual and theoretical case for an extended period of very low interest rates and, in combination with other papers from both inside and outside the Fed from heavyweight economists, make a strong case for beginning to taper sooner rather than later, but for accompanying that tapering with a commitment to an even more protracted period of ZIRP. We are going analyze these papers, as they are critical to understanding the future direction of Federal Reserve policy. Secondly, we’ll look at some of the unintended consequences of long-term ZIRP.
2013-11-14 00:00:00 In 20 Years, What Country Will Produce the Most Gold? by Frank Holmes of U.S. Global Investors
A question like that is impossible to answer, of course, due to mining difficulties, diminishing resources, and changing government policies and regulations that help or hinder a countrys ability to mine, farm or drill efficiently.
2013-11-05 00:00:00 Letters to the Editor by Various (Article)
Several readers respond to Bob Veres’ article, Why Deficits Don’t Matter, which was published last week. A reader responds to Adam Apt’s article, Is Gold Overpriced?, which was published Oct. 15, and a reader responds to the commentary, Scrooge McDucks, by Bill Gross of PIMCO, which appeared Oct. 31.
2013-11-05 00:00:00 Even Economists Get Stuck Looking in the Rearview Mirror by Bill Smead of Smead Capital Management
Will the US economy grow in an above-average way in the next ten to twenty years or do we need to resign ourselves to an era of anemic economic growth? Two pieces of information came out this week, adding to existing information on the subject and speak to this core debate in the US stock market. The first piece was called Slowing to a Crawl by Jonathan Laing from Barrons.
2013-10-31 00:00:00 What's Your Plan for Getting Punched in the Mouth? by Miguel Perez-Santalla of BullionVault
Planning to win is where you should start. But what if your opponent hits back...?
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.
2013-10-29 00:00:00 Defining the EM Corporate Bond Opportunity by Sponsored Content from Loomis Sayles (Article)
Finance is a numbers business. Investors study prices, yields, rates of return. However, when it comes to sizing up emerging markets, we think they should also pay attention to semantics. In the past, terming a country “emerging” made it synonymous with low credit quality and higher risk. But today, many emerging markets boast strong credit profiles while parts of the developed world buckle under heavy debt loads.
2013-10-29 00:00:00 Is This the New Normal'? by Sam Wardwell of Pioneer Investments
Markets Settle into a New Normal All sorts of economic data were released last week, but volatility has dropped: rightly or wrongly, market forecasts about the pace of quantitative easing (QE) and earnings growth in the U.S. appear to have coalesced around an outlook for slow growth with ongoing QE.
2013-10-26 00:00:00 A Code Red World by John Mauldin of Millennium Wave Advisors
The heart of this week’s letter is the introduction of my just-released new book, Code Red. It is my own take (along with co-author Jonathan Tepper) on the problems that have grown out of an unrelenting assault on monetary norms by central banks around the world.
2013-10-23 00:00:00 Investment Bulletin: Global Equity Strategy by Team of Bedlam Asset Management
The portfolio enjoyed another index-beating month with a gain of 0.9% versus 0.6%, so improving further the long term numbers. As noted in previous Bulletins, correlations between growth and equity market returns are low. Investors remain fixated otherwise, but some confusion is reasonable given that growth in earnings per share is also slowing. Yet strong equity markets can be justified by the Free Lunch Theory.
2013-10-22 00:00:00 Venerated Voices? by Various (Article)
Advisor Perspectives, a leading publisher serving financial advisors and the financial advisory community, has announced its Venerated Voices? awards for articles published in Q3 2013.
2013-10-22 00:00:00 Washington Strikes a No-Surprise Deal - Now What? by Sam Wardwell of Pioneer Investments
Congress called a time-out in the budget/debt fight last week, striking a deal to avoid default and fund the U.S. government through January 15, 2014 and raise the debt limit through February 7, 2014. While the parties agreed to budget talks, they did not commit to reaching an agreement (technically, Paul Ryan and Patty Murray, the House and Senate budget committee chairs will begin a process of fiscal negotiations, due to wrap up by mid-December).
2013-10-20 00:00:00 The Damage to the US Brand by John Mauldin of Millennium Wave Advisors
There is no doubt that the image what I will refer to in this letter as the "brand" of the United States has been damaged in the past month. But what are the actual costs? And what does it matter to the average citizen? Can the US recover its tarnished image and go on about business as usual? Is the recent dysfunction in Washington DC now behind us, or is it destined to become part of a bleaker landscape?
2013-10-16 00:00:00 Economic Assessment Without Government Reports by Team of Northern Trust
The very near-term economic outlook is unclear and will remain so until the political impasse in Washington over the government shutdown and debt ceiling is settled. If differences are resolved in a day or two, the damage could be about 0.2 percentage points to fourth quarter real gross domestic product (GDP). A failure to raise the debt ceiling would more of a calamity, which we hope not to encounter.
2013-10-15 00:00:00 Is Gold Overpriced? by Adam Jared Apt (Article)
New research, based on an econometric model of gold prices, has attempted to answer the question, “Is gold overpriced?”
2013-10-14 00:00:00 Can Markets Remain Resilient in Light of Political Dysfunction? by Bob Doll of Nuveen Asset Management
Equities were mixed again last week, and the markets remain focused on the budget impasse in Washington, D.C., after the second week of the partial government shutdown. The S&P 500 closed the week in positive territory, increasing 0.8%.1 It is hard to ignore headlines and market volatility, but the real issues for markets are the debt ceiling debate and third quarter corporate earnings announcements.
2013-10-08 00:00:00 New Fed Alarm Over Shadow Banking by Miguel Perez-Santalla of BullionVault
It comes to something when every story you read in the papers makes you ask: Whats the agenda? says Miguel Perez-Santalla at BullionVault.
2013-09-25 00:00:00 Surprise! No Tapering and More Budget Progress than Meets the Eye by Sam Wardwell of Pioneer Investments
On Monday, Larry Summers exited the pool of candidates for the next Federal Reserve (Fed) chairman. (Only the timing was really a surprise.) On Wednesday, the Fed didnt taper and de-emphasized several of the targets theyd set earlier. (Big surprise versus consensus - not central bank best practices). Municipal bond offerings by Puerto Rico, California, and Illinois were met with strong investor demand.
2013-09-24 00:00:00 William Bernstein ? “Stocks for the Long Run” by Michael Edesess (Article)
William Bernstein’s reading of history is that if you want to build a nest egg and protect against the “four horsemen” that threaten it over the long term, the best thing to do is invest in a globally diversified stock portfolio.
2013-09-24 00:00:00 Four Ways to Attract Affluent Clients by Dan Richards (Article)
Attracting HNW clients is all about credibility ? as a result, it’s typically lower key, takes longer and requires an upfront investment of time and effort to position yourself to interact with HNW prospects.
2013-09-23 00:00:00 Loose and Looser by Brian Wesbury, Bob Stein of First Trust Advisors
Larry Summers took his name out of the hat and wont be considered for the top spot at the Federal Reserve. And while nothing is a slam dunk, it looks very much like current Vice Chair Janet Yellen is going to get the call from President Obama to step up and replace Bernanke.
2013-09-21 00:00:00 Rich City, Poor City by John Mauldin of Millennium Wave Advisors
This week we will conclude our look at pension plans for the nonce with a 30,000-foot overview of the states and then take a deeper dive into one city: mine. This will give you at least one version of how to do your own homework about your own hometown. But fair warning, depending on your locale, you may need medical help or significant quantities of an adult beverage after you finish your research.
2013-09-18 00:00:00 Dow Changes as a Contrary Indicator by Bill Smead of Smead Capital Management
The folks who select the companies in the Dow Jones Industrial Average (DJIA) came out with their latest changes on Monday, September 9, 2013. They removed Bank of America (BAC), Hewlett Packard (HPQ) and Alcoa (AA) from the DJIA. Added to the index were Visa (V), Nike (NKE) and Goldman Sachs (GS). At Smead Capital Management, we are always looking for important psychological clues to human behavior as it pertains to the popularity of common stocks.
2013-09-03 00:00:00 The Hidden Risk in Gold by Robert Huebscher (Article)
Since their introduction a little over a decade ago, gold-backed exchange-traded funds (ETFs) have accumulated more than $500 billion in assets. Investors’ most common rationale for owning gold is that it acts as a hedge against financial instability or a sudden shock to the markets, such as the 9/11 attacks. But what if the flow of assets into gold ETFs plays a greater role in the price of gold than do investors’ fears of instability? Is gold the hedge investors believe it to be?
2013-08-31 00:00:00 How Do I Hate Thee? by John Mauldin of Millennium Wave Advisors
I will list a number of reasons why I hate this market and then suggest a few reasons why that should get you excited. We will look at some charts, and I’ll briefly comment on them. No deep dives this week, just a survey of the general landscape.
2013-08-29 00:00:00 Don't Buy Gold Below the 300-Day Moving Average by Mark Ungewitter of Charter Trust Company
Though gold bullion appears to have made a cyclical bottom, its long-term trend remains highly damaged. From a behavioral perspective, the price of gold must surpass its 300-day moving average (currently near $1560) to prove that a secular bull market remains intact. Long-term investors should recognize that the breakdown of April 2013 raised serious questions that have yet to be resolved.
2013-08-28 00:00:00 A Couple of Thoughts on Decoupling by Adam Peck of Heartland Advisors
As equity markets have pushed toward new highs this year, one of the worries lingering in the background has been the potential impact of Chinas economic slowdown on the U.S. weakening demand from that country, the thinking has gone, could hurt the broad range of companies that export goods to China.
2013-08-28 00:00:00 A New Leg In The Commodity Decline? by Doug Ramsey of Leuthold Weeden Capital Management
For more than two years weve discussed the supply-side risks to commodity producers stemming from capacity built during the manic Third Act of last decades Three Act Play in commodities. Commodity-oriented equities have indeed underperformed since 2011 (chart 1), but to date, most pundits have laid blame squarely on the demand side (i.e., the sharp deceleration in Chinese economic growth). We dont have a strong opinion on the short-term direction of the Chinese economy, but the capacity overhang looks like a multi-year story to us, independent of China
2013-08-27 00:00:00 The Price Clients Pay for Worst-Case Forecasts by Bob Veres (Article)
Clients and the world at large give inordinate attention to downside scenarios, and nobody is calling our attention to the much larger upside of our business and investment landscape. The human brain amplifies this effect, because it is hardwired to notice threats much more than opportunities. I recently spoke with Dennis Stearns ? an advisor who happens to be an expert in scenario planning ? about the role planners need to play to counteract media-driven negativity.
2013-08-07 00:00:00 What's in the Vault? by Peter Schiff of Euro Pacific Capital
Given that the demand for physical gold among private investors has remained strong throughout 2013, the significant price declines in recent months took many investors by surprise.
2013-08-02 00:00:00 3 Reasons Silver Is Not the Same As Gold by Russ Koesterich of iShares Blog
Many investors who remain cautious on gold wonder whether they should get their precious metal exposure through silver instead. In response, Russ explains why the two metals arent interchangeable.
2013-07-29 00:00:00 Japan: Firing the Third Arrow by Guy Bruten of AllianceBernstein
Japanese Prime Minister Shinzo Abes ability to implement his agenda is politically unfettered. But can he deliver, and will his policies work? We remain cautiously optimistic.
2013-07-19 00:00:00 Is Inflation Really Gone Forever? by Jon Ruff of AllianceBernstein
Recent movements in asset prices suggest that markets have forsaken any possibility of an inflation outbreak in the next decade. We believe that view is far too sanguine.
2013-07-17 00:00:00 Bubbles Forever by Robert Shiller of Project Syndicate
In 2006, the largest global real-estate bubble in history imploded, and the collapse of a major worldwide stock-market bubble a year later triggered the global financial crisis. Although one might think that we have been living in a "post-bubble" world since then, talk of new bubbles keeps reappearing.
2013-07-16 00:00:00 Venerated Voices? Awards for the Second Quarter of 2013 by Advisor Perspectives (Article)
We announce our Venerated Voices awards for commentaries published in Q2 2013. Rankings were issued in three categories: The Top 25 Venerated Voices by Firm, The Top 25 Venerated Voices by Author and The Top 10 Venerated Voices by Commentary.
2013-07-16 00:00:00 AdvisorShares Weekly Market Review by AdvisorShares Research of AdvisorShares
The market increased again last week and both the S&P 500 and the Dow Jones Industrial Average reached record highs by the end of the week. The Nasdaq Composite Index also rose significantly, hitting a 12 year high.
2013-07-15 00:00:00 And That's the Week That Was by Ron Brounes of Brounes & Associates
After weeks of naysaying and fear-mongering about the Fed, investors finally embraced news from Bernanke and friends and equities moved back into record-setting territory. While most accept the fact that the Fed has entered the beginning-of-the-end of its bond-buying stimuli, the minutes from the latest policy meeting and a few comforting comments from Dr. B. himself helped calm the masses that the program would not end yesterday.
2013-07-12 00:00:00 Weekly Market Review-Highlights of the Prior week by AdvisorShares Research of AdvisorShares
Stocks moved higher but volume was notably low over the holiday shortened trading week. This week for a change, positive economic data, not speculation about the Federal Reserves tapering of Quantitative Easing drove the market in the US.
2013-07-09 00:00:00 U.S. Stocks Continue to Dominate ? What’s Next? by Ron Surz (Article)
U.S. stocks earned 2.5% in the second quarter, bringing the year-to-date return up to a lofty 14%. By contrast, the EAFE index lost 1% in the quarter, bringing its year-to-date return down to 4%. In fact, as shown in the following graph, no other asset class comes even close to the return on U.S. stocks so far this year.
2013-07-09 00:00:00 The Germans Deserve Credit for Extending Credit by Sam Wardwell of Pioneer Investments
Germanys government agreed to (indirectly, via guarantees) provide Spains government-run ICO development banks with the funding to make up to 800 million of low-interest loans to small and medium-sized businesses.
2013-07-03 00:00:00 AdvisorShares Weekly Market Review by AdvisorShares Research of AdvisorShares
Markets went higher last week after central bankers around the world reassured investors that they would not kill the economic recovery with higher interest rates. More volatile small and mid-cap stock indices performed even better than the S&P 500.
2013-07-02 00:00:00 Gundlach’s One-Word Explanation for June’s Decline by Robert Huebscher (Article)
According to Doubleline’s Jeffrey Gundlach, a single word explains the declines global capital markets experienced in June.
2013-07-01 00:00:00 "This Country is Different" by John Mauldin of Millennium Wave Advisors
Cyprus is a very small country, some 800,000 people. Among the leadership, everyone knows everyone. There is much to admire, as we will see. But Cyprus has had a gut-wrenching crisis, proportionately more dire than any in other European countries recently; and precedents are being established here for how future problems will be dealt with in the Eurozone and elsewhere.
2013-06-27 00:00:00 AdvisorShares Weekly Market Review by Team of AdvisorShares
Once again, US stock indexes declined last week based on investors fears of rising interest rates. While markets were rising at the beginning of the week, on Wednesday, Federal Open Market Committee Chairman Ben Bernanke said that if the economy continued on its current growth path, the Fed would scale back on asset purchases by the end of the year and attempt to end the extraordinary measures by the middle of 2014.
2013-06-25 00:00:00 The Great Debate on Inequality: Stiglitz versus Krugman by Michael Edesess (Article)
Economics Nobel laureate Joseph Stiglitz is the chief alarmist warning that income and wealth inequality in the U.S. is a very serious threat to the economy. So it comes as a surprise that his fellow Nobelist Paul Krugman ? Stiglitz’s intellectual comrade-in-arms ? disagrees with him. Their disagreement goes to the heart of today’s economic problem.
2013-06-25 00:00:00 The Price Your Clients Pay for Using Safe Withdrawal Rates by David B. Loeper (Article)
Safe-withdrawal rates (SWRs) are perhaps the most extensively studied topic in financial planning literature. But applying a single SWR-driven methodology to all clients neglects their unique and individual needs. A better approach is for advisors to assist clients in defining their ideal and acceptable goals and the relative priorities among them. Then they can demonstrate through Monte Carlo simulation the likelihood of the recommended plan becoming over- or under-funded relative to those goals.
2013-06-25 00:00:00 Back to Normal by Brian Wesbury, Bob Stein of First Trust Advisors
Market behavior especially since Fed Chair Ben Bernanke mentioned QE tapering has been relatively dramatic. Not unprecedented, but dramatic. By contrast, the reaction of the punditry has been way over the top.
2013-06-17 00:00:00 Keynesian Model Blew It Again by Brian Wesbury, Bob Stein of First Trust Advisors
If theres one economic conclusion we can make from recent data, its that the Keynesian model has failed - again.
2013-06-04 00:00:00 Your Value Proposition: A Precursor to the Elevator Pitch by Teresa Riccobuono (Article)
Every business should stand on four legs: values, a mission statement, a vision statement and a value proposition. This fourth item, a value proposition, must provide concrete data about your organization, why it exists and who you serve.
2013-06-01 00:00:00 After the Gold Rush by Nouriel Roubini of Project Syndicate
The run-up in gold prices in recent years from $800 per ounce in early 2009 to above $1,900 in the fall of 2011 had all the features of a bubble. And now, like all asset-price surges that are divorced from the fundamentals of supply and demand, the gold bubble is deflating.
2013-06-01 00:00:00 Central Bankers Gone Wild by John Mauldin of Millennium Wave Advisors
For the last two weeks we have focused on the problems facing Japan, and such is the importance of Japan to the world economy that this week we will once again turn to the Land of the Rising Sun. I will try to summarize the situation facing the Japanese. This is critical to understand, because they are determined to share their problems with the world, and we will have no choice but to deal with them. Japan is going to affect your economy and your investments, no matter where you live; Japan is that important.
2013-05-25 00:00:00 The Mother of All Painted-In Corners by John Mauldin of Millennium Wave Advisors
Japan has painted itself into the mother all corners. There will be no clean or easy exit. There is going to be massive economic pain as they the Japanese try and find a way out of their problems, and sadly, the pain will not be confined to Japan. This will be the true test of the theories of neo-Keynesianism writ large. Japan is going to print and monetize and spend more than almost any observer can currently imagine. You like what Paul Krugman prescribes? You think he makes sense? You (we all!) are going to be participants in a real-world experiment on how that works out.
2013-05-24 00:00:00 4 Ideas for Today's Low Inflation Environment by Russ Koesterich of iShares Blog
Theres certainly no shortage of things to worry about right now related to the US economy. But one thing were not too worried about right now: Inflation. Not only is inflation low, but the latest numbers show its actually falling. And as I write in my commentary this week, inflation is unlikely to become a problem in the United States for at least another 12 to 18 months. Why? There are a number of headwinds keeping US prices low in the near term.
2013-05-23 00:00:00 Chart of the Week: S&P 500 versus Expected CPI by Mark Ungewitter of Charter Trust Company
In the post-crash environment, US equities have shown a remarkable 70% correlation with TIPS breakeven spreads. This compares with a 0% correlation in the four years preceding March 2009.
2013-05-22 00:00:00 Is Japan's Economic Rebound For Real? by Daisuke Nomoto of Columbia Management
The two phrases Abenomics and the BOJs Shock and Awe Monetary Easing are all over the headlines about Japan. Prime Minister Abe unveiled his economic policy late last year calling for a 3% annual nominal gross domestic product (GDP) growth target and an aggressive monetary easing by the BOJ (The Bank of Japan) to achieve 2% inflation. The BOJ unleashed the worlds most intense burst of monetary stimulus last month promising to double the monetary base to 270 trillion yen ($2.7 trillion) by the end of 2014 to defeat deflation.
2013-05-21 00:00:00 A CFA and Three CPAs Walked into a Room... by Mariko Gordon (Article)
It’s easy (and often enjoyable) to engage in abstract discussions on any number of topics. When it comes to making investment decisions, however, it’s critical that you and your team first have a shared level of understanding regarding the situation and facts. Let’s look at the benefits of describing a process, issue or opportunity concretely, before moving on to a broader discussion.
2013-05-14 00:00:00 David Rosenberg ? My Love Affair with Bonds is Over by Robert Huebscher (Article)
The chorus of rate-spike-fearing inflationists has a new member. David Rosenberg, a stalwart advocate of fixed-income investing for the last quarter century, publicly declared on May 3 that his “love affair with the bond market has come to an end.” Prepare for a redux of 1970s stagflation, he said, and he advised investors how to construct portfolios to prepare for that scenario.
2013-05-14 00:00:00 Nassim Taleb on the Anti-Fragile Portfolio and the Benefits of Taking Risks by Ben Huebscher (Article)
As we recover from the most recent financial crisis, how we can we learn from the mistakes to best prepare for the future? Nassim Taleb tackled this very question in his latest book, Antifragile: Things That Gain From Disorder, which built off his previous works and applies the lessons learned to today’s biggest challenges. Taleb examined how small doses of volatility can help systems handle larger disruptors in the future.
2013-05-14 00:00:00 Inflation Update by Team of North Peak Asset Management
Basing investment decisions on inaccurate measurements of the inflation rate can result in investors unknowingly positioning their portfolios to lose purchasing power over time. This mis-measurement could be especially dangerous when yields are low. For example, evaluating a nominal 3% investment opportunity using an inaccurate 2% inflation rate indicates a marginally attractive 1% real return opportunity. However, if inflation is actually running at 5%, this becomes a deeply unattractive negative 2% real return investment.
2013-04-30 00:00:00 Beyond Gold: 4 Reasons to Think Energy by Russ Koesterich of iShares Blog
While the sell-off in gold has dominated headlines lately, another commodity oil has also experienced price declines in recent months. But despite crudes drop, Russ is still a fan of energy stocks for four reasons.
2013-04-22 00:00:00 Gold Market Free Fall: Time to Jump Ship? by Walter Stabell III of Invesco
The gradual fall of the gold market intensified this week as investors reacted to signals that the US Federal Reserve would wind down its stimulus bond-buying programs as well as reports that the Cyprus government could sell its gold reserves to fund the countrys debts.
2013-04-22 00:00:00 Commodity Declines and Weak Data Startle Investors by Bob Doll of Nuveen Asset Management
U.S. equities declined last week as the S&P 500 fell by more than 2.0%, which came on the heels of a new all-time high the prior week. Led by gold, commodities experienced volatility and declined over the past two weeks. Other detractors included disappointing first quarter Chinese economic numbers and somewhat softer U.S. releases.
2013-04-18 00:00:00 Inflation and Interest Rates by Scott Brown of Raymond James
The Federal Reserve began its first asset purchase program in the fall of 2008, during the depth of the financial panic. Some observers feared that the Feds actions would fuel higher inflation. However, the Fed is now well along in its third asset purchase program and inflation (as measured by the PCE Price Index) has remained low. In fact, Fed officials expect that inflation will trend at or below the 2% target for the next couple of years. That hasnt stopped the inflation worrywarts from predicting that inflation is still just around the corner.
2013-04-16 00:00:00 All That Glitters by Jerry Wagner of Flexible Plan Investments
Gold prices officially fell into bear market territory on Friday. With a 4% decline that day, the current drop in the price of gold from its August 22, 2011 top crossed the negative 20% mark. Today as I write this, the precious metal is down another 10% plus.
2013-04-15 00:00:00 Is Gold Signaling a Secular Bull Market in Common Stocks? by Mark Ungewitter of Charter Trust Company
Gold is an asset that some people love to hate. Intelligent investors, however, should keep an open mind toward the shiny metal and the message it conveys.
2013-04-08 00:00:00 Cypriot Chaos Assists EU Centralization by John Browne of Euro Pacific Capital
Remarks by members of the European Unions elite suggesting that banking deposit seizures may become standard practice appear to have heightened the risk of a European bank run and perhaps even a catastrophic collapse of the euro. Any threat to the euro is a threat to the European publics conception of the Unions manifest destiny. As such, I believe members of the EU elite may be purposefully leveraging the crisis to push for a centralized European banking system to cement the political framework of an EU superstate.
2013-04-02 00:00:00 Bernanke’s Motives Behind Quantitative Easing by Paul Franchi (Article)
We are at a turning point: away from one global monetary standard, to a yet-to-be-determined new form.
2013-03-26 00:00:00 How to Invest Like Buffett by Robert Huebscher (Article)
Listen to Jim Cramer or his cohorts on CNBC and you’ll hear statements like, “Don’t settle for the mediocre returns of a market index!” and “It’s not that hard for investors to pick stocks that will beat the market!” Unless you possess the skills of Warren Buffett, that’s not true. But in the book Think, Act and Invest Like Warren Buffett, Larry Swedroe says you indeed can invest like Buffett ? just not by stock-picking.
2013-03-18 00:00:00 And That’s the Week That Was by Ron Brounes of Brounes & Associates
Move over Dow Jones, here comes the S&P. What few thought possible a year ago is coming to fruition as the major indexes continue to push toward record territory. The S&P 500 is close (but no cigar) to besting its personal high set in late 2007, before this whole banking mess emerged and sent equities into a tailspin. Confident investors seemed to be overlooking the numerous concerns (budget/sequester, payroll taxes, Europe, China) so they can participate in the record run.
2013-03-13 00:00:00 Dow--Then and Now by Frank Holmes of U.S. Global Investors
The Dow Jones Industrial Average is making record highs, knocking the 2007 peak off its pedestal, but investors arent celebrating.
2013-03-12 00:00:00 America?s Criminal Crony Capitalism by Michael Edesess (Article)
Charles Ferguson believes that every prosecutorial tool at our disposal should be used to indict, fine severely, and imprison those whose transgressions contributed to the recent financial crisis ? not just their companies, but the executives as individuals.
2013-03-07 00:00:00 After the Dow Record Close: What Comes Next? by Russ Koesterich of iShares Blog
After Tuesday's record setting Dow Industrials close, are US stocks still cheap? Can the market move higher? Russ answers these questions and more.
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.
2013-02-19 00:00:00 Alan Greenspan on the Market and the Global Economy by Adam Jared Apt (Article)
During his six-decade-long career in financial services, Alan Greenspan was a central figure in seminal events that drove investment markets, from the savings-and-loan crisis to the dot-com bubble to the housing crisis. Now, nearing 87, he rarely speaks in public. But he did so last week, offering his forecasts for the U.S. and European economies.
2013-02-19 00:00:00 On Competitive Devaluations by Scott Brown of Raymond James
Aggressive monetary policy moves in recent years have been accompanied by a growing fear of a currency war. In a currency war, or competitive devaluation, countries attempt to weaken their currencies to boost exports, but each devaluation leads to counter devaluations. That's not what's going on now. However, whether a country is purposely devaluing its currency or is merely pursuing accommodative monetary policy is irrelevant, the consequences are the same. The recent meeting of G-20 finance ministers and central bankers highlights the lack of coherent policies to boost growth.
2013-02-12 00:00:00 Don't Just Do Something, Sit There. by Jeffrey Saut of Raymond James
"Don't Just Do Something, Sit There" is the title of a book written by Sylvia Boorstein. I was reminded of the title when I received the following email from a financial advisor at another firm last week...
2013-02-11 00:00:00 When to Worry About Inflation by Russ Koesterich of iShares Blog
Though the Fed continues to flood the US economy with money, Russ explains why inflation isn't likely to be a problem until 2014 and what investors can do in the meantime to prepare.
2013-02-08 00:00:00 World War C: Neosho Capital On The Currency War by Chris Richey of Neosho Capital
This summer, Brad Pitt will star in a new film called "World War Z", an action-horror film about a post-zombie apocalypse Earth, hence the "Z" in the title. Zombie films are not our cup of tea at Neosho (we thought the genre was dead), so it is debatable whether we will see this film, but one thing is clear to us, we are perched on the precipice of "World War C", where "C" stands for "currency".
2013-02-06 00:00:00 What Happens When the Fed Loses Money by Zach Pandl of Columbia Management
The Federal Reserve's exit from ultra-easy monetary policy still looks very far offby most accounts, rate hikes will not begin for more than two years and asset sales for even longer. However, the exit strategy could matter for markets well before that point. Fed officials have said that they will consider the costs and risks associated with quantitative easing (QE) when deciding how long to continue their purchases, and one factor they will be looking at will be whether the program could "complicate the Committee's efforts to eventually withdraw monetary policy accommodation."
2013-01-22 00:00:00 Dylan Grice: Witch Hunts, Inflation Fears, and Why I?m Bearish in 2013 by Michael Skocpol (Article)
For someone who started his remarks proposing to 'kill all the economists,' Dylan Grice can wax surprisingly sentimental, with a fresh, human take on monetary policy that leads him to some worrisome conclusions. Making a case for gold, cash, and other safe havens, Grice said the biggest threat to investors today is a problem that has plagued societies throughout history ? mistrust.
2013-01-16 00:00:00 Obama Claims We Don't Have A Spending Problem by Gary Halbert of Halbert Wealth Management
There's a lot to talk about this week. A lot of my contemporaries are offering their predictions for the New Year. But with our nation now over $16 trillion in debt and annual budget deficits over $1 trillion, I don't think there is any way to accurately predict what will happen this year. Another financial crisis could rear its ugly head just about any time.
2013-01-16 00:00:00 The Trillion Dollar Trick by Peter Schiff of Euro Pacific Capital
The birth, and the apparent death, of the trillion dollar platinum coin idea may one day be recalled as a mere footnote in the current debt crisis drama. The ultimate rejection of the idea (which was to use a loophole in commemorative coinage law to mint a platinum coin of any denomination) by both the President and the Federal Reserve seems to offer some relief that our economic policy is not being run by out-of-touch academics and irresponsible congressmen. In reality, our government has been creating more than one trillion dollars out of thin air every year for the past five.
2013-01-15 00:00:00 Gundlach?s Predictions for 2013 by Robert Huebscher (Article)
Don't expect the low volatility that characterized the capital markets in 2012 to continue. Global economic uncertainty remains, and markets are poised like a 'coiled snake' to reward or penalize investors in certain asset classes, according to Jeffrey Gundlach.
2013-01-03 00:00:00 More Skin in the Game In 2013 by Nassim Nicholas Taleb of Project Syndicate
In an opaque system, operators have an incentive to hide risk, taking upside without downside. And there is no possible risk management method that can replace having skin in the game particularly when informational opacity is compounded by informational asymmetry.
2012-12-26 00:00:00 Gundlach's High-Conviction Investment Idea by Robert Huebscher (Article)
Count Jeffrey Gundlach among those who expect Japan's currency to collapse because it can't service its debt. Japan's challenges may parallel those that the US faces, and Gundlach feels strongly that they have created a compelling investment opportunity.
2012-12-26 00:00:00 Lessons from the Downfall of Lance Armstrong by Charlotte Beyer (Article)
The private wealth industry - where teams of elite advisors are trusted to safeguard the wealth of individuals and families and hold themselves to a fiduciary standard - can take several lessons from what happened at the Tour de France.
2012-12-18 00:00:00 Jeremy Siegel on 'Dow 15,000' by Robert Huebscher (Article)
Jeremy Siegel was one of very few individuals to have correctly predicted the strong performance of the equity markets over the last year. The Wharton professor and author of the renowned book, Stocks for the Long Run, forecasts continued strong performance for the year ahead.
2012-12-18 00:00:00 Three Takeaways from the Fed by David Rosenberg (Article)
The equity market likes the prospect of more money printing and the Fed's more forceful efforts to reflate the economy, and stocks are a far better inflation hedge than bonds.
2012-12-11 00:00:00 Luck versus Skill in Investing: New Insights from the World of Sports and Beyond by Michael Skocpol (Article)
Skill exists in investing. Indeed, the most skilled managers today are likely the most skilled there have ever been. But there's more to it.
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.
2012-11-20 00:00:00 President Obama?s Re-Election and the Impact on the U.S. Economy by Eaton Vance Distributors, Inc. (Article)
President Obama?s re-election resolves a major element of uncertainty that has hung over the political landscape. But what kind of impact will his victory have on the economy and the markets, especially with the House still in Republican control? We posed that question to a roundtable of five investment professionals from Eaton Vance Management, Hexavest and Richard Bernstein Advisors.
2012-11-20 00:00:00 The Fallacies in Today?s Retirement Plan Assumptions: Putting the Hedonic Pleasure Index to Work by Bob Veres (Article)
Are you dramatically underestimating your clients' retirement lifestyle expenditures when you use Monte Carlo software? If you stop and look at a number of important assumptions hidden in the current models, you'll suddenly have a lot less confidence in the retirement plans you?re mapping out for your clients.
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.
2012-11-06 00:00:00 Six Technology Integration Disasters to Avoid by Jennifer Goldman (Article)
Technology integration is the Holy Grail for today's top-performing financial advisors. When applications talk to each other, advisors can run their practices more efficiently, save money and reduce the size of their staff. That all sounds great, but I'm writing to offer a word of caution: I've seen many such efforts end in disaster.
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.
2012-10-23 00:00:00 Chip Roame on the Next Big Problem by Robert Huebscher (Article)
The financial crisis decimated consumer wealth, and scandals such as J.P. Morgan's 'whale' and MF Global's collapse have plagued the investment industry. But the next challenge advisors and money managers face may be even worse.
2012-10-02 00:00:00 Woody Brock on Why to Own Stocks Now by Robert Huebscher (Article)
Dr. Horace 'Woody' Brock is the founder Strategic Economic Decisions and the author of American Gridlock. In a recent talk, he explained why investors should own stocks - particularly those with stable dividends - and why bonds are very risky in today's environment. This is the transcript; a video of this talk is also available.
2012-10-02 00:00:00 A Daily Reading Plan That Attracts New Clients by Dan Richards (Article)
Digesting news and sharing it with clients is part of every advisor's daily routine. Doing that efficiently, however, in such a way as to better position yourself with your clients, requires a structured approach that is far from obvious.
2012-10-02 00:00:00 When Centers-of-Influence Don?t Refer Clients by Beverly Flaxington (Article)
Everyone tells me I can sell more through relationships with attorneys and accountants. I have some that I know well. I refer to them, but they don't reciprocate. What am I doing wrong?
2012-09-25 00:00:00 Bill Gross: Hedging Your Bet on Deflation versus Inflation by Ben Huebscher (Article)
Will deflation or inflation prevail? The answer to that one question determines portfolio construction, according to Bill Gross, founder, managing director, and co-CIO of PIMCO.
2012-08-21 00:00:00 The Profession's Faulty Assumptions: A Top Ten List by Bob Veres (Article)
In the financial planning profession, we make a lot of assumptions about the world in order to run spreadsheet models, retirement projections and sufficiency analyses, and generally determine how much a client should save and invest for the future. But many of the industry-standard inputs into our models are (how can I say this delicately?) garbage. Here are my top ten garbage inputs, with an explanation of how we might possibly improve on them.
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.
2012-07-31 00:00:00 The False Promise of Gold as an Inflation Hedge by Michael Edesess (Article)
If you were a time traveler, hopping from one point in history 2,000 years forward or back, you'd best carry with you - if your time machine will allow it - a small stash of gold. Gold has been an effective hedge against inflation over the very, very long term. But that's about all it's good for. The other common reasons for owning gold - in particular, to use as a short-term or even a long-term hedge against inflation - are baseless.
2012-07-31 00:00:00 The Alternative to AUM-Based Fees: The Total Profitability Retainer Formula by Bob Veres (Article)
Many - perhaps most - advisors are overcharging a few of their clients and undercharging the rest. In other words, a small number of investment advisor clients are subsidizing the services that the others are receiving. Here's a way to address that.
2012-07-31 00:00:00 Beyond the Ultimate Death Cross by Georg Vrba, P.E. (Article)
Last week, I showed why the 'ultimate death cross' is not a bearish signal. But the methodology behind that signal - what's known as a 'golden-cross trigger' - can indeed offer a reliable guide to investors. And one can do even better with a simple improvement to the trigger that I have devised.
2012-07-17 00:00:00 Breaking Bad by Michael Lewitt (Article)
With our largest business and government institutions committing every conceivable act of legal or moral anomie, we have every right to ask who is going to protect the rest of us from those who have been entrusted with so much power and influence. The institutions that were supposed to be the lifeblood of our economy are the same institutions that inflicted the greatest harm on society. When the family has to be protected from the man who is supposed to protect the family, the family is in serious trouble.
2012-07-17 00:00:00 Gundlach ? Avoid Riskier Assets by Robert Huebscher (Article)
Since early this year, Jeffrey Gundlach has warned investors to avoid exposure to riskier assets ? among them, equities, non-dollar-denominated securities and sovereign debt. Still reluctant to move to a more aggressive position, Gundlach said on Thursday that 'substantial opportunities await,' but they may be as much as a year away.
2012-07-10 00:00:00 Insights into the First Half of 2012 by Ron Surz (Article)
U.S. stock markets at mid-year have earned a respectable 9.5% return. A euphoric first quarter 12.6% gain gave way to a 2.8% minor setback in the second quarter. Foreign markets have not fared as well, earning only 3.4% over the first half of the year. The graph below provides the details, and adds a look at gold's performance.
2012-07-03 00:00:00 Don't Get Emotional by Michael Nairne (Article)
With the developed world mired in slow growth and the eurozone teetering on the brink of disintegration, to many investors the future seems bleak. Some are so disheartened they are abandoning the stock market as a hopeless endeavor. Yet, one of the abiding tenets of investing is that investor sentiment is rarely predictive of the future.
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?
2012-05-08 00:00:00 Why the Best Conductors Sent Us Home Early by Justin Locke (Article)
As a professional speaker, I focus on leadership and management. But I have a major handicap to overcome: the conventional wisdom that a core goal of leadership is to motivate greater effort.
2012-05-08 00:00:00 The Adjusted Gold/XAU Ratio as an Indicator of Forward Returns for Gold Stocks - An Update by Georg Vrba, P.E. (Article)
The latest data have a clear message for investors: gold stocks are attractively priced.
2012-05-08 00:00:00 Can You Make Great Sushi Out of Crappy Fish? by Mariko Gordon (Article)
What does it take for a tiny sushi restaurant in Tokyo to earn a Michelin three-star rating? The answer offers insights for stock-picking (really!). Here are seven suggestions for determining which analysts are most worthy of your attention.
2012-05-01 00:00:00 Another Story of Too Much Debt: Investing During Unsustainable Economic Conditions by Brian McAuley (Article)
US-based investors cannot ignore the macro environment, and therefore must consider the consequences of our increasing indebtedness and its impact on capital markets. We can gain valuable insights into our fiscal problems from the housing bubble and the European sovereign debt crisis - lessons which every value investor should heed.
2012-04-17 00:00:00 The Rebalancing Problem by Michael Nairne (Article)
Selling winning asset classes to buy losers runs counter to human nature. But doing so with discipline can increase the potential return of a portfolio while critically maintaining its risk profile. The rebalancing premium is an important and often overlooked addition to returns of properly managed portfolios.
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.
2012-04-17 00:00:00 The Unemployment Rate: A Coincident Recession Indicator by Georg Vrba, P.E. and Dwaine van Vuuren (Article)
For what is considered to be a lagging indicator of the economy, the unemployment rate provides surprisingly good signals for the beginnings and ends of recessions. We have developed a model that uses unemployment figures to produce these signals and to determine the probability of when a recession may start.
2012-04-10 00:00:00 Allocating to Real Assets: Why Diversification Matters by Cohen & Steers (Article)
One way to extend the long-term purchasing power of a traditional stock and bond portfolio is through an allocation to real assets. But individually, categories like commodities, natural resource equities and REITs can be volatile. Cohen & Steers meets the challenge with a focus on broad asset-class diversification.
2012-04-10 00:00:00 Down the Rabbit Hole of Cognitive Dissonance by Mariko Gordon (Article)
What you see is not always what you get. It is easy to misinterpret signals and leap to the wrong conclusions, and it is vital to keep working until you get to the truth.
2012-03-27 00:00:00 GMO: Two Questions We Can't Answer by Robert Huebscher (Article)
Its reputation was built on stellar returns achieved with long-term bets on undervalued asset classes. Current market conditions, however, pose two unanswerable questions for GMO ? leaving the firm with an uncertain strategy for its equities and fixed-income allocations.
2012-03-27 00:00:00 Jack Bogle: The Triumph of the Index Fund by Robert Huebscher (Article)
Jack Bogle has spent his career selling investors on virtues of index funds. In a talk last week, he spoke triumphantly, as if the battle is all but over.
2012-03-20 00:00:00 Jeremy Grantham: This Time is Different by Michael Edesess (Article)
Jeremy Grantham is a paradox. A man who has said many times, 'This time it's different are the four most dangerous words in the English language,' is now saying - loud and clear - this time it really is different.
2012-03-13 00:00:00 Concentrated Equity Triple Play Higher Returns, Lower Risk, Lower Correlations by C. Thomas Howard, Ph.D. (Article)
Concentrating a portfolio on a few choice assets dramatically increases an investor's chance of superior performance. Nonetheless, most advisors and investors shun portfolio concentration as unacceptably risky. To a great extent, this is driven by the myth that adequate diversification is impossible unless one holds many stocks - a myth I will debunk.
2012-02-21 00:00:00 David Rosenberg: "Searching for Certainty in a Sea of Uncertainty" by Katie Southwick (Article)
David Rosenberg is known for his bearish outlook, and he has not yet seen anything in recent economic news that persuades him to change his tune. Contrary to prevailing "bullish complacency" and the widespread belief that central banking systems "have the answers to the ongoing global debt deleveraging cycle," in the United States Rosenberg sees monumental deficits, flat growth, an underlying trend of deflation, and current fiscal policies that will limit future flexibility. In other words, trouble remains on the horizon.
2012-02-21 00:00:00 Gundlach: The Two Questions that Matter Most by Robert Huebscher (Article)
Two questions stand out amid the complexity of the current economic and market environment, according to Jeffrey Gundlach, both of which relate to critical elements of fiscal and monetary policy and should guide portfolio construction for investors.
2012-02-07 00:00:00 Neel Kashkari on PIMCO's Equity Strategy by John Heins (Article)
Bond titan PIMCO has been methodically building its equity-investing expertise. Here the architect of that effort, Neel Kashkari, and his first major hires describe their strategy and how they're uncovering value in today's market.
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.'
2012-01-24 00:00:00 Michael Lewis on the True Depth of the Crisis in Europe by Larry Siegel (Article)
Michael Lewis is a financial writer and author, most recently of Boomerang: Travels in the New Third World, in which he reported on the European debt crisis from several of the affected countries. In this interview, he discusses a range of topics, including the future of Wall Street and the challenges of great financial writing.
2012-01-17 00:00:00 GMO: Something's Fishy in China by Robert Huebscher (Article)
A wide gulf separates the two most prominent views regarding China's future. Faced with slowing economic growth, one side says its leaders will deftly navigate a soft landing, while the other claims it will face an implosion similar to those that befell Japan 20 years ago and the US in 2008. Count GMO, a firm that has built its reputation on its ability to identify a bubble about to pop, in the latter camp.
2012-01-17 00:00:00 A Nobel Laureate?s View on the US A Debt Problem, but an Unemployment Crisis by Dan Richards (Article)
Peter Diamond is a professor emeritus at MIT and the winner of the 2010 Nobel Prize in Economics for his work on unemployment and labor market policy. In this interview, he discusses the degree to which US unemployment is a structural problem and whether it can be reduced through fiscal stimulus. This is the transcript of the interview.
2012-01-10 00:00:00 Gundlach on the Key Risk for Bond Investors by Robert Huebscher (Article)
Watch out if you own a bond fund that underperformed its benchmark by 2% or more last year, as most did. Rather than put their careers at risk by suffering a second year of poor performance, those fund managers will turn to indexation, according to DoubleLine?s Jeffrey Gundlach. And since the Barclay?s Aggregate Index holds nearly 35% of its assets in Treasury bonds with near-zero yields, its investors will endure poor returns.
2012-01-10 00:00:00 2011: The Famine That Followed the Feast That Followed the Fiasco by Ron Surz (Article)
Ron Surz provides his award-winning commentary on the US and global markets.
2012-01-03 00:00:00 US Recession - An Opposing View by Dwaine van Vuuren (Article)
A large number of reputable analysts and companies are forecasting a new U.S recession on the immediate horizon. Attracting the most attention is ECRI, which made a public recession call on September 30th and several television reaffirmations since. But an examination of a broader range of other composite economic indicators shows that sole reliance on ECRI's forecast would be misplaced.
2011-12-20 00:00:00 Gundlach on the Key Threat to Global Economies by Robert Huebscher (Article)
If class warfare is to be the dominant theme in next year?s presidential campaign, it will revive the premise of Ernest Hemingway's 1937 novel, To Have and Have Not, which he wrote in the midst of the second downturn of the Great Depression. That was also the title Jeffrey Gundlach gave his conference call with investors last week, during which he warned that wealth inequality will threaten European and domestic economies. Last week also saw Morningstar pass over Gundlach as a candidate for its fixed-income manager of the year award, so we?ll look at whether that decision made sense.
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.
2011-12-13 00:00:00 Can this be Serious? by Robert Huebscher (Article)
Of the hundreds of investment books that we are asked to review, a recent one stood out for its utter audacity: '401(k) Day Trading: The Art of Cashing in on a Shaky Market in Minutes a Day,' by Richard Schmitt. The premise of this book is as preposterous as its title. But it raised two important questions, meriting this review.
2011-12-06 00:00:00 The Quality Conundrum by J.J. Abodeely, CFA, CAIA (Article)
We are witnessing the end of a remarkable and confounding era for stocks, best described by the 'quality conundrum' investors faced for much of the last two years. During that time the combined outperformance of low-quality stocks alongside the underperformance of high-quality stocks was unprecedented in the last 30 years. Now, we are embarking on an era where high-quality stocks will likely significantly outperform low-quality stocks, resolving this conundrum.
2011-12-06 00:00:00 Small-Cap ETFs: Tail or Dog? by Mariko Gordon (Article)
Now that ETFs represent anywhere from 30% to 40% of small-cap trading volume, the creature that was created to shadow its master has become bigger than the index itself. Let's look at the impact of this rapid growth and the three important questions it raises.
2011-11-29 00:00:00 Jeremy Siegel on Why Stocks are 'Extremely Attractive' by Robert Huebscher (Article)
Jeremy Siegel is the Russell E. Palmer Professor of Finance at the Wharton School of the University of Pennsylvania. His book, Stocks for the Long Run, now in its fourth edition, is widely recognized as one of the best books on investing. We spoke to him last week about equity valuations and the prospects for the economy.
2011-11-22 00:00:00 Morningstar?s Attempt to Predict Performance by Robert Huebscher (Article)
Few question that skillful mutual fund managers exist, but virtually all attempts to identify them ex ante have failed. Last week, Morningstar took up the challenge with its Analyst Ratings, which aim to identify funds with the 'long-term potential for superior risk-adjusted performance.' Given the futility of such efforts over the last several decades, advisors should approach this new effort with skepticism.
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.
2011-11-15 00:00:00 Michael Aronstein on Today's Key Macro Trends by Robert Huebscher (Article)
Michael Aronstein is the president and chief executive officer of Marketfield Asset Management. Since its inception in 2008, his fund has returned 31% while the S&P has been down 15%. I spoke with him about the key macroeconomic and strategic issues facing investors today.
2011-11-15 00:00:00 A Strategy with a 25-year Record of 25% Returns by Robert Huebscher (Article)
Indiana-based SBAuer Funds launched its inaugural mutual fund in December of 2007, after having established a successful track record with a separately managed account business. I spoke with Bob Auer, who has employed the same stock selection system used by the fund for the last 25 years, over which time returns have averaged 25% annually.
2011-11-15 00:00:00 It's All Greek to Me by Michael Lewitt (Article)
As one who has written that there is little chance of a long-term solution to Europe's problems without a radical rethinking of global economic policy, the Europeans still have little choice once they peer over the cliff to realize other than to step back and buy some time before taking the inevitable leap. For, in the end, they have no other options than to jump.
2011-11-15 00:00:00 Are Gold Prices Correlated to the Real Federal Funds Rate? by Georg Vrba, P.E. (Article)
The price of gold depends on many variables, among them the real federal funds rate, which is the federal funds rate adjusted for inflation. But the real federal funds rate, or RFFR, alone does not explain variation in gold prices. One must also look at the change in the RFFR for a full understanding.
2011-11-08 00:00:00 Politics, Taxes and the Markets by Robert Huebscher (Article)
One of the most engaging speakers at last week's Schwab IMPACT conference was Andy Friedman, who offered some provocative predictions about next year's elections and what we can expect from the deficit super committee.
2011-10-25 00:00:00 The Questions You Should Ask about PIMCO?s Total Return Fund by Martin Weil (Article)
When a manager's performance slips, the inevitable question is why. Was this a simple misjudgment on the direction of the markets or an incorrect selection of securities in the portfolio? On the other hand, is the slip indicative of a more serious process failure? When the manager in question is Bill Gross, the answers to these questions become crucial to money managers and investors across the country.
2011-10-18 00:00:00 Gundlach: Markets Aren?t Cheap Enough Yet by Robert Huebscher (Article)
Prices for risky assets are straddling the extremes of two potential outcomes. A 'hurricane' may hit, in the form of a blow-up in Europe or a move to put the US federal government on an austerity program, driving prices lower. Or world economies will plod along, in which case optimistic pricing makes sense. But prices should be 'truly cheap' against those parallel problems, according to Jeffrey Gundlach, and that is not yet the case.
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.
2011-10-11 00:00:00 The Global ?Old Normal? by Michael Nairne (Article)
Amidst a torrent of dismal economic news and plunging stock prices, investment horizons have become increasingly short-sighted. The new normal of faltering growth and painful deleveraging appears to be only too true. However, investors capable of taking a long-term, global view will find forces at work that will likely drive resurgent world growth akin to that which occurred in the decades right after World War II.
2011-10-04 00:00:00 Jeffrey Gundlach: Preparing for the Coming Crisis by Katie Southwick (Article)
Speaking at a luncheon in New York last week, Jeffrey Gundlach, the founder and chief investment officer of DoubleLine Capital, gave investors advice on how to survive pending crises at home and abroad. After outlining the current state of U.S. debt and tax policy, Gundlach advised against European investments, favoring the U.S. dollar and owning U.S. government bonds as a hedge against credit.
2011-10-04 00:00:00 Moneyball Investing by F. Sean Bonner (Article)
In capital markets, emotions often rule the day, to the benefit of those who best remain well grounded in theory and math. The same holds true in baseball, as the new movie Moneyball reminds us.
2011-10-04 00:00:00 The Adjusted Gold/XAU Ratio as an Indicator of Forward Returns for Gold Stocks by Georg Vrba, P.E. (Article)
While the recent bull market took gold prices to new highs, the prices of gold-mining companies lagged. Some claim those companies are now drastically undervalued, and we can investigate that claim by examining the relationship between gold and gold-mining prices.
2011-09-27 00:00:00 A Buying Opportunity in Investment-Grade Corporate Bonds by Chris Shayne, CFA (Article)
Given that yields on Treasury and high-quality corporate bonds are near 50-year lows, investors looking for relative value in fixed income should consider purchasing lower-rated investment-grade corporate bonds. As Gluskin Sheff's David Rosenberg said last Wednesday, 'if you have money to put to work, and are looking for a reward that more than compensates for the incremental risk involved at this juncture, credit is a good place to be looking.'
2011-09-20 00:00:00 Letter to the Editor by Various (Article)
A reader responds to Dennis Gibb's article, The Risks of Exchange-Traded Products, which appeared last week.
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.
2011-09-06 00:00:00 Byron Wien Reflects on His List of Surprises by Laurence B. Siegel (Article)
Byron Wien is a senior managing director and vice chairman of Blackstone Advisory Partners, the largest alternative investment firm in the world with $140 billion under management. Each year, for the last 26 years, he has published a list of 10 'surprises' investors should expect in the capital markets and the economy. In this interview, he reflects on his list for 2011 and what see sees ahead.
2011-08-23 00:00:00 A Cautionary Note to my Fellow Gold Bugs by Emilio Vargas (Article)
The volume of missives I receive regarding the evolving debt-bubble collapse rises with the price of gold. The best time to buy gold was in 2001. Don't fall in love with gold now that the crisis is breaking and the price is going vertical.
2011-08-23 00:00:00 Letters to the Editor by Various (Article)
A reader responds to our article, Jeremy Grantham Guarantees Gold will Crash, which appeared on May 18, 2010. Another reader responds to Michael O. Kokesh's Letter to the Editor, published last week, which was in response to Paul Kasriel's July 26 commentary, Washington Had a Spending Problem.
2011-08-09 00:00:00 Does Government Intervention in Financial Markets Slow Economic Growth? by Michael Edesess (Article)
As we saw with the Dodd-Frank legislation and the Consumer Financial Protection Bureau, the question underlying the debate over financial regulation is whether it stifles economic growth. Leo F. Goodstadt's book, Reluctant Regulators, provides useful insights from the experiences of Hong Kong and China. It also causes us to ponder whether our measurement of economic growth is fundamentally flawed.
2011-08-09 00:00:00 Can American Become Greece? by Keith C. Goddard, CFA (Article)
Investors face four possible implications from the recent downgrade of America's long-term credit rating by Standard & Poor's: 1) Lower prices for financial assets; 2) Higher volatility in the asset markets; 3) Greater potential for trend-following investment strategies, and 4) Attractive opportunities in 'blue chip' stocks.
2011-08-09 00:00:00 How Conservative Investing Threatens Retirement by Dan Richards (Article)
Just as the Great Depression left a generation with a poverty mentality that still persists, the two bear markets of the last 10 years risk shaped an entire generation's attitude to investing. That's a key finding from a survey of affluent Americans commissioned by Merrill Lynch and released earlier this year, and it raises important implications for how financial advisors should deal with conservatively-minded investors.
2011-07-26 00:00:00 Investing with a View of Significant Inflation by Bob Kargenian (Article)
Almost all the analysis we read has concluded that, with the Fed seemingly printing money out of nowhere, the inevitable consequence must be significantly higher inflation. We're not convinced, but we have identified which strategies are likely to best protect clients if inflation accelerates.
2011-07-12 00:00:00 Inflation Field Manual: A Guide for a Changing World by American Century Investments (Article)
This client-approved executive summary by Senior PM Robert Gahagan and Senior PM William Martine, CFA examines the competing forces at work that will affect inflation for the months and years to come. It also provides an analysis of inflation-hedging assets in different market environments, and suggests strategies for protecting a portfolio from inflation risk.
2011-07-12 00:00:00 The Real Story behind Bond Yields by Michael Nairne (Article)
One of the most important questions that individuals should ask before making any investment is 'Am I being paid enough for the risk of this investment?' I analyze the returns available today from government bonds and answer this important question for this asset class.
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.
2011-07-05 00:00:00 Essential Summer Reading - Desperate Households and More by Michael Shamosh (Article)
Summer reruns don't have to be boring and predictable. If we use a little imagination, televised repeats can depict the problems facing our economy and markets, and the storylines can become tantalizingly uncertain.
2011-07-05 00:00:00 Fox in the Henhouse by Joseph Calhoun and Douglas Terry (Article)
In 1971, President Nixon ended the Bretton Woods gold standard currency system. That move set us on a path of debauching our currency through inflation. Ever since, we have counted on the Federal Reserve to preserve the purchasing power of our money. We have depended on the fox to protect our hens.
2011-06-14 00:00:00 Bruce Berkowitz - Ignoring the Crowd on Financials by Sam Parl (Article)
Bruce Berkowitz has said that his deep value and contrarian investing style will not guarantee short-term results, but he promises his shareholders will be rewarded for their patience over the long term. Last week, he explained why some of his positions - especially those in the financial services sector - are among the best opportunities in the market.
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.
2011-06-14 00:00:00 A Cautionary Tale from the World's Most Influential Economist by Dan Richards (Article)
Raghuram Rajan was recently cited by The Economist as having the most important ideas for the post-crisis world. In this interview, he identifies key policy issues the Obama administration must confront. This is a transcript of the interview.
2011-06-14 00:00:00 Who's Afraid of the Big Bad Debt? by Kerry Pechter (Article)
Not Warren Mosler, bond trader, racecar dabbler, Senatorial candidate and recent author of The Seven Deadly Innocent Frauds.
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.
2011-06-07 00:00:00 Why Jim Rogers is Bullish on Gold by Dan Richards (Article)
The veteran investor Jim Rogers explains why he is bullish on gold and the US dollar, and offers his thoughts on Asian economies why he chose to move his family to Singapore. This is the transcript of the interview.
2011-06-07 00:00:00 Why Jim Rogers is Bullish on Gold (Video) by Dan Richards (Article)
The veteran investor Jim Rogers explains why he is bullish on gold and the US dollar, and offers his thoughts on Asian economies why he chose to move his family to Singapore. This is the video of the interview.
2011-06-07 00:00:00 Letters to the Editor - On the WikiLeaks of the Economics Profession by Various (Article)
This is a follow-up to last week's exchange between Guy Cumbie and Michael Edesess, which concerned Edesess' article two weeks ago, Letter to the Editor On the Wikileaks of the Economics Profession.
2011-05-17 00:00:00 Dylan Grice on Japan's Coming Hyperinflation by Robert Huebscher (Article)
The Japanese scenario haunts US policy makers, who recall that country's two-decade miasma of lethargic growth and escalating fiscal deficits with apprehension. What scares them most, perhaps, is the potential endgame Japan now faces: an insolvent government crippled by uncontrollable inflation. While Japan's current situation closely parallels the experience of other countries that went on to confront hyperinflation, according to Dylan Grice, we shouldn't expect a crisis in the near term.
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 Inflation Field Manual: A Guide for a Changing World by American Century Investments (Article)
We examine the competing forces at work that will affect inflation. On the one hand, a whole host of factors are currently constraining inflation. On the other hand, US monetary and fiscal policies and a number of global economic imbalances suggest an environment of high and rising inflation. The outcome of this debate is important for financial assets, whose performance turns on the difference between expected and actual inflation-it is when inflation surprises to the upside that stocks and nominal bonds typically underperform and inflation-protected assets do best.
2011-04-26 00:00:00 Ethics Among Thieves by Michael Edesess (Article)
'Inside Job' is a thoroughgoing indictment of the financial industry that has its virtues but relies on some unsavory vices. On the one hand, through interviews, congressional testimony, and other video, the film exposes cronyism, corrupt ethics, and excessive power at the core of the financial industry. On the other, the movie at times unfortunately feels more like a polemic than a hard-hitting, fact-finding investigative reporting piece.
2011-04-19 00:00:00 Four Ways to Make Recommendations Stick by Dan Richards (Article)
All too many client conversations are monologues, with the advisor talking and clients listening. Even when you ask if clients have questions, they say 'no.' If you want clients to buy into your recommendations, you have to engage them in conversation.
2011-04-12 00:00:00 A Top Value Manager Looks Outside the US by Robert Huebscher (Article)
David Winters, manager of the Wintergreen Fund, began his career working for Max Heine, where Seth Klarman and Michael Price also worked. In this interview, Winter discusses the why he believes many of today's best opportunities are outside the US and how he is hedging against the threat of inflation.
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."
2011-04-05 00:00:00 Letters to the Editor: GMWBs and the Permanent Portfolio by Various (Article)
A reader responds to our article, Understanding Variable Annuities with GMWBs, which appeared on March 1 and another reader responds to Geoff Considine's article, What Investors Should Fear in the Permanent Portfolio, which appeared on March 22.
2011-03-22 00:00:00 What Investors Should Fear in the Permanent Portfolio by Geoff Considine, Ph.D. (Article)
Over the last decade, the assets of the fund PRPFX have swelled from $50 million to more than $10 billion. The concept underlying that fund, Harry Browne's Permanent Portfolio (PP), has rewarded PRPFX investors with attractive risk-adjusted returns. Those investors, however, may want to rethink their exposure - especially if PRPFX is the core of a retirement-oriented strategy.
2011-03-15 00:00:00 Mason Hawkins and Staley Cates on Today?s Opportunities for Value Investors by Robert Huebscher (Article)
Southeastern Asset Management's Mason Hawkins and Staley Cates, two of today's most respected value investors, discuss their portfolio and the principles behind their Graham and Dodd methodology. They explain why they like certain commodity-based companies and why they disagree with Bruce Berkowitz on the opportunities in the financial sector.
2011-03-15 00:00:00 Running on Empty by Michael Lewitt (Article)
Despite the increasing undercurrent of negative news creeping into the financial markets, the stock market remains strong. HCM expects equities to continue to perform well for the foreseeable future (i.e. through the end of June) although most of this letter will discuss the reasons why it shouldn't. In some ways, this market is a lot like Charlie Sheen. It pretends to have tiger blood and the powers of a warlock, but deep inside it is suffering from an addiction to a substance (i.e. debt) that will ultimately kill it.
2011-03-08 00:00:00 Ed Hyman: The Key Threat to Economy Recovery by Robert Huebscher (Article)
Ed Hyman is not worried about China, quantitative easing or fiscal deficits. Equity market performance this year will be strong, he predicts, and the US economic recovery will proceed. But there is a caveat in his outlook ? and it is an immense one.
2011-03-08 00:00:00 The Clued-in, the Clueless, the Oblivious and the Conflicted by Michael Edesess (Article)
I?ve now read perhaps 10 books about the financial crisis. Maybe I?m a junkie, but each has given me new information or a fresh way of looking at events. 'All the Devils Are Here' offers a treasure trove of information about company behavior during the crisis, notably Fannie and Freddie, Goldman Sachs, Merrill Lynch, AIG, Countrywide, and Ameriquest.
2011-03-01 00:00:00 Subsuming the Efficient Market Hypothesis by Keith C. Goddard, CFA (Article)
A recent article highlighted important gaps in the efficient markets model (EMH) that limit its practical applications. It encouraged a search for a new theory of markets that builds upon EMH by rendering it as a special case within a broader, more general theory. Mordecai Kurz? Rational Belief Equilibrium is such a theory.
2011-03-01 00:00:00 Simon Johnson on the Unconscionable Risks We Face by Dan Richards (Article)
Simon Johnson is a professor of economics at MIT and was the chief economist for the International Monetary Fund. In this interview, he explains why the underlying factors which led to the financial crisis remain unresolved. This is the transcript; a video is also available.
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.
2011-02-15 00:00:00 David Laibson on the Hidden Challenges of Aging Clients by Dan Richards (Article)
In this interview, Harvard economist David Laibson discusses his research into the challenges of helping elderly clients with their financial planning. He also discusses how to overcome the procrastination and laziness that often result in inferior investment decisions. This is a transcript of the interview.
2011-02-15 00:00:00 Journey to the Center of the Average by Mariko Gordon (Article)
Averages, while comforting in their simplicity, often do more to hide the truth than reveal it. This article is inspired by a recent conversation with author and statistician extraordinaire, Kaiser Fung, who shares my suspicion of this often-abused mathematical construct.
2011-02-08 00:00:00 Optimizing Your Fixed Income Allocation by Geoff Considine, Ph.D. (Article)
Here's a little-known fact: The traditional 60/40 portfolio, when using the aggregate-bond index for its fixed-income allocation, has a 99% correlation to the returns of the S&P 500. One way to overcome the limited diversification value offered by the aggregate index is to use a risk-parity approach. In this article, I explore the concept of risk parity in asset allocation and how it provides value for portfolio management.
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.
2011-01-25 00:00:00 Beyond the Efficient Market Hypothesis by Michael Edesess (Article)
John Cassidy's 2009 book, "How Markets Fail," drives the final nail in the coffin of the Efficient Market Hypothesis. Well, perhaps the penultimate nail - as I'll explain. It is the most compelling argument I have read that we need a new and improved theory of markets, a theory that subsumes the efficient market hypothesis, much as Einstein's relativity theory subsumed Newtonian physics.
2011-01-25 00:00:00 Advisor Perspectives Announces First Venerated Voices Awards by Advisor Perspectives (Article)
Advisor Perspectives, a leading publisher serving financial advisors and the financial advisory community, today announced its first Venerated Voices? awards, recognizing the market commentators who were most frequently read by advisors during 2010. Awards were issued in three categories: The Top 25 Venerated Voices? by Firm, The Top 25 Venerated Voices? by Author and The Top 10 Venerated Voices? by Commentary.
2011-01-18 00:00:00 Jeffrey Gundlach: The Greatest Investment Opportunity of 2011 and 2012 by Robert Huebscher (Article)
In June of 2007, against a backdrop of strong equity and corporate bond performance, Doubleline's Jeffrey Gundlach was one of the first to warn investors that sub-prime mortgages were 'a total unmitigated disaster, and they are going to get worse.' In an equally bold statement, last week he identified the asset class he considers the greatest investment opportunity for the next two years. Again, it was one for investors to avoid.
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.
2011-01-11 00:00:00 2010: A Truth Odyssey by Ron Surz (Article)
I review some of the lessons learned in the last two years. I review the last year, discuss 2008's lessons, and conclude with my traditional review of the longer-term history of U.S. markets over the past 85 years.
2010-12-28 00:00:00 The Ten Most-Read Articles in 2010 by Robert Huebscher (Article)
As is our custom, we conclude the year by reflecting on the 10 most-read articles over the past 12 months. In decreasing order, based on the number of unique readers, those are...
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.
2010-12-14 00:00:00 Letter to the Editor by Various (Article)
A reader responds to our article, Black Gold, Texas Tea, which appeared on November 30.
2010-12-06 00:00:00 Why You Aren't Getting Referrals - And What to Do About It (Part 2) by Dan Richards (Article)
In his previous column, Dan Richards discussed seven misconceptions that prevent advisors from getting referrals. Here, he concludes with eight more referrals fallacies.
2010-12-06 00:00:00 Creating a Mirage of Economic Growth by Doug Carey (Article)
Bubble formation is not random. Some may believe it is, but bubbles are in fact a predictable byproduct of the fractional reserve system upon which our economy is built. By stimulating and amplifying lending through its fractional reserve system, the Federal Reserve systematically creates the mirage of growth, from which deception systemic crises inevitably result.
2010-11-30 00:00:00 Black Gold, Texas Tea by Robert Huebscher (Article)
The flow of money into gold-related funds is, at least in part, driven by good intentions - hedging against dollar debasement, inflation, and systemic risk. As investors drive the price of gold to record levels, though, they are overlooking an equally compelling commodity hedge, one that the Beverly Hillbillies once dubbed 'black gold, Texas tea' - oil, that is.
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 Will Municipal Bonds be the Next Disaster? by Dennis Gibb (Article)
It has been an article of faith that municipal bonds are safe investments, but this complacency about the safety of munis may soon be proven unwise.
2010-11-16 00:00:00 Jeremy Siegel on the Upside for Equities and the Virtues of QE2 by Robert Huebscher (Article)
In our annual interview, Jeremy Siegel, the Russell E. Palmer Professor of Finance at the Wharton School, offers his forecast for equities - a 10% to 20% gain in 2011, along with a continued rally through the end of this year. He also explains why the current round of quantitative easing is exactly what is needed to stimulate the economy.
2010-11-16 00:00:00 A Reading List for 2010: Part 2 by Vitaliy Katsenelson (Article)
Updated for 2010 and in time for the holidays, here is the latest installment of my recommended books. I originally wrote this list in 2008 and again last year. I intend to keep adding to and revising it every year. It contains seven sections: Selling, Think Like an Investor, Behavioral Investing, Economics, Stock Market History, Risk and Books for the Soul. The first three sections were presented last week and the remaining four are presented here.
2010-11-16 00:00:00 Skin in The Game, Part II by Mariko Gordon (Article)
In my previous column, I examined the validity of using the 'skin in the game' metric when evaluating a money manager. Today, we see how well it applies when used to assess corporate management. (Hint: Not so well.)
2010-11-09 00:00:00 How Modern Is Your Portfolio Theory? by Direxion Funds (Article)
After 58 Years, is there Another Way to Conquer the Efficient Frontier? In the past, active or "tactical" investment management referred to jumping in and out of stocks and bonds - market timing. With the introduction of sophisticated funds that help the masses harness the power of institutional managers and alternative asset classes and strategies, today, tactical management may help to renovate your portfolios - and help you retain and attract assets.
2010-11-09 00:00:00 Keynesian Confusion by Michael Lewitt (Article)
Keynesian policies are inflicting untold damage on the U.S. and global economies today. Keynes did not have to be misread. The reason that the current recovery is below par is that the economy is experiencing a massive paradox of thrift. We doubt that reducing already low rates is going to stimulate much of anything other than more frustration on the part of savers. Sooner or later, everything being earned on the upside of this liquidity-induced rally will be given back in spades - the only question is when.
2010-11-09 00:00:00 Waiting for Superman: The Fate of Teachers? Unions by Charlie Curnow (Article)
In 'Waiting for Superman,' the new documentary film about the shortcomings of American public education, director Davis Guggenheim argues that, in order to compete with rival school systems in Asia and Europe, the U.S. must rein in its teachers unions and embrace the free market principles of private schools and privately managed charter schools. Is this a fair assessment?
2010-11-02 00:00:00 Gold and the Decade to Come by American Century Investments (Article)
Gold is an asset class unto itself. It is not only a barometer of confidence in governments and the financial system, but also a reserve asset, an alternative currency, and a store of value. Those characteristics make gold an ideal diversifier because it has low correlation to most financial assets, both in expansionary and recessionary periods. Indeed, the return pattern to gold investments is not only uncorrelated to most traditional financial assets, but makes gold uniquely positioned to outperform when you want diversification the most--during periods of crisis.
2010-11-02 00:00:00 A Top Economist's Nightmare Scenario by Charlie Curnow (Article)
Remember the 1970s? Stagflation like we saw then could return to the U.S. if unsustainable public debt levels trigger a selloff of government bonds and dollar-denominated holdings, according to a recent study by John C. Cochrane. Cochrane, a finance professor at the University of Chicago, is perhaps best known for his response to Paul Krugman's article in the New York Times on why mainstream economics failed to anticipate the financial crisis.
2010-10-29 00:00:00 Four Critical Investment Themes for the Next Decade by Robert Huebscher (Article)
Four investment themes will dominate market behavior over the next decade, according to Martin Murenbeeld, the chief economist at DundeeWealth Economics, a Canadian investment manager and financial advisor. Investors, he said, would be wise to overweight gold and other commodities.
2010-10-19 00:00:00 Allen Sinai: US at the Crossroads by Robert Huebscher (Article)
America is at a crossroads in a shifting global economy, and it's not just our economy that is in trouble. We have moved from a mindset of prosperity to a much gloomier self-conception, and dysfunctions within our government and society are pushing us downward. That sobering assessment was delivered by Allen Sinai, the president of Decision Economics, an economic research firm he founded in 1996.
2010-10-12 00:00:00 Gold Continues to Glitter by BlackRock (Article)
Gold recently reached all-time highs in several currencies as investors flocked to the asset class as a safe-haven investment. This is despite volatile financial markets and continued investor concerns regarding the impact of the US government's massive fiscal and monetary stimulus on inflation/deflation. Learn why BlackRock believes gold will continue to remain attractive to investors.
2010-10-12 00:00:00 Simon Johnson on Why This Crisis Wasn?t the Last by Robert Huebscher (Article)
Is the last financial crisis over? Did we at least fix the problems that caused the crisis? Were those the worst of our problems? Answering those three questions was the focus of a talk by Simon Johnson, formerly the chief economist at the IMF.
2010-10-12 00:00:00 Beggar Thy Neighbor, Beggar Thyself by Michael Lewitt (Article)
In the latest edition of the HCM Market Letter, Michael Lewitt argues that reported attempts by countries to devalue their currencies will only result in higher inflation and not economic growth. QE2 will similarly fail, and the necessary "heavy lifting" for the economy should be through fiscal, not monetary, policy. A continuation of Keynesian policies, as advocated by Paul Krugman, will also fail. Lewitt warns of dangers in ETFs and offers his investment recommendations.
2010-10-12 00:00:00 The Perfect Storm: Threat or Opportunity by Dinesh Sharma and Michelle Goldstein (Article)
Our primary client base, baby-boomers, is quickly sliding into retirement, leaving us to question where our growth will come from. And now we have the uncertainty surrounding the Dodd-Frank Wall Street Reform and Consumer Protection Act and the anxiety that comes with it. Financial advisors can choose to see the convergence of these factors as a threat to their well-being or as an opportunity to prosper.
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.
2010-09-28 00:00:00 A Better Alternative - Natural Resource Equities by RS Investments (Article)
Investors look to the commodity market to provide three primary benefits: portfolio diversification, inflation protection, and equity-like returns. However, empirical data shows that over the last decade, shifts in underlying fundamentals have undermined the role which commodities are expected to play in a diversified portfolio, particularly relative to natural resource equities. RS Investments reviews the return streams generated by both commodities and natural resource equities in the context of the benefits expected from each investment option. We thank them for their sponsorship.
2010-09-14 00:00:00 A Better Way to Invest in Gold by Geoff Considine, Ph.D. (Article)
In the year since Geoff Considine last wrote about gold, underlying prices have risen 24%, leading to several important questions - including whether his advice of a year ago still holds today. We look closely at how a direct investment in GLD performed as compared to a bond-plus-call-option strategy, and which conditions favor each strategy.
2010-09-07 00:00:00 Jeffrey Gundlach on Bonds, Stocks and Gold by Robert Huebscher (Article)
DoubeLine's Jeffrey Gundlach recently reduced his position from "overweight" to "small underweight" in Treasury bonds, and cited "divergent behavior across the yield curve." In this interview, he discusses that behavior and the rationale behind his move, as well as his thoughts on other asset classes, including equities and gold.
2010-09-07 00:00:00 The Free Lunch Illustrated by Michael Nairne (Article)
One of the most remarkable discoveries in modern finance is the ability to improve the expected return of a portfolio while simultaneously reducing its risk. In this guest contribution, which advisors can share with clients, Michael Nairne explains that the proverbial "free lunch" does exist, its exploitation requires a focus not only on the returns and volatility of the assets in the portfolio but on the degree of covariance between those assets.
2010-08-31 00:00:00 Double ?Bubble,? Toil and Trouble by Sam Bass (Article)
The latest economic prophecy, which has gripped investors' fears for the past three years and counting, is that a 'bubble' in US Treasury bonds is about to burst. Hyperinflation is just around the corner, the prediction goes, and US Treasury bonds, driven up in price to record levels by unprecedented policy measures, are about to crash. In this guest contribution, Sam Bass writes that advisors shouldn't follow the advice of these "seers."
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 Misconceptions about Risk and Return Uncovered by Geoff Considine, Ph.D. (Article)
Our beliefs about risk and return determine how we construct portfolios and manage risk. Research over the last decade suggests that a number of the ideas on which many investors and advisors rely lead to portfolios that are too highly exposed to market risk. In this article, we review a number of ideas that determine how we select assets and how we determine what to expect from those assets.
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 Letter to the Editor by Various (Article)
In a letter to the editor, a reader responds to Dave Loeper's article, Fake Diversification Exposed: Does Asset Allocation Work?, which appeared on July 13.
2010-07-27 00:00:00 Important New Research Talking to Seniors About Risk and Market Volatility by Dan Richards (Article)
New research shows how to talk to seniors about their investments. Titled "Behavioral finance and the post-retirement crisis" and released in May, this report compiles findings on how older investors perceive risk and make financial decisions. Dan Richards discusses the findings.
2010-07-27 00:00:00 Rediscovering Your Listening Skills by Justin Locke (Article)
Listening may be the most critical part of your job, both for acquiring new clients and for maintaining current relationships. Everyone's listening abilities are unique, but many common fears and anxieties can interfere with your innate listening skills. In this guest contribution, Justin Locke identifies a few common problems and suggestions for how to work around them.
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 Nouriel Roubini on Crisis Economics by Michael Edesess (Article)
There's good reason why Nouriel Roubini has been dubbed Dr. Doom. After reading his book co-authored with Stephen Mihm, Crisis Economics, one might despair for our economic system. Roubini makes the recent crisis seem inevitable, hard to stop, and very hard to keep from happening again.
2010-07-13 00:00:00 Fake Diversification Exposed: Does Asset Allocation Work? by David B. Loeper, CIMA, CIMC (Article)
Domestic equities are down roughly 14.5% from their April 23rd high. Many advisors tout sophisticated (and very expensive) asset diversification strategies, supposedly to protect their clients against precisely these circumstances. So, with this recent decline, Dave Loeper asks whether all of those supposed diversifiers protected portfolios?
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."
2010-07-13 00:00:00 Chronicle of the Quarter by Bob Veres (Article)
Bob Veres provides one of his Client Articles, which is a service for advisors to send to their clients; it's a daily blog about what it felt like to watch the market during the past fiscal quarter. It communicates several points: perhaps most importantly, that what seems clear in hindsight (the markets gave back their first quarter gains) is not at all clear as it is experienced.
2010-07-06 00:00:00 Currency Management Series - Part Two: Currencies as an Asset Class and Source of Alpha by John Lovito and Federico Garcia Zamora (Article)
Active currency management allows professional managers to extract alpha on a consistent basis. Two members of American Century Investments' management team explain why, despite being one of the most liquid markets, global currencies remain inefficient. We thank them for their sponsorship.
2010-06-29 00:00:00 Inflation Protection Investment Strategies by Vern Sumnicht (Article)
The value of the dollar is sure to erode, and investors will be left to grapple with the inflationary consequences. As Vern Sumnicht shows in this guest contribution, recent policies suggest steep inflation may be just around the corner. Fortunately, investors have some options to bolster their portfolios against the threat of inflation.
2010-06-22 00:00:00 Inexpensive Protection Against Rising Rates by Geoff Considine, Ph.D. (Article)
As is too often the case, the biggest risks are those that we discount. The possibility of a surge in interest rates appears to be today's ignored risk, despite the warnings of many experts, including David Einhorn, Bill Gross, and Seth Klarman. We discuss an inexpensive strategy to protect your portfolios from the tail risk of rising rates.
2010-06-22 00:00:00 Niall Ferguson on Japan, China, and the US by Dan Richards (Article)
Harvard's Niall Ferguson is arguably today's leading economic historian. In part two of this interview, Ferguson explains why he fears the future is bleak for Japan, why China may someday be the leading global superpower, and what all this means for the US. We provide a video and a transcript.
2010-06-15 00:00:00 Today?s Top Economic Historian: The Path to European Stability by Dan Richards (Article)
Harvard's Niall Ferguson is arguably today's leading economic historian. In this interview with Dan Richards, Ferguson discusses the current troubles and future outlook for Europe. We provide a transcript and a video.
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 Five Strategies for a Rising Rate Environment by Kane Cotton, CFA and Jonathan Scheid, CFA (Article)
The Federal Reserve can't accommodate forever, and the global stimulus effort will likely lead to inflation. Our growing indebtedness can only result in increased borrowing costs. That much we know. What we don't know is when and how quickly interest rates will rise. In this guest contribution, Kane Cotton and Jonathan Scheid examine five strategies for a rising rate environment.
2010-06-08 00:00:00 Three Words to Blow Away Clients by Dan Richards (Article)
Every advisor's goal is to build deep relationships with key clients, partly to foster loyalty and increase the assets you have from them, partly to open the door to referrals. One way to do that is to have clients "wowed" by their experience in dealing with you, and Dan Richards says three key words will create that "wow" effect with important clients.
2010-06-08 00:00:00 Barfing Your Way to Investment Success by Mariko Gordon (Article)
When it comes to air travel, turbulence is to be expected. If you're not of the same mindset with your investments, you may be in for a bumpy, barfy ride, says Mariko Gordon of Daruma Asset Management in this guest contribution.
2010-06-01 00:00:00 Three Ways to Improve Safe Withdrawal Rates by Geoff Considine, Ph.D. (Article)
Using Monte Carlo analysis, Geoff Considine examines three ways safe withdrawal rates can be increased beyond the baseline 4% guideline. He compares and quantifies the benefits of increasing diversification beyond equities and bonds, increasing allocations to fixed income, and employing tactical asset allocation.
2010-06-01 00:00:00 Equity Income Targets Utilities by Philip Sundell, CFA (Article)
Natural gas local distribution companies are appealing utility business models to conservative equity investors. They tend to have stable earnings and stronger balance sheets. Philip Sundell of American Century Investments discusses his overall outlook for utilities in this interview. We thank American Century for their sponsorship.
2010-05-25 00:00:00 Seth Klarman is More Worried than at Any Time in his Career by Robert Huebscher (Article)
The concern that the dollars he earns for his clients will lose their purchasing power is always on hedge fund manager Seth Klarman's mind. The possibility that the government will continue to print money to solve our economic problems has left him more worried than at any time in his career. We report on Klarman's remarks at last week's CFA conference.
2010-05-25 00:00:00 Sleeping with the Enemy by John W. Pfenenger II, CFA (Article)
When it comes to investing, our worst enemy may be the one we see in the mirror every morning - ourselves. In this guest contribution, John Pfenenger looks at how emotions affect investment decisions, and how understanding behavioral economics can help advisors work with their clients.
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.
2010-05-18 00:00:00 Anthony Boeckh on the Great Reflation by Robert Huebscher (Article)
Tony Boeckh has been the guiding force behind Bank Credit Analyst, and in this interview he discusses his new book, The Great Reflation. Boeckh stakes out a deflationary forecast, and explains how the flow of liquidity in the financial system will determine asset class performance.
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.
2010-05-04 00:00:00 How Much is that Investment Worth in Real Money? by Adam Jared Apt (Article)
In the latest installment of his series of articles geared to the educated layman, Adam Apt looks at the topic of the time value of money, and how discount rates can be used to determine the value of a security. He shows the practical applications of present value calculations and its limitations.
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 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.
2010-04-06 00:00:00 A Review of "The Big Short" by Michael Lewis by Michael Edesess (Article)
"The Big Short" tackles the financial meltdown as seen by four relatively minor, but colorful players. (Minor means running only hundreds of millions, not billions.) All of them were voices in the wilderness, writes Michael Edesess, our reviewer. All of them bet heavily against the subprime real estate bubble that, for a while, fueled huge gains.
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.
2010-03-09 00:00:00 Communicating with Ease by Beverly Flaxington (Article)
Advisors, like so many people in relationship-oriented businesses, depend on strong communication to maintain and grow their businesses. In this guest contribution, author Beverly Flaxington discusses her new book about how advisors can communicate with ease and strengthen their bonds with clients.
2010-03-02 00:00:00 Nine Essential Lessons from Olympians by Dan Richards (Article)
For the past two weeks, the world's eyes were on the Winter Olympics in Vancouver, focusing on those athletes who excelled, pulling away from the pack with multiple medals. Watching the Olympics, however, isn't just about athletes achieving their goals. As Dan Richards writes, financial advisors looking for guidance on hitting their own goals can take away nine important lessons.
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.
2010-03-02 00:00:00 Letters to the Editor by Various (Article)
In our letters to the Editor, a reader responds to our article How to Squander $170 Billion, and another responds to a claim that clients are moving away from their existing advisory relationship as a result of recent market events.
2010-02-23 00:00:00 Jason Zweig on Protecting your Wealth by David Raileanu (Article)
Jason Zweig is a senior writer and columnist for Money magazine and frequently writes for the Wall Street Journal. In this interview, he discusses strategies for protecting client wealth, proper asset allocation, and the role of advisors in a fiduciary relationship.
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.
2010-02-04 00:00:00 thinking about doing by Tom Brakke of the research puzzle
Investors should take a lesson from Ryan St. Onge, the Olympic freestyle aerialist, who spends 80% of his time "thinking" and 20% of his time "doing." "We tend to copy first and think later," Brakke warns.
2010-02-02 00:00:00 More Government in the Financial Sector to Save Capitalism by Vitaliy Katsenelson (Article)
In this article, Vitaliy Katsenelson argues that, despite his free market bias, the "too big to fail" banks will benefit from tighter regulation.
2010-01-26 00:00:00 The Potemkin Market by Michael Lewitt (Article)
We are again privileged to publish the current issue of Michael Lewitt's newsletter, titled The Potemkin Market. Lewitt updates his forecast for the S&P 500, criticizes the current financial reform efforts and the ongoing GSE bailout and Fed Chairman Bernanke. Lewitt argues that risk is overpriced in many segments of the market.
2010-01-26 00:00:00 Buffett?s Gold by Emilio Vargas (Article)
Warren Buffett's valuation of Burlington Northern and his use of arguably cheap Berkshire Hathaway stock to purchase it have created a bit of a cacophony among analysts. It seems to some very un-Buffett-like to pay top dollar for an asset and to use precious equity currency to get a deal done. What does Buffett see that others do not? Oddly, the argument made by gold bugs for their asset of choice may hold the answer.
2010-01-26 00:00:00 Letters to the Editor by Various (Article)
In our letters to the Editor, readers comment on recent articles about Paul Krugman, health care, John Cochrane and the need for trust in advisory relationships.
2010-01-22 00:00:00 Reflections Across the Pond by John Browne of Euro Pacific Capital
Having been among the economic engines of Europe for much of the past decade, it appears as if the British economy has run out of steam. Inflation is rising while bankruptcies and unemployment continu
2010-01-19 00:00:00 Steve Leuthold: The Market will Rally This Year by Robert Huebscher (Article)
Steve Leuthold is chairman of the $4.5 billion Leuthold Group and one of the most widely-followed market analysts. In his keynote presentation at last week's Fortigent conference, he offered an upbeat forecast for the first half of 2010.
2010-01-19 00:00:00 Letters to the Editor by Various (Article)
Readers responded to a range of topics in our letters to the Editor: our Paul Krugman interview, our article last week on the causes of the financial crisis, our article on the true cost of insuring the uninsured, and our article on costless collars using options.
2010-01-12 00:00:00 Things Fall Apart in Eurozone by John Browne of Euro Pacific Capital
2010-01-05 00:00:00 Paul Krugman on Deficits, Taxes, Inflation, and Recovery by Dan Richards (Article)
Dan Richards' interview with Paul Krugman, the 2008 Nobel prize winner in Economics, covers his views on the size of the next stimulus package, how high marginal tax rates should go, and lessons from the Japanese experience. Whether or not you agree with him, Krugman is highly influential and his views may presage future policy decisions.
2010-01-05 00:00:00 Perspectives on 2009 and Beyond by Ron Surz (Article)
We are again privileged to provide Ron Surz' award-winning market commentary. Surz examines global performance in Q4, 2009 and the prior decade.
2009-12-30 00:00:00 Monetary Policy: Inflation-Deflation, Debt, Excess Reserves, Currency Volatility by Michael J. Schussele of Michael J. Schussele, CPA
2009-12-29 00:00:00 Diversification is Not Enough by Roger J. Schreiner (Article)
The mainstream financial services industry, the media and academia - virtually everyone - has overestimated the value of diversification in risk management. The recent crisis has shown that investors need more than simple diversification to protect them from both the known and the unknown risk that they will eventually encounter. In this guest contribution, Roger Schreiner, says that when it comes to risk management, diversification simply is not enough.
2009-12-15 00:00:00 Barton Biggs on Undervaluation in the S&P 100 by Robert Huebscher (Article)
Barton Biggs, the former Chief Global Strategist for Morgan Stanley who now runs the hedge fund Traxis Partners, says the high-quality, large-capitalization stocks in the S&P 100 are now undervalued by one standard deviation. In our interview, Biggs also discusses his fears and how investors should protect themselves from the worst-case scenarios.
2009-12-01 00:00:00 Allen Sinai: Jobless Recovery and the Failure of Current Economic Policies by Robert Huebscher (Article)
As the Democratic leadership in Congress has looked for ways to simultaneously create jobs and reduce the deficit, a key person they have turned to and continue to rely on is Allen Sinai. Sinai now fears the US is in the "mother of all jobless recoveries" and that the economic policies of the Obama administration are not working.
2009-11-24 00:00:00 The Jedi Knight's Guide to Real-Life Investing by Mariko Gordon (Article)
The term "textbook investing" suggests a perfect approach. But as a recent visit with a class of college students reminded Mariko Gordon of Daruma Asset Management, there's still much to be learned beyond textbooks and lecture halls. She takes a look at five insights from the "real world" of investing.
2009-11-17 00:00:00 Ned Davis: The Cyclical Bull Rally is Not Over by Robert Huebscher (Article)
In February of last year, Ned Davis, president and senior investment strategist of an eponymous Florida-based institutional research firm, correctly forecast last year's market decline. In February of this year, he called the market rally that began in March. Now, he says, that cyclical bull rally is not over.
2009-11-17 00:00:00 Bruce Greenwald on Positioning First Eagle?s Funds by Robert Huebscher (Article)
Bruce Greenwald is a professor of finance at Columbia, the Director of Research at First Eagle Funds, and a leading expert on value investing. Last week we published part one of our interview, where he discussed the structural problems in the economy and his forecast for higher unemployment. This week he discusses the positioning of First Eagle's investments, and why Warren Buffett's purchase of Burlington Northern was a mistake.
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.
2009-11-03 00:00:00 The Best Books on Investing by Vitaliy Katsenelson (Article)
Author and fund manager Vitaliy Katsenelson provides us with his list of the best books on investing. It contains six sections: Selling, Think Like an Investor, Behavioral Investing, Economics, Stock Market History, and Books for the Soul.
2009-10-20 00:00:00 Letters to the Editor - Fama-French and the Active-Passive Debate by Various (Article)
Last week's article, Luck vs. Skill in Mutual Fund Alpha Estimates, on the latest research from Ken French and Gene Fama drew plenty of responses. We publish two of them, both in support of active management.
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.
2009-10-13 00:00:00 Seven Ways to Reach Prospects in the New Normal by Nancy Opiela (Article)
Extravagance is out and frugality is in. Finding happiness in what we can afford is what sells. With many investors implicitly or explicitly bracing for the New Normal and lower returns from the capital markets, advisors need to rethink their marketing programs to be consistent with their clients' tempered expectations.
2009-09-29 00:00:00 Strategic and Tactical Perspectives on Gold by Geoff Considine, Ph.D. (Article)
There are good reasons for investors to maintain a long-term strategic allocation to gold, which has clear, positive portfolio benefits (due to low correlation to other asset classes). That said, gold is in an historic run-up in value and has been generating unsustainably high returns. Because of its high price and rising volatility, Geoff Considine argues there is significant tactical risk in gold.
2009-09-29 00:00:00 The Case Against Inflation by Robert Huebscher (Article)
Investors should expect extremely low inflation - just slightly above zero - for the indefinite future, according to Connie Everson, the Managing Director and co-founder of the Capital Markets Outlook Group, a Boston-based economic consulting firm that serves institutional investors throughout the world. Everson delivered her remarks to an audience of financial analysts in Boston last Thursday.
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.
2009-09-15 00:00:00 Five Reasons to Avoid the Gold Rush (Updated) by Vitaliy Katsenelson (Article)
The reasons why one should sell the cat, pawn the mother-in-law, and use the proceeds to buy gold are well known. However, in this guest contribution, Vitaliy Katsenelson offers arguments why one should think twice before jumping in bed with the gold bugs, or at least remain sober while determining gold's weight in the portfolio.
2009-09-15 00:00:00 The Key to Trading and Investing in ETFs by Paul Weisbruch (Article)
In this guest contribution, Paul Weisbruch argues that an ETF does not require a certain amount of trading volume in order to be liquid. The underlying securities of the ETF determine its liquidity. Many within the industry do not grasp this reality and are missing out on a lot of quality ETFs.
2009-09-01 00:00:00 Politics and Fund Managers by Robert Huebscher (Article)
Those readers who would like to know whether to invest with Democrat or Republican fund managers finally have some guidance, thanks to a new academic study. We report the results, along with a host of reasons why you shouldn't read too much into this data. We also provide the names of the top fund manager donors to each party over the period from 1992 to 2006.
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.
2009-08-11 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 Paul Krugman on the Prospects for Recovery by Eric Uhlfelder (Article)
Nobel laureate economist Paul Krugman tells Eric Uhlfelder that massive government spending is essential for generating growth, but fears the first stimulus package will not be enough to keep the economy from slipping back into recession nor reducing unemployment.
2009-08-04 00:00:00 How to Think about Return and Risk at the Same Time by Adam Jared Apt (Article)
In this guest contribution targeted to the educated layman, Adam Apt discusses the relationship between return and risk. Only when you can keep in mind at one and the same time these two concepts can you properly understand how to invest. And you will also understand why you should invest. Without the marriage of the concepts, you will be playing the market-or shunning it-as if it were a casino.
2009-08-04 00:00:00 Letters to the Editor by Various (Article)
In our letters to the Editor, readers respond to last week's article, How Long is the Long Run?, Geoff Considine's article, The Retirement Portfolio Showdown: Jeremy Siegel v. Zvi Bodie , and Ted Wong's article, Moving Average: Holy Grail or Fairy Tale - Part 3.
2009-07-14 00:00:00 Some Signs of Life and Hope for a New Recovery by John P. Calamos and Nick P. Calamos (Article)
Calamos Investments' co-CIOs John P. Calamos, Sr. and Nick P. Calamos discuss the current market climate, implications of Fed and government actions, and investment opportunities in the shorter- and longer-term. Global governmental policies have restored a degree of confidence in the financial markets and many key financial metrics are back to pre-Lehman levels. Many investment opportunities will be available in the future. We thank them for their sponsorship.
2009-07-07 00:00:00 Burton Malkiel Talks the Random Walk by Robert Huebscher (Article)
Passive investing has no more outspoken advocate than Burton Malkiel. At age 72, Malkiel remains every bit as committed to the efficient market hypothesis as when he wrote A Random Walk Down Wall Street in 1973. Malkiel, who has taught finance at Princeton for the last 20 years, was a featured speaker at the Forbes Advisor Conference last week. He insists that investors should buy and hold index funds and defended his position against a series of challenges put to him.
2009-06-30 00:00:00 Letters to the Editor: The Road to Zimbabwe by Various (Article)
In the second set of our letters to the Editor, we publish responses to to our article, The Road to Zimbabwe.
2009-06-23 00:00:00 The Road to Zimbabwe by Robert Huebscher (Article)
John Williams of Shadow Government Statistics is best known for exposing inaccuracies and biases in government reporting of data - most notably the understatement of the CPI index. Williams says the US economy is on the brink of hyperinflation which will render the dollar worthless, as happened recently to Zimbabwe's local currency.
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 Peter L. Bernstein Remembered by Robert Huebscher (Article)
The investment industry lost one of its leaders last week, when Peter L. Bernstein passed away at the age of 90. As an author, Bernstein provided clarity and insight to our understanding of risk and the way markets operate, through his books and his newsletter, Economics and Portfolio Strategy. We are republishing our interview with him last January, when he foresaw many of the elements of the current crisis.
2009-06-16 00:00:00 Tackling Today?s Number One Client Challenge by Dan Richards (Article)
Talk to advisors about the challenges they face today and you'll get a lengthy list - often headed by unhappy clients, reduced income and a struggle to stay positive and productive. While these are all serious issues, says Dan Richards, for most advisors they are dwarfed by the number one obstacle to getting business back on track - rebuilding investor confidence in our trust and integrity.
2009-06-16 00:00:00 Annual Style Index Reconstitution: Good or Bad? by Ron Surz (Article)
In just two weeks, at the end of June, the Russell style indexes will undergo their annual reconstitution. A lot has happened in the last year, especially to the finance sector. Ron Surz identifies the pressing questions for financial advisors.
2009-06-09 00:00:00 Simon Johnson on Obama?s Achilles Heel by Eric Uhlfelder (Article)
While he agrees with much of what the US administration is doing to confront the economic crisis, Simon Johnson, the former chief economist of the International Monetary Fund, fears that present policy is not addressing a key issue: the overwhelming influence of the finance industry in US economic affairs. He likens this imbalance to what we see at the core of many emerging markets crises.
2009-06-09 00:00:00 Bill Gross and the New Normal by Robert Huebscher (Article)
Nearly a half-century of global economic prosperity has ended, and investors must gird themselves for muted returns from the capital markets, according to Bill Gross, a Managing Director at PIMCO. Gross shared his outlook at the Morningstar Investor Conference.
2009-06-09 00:00:00 Let?s Talk Stocks: Berkowitz, Marsico and Weitz by Robert Huebscher (Article)
Three of the industry's most accomplished value investors - Bruce Berkowitz of the Fairholme Fund, Tom Marsico of Marsico Capital Management and Wally Weitz of Weitz Funds - spoke at a panel discussion at the Morningstar Investor Conference on May 28. We present some excerpts of their thoughts on key questions raised during the panel.
2009-06-09 00:00:00 Changes in the Most Popular Mutual Funds by Robert Huebscher (Article)
Each quarter we review changes in the Advisor Perspectives (AP) Universe, which represents $50 billion in high-net worth assets managed by RIAs. Our analysis looks at changes in asset allocation, the mutual funds and ETFs that gained or lost market share, and the performance of the most popular actively managed mutual funds. This analysis focuses on the most popular mutual funds.
2009-06-02 00:00:00 Jeremy Grantham's Warnings to Investors by Robert Huebscher (Article)
Of the thousands of investment letters penned in the industry, only one draws as much readership as Warren Buffet's annual letter to his shareholders: The quarterly commentary written by Jeremy Grantham. Grantham, the Chairman of the Boston-based investment firm Grantham Mayo Van Otterloo, was a featured speaker at Morningstar's Investor Conference last week, and he spoke at two breakout sessions. Those who, like me, attended both were richly rewarded, as he gave two distinctly different talks, addressing many subjects not covered in his commentaries.
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.
2009-05-19 00:00:00 Opportunities in TIPS by Robert Huebscher (Article)
TIPS offer a perfect hedge against inflation for US investors, but advisors need to understand their risks. We look at the history of TIPS prices and explain why this asset class is more volatile than you might think.
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.
2009-05-19 00:00:00 Waiting for the Fifth Wave by Robert Huebscher (Article)
In response to skepticism we've expressed in the past about technical analysis, one of our readers invited us to attend the Market Technicians Association symposium in New York last week. Our skepticism remains, but it was an enjoyable event and we report on the forecasts of Elliot Wave theorist Robert Prechter.
2009-05-12 00:00:00 The Well-Meaning by Michael Lewitt (Article)
We are once again privileged to publish the latest version of the HCM Market Letter, edited by Michael Lewitt. Lewitt's analysis and writing are a cut above virtually everything else we see, and you will enjoy reading his latest thoughts. You can also subscribe directly to his newsletter using the link at the beginning of the article.
2009-05-05 00:00:00 Defending Against Inflation: A New Look across Asset Classes by Robert Huebscher (Article)
In the long-term performance race against inflation, stocks are the hands-down winner, outpacing inflation 9.7% to 3.0% since 1926. But that history is characterized predominantly by modest inflation, with one big exception - the 1970s, when double-digit inflation contributed to a bear market. We look at new research showing the effectiveness of different asset classes as inflation hedges, and Zvi Bodie explains the implications for retirement portfolios.
2009-04-28 00:00:00 Gary Shilling ? Economic Forecast and Current Market Opportunities by Robert Huebscher (Article)
Gary Shilling is well-known for his forecasting record, having correctly predicted major economic events over the past several decades. Beginning in 2002, he warned his clients that the housing market "has taken on self-feeding, bubble dimensions that will sooner or later collapse," and continued to sound this warning through 2007, when his predictions came true. Dr. Shilling shares with us his current forecast for the economy and the market.