More on Related Themes
2016-04-28 00:00:00 A Gold Revaluation Could Transform Your Financial Status – Overnight by David Smith of Money Metals Exchange
As we move through 2016, the Horsemen of the geopolitical, economic, and social apocalypse are on the march.
2016-04-25 00:00:00 Confusion Reigns by Carl Kaufman, Simon Lee, Bradley Kane of Osterweis Capital Management
Osterweis Capital Management Fixed Income Outlook April 2016
2016-04-23 00:00:00 Echoes of 1999: The Tech Bubble and the "Asian Flu" by Rob Arnott of Research Affiliates
Four market conditions now parallel the extremes last experienced in December 1998, setting up 1999 as the first year in a decade of outperformance by inflation-fighting and diversifying assets. Now is the time to rotate into these unloved asset classes.
2016-04-18 00:00:00 The Market Pendulum by Joseph Amato of Neuberger Berman
Can 2016 earnings justify today’s valuations? Traditionally, equity people are supposed to be more optimistic than bond people, but I am prepared to buck the stereotype just a little as we enter day four of the Q1 earnings season.
2016-04-13 00:00:00 Alpha or Assets? — Factor Alpha vs. Smart Beta by Patrick O'Shaughnessy of O'Shaughnessy Asset Management
More and more investors are buying “factor”-based strategies, which invest using measures like valuation and low volatility. However, the most popular strategies are applying factors the wrong way. We believe that strategies should be built for alpha, not scale—but the asset management industry has gone in the opposite direction.
2016-04-11 00:00:00 Oil, the Dollar, Rates: Three Stars Align by Brad Tank of Neuberger Berman
Lower dollar, higher oil could improve prospects for 2016 earnings.
2016-04-11 00:00:00 European Bank Regulation: Expect a Shift by Joshua Anderson of PIMCO
Regulatory uncertainty will create opportunities for private capital as banks retrench from some lending markets.
2016-04-06 00:00:00 Market Valuation, Inflation and Treasury Yields: Clues from the Past by Jill Mislinski (Article)
Our monthly market valuation updates have long had the same conclusion: US stock indexes are significantly overvalued, which suggests cautious expectations on investment returns. In a "normal" market environment -- one with conventional business cycles, Federal Reserve policy, interest rates and inflation -- current valuation levels would be a serious concern.
But these are different times.
2016-04-05 00:00:00 Actively Managing the Evolution in the Insurance Industry by Robert Young of PIMCO
How are insurance companies adapting to low returns, industry consolidation and new regulations?
2016-04-04 00:00:00 Markets to Investors: It’s ‘Time In,’ Not ‘Timing’ by Erik Knutzen of Neuberger Berman
The old adage says that “time in the market” is more important than “timing the market.” Anyone who needed a reminder of that truth got it in spades during the first quarter of 2016. Who would have thought, on the dark morning of February 12 with the S&P 500 Index down more than 10%, that U.S. equities would finish the quarter up 0.8%?
2016-04-02 00:00:00 Open Letter to the Next President, Part 4 by John Mauldin of Mauldin Economics
Today we are going to look at what the next president might do in response to recession – and possibly even to prevent a recession. I actually think a positive path can be found, but following it will take an enormous political effort and a big shift in the current environment of noncooperation.
2016-04-01 00:00:00 Driving in Neutral by Team of Neuberger Berman
So far, 2016 has been characterized by stomach churning swerves in market direction with little actual change in levels.
2016-04-01 00:00:00 Real and Alternative Assets Outlook Second Quarter 2016 by Team of Neuberger Berman
Despite challenges, we maintained a slightly overweight view on lower volatility and directional hedge funds; meanwhile certain areas within private debt appear attractive.
2016-04-01 00:00:00 Fixed Income Outlook Second Quarter 2016 by Team of Neuberger Berman
High yield, particularly short-duration issues and higher-rated credits, remains in favor given current prevailing yields and the outlook for credit quality.
2016-04-01 00:00:00 Equity Outlook Second Quarter 2016 by Team of Neuberger Berman
Global equities—particularly those in developed markets outside the U.S.—may provide more opportunities over the coming 12 months.
2016-04-01 00:00:00 Crestmont Market Valuation Update by Jill Mislinski (Article)
Quick take: Based on the March S&P 500 average of daily closes, the Crestmont P/E is 86% above its arithmetic mean and at the 97th percentile of this fourteen-plus-decade monthly metric.
2016-03-31 00:00:00 A Flat Market Year-To-Date by Jack Rivkin of Altegris Advisors
The noise of the first three months of the year was hard to avoid, and the liquidity trap led to some investors selling at the wrong time. Jack Rivkin, CEO of Altegris Advisors, points out that had investors avoided the noise, they’d see that the equity market has actually been flat YTD.
2016-03-29 00:00:00 Real Estate Gets Its GICS by Team of Neuberger Berman
A dedicated sector classification gives real estate securities the recognition they deserve.
2016-03-28 00:00:00 Equity Markets: A Pause that Refreshes? by Joseph Amato of Neuberger Berman
Geopolitical events have been occupying the attention of investors, but without much effect on markets.
2016-03-28 00:00:00 Terrror, Debt And Valuation by Christian Thwaites of Brouwer & Janachowski
The market took a rest last week. Some of it was pure exhaustion from the prior week’s data. Some of it was positioning, and trader absenteeism ahead of the Easter break in most countries. And some was shock at the horrific actions in Brussels. As of Thursday’s close, the market broke its fifth straight week of gains to close more or less flat. Still, that's up around 10% from February lows and other markets; for example, U.S. Small Cap and Emerging Markets, up by even more.
2016-03-24 00:00:00 The Value of Value by Brandon Thomas of Envestnet
Value investing as an investment strategy has existed for at least 100 years, and likely for centuries (if not millennia). At its core, value investing is a fairly straightforward strategy: Investors seek to buy an asset when its price is perceived to be “cheap” relative to measures of fundamental value.
2016-03-21 00:00:00 Central Banks Just Pulled Back from the Abyss by Brad Tank of Neuberger Berman
A spiral into deeper negative rates is off the table for now.
2016-03-19 00:00:00 Rising Global Taxes and Regulations (Indirect Taxation) Are Chipping Away at the Benefits of Low Int by Frank Holmes of U.S. Global Investors
Compliance and regulation measures have intensified from the financial sector to the food industry, from the U.S. all the way to Brazil. Many CEOs of banks, as well as brokers that I have spoken with recently, have lamented on the financial burden of excessive regulation and the indirect taxation that comes along with this rise in rules on steroids. Regulations are fueled with good intentions; however, the unexpected consequences like slow global growth need to be adjusted.
2016-03-15 00:00:00 Why I Love Christmas In My Bathing Suit by Greg Silberman of Atlanta Capital Group
In our 2016 Market Forecast we postulated that this would finally be the year of rising interest rates! So far this forecast is a bust with the 10-year rate dropping precipitously to a (panic) low of 1.57% in February. Our thinking has been that Government Bonds would be the recipient of any flight to safety during an equity market sell-off which is indeed how things have worked out -- so far.
2016-03-15 00:00:00 Newsletter - March 2016 by Harold Evensky of Evensky & Katz / Foldes Financial Wealth Management
Harold Evensky's quarterly letter to his readers.
2016-03-07 00:00:00 March: In Like a Lamb, Out Like a Lion? by Joseph Amato of Neuberger Berman
In the old days, they said that when March comes in like a lamb it goes out like a lion. The proverb is rooted in the reality that, in the northern hemisphere at least, this month’s weather tends to be changeable and unpredictable—volatile, as we might say in the investing industry. At this time of year, winter and spring contend with one another like bears and bulls in financial markets. When it comes to the seasons, however, we may suffer the odd gale, but we know the days will lengthen, the air will warm. The markets are not so easy to forecast.
2016-03-01 00:00:00 Can Policy Evolution Be a Shot in the Arm for Hedge Funds? by Marc Gamsin, Jeff Bennett of AllianceBernstein
Hedge fund returns lagged during the multiyear rally in US equities, as capital markets rode a wave of unprecedented monetary easing. But the impact of policy changes could mean changing fortunes for alternatives.
2016-02-29 00:00:00 Politics and Your Portfolio by Erik Knutzen of Neuberger Berman
Tomorrow is “Super Tuesday” here in the U.S. Last week, all the talk in Europe was about “Brexit.” These newspaper buzzwords rarely figure in investors’ strategy meetings. But a new specter is haunting markets: the specter of political risk.
2016-02-29 00:00:00 As Equity Markets Normalize, Alternative Strategies May Be Worth Considering by Walter Davis of Invesco Blog
As the equity market normalizes, I believe alternative investments can be helpful to investors. That’s because alternatives have a history of outperforming equities during periods of stock market weakness.
2016-02-22 00:00:00 An Ocean Divides European and U.S. Banks by Brad Tank of Neuberger Berman
We believe U.S. banks are well-capitalized, well-managed and good value.
2016-02-20 00:00:00 Monopoly Is Going Cashless. Could We Be Next? by Frank Holmes of U.S. Global Investors
Hasbro Gaming just released an “Ultimate Banking” version of the popular board game Monopoly that nixes the funny money in favor of play credit cards and an electronic scanner.
2016-02-19 00:00:00 Royce Opportunity Fund Review and Outlook by (Article)
Portfolio Manager Bill Hench looks at the factors that impacted Royce Opportunity Fund in 2015, and explains why he is optimistic about this broadly diverse, deep value portfolio for 2016.
2016-02-18 00:00:00 Marc Faber on Cashless Society Insanity and Why Wall Street Hates Gold by Mike Gleason of Money Metals Exchange
It is my privilege now to be joined by a man who needs little introduction, Marc Faber; editor and publisher of The Gloom, Boom & Doom Report. Dr. Faber has frequently appeared on financial shows across the globe and he's a well-known Austrian school economist, and an investment adviser.
2016-02-18 00:00:00 Asia-Pacific: A Broader Investment Landscape in 2016 by Eric Mogelof of PIMCO
In the turbulent market environment, five longer-term investment trends stand out for 2016. It has been a turbulent year for Asia’s financial markets. In the following interview, Eric Mogelof, head of Asia-Pacific at PIMCO, puts events in perspective and discusses investment trends in the region for the year ahead.
2016-02-11 00:00:00 3 Reasons Why this Gold Rally Is the Real Deal by Frank Holmes of U.S. Global Investors
Gold prices peaked at $1,900 per ounce in September 2011. It was the end of a spectacular, decade-long bull market, during which the precious metal’s value increased a phenomenal 645 percent.
2016-02-09 00:00:00 A View From the Hill by Team of Cedar Hill Associates
Investors cautious after rocky 2015, but recession appears remote. Investors stomached a white-knuckle ride through much of 2015 as the financial markets searched for direction. Although global equity indices bounced off their September lows during the fourth quarter, returns for the full year proved disappointing.
2016-02-08 00:00:00 The Most Dangerous Financial Products by Michael Edesess (Article)
What would we think of doctors who deliberately hurt patients by prescribing dangerous and unhealthful products in order to make more money? Fortunately, the medical profession is set up in such a way that such things virtually never happen. This is not so in the financial services industry, where hazardous products are routinely sold to unsuspecting consumers.
2016-02-08 00:00:00 Sustainable and Responsible Investing: Is There a Price to Pay? by Larry Swedroe (Article)
Consumers can use their market power to demonstrate their aversion to certain business activities by choosing not to purchase goods or use services from companies that, in their minds, are selling immoral products. Similarly, investors can decide not to invest in such companies. But do those investors sacrifice returns relative to a broad-based index fund?
2016-02-08 00:00:00 Crude Oil- Lower for Longer? by Joseph Hickey of Cleary Gull
The High Yield market is declining as the magnitude of the capital loss is amplified by the decline in energy prices. Most of the energy debt exposure is held by High Yield mutual funds and Hedge funds, not the banks. This is an important distinction. The High Yield market is designed to withstand a certain level of defaults and restructurings. Potential losses, while painful, should not cause the systemic collapse of the banking system and its ability to extend credit to the U.S economy.
2016-02-08 00:00:00 Weighing the Week Ahead: Is a Recession Looming? by Jeff Miller of NewArc Investments, Inc.
The economic calendar is light and it is the start of the week-long Chinese New Year. This means some media time and space that must be filled. Needing an attention-getter, I expect the punditry to be asking: Is a recession looming?
2016-02-05 00:00:00 GMO Quarterly Letter by Ben Inker, Jeremy Grantham of GMO
In a new quarterly letter to GMO's institutional clients, co-head of asset allocation Ben Inker examines U.S. high yield corporate bonds, an "asset class that had a notably bad year," concluding, "at current spreads, high yield seems to be no worse than fair value and probably better than that... In today's environment, that makes it one of the best available risk assets for investors" ("Giving a Little Credit to High Yield").
2016-02-02 00:00:00 As Markets Swing, Momentum Can Be Deceiving by Russ Koesterich of BlackRock
BlackRock Chief Investment Strategist Russ Koesterich discusses the likelihood that markets will remain volatile, and what that means for stocks, particularly for the momentum theme.
2016-02-01 00:00:00 James Montier on Fed-Induced Bubbles, Market Valuations, Smart Beta and Liquid Alts by Robert Huebscher (Article)
James Montier is a member of Grantham Mayo van Otterloo’s (GMO’s) asset allocation team. In this interview, he discusses the effect of monetary policy on market valuations, and offers his opinion on smart-beta and liquid-alt investment products.
2016-02-01 00:00:00 What Would Minsky Do Now? by Laurence B. Siegel (Article)
In the two decades since his death, Hyman Minsky’s stature has grown enormously. He foresaw the great financial crisis of 2007-2009, and economists routinely refer to “Minsky moments” as the tipping point when seemingly stable financial markets collapse with catastrophic consequences. It’s instructive to speculate on how Minsky would view our post-crisis economic recovery, and a new book allows us to do just that.
2016-01-29 00:00:00 Crude Oil: The Bane of a Commodity Trader’s Existence by Harish Sundaresh of Loomis Sayles
Oil traders everywhere probably had their fingers crossed that oil’s craziest trading days would not persist into the New Year. In 2015, we watched benchmark oil indices drop over 30% and the sheer number of shuttered commodity hedge funds is testament to how difficult trading ‘black gold’ has been. Unfortunately, I expect 2016 to be no easier – full of fits and starts with lots of volatility in between. However, by end of 2016 I expect crude prices to rise to $45-50 from current levels of just under $30.
2016-01-27 00:00:00 Opportunities in the Evolving Non-Agency Mortgage Backed Security Market by Jason Callan of Columbia Threadneedle Investments
The non-agency MBS market has evolved over the past few years with new sectors offering attractive investment opportunities. Non-agency MBS have attractive fundamentals as consumers benefit from a stronger dollar and lower energy prices. Flexible strategies with disciplined credit selection can help take advantage of the evolving non-agency RMBS investment landscape.
2016-01-26 00:00:00 Second Set of Updates at Crestmont Research by Doug Short (Article)
Note from dshort: My friend Ed Easterling, whose Crestmont Research P/E valuation is a regular feature on this website, has published a collection of periodic updates to his ongoing analysis. The commentary below is based on his latest distribution email to subscribers.
2016-01-25 00:00:00 The First Eagle Portfolio Management Team on the Trends Driving Global Opportunities by Robert Huebscher (Article)
First Eagle’s Global Fund (SGENX) is its flagship fund, with over $45 billion in assets. Since inception (1/1/79), it has returned 13.35% annually, versus 9.50% for the MSCI world index. Over the last 15 years, it has been in the top 2% of its peer group. I recently spoke with its managers about the global trends driving opportunities for their fund.
2016-01-22 00:00:00 On January Barometers and Market Bargains by Templeton Global Equity Group of Franklin Templeton Investments
We are now witnessing historic extremes in the discount afforded to value relative to growth, quality and safety. While this environment has been (and may remain) painful for some time, the eventual normalization of these extremes represents the most compelling opportunities in equity markets today.
2016-01-14 00:00:00 Four Reasons Why the Bond Market Is Not Headed Toward a Liquidity Crisis by Tony Wong of Invesco Blog
Liquidity in fixed income markets has become a major focus of concern inside and outside of the investing community. While the consensus view suggests that US bond markets have become more susceptible to serious shocks, Invesco Fixed Income believes there are four main factors that will help the US avoid a liquidity-induced systemic crisis.
2016-01-08 00:00:00 CIO Newsletter – Jan 2016 by Ritesh Jain, Abhishek Sonthalia of Tata Asset Management
This newsletter has my views on the important developments in the investment world in 2015 and the outlook for 2016. Indeed we are in a very dynamic global environment and volatility is abound. One of the most important developments in 2015 was the depletion of global forex reserves held by central banks and asset sales by petro dollars funded sovereign wealth funds.
2016-01-07 00:00:00 New Updates at Crestmont Research by Doug Short (Article)
Note from dshort: My friend Ed Easterling, whose Crestmont Research P/E valuation is a regular feature on this website, has published collection of periodic updates to his ongoing analysis. The commentary below is based on his latest distribution email to subscribers.
2016-01-05 00:00:00 Liftoff by Dr. Richard Michaud of New Frontier Advisors
Domestic equities were positive for the quarter but mostly flat for the year. In the quarter the S&P 500 gained 4.8%, the Dow Jones Industrials 5.8% and the NASDAQ 6.4%. Year to date the S&P went down by 0.7%, Dow declined by 2.2% but the NASDAQ was up nearly 5.7%. U.S. small caps underperformed large caps; the Russell 2000 index gained 1.9% for the quarter and lost 5.7% for the year. Domestic bond markets were little changed for the quarter and year.
2016-01-05 00:00:00 2015 In Review: It Was A Wild Year In The Markets by Gary Halbert of Halbert Wealth Management
As we begin another New Year, it is often good to reflect on the year that just passed and what we may have learned from it. Here are some thoughts about the market activity we saw in 2015 and what we may see in 2016.
2015-12-22 00:00:00 5 Investing Myths That Will Hurt You by Lance Roberts of Real Investment Advice
In the summer of 1885 William R. Travers, prominent NYC businessman and builder of Saratoga Race Track, was vacationing in Newport, Rhode Island. He pointed out a long line of beautiful yachts tied up in the harbor. When he was informed that they all belonged to Wall Street brokers he simply asked, “Where are their clients’ yachts?”.
2015-12-20 00:00:00 The Seven Fat Years of ZIRP by John Mauldin of Mauldin Economics
In today’s letter we are going to examine the problematic credit markets, and I want to focus on something that is happening off the radar screen: the continuing rise of credit in private lending. I predicted the rise of private credit back in 2007 and said that it would become a major force in the world, but I got strange looks from audiences when I talked about the arcane subject of private credit. Today the shadow banking system is taking significant market share from traditional banking.
2015-12-16 00:00:00 Weighing the Week Ahead: Is It Finally Time for the Santa Claus Rally? by Jeff Miller of NewArc Investments, Inc.
Last week’s stock results were poor for nearly all funds and sectors. Will this continue? Until Wednesday, we can expect a continuing focus on the Fed. After that announcement we may see a change in tone: Pundits will be asking: Is it finally time for the Santa Claus Rally?
2015-12-14 00:00:00 Deja Vu: The Fed's Real "Policy Error" Was To Encourage Years of Speculation by John Hussman of Hussman Funds
Over the past several years, yield-seeking investors, starved for any “pickup” in yield over Treasury securities, have piled into the junk debt and leveraged loan markets. Just as equity valuations have been driven to the second most extreme point in history (and the single most extreme point in history for the median stock, where valuations are well-beyond 2000 levels), risk premiums on speculative debt were compressed to razor-thin levels. By 2014, the spread between junk bond yields and Treasury yields had fallen to less than 2.4%.
2015-12-11 00:00:00 Extreme Leverage in a Gold Futures Market Nearing the Breaking Point by Clint Siegner of Money Metals Exchange
The metals markets rallied strongly on Friday – action which came as a surprise to many. The gains snapped a 6-week losing streak for gold, silver, and platinum. Prices rose despite a stronger-than-expected November jobs report raising the odds the Fed will hike interest rates later this month.
2015-12-09 00:00:00 Why Getting Valuation Right Is So Important To Retired Dividend Growth Investors by Chuck Carnevale of F.A.S.T. Graphs
Although getting valuation right before you buy a stock is critically important to the long-term oriented retired dividend growth investor, it is not a short-term market timing concept. My point is that short-term market movements are typically volatile and unpredictable. The reason is simple. Over short periods of time, which I define as less than a business cycle (3- 5 years), emotion has a major effect on stock prices.
2015-12-08 00:00:00 Extending the Cycle by Erik Knutzen of Neuberger Berman
At our most recent (fourth-quarter) Asset Allocation Committee meeting, perhaps the single most important issue we considered was whether the then-fresh decline of risk assets indicated a needed bull market correction, or something far more serious. Our analysis suggested short-term weakness, but for a while, the noise around China’s devaluation, Federal Reserve policy and concern about emerging markets and commodity prices had many investors very worried.
2015-12-07 00:00:00 Four Key Reasons to Consider Market Neutral Investing by Kenneth Masse of Invesco Blog
The market downturn and ensuing volatility in the third quarter of 2015 is a timely reminder about the benefits of diversifying your portfolio with investment strategies that are expected to exhibit little-to-no correlation with the broad equity and bond markets.
2015-12-06 00:00:00 You Have Questions, I Have Answers by John Mauldin of Mauldin Economics
Rather than dive deeply into a single topic today, I will weigh in on some of the week’s top financial stories. I recently did a webinar debate with my friend Frank Trotter, hosted by Robert Huebscher of Advisor Perspectives, on whether the Fed should raise rates in December. I argued they should, for reasons I’ve written about before, so we won’t go into that. But we did get a number of incisive, timely questions during and after the webinar. I will try to answer most of them in this letter.
2015-12-01 00:00:00 Weighing the Week Ahead: Will the Fed be Data Dependent? by Jeff Miller of NewArc Investments, Inc.
Back from a quiet, holiday-shortened week, market participants face an avalanche of data and plenty of FedSpeak. This is an irresistible combination for pundits, who will parse each economic report with emphasis on what it might mean for the Fed. In light of many Fed promises, they will all be asking: Will the Fed really be data dependent?
2015-11-25 00:00:00 To Be Continued … the Fed Drama and Its Implications by David Robertson of Arete Asset Management
The Fed has strung investors along for quite a while in anticipation of the first rate increase in nearly a decade. What would happen if low rates were to become a permanent fixture of the investment landscape?
2015-11-25 00:00:00 Technically Speaking: The Real Value Of Cash by Lance Roberts of Streettalk Live
With the "inmates running the asylum" during a holiday-shortened trading week, the upward bias to the market is set to continue.
2015-11-25 00:00:00 How Should an Asset Allocator Think About The Royce Funds Today? by (Article)
Portfolio Manager Steve Lipper talks with Co-CIO Francis Gannon about why an important ingredient in any recipe for asset allocation is measured by one’s view of the economy. This is why in The Royce Funds, we not only emphasize consistency, discipline, and risk awareness in how we operate, but also offer distinctive strategies designed to perform differently in different market environments.
2015-11-17 00:00:00 Sustaining a Foundation, Stepping Up as Fiduciaries by Seth Masters of AllianceBernstein
Establishing a foundation can be a great way to pursue charitable objectives, but it often brings a host of fiduciary responsibilities that donors may feel ill-equipped to handle. In this hypothetical case study, a couple of entrepreneurs sought our advice on asset allocation.
2015-11-16 00:00:00 The Bubble Right In Front Of Our Faces by John Hussman of Hussman Funds
Investors have a habit of pointing to past bubbles as if they have actually learned something, even when they are in the midst of another one.
2015-11-11 00:00:00 Technically Speaking: Short-Term Bull Or Bearish Top by Lance Roberts of Streettalk Live
Over the last couple of weeks, I have discussed the entrance of the markets into the seasonally strong period of the year and the potential to increase equity exposure in portfolios on a "short-term" basis.
2015-11-09 00:00:00 Weighing the Week Ahead: What Will Higher Interest Rates Mean for Financial Markets? by Jeffrey Miller of NewArc Investments, Inc.
Friday’s employment report, rightly or wrongly, confirmed expectations for a December shift in Fed policy. There will be a parade of Fed speakers. We can expect daily discussion about the implications. The punditry will be asking: What will higher rates mean for financial markets?
2015-11-09 00:00:00 Resisting the Chase: Reimagining Liquidity and Diversification by Douglas A. Dachille and Mark G. Alexandridis (Article)
Mutual fund bond investors have reached an unwelcome crossroads. With interest rates at historic lows, they have spent much of their post-crisis existence cautiously ascending the risk ladder in search of yield. While the liquid alternative space has been touted as fertile ground for diversification and non-correlated returns, it has fallen short of delivering the kind of liquidity and diversification today’s retail investor really needs.
2015-11-03 00:00:00 6 Reasons To Be Bullish (or Not) On Stocks by Lance Roberts of Streettalk Live
In between inspecting my kids candy cache for "safety reasons," which is parent code for eating the Snickers bars, I read an interesting piece by Simon Constable via U.S. News.
2015-11-02 00:00:00 Should FIFAA Be Red-Carded? by Niels Jensen of Absolute Return Partners
No, I haven’t gone bonkers – the focus of the Absolute Return Letter has not all of a sudden switched to football. Nor have I lost the ability to spell correctly, although I am sure that there are one or two like-minded readers out there who would also like to see the rear side of Sepp Blatter one final time.
2015-11-02 00:00:00 How European Insurance Portfolios Can Benefit From Alternatives by Tom Collier, Matthieu Louanges, Jeroen Van Bezoouen of PIMCO
Adding alternatives may not only make economic sense, but it also has the potential to improve European insurers’ return on capital.
2015-10-29 00:00:00 The Weather Will Change for MLPs by David Chiaro of Eagle Global Advisors
The advantages and competitiveness of North American shale assets will only grow over time and we expect production to resume its increase at some point. We believe the recent sell off in MLPs is due to forced selling and a typical equity market cascade and overshoot, which has created a potentially attractive opportunity for investors to allocate to the asset class. Adapting Mark Twain to the MLP market, the reports of its demise are greatly exaggerated.
2015-10-29 00:00:00 The Upside Potential in Buying Some Puerto Rico’s Bonds Now by Robert Kane of BondView
Puerto Rico’s municipal bonds have crashed just like Greek bonds did three years ago. Puerto Rico issues hundreds of different types of bonds. They shouldn’t be viewed as a homogeneous h?oard??. They have varying degrees of credit quality and risks. Some are insured. Many have become mispriced because of the company they keep and are trading at a steep discount to face value.
2015-10-28 00:00:00 On Mutual Fund Liquidity, SEC Headed in Right Direction by Ashish Shah of AllianceBernstein
Investors trust open-ended mutual funds because they promise easy entry and exit. We think proposed new liquidity rules should help fund managers deliver on that promise.
2015-10-23 00:00:00 Indexing the Past by Bob Rice of Neuberger Berman
Today’s financial world disputes many of the most basic assumptions of yesteryear’s investing “truths.” Globalization, the rise of a “winner take all” digital economy and markets led by policymakers have redrawn the investing map in profound ways.
2015-10-22 00:00:00 The US Bond Market: A Welcome "Nonstory" During August's Turmoil by Payson Swaffield of Eaton Vance
Overall, the bond market functioned relatively well in the risk-off month of August – it did its job in reflecting relative value among sectors.
2015-10-19 00:00:00 Weighing the Week Ahead: Can Strong Housing Data Give An "All Clear" Signal for the U.S. Economy? by Jeff Miller of NewArc Investments, Inc.
It is a very unusual week for data, with many of the major housing reports on tap and not much else. China’s GDP will be a big story over the weekend, and important earnings news will continue. Despite this, pundits will turn their attention to housing, asking: Can a housing rebound signal “all clear” for the U.S. economy?
2015-10-16 00:00:00 Market Overview Q315 by David Robertson of Arete Asset Management
Turmoil in the third quarter signaled some important changes that are going to require investors adopt new playbooks in order to succeed.
2015-10-13 00:00:00 The Fed DID NOT Save the Economy by Brian Wesbury, Robert Stein of First Trust Advisors
Last week the Wall Street Journal (WSJ) opinion page published a piece by former Federal Reserve Chairman Ben Bernanke. The title was “How the Fed Saved the Economy.”
2015-10-12 00:00:00 Describing Liquid Alts Common Requirements under the Investment Company Act of 1940 by Michael Breitenbach of Larkin Point Investment Advisors LLC
Liquid alternative mutual funds have become a popular investment category, but they are not easily described by a single label. “Liquid alts” tend to exhibit risk, return, and regulatory characteristics unique to particular strategies.
2015-10-10 00:00:00 Unhealthy, Not Wealthy, and Far from Wise by John Mauldin of Mauldin Economics
In this week’s letter we’re going to take another look at healthcare trends. Healthcare is roughly 20% of the economy and every bit as impactful as the energy and food sectors.
2015-10-06 00:00:00 Equity Outlook Fourth Quarter 2015 by Neuberger Berman Asset Allocation Committee of Neuberger Berman
The Committee upgraded our view on U.S. large cap equities following the recent correction, and maintained a slightly overweight view on European equities. Our view on MLPs has also improved following a challenging year.
2015-10-05 00:00:00 The Looming Risk in the Bond Market by Robert Huebscher (Article)
Lack of bond-market liquidity has been the focus of recent reporting in the financial media. But one of the first to warn about that danger was Michael Aronstein, who said last week that the risks are clearer than ever. Mutual fund investors face the greatest peril.
2015-10-02 00:00:00 Master Limited Partnerships: Where To Next? by Investment Strategy Group of Neuberger Berman
Master Limited Partnerships (MLPs) have seen sharp declines this year, underperforming not only broad equity markets but also other income-producing assets such as utility stocks and real estate investment trusts.
2015-10-01 00:00:00 Recent Volatility Signals a Market in Transition by Chuck Royce, Francis Gannon of The Royce Funds
CEO Chuck Royce and Co-CIO Francis Gannon talk about why they believe the decline for equities in 3Q15 is part of the market transitioning back to more historically typical performance patterns, why a rate hike could be positive for small-caps and stocks as a whole, how history reveals the importance of discipline, the necessity of diversification within the small-cap asset class, and more.
2015-09-30 00:00:00 Liquid Alternatives: Considerations for Portfolio Implementation by Justin Blesy, Ashish Tiwari of PIMCO
Since the financial crisis, investors have poured nearly half a trillion dollars into liquid alternative strategies – typically mutual funds and ETFs that deploy non-traditional strategies once reserved for large institutional investors.i These vehicles offer the potential for diversification, downside risk mitigation and attractive risk-adjusted returns with the transparency and daily liquidity many investors desire. Liquid alternatives have been a democratizing force for investors, and we believe today’s market environment arguably has only made them more attractive.
2015-09-28 00:00:00 Equities May Remain Trendless Until More Clarity Emerges by Robert Doll of Nuveen Asset Management
Sentiment was negative for most of last week, as investors focused on continued uncertainty over Federal Reserve policy, slowing growth in China and emerging markets and ongoing weakness in commodities. Stock prices bounced on Friday following comments from Fed Chair Janet Yellen that a rate increase was looking more likely in 2015. Nevertheless, equities finished in negative territory, with the S&P 500 Index falling 1.4%. The health care, materials and industrials sectors came under pressure, while utilities, consumer staples and financials finished higher.
2015-09-26 00:00:00 Balloons in Search of Needles by John Mauldin of Mauldin Economics
It would be hard to miss an analogy to the stock market. Everything’s peaceful and calm, you’re drinking some fabulous wine, eating some fantastic fresh game and fish, looking at all the beautiful animals as you drift easily with the current. Anybody can steer the boat in a bull market. Until the rapids hit and the bottom falls out.
2015-09-25 00:00:00 Mutually Inclusive by Fred Ingham, Ian Haas, of Neuberger Berman
A quiet revolution is happening in hedge funds. Investors continue to allocate to the asset class, but the way they are allocating is changing, while its investor base is growing broader and becoming more inclusive.
2015-09-24 00:00:00 One Year, Three Lessons by David Katz of Larch Lane Advisors
As the category of liquid alts funds has exploded this year with numerous launches, there has been a healthy dose of skepticism about the products and the true ability to perform well in down markets. The following article from David Katz, who is President and COO of Larch Lane Advisors LLC, which is a leader in early stage hedge fund investing. The firm formed a joint venture with Rothschild Asset Management to manage the Rothschild Larch Lane Alternatives Fund.
2015-09-23 00:00:00 Logical Song: What to Make of Record Buybacks by Liz Ann Sonders of Charles Schwab
A common question I’ve been getting at client events lately is about stock buybacks and the effect they’re having on earnings-per-share (EPS); as well as what they say about the economy overall and investor/business psychology.
2015-09-22 00:00:00 On My Radar: “Dammit Janet” by Steve Blumenthal of CMG Capital Management Group
Whatever you can do, or dream you can… begin it; boldness has genius, power and magic in it.” – Johann Wolfgang von Goethe
2015-09-21 00:00:00 When an Easy Fed Doesn't Help Stocks (and When It Does) by John Hussman of Hussman Funds
Investors who wonder why the stock market failed to advance on the Fed’s decision to leave interest rates unchanged would do well to understand that the market is following a script that has played out repeatedly across a century of market history. The short explanation is straightforward. When investors are risk-seeking (which we infer from the behavior of market internals), Fed easing tends to be very favorable for the stock market, because risk-free, low-interest liquidity is a hot potato to risk-seeking speculators.
2015-09-18 00:00:00 The China Syndrome: Lessons from the A-Shares Bubble by Jason Hsu of Research Affiliates
The rapid rise and sharp decline of the A-shares market represents a massive redistribution of wealth, especially painful to uninformed investors who bought hot stocks near the peak. What should the Chinese government do now?
2015-09-18 00:00:00 Municipal High Yield: Do Outflows Indicate Increased Opportunity? by James Iselin, S. Blake Miller of Neuberger Berman
It may seem counterintuitive, but recent investment outflows may have contributed to return potential within the municipal high yield marketplace.
2015-09-15 00:00:00 Weighing the Week Ahead: To Hike, or not to Hike? by Jeff Miller of NewArc Investments, Inc.
After many years of standing pat on interest rates, there is finally a genuine chance of a shift in Fed policy. The punditry will be asking: To hike, or not to hike?
2015-09-10 00:00:00 Uncertainty = Opportunity® by Richard Bernstein of Richard Bernstein Advisors
While market volatility is currently making front-page headlines in the media, we argue that investors must look past the noise and objectively focus on the fundamentals. Before you decide on a drastic asset allocation shift, learn what opportunities we see in these uncertain markets.
2015-09-09 00:00:00 Newsletter - September 2015 by Harold Evensky, of Evensky & Katz / Foldes Financial Wealth Management
Harold Evensky's quarterly letter to his readers.
2015-09-08 00:00:00 ETFs: “Like Handing an Arsonist a Match” by Mark Oelschlager of Oak Associates
The popularity of ETFs has grown among market participants who, in the aftermath of the financial crisis, want to be able to reduce market exposure or shift between sectors when they sense danger/opportunity. The recent correction has brought to light the role of ETFs in the market, and the volume statistics are mind-boggling. Innovation is generally good, but like many things in life, there is a downside, and we would argue the downside to using ETFs to engage in frequent portfolio repositioning is particularly steep.
2015-09-08 00:00:00 CEF Investors by (Article)
Longtime investment analyst Maury Fertig of Relative Value Partners describes what he sees as three types of closed-end fund investors.
2015-08-31 00:00:00 The Active-Passive Debate Revisited by Bob Veres (Article)
Asset flows to passively managed funds are surging. But, as often happens, advisors are embracing a trend just as debunking information is arriving in the marketplace. New research is showing that selecting above-average active funds may not be the impossible task that the academic research has suggested.
2015-08-28 00:00:00 Doodles from an Eventful Summer by Niels Jensen of Absolute Return Partners
This month's Absolute Return Letter is a little different. It was a very eventful summer with many incidents impacting financial markets and we have compiled all these topics into one letter. China is, not surprisingly, a core subject. If the Chinese economy is slowing (and it is), we don't think China is in for a hard landing. If anyone is in the near term - and this may surprise you - we think the U.S. and the euro zone are far more likely candidates.
2015-08-28 00:00:00 Feeling Old Yet? Incoming College Freshmen Have Always Known Google by Frank Holmes of U.S. Global Investors
I use Google every day, and yet I still marvel at how amazing a tool it is. Part of this amazement stems from the fact that most of my life was spent in the dark ages before the search giant changed human knowledge forever. I appreciate it in a way 19th-century, transcontinental travelers must have appreciated steam locomotives’ ability to shave days and weeks from their covered-wagon travel time. Except Google is more like a rocket ship than a locomotive.
2015-08-27 00:00:00 Solidifying a Case for Liquid Alternatives by David Saunders of Franklin Templeton Investments
Skeptics may be surprised to learn that the majority of hedge fund managers focus on providing capital appreciation with lower volatility than the broad markets.
2015-08-26 00:00:00 Turning an Oxymoron into an Opportunity by François Sicart of Tocqueville Asset Management
For my part, I feel in total harmony with the contrarian and value disciplines that have guided my investments for 40 years. At the same time, I also claim (and aim) to be a long-term investor. Yet, almost from the start of my career, I have had the somewhat uncomfortable feeling that, in practice, these claims may be contradictory.
2015-08-25 00:00:00 The Fed Is Spooking the Markets Not China by Peter Schiff of Euro Pacific Capital
Fasten your seat belts, this ride is getting interesting. Last week the Dow Jones Industrial Average was down more than 1,000 points, notching its worst weekly performance in four years. The sell-off took the Dow Jones down more than 10% from its peak valuations, thereby constituting the first official correction in four years. One third of all S&P 500 companies are already in bear market territory, having declined more than 20% from their peaks. Scarier still, the selling intensified as the week drew to a close, with the Dow losing 530 points on Friday, after falling 350 points on Thursday.
2015-08-24 00:00:00 Equities: Enhancing Your Small Cap Allocation by Laura Schlockman, Steve Jones of PIMCO
Our New Neutral outlook is generally supportive of equities: Low discount rates, recovering but muted inflation and a drawn-out business cycle argue for positive equity performance. However, full valuations and uneven growth suggest returns may be significantly lower than long-term averages. This means that capturing equity alpha will be critical for investors to meet their return objectives.
2015-08-21 00:00:00 The Paradox of Chasing Returns, Part 2 by Kyle Vogel of AdvisorShares
In part one, we looked at the statistics of how difficult it was for hedge fund managers to consistently outperform the universe average. In part two, we wanted to examine the consistency of a hedge fund’s1 performance as its assets grow. We took the HFRI Equity Hedge Fund universe and looked at individual managers’ assets and returns during a recent period. The dataset includes funds reporting at any point between August 2008 to March 2015.
2015-08-21 00:00:00 Gold Glimmers as Global Market Fear Grips Investors by Frank Holmes of U.S. Global Investors
Gold this week broke above its 50-day moving average as a fresh round of negative news from around the globe rekindled investors’ interest in the yellow metal as a safe haven. The Fear Trade, it seems, is in full force.
2015-08-20 00:00:00 The Paradox of Chasing Returns, Part 1 by Kurt Voldeng of AdvisorShares
Our firm often cites a paradox in the hedge fund industry: hedge fund of funds lag the mean hedge fund return. Represented below, the HFRI Fund Weighted Composite Index is composed of individual hedge funds of all types that are equally weighted while the HFRI Fund of Funds Composite Index is a separate index composed of equally weighted funds of hedge funds.
2015-08-05 00:00:00 The Case for Hedge Fund Strategies in a Rising-Rate Environment by Dr. Sudhir Krishnamurthi, Ronald van der Wouden, Kenneth LaPlace of Wells Fargo Asset Management
Dr. Sudhir Krishnamurthi, Ronald van der Wouden, and Kenneth LaPlace from The Rock Creek Group, LP explain why hedge funds may outperform traditional fixed-income investments in a rising-rate environment.
2015-08-04 00:00:00 Update on Puerto Rico as Aug. 1 Debt Deadline Missed by Rafael Costas, Sheila Amoroso of Franklin Templeton Investments
In our opinion, the governor’s wishes to restructure Puerto Rico’s debt will likely be very difficult—and expensive—to realize.
2015-08-02 00:00:00 Is Now the Time to be Bearish on China? by Andy Rothman of Matthews Asia
One of the world’s largest hedge funds has turned bearish on China, arguing that the recent stock market correction means ‘‘there are now no safe places to invest’’ in that country. I disagree. I respect Bridgewater as an investment house and their views require serious attention. But I think it worthwhile to explain some areas where my views differ.
2015-08-02 00:00:00 When China Stopped Acting Chinese by John Mauldin of Mauldin Economics
Much of the world is focused on what is happening in Greece and Europe. A lot of people are paying attention to the Middle East and geopolitics. These are significant concerns, for sure; but what has been happening in China the past few months has more far-reaching global investment implications than Europe or the Middle East do. Most people are aware of the amazing run-up in the Shanghai stock index and the recent “crash.” The government intervened and for a time has halted the rapid drop in the markets.
2015-07-31 00:00:00 The Danger in "Debalancing" by John West, Brandon Kunz, Amie Ko of Research Affiliates
Eat a balanced diet. Drilled into our brains since preschool, this advice falls squarely in the “duh, everybody knows that” camp. But it’s not just kids who need reminding. Parents and grandparents, as role models and dietary enforcers, do too. Common sense alone tells us this universally applicable dictum is the right way to eat. Different foods have different nutritional and caloric values. If we eat a wide variety of food groups, or as a five-year-old child is taught, “Eat a rainbow,” good nutrition is likely to take care of itself.
2015-07-31 00:00:00 3 Questions to Check Yourself Before You Wreck Yourself by Adam Butler, Michael Philbrick, Rodrigo Gordillo of BPG & Associates
A few simple questions one should ask oneself before making any decisions in public markets.
2015-07-29 00:00:00 Inflation Deniers Emboldened by Gold's Struggles by Clint Siegner of Money Metals Exchange
The vultures are circling. Precious metals bulls, laid flat by gold and silver prices dropping for the 5th week in a row, are watching deflationists such as Harry Dent and the financial media squawk about the imminent demise of precious metals.
2015-07-23 00:00:00 Tocqueville Gold Strategy Investor Letter: Q2 2015 by John Hathaway of Tocqueville Asset Management
What is required to restore investor interest in gold? In our opinion, a prolonged bout of financial-market adversity would suffice. After all, the cornerstone of coordinated central-bank policy since 2008 has been the levitation of financial assets via Zero Interest-Rate Policy (ZIRP) and Quantitative Easing (QE) by forcing investors into risky assets. We believe that nothing would serve better to undermine confidence in central bankers than a bear market in bonds and equities. The roof above the dollar gold price has been built brick by brick from confidence in central bankers.
2015-07-21 00:00:00 Secular Outlook: Implications for Asia-Pacific Investors? by Eric Mogelof, Alan Isenberg of PIMCO
We hope you have had the opportunity to review the summary from our secular forum in May: “The New Neutral Revisited,” written by PIMCO’s Group CIO Dan Ivascyn, Global Fixed Income CIO Andrew Balls an?d Global Strategic Advisor Rich Clarida. In this analysis, the authors identify the six key themes that emerged from our discussion, as well as six risks.
2015-07-20 00:00:00 Understanding “Liquidity” by Payson Swaffield of Eaton Vance
In the U.S., the consumer economy is strengthening, while the industrial economy continues to struggle. What does it mean for equities?
2015-07-14 00:00:00 How Likely is Hyperinflation in the U.S? Part Two by Seaborn Hall (Article)
My previous article covered hyperinflation's history, process, effects, definition, types and causes. Part Two answers the questions of how to gauge the likelihood of hyperinflation in the U.S., what the emerging dangers are, how it might happen here and how to prepare if it does.
2015-07-11 00:00:00 It’s Not Over Till the Fat Lady Goes on a P/E Diet by John Mauldin of Mauldin Economics
The answer to the seemingly arcane question of whether we are in a secular bull or bear market makes a great difference in the proper positioning of your portfolios. And getting it wrong can have serious consequences.
2015-07-11 00:00:00 Global Investors: You Should Be Paying Attention to this Economic Indicator by Frank Holmes of U.S. Global Investors
In addition to our own macro models, BCA Research , a highly respected independent research company, pointed out that PMIs in developing economies have plunged to new lows. The International Monetary Fund also revised downward its global growth forecast for 2015. On this account, bad news is good news, as central bankers are scrambling to stimulate economic growth.
2015-07-08 00:00:00 Shareholder Activism Continues to Attract Assets and Boost Activity by Francis Gallagher, Peter Drippé of Visium Funds
While shareholder activism has been maligned in the past by the corporate world as a way to reap short-term gains at the expense of long-term shareholders, the practice is now enjoying an increasingly positive reputation. This change in perception is based on the beneficial long-term results of activist campaigns and the current view of activists as champions of shareholder value. Accordingly, the recent performance of activist-related investments, as well as their role in providing low-correlated returns has drawn significant interest from the institutional investment world.
2015-07-07 00:00:00 Earning an Illiquidity Premium in Private Credit by Joshua Anderson, Tom Collier of PIMCO
With low yields and tight spreads prevalent in traditional liquid fixed income markets, many institutional investors are considering whether higher returns are available by assuming credit risk in private or illiquid form. We believe this type of alternative credit strategy may enhance portfolio returns, but investors should be extremely judicious when giving up liquidity, particularly today.
2015-07-07 00:00:00 A Greek Play by Dr. Richard Michaud of New Frontier Advisors
The second quarter of 2015 experienced heightened bond market volatility in anticipation of the Fed’s first rate increase as well as international equity volatility involving Greek debt and Chinese equities. Despite whipsawed volatility, the major domestic and international equity indices ended close to where they started.
2015-07-04 00:00:00 A Week of Unseen Things by John Mauldin of Mauldin Economics
We Americans are celebrating our Independence Day this weekend. The news our ancestors read on this day in 1776 wasn’t so great – but the US survived its rough start. China, Puerto Rico, and Greece will survive, too. But the decisions their government make, just like the ones our fledgling government made all those years ago, will make a great deal of difference. Let’s get past the gloom and doom to see if we can find some good news.
2015-07-02 00:00:00 The Business Cycle—Middle-Aged or Elderly? by Erik Knutzen of Neuberger Berman
When it comes to the duration of the business cycle, 50 is the new 40. Much the way that better diet, health care and exercise have helped double life expectancy over the past century, central banks have prolonged the current expansion using new elixirs such as zero interest rates and quantitative easing. At 72 months, the business cycle has well surpassed the 58.4-month average of the modern era and is now more than twice the length of the pre-WWII average.
2015-07-01 00:00:00 Investing in Lake Wobegon: Where all the returns are above average by David Robertson of Arete Asset Management
The implicit assumption of many funds is that returns will be attractive over the investor's time horizon. Increasingly, this assumption appears to be invalid and many long term investors would be better served by taking an "absolute return" approach to investing.
2015-07-01 00:00:00 A Return to Fundamentals? by Niels Jensen of Absolute Return Partners
June was a very eventful month, in particular here in Europe. Greece went from bad to worse, and the Greek people have now been asked to vote on their own destiny in a referendum scheduled for Sunday 5 July, which we expect to return in a 'Yes' vote. However, Greece is not the only subject in the July Absolute Return Letter. Financial markets have in many ways behaved oddly since the near meltdown in 2008. The objective of this month's letter is to look at whether we are finally beginning to see some sort of normalisation - as in a return to the conditions we had prior to 2008...
2015-07-01 00:00:00 More Volatility: A Positive Environment for Active Managers by Chuck Royce, Francis Gannon of The Royce Funds
Dating from the year-to-date low for the 10-Year Treasury on January 30 through the end of the first half, we have observed promising signs that the market may be taking greater strides toward normalization. CEO Chuck Royce and Co-CIO Francis Gannon discuss how higher rates might benefit bottom-up stock pickers, the potential for quality companies to regain leadership as volatility increases, the possible consequences of global economic recovery for both domestic and non-U.S. small-cap stocks, and the favorable landscape for consumers and its effect on our portfolio positioning.
2015-06-30 00:00:00 It Never Rains in California by Bill Gross of Janus Capital Group
Ted Cruz recently suggested praying for rain in Texas, and apparently someone did a few weeks ago, producing a deluge resembling a modern day Noah’s Ark of sorts. California’s Governor Brown on the other hand, has taken a more secular approach. He believes that Mammon, not God, bears responsibility for the Golden State’s record drought and that I, we, all of us simple folk should cut back water usage by a minimum of 25%.
2015-06-17 00:00:00 Managing Risk by Investing in Dividend-Paying Stocks by (Article)
Small-cap is an asset class that has historically been associated with increased volatility. We have always believed that dividends, plentiful in the small-cap space, can help mitigate some of that risk. But what are we looking for in the dividend-paying companies in which we invest? Portfolio Manager Jay Kaplan and Co-CIO Francis Gannon discuss.
2015-06-16 00:00:00 Gundlach: Rising Rates and Summer Insects by Robert Huebscher (Article)
You should never ask summer insects about ice, according to the Chinese philosopher Chuang Zhu, because they are bound by a single season. In the same way, many investors have never experienced a period of increasing rates. One who has, however, is Jeffrey Gundlach, who offered his forecast for rates and the one sector of the bond market that is most vulnerable.
2015-06-02 00:00:00 Why Emotions and Bias Trump Facts by Daniel Solin (Article)
This interesting article on the role emotions play in making sales revealed some fascinating insights that savvy advisors can utilize.
2015-05-18 00:00:00 Weighing the Week Ahead: Will the Interest Rate Spike Threaten Stock Prices? by Jeff Miller of New Arc Investments
This week’s economic calendar includes the most important housing data, but the market context will prove irresistible to the pundits. Stocks continue at the top of the trading range, and even broke through for a few minutes. Even more interesting is the bond market. Interest rates decisively broke their trading range and also showed a lot of volatility.
2015-05-15 00:00:00 The Discovery of Ignorance by Francois Sicart of Tocqueville Asset Management
Eleanor Roosevelt reportedly said that small minds discuss people, average minds discuss events, and great minds discuss ideas. If she was right, my own mind took a huge leap toward greatness in the last few weeks.
2015-05-04 00:00:00 On My Radar: “The Rodney Dangerfield Expansion” by Steve Blumenthal of CMG Capital Management Group
"Earnings don't move the overall market; it’s the Federal Reserve board. And whatever you do, focus on the central banks and focus on the movement of liquidity. Most people in the market are looking for earnings and conventional measures. It's liquidity that moves markets." - Stan Druckenmiller
2015-04-30 00:00:00 Breaking Out of Bondage by Ben Inker of GMO
In a new quarterly letter to GMO's institutional clients, co-head of asset allocation Ben Inker provides the basis for future bond returns: "For while it is unlikely that stock investors are going to achieve anything like as strong a return over the next 30 years as they did over the last, it is basically impossible for bond investors to duplicate their feat." ("Breaking Out of Bondage").
2015-04-29 00:00:00 Newsletter by Harold Evensky of Evensky & Katz
Harold Evensky presents his quarterly newsletter.
2015-04-28 00:00:00 Reasonable Expectations, Warren Buffett and Active Management by Michael Crook (Article)
According to the ongoing SPIVA analyses, most equity mutual fund managers have failed to keep up with their respective benchmarks recently. In fact, roughly 60% of domestic managers and 65-70% of international managers underperformed in 2014 - a phenomenon that most investors observed in their own portfolios. But that is not a reason to abandon active management, assuming you own active managers for the right reasons.
2015-04-20 00:00:00 Thoughts from the Frontline: Half a Bubble Off Dead Center by John Mauldin of Mauldin Economics
Central banks, in their valiant, unceasing efforts to restore liquidity and growth, have unleashed numerous unintended consequences that are beginning to show up in earnest. Today we are going to review the well-meaning behavior of central banks for clues about our near future.
2015-04-14 00:00:00 Tocqueville Gold Strategy Investor Letter by John Hathaway of Tocqueville Asset Management
John Hathaway, manager of the Tocqueville Gold Fund (TGLDX), looks back at the performance of gold over the first quarter, noting that "Gold and gold mining shares appear to be as contrarian today as in 1999, before a decade?plus run in which bullion rose nearly seven?fold in US dollar terms."
2015-04-13 00:00:00 Liquid Alternative Strategies as Mutual Funds by Michael Winchell of Larkin Point Investment Advisors LLC
The recent growth of mutual funds offering a wide array of liquid alternative strategies has raised questions among many advisors about the possible drawbacks of attempting alternative strategies within a 1940 Act vehicle.
2015-04-02 00:00:00 The Perfect Storm for Risk-Conscious Active Managers by (Article)
Principal and Portfolio Manager Steve Lipper discusses three specific conditions that have shaped the current small-cap market and how, after five years, these developments all showed signs of reversing in the latter part of 2014.
2015-03-27 00:00:00 Liquidity by Howard Marks of Oaktree Capital Management
My wife Nancy’s accusations of repetitiveness notwithstanding, once in a while I think of something about which I haven’t written much. Liquidity is one of those things. I’m not sure it’s a profound topic, and perhaps my observations won’t be either. But I think it’s worth a memo.
2015-03-10 00:00:00 Never Smile at a Crocodile by John Mauldin of Mauldin Economics
We will briefly survey my worry closet today before resuming our series on debt, in which we’ll encounter Paul Krugman’s lament that “Nobody understands debt.”
2015-03-09 00:00:00 An Overview of Alternative Investments by Michael Winchell of Larkin Point Investment Advisors LLC
If you have been thinking about adding alternative investments to your clients’ portfolios, it’s important to step back and analyze the various types of investments available to you—which, despite being lumped together in the same category, have become increasingly varied.
2015-03-05 00:00:00 Don’t Audit It: Reign It In by Brian Wesbury of First Trust Advisors
Some in Congress want to “Audit the Fed.” But an audit, unless the word is used in a very broad sense, would be redundant and basically irrelevant. The Fed is already audited, by Deloitte & Touche LLP and it releases an annual report that includes the auditor’s opinion, each year.
2015-02-26 00:00:00 Hedge Funds on the Comeback? by Roger Nusbaum of AdvisorShares
A few days ago I stumbled across a post from CIO titled Reports Of My Death Have Been Greatly Exaggerated that chronicles the outflows from hedge funds last year and posits whether a comeback might be around the corner but with generally lower fees. The lower fee angle of the article seemed to focus on negotiating a lower fee with the manager. Of course lower fees are available through the various exchange traded products that one way or another replicate the exposure but doing so without the so called ‘2 and 20’ fee structure.
2015-02-24 00:00:00 Debt Be Not Proud by John Mauldin of Mauldin Economics
Some things never change. Here is Eugen von Böhm-Bawerk, one of the founding intellectuals of the Austrian school of economics, writing in January 1914, lambasting politicians for their complicity in the corruption of monetary policy.
2015-02-23 00:00:00 When Volatility Rises, So Have Active Management Results by Team of The Royce Funds
For many investors, volatility is often synonymous with risk. We as value investors (and risk managers), on the other hand, have always viewed volatility as a crucial component of active stock selection. In our latest Royce Research piece, we explore the relationship between low- and high-volatility environments and the relative performance of active managers versus their respective benchmarks during these periods. This deep dive is especially important in a market that has recently seen more volatility and its largest correction in almost three years.
2015-02-22 00:00:00 Deja You? by Robert Isbitts of Sungarden Investment Research
This picture is the story of many investors’ lives, providing they were investing 20-25 years ago. While younger investors may not be able to “feel” the similarities between today’s investor environment and that of the late 1990s buildup to the Nasdaq Composite hitting the 5000 level, those of us who remember it...
2015-02-18 00:00:00 On My Radar: Schumpeter’s Creative Destruction by Steve Blumenthal of CMG Capital Management Group
This week let’s take a look at debt around the globe. I share a great piece from McKinsey & Company that shows just how much more debt, county by country, has been piled on since the 2007 debt induced financial crisis. Evidence is apparent in the commodity market and I also share a few ideas how you may risk manage those allocations.
2015-02-17 00:00:00 Gary Shilling - Why You Should Own Bonds by Robert Huebscher (Article)
If you followed Gary Shilling's advice for the last 30 years, you would be very wealthy. Since 1981, Shilling has consistently advocated owning long-dated Treasury securities. In a talk last week, he reiterated that advice as one piece of his three-part asset-allocation strategy for the coming year.
2015-02-15 00:00:00 Weighing the Week Ahead: Will Energy Stocks Support the Market Breakout? by Jeff Miller of New Arc Investments
I do not know whether we have reached a bottom in energy prices, but I have identified two important themes.
2015-02-15 00:00:00 Mamas, Don’t Let Your Babies Grow Up to Be Pension Fund Managers by John Mauldin of Mauldin Economics
We do not have to look to Greece to find massively underfunded obligations. Here in the US we can find hundreds of examples, willingly created by politicians and businessmen who proclaim they are working for the public good. We call them pension funds, but they’re just another form of unfunded debt. A sovereign bond is a promise to pay a certain amount of money over time.
2015-02-10 00:00:00 Evensky & Katz Newsletter by Harold Evensky of Evensky & Katz
Harold Evensky presents his quarterly newsletter.
2015-02-08 00:00:00 The Eurozone: Collateral Damage by John Mauldin of Mauldin Economics
Now we're watching another Greek drama that could have significant unintended consequences – far beyond anything the market has priced in today. Then again, maybe not. Maybe the market is right this time. When we enter unknown territory, who knows what we will find? Fertile valleys and treasure, or deserts and devastation? Today we look at the situation in Europe and ponder what we don't know. Greece provides a wonderful learning opportunity.
2015-02-05 00:00:00 Your Alpha is My Beta by Adam Butler, Mike Philbrick and Rodrigo Gordillo of Butler|Philbrick|Gordillo & Associates
A couple of weeks ago, I had the pleasure of a short correspondence with Lars Kestner, a well known quant and derivatives trader, and creator of the thoughtful K-ratio as a measure of risk adjusted performance. We connected on the definition of alpha, and how the term has been so abused in media and marketing as to become almost meaningless.
2015-02-03 00:00:00 PIMCO Introduces the PIMCO Multi-Strategy Alternative Strategy by of PIMCO
In a New Neutral environment that anticipates muted returns and heightened volatility, many investors have looked to liquid alternatives in an effort to boost returns and lower overall portfolio risks. Our approach seeks to efficiently combine a range of complementary liquid alternative strategies, offering the potential for diversification and higher return per unit of risk than a single strategy could achieve on its own. This strategy can play a central role in liquid alternatives allocations or be used as a stand-alone complement to traditional stock and bond allocations.
2015-02-02 00:00:00 Portfolio Strategies 2015: Investing in an Age of Divergence by John Mauldin of Mauldin Economics
Everyone is worried about being blindsided by a significant downdraft in the markets when maybe we should be thinking about making sure we don’t miss a bull market somewhere. These and several dozen other topics were on the table when the Mauldin Economics writing team gathered here in Dallas for 3½ days of intensive talk, interviews, and planning. Today we’ll go over a few of the highlights of this last week, and I’ll share a few reasons to be optimistic about 2015.
2015-01-29 00:00:00 The Unintended Consequences of "Sophisticated" Performance Measurement by Francois Sicart of Tocqueville Asset Management
Sicart believes a measure of investment success should encompass "several cycles, with bull and bear markets as well as many fads and fashions and their aftermaths." He notes that "economic events really progress at a near-tectonic pace," so "a quarter or even a year is almost always a totally irrelevant period."
2015-01-29 00:00:00 The Strange Case of the Current Small-Cap Cycle by Team of The Royce Funds
For much of the past five years, small-cap stocks have generated returns well above their monthly rolling five-year averages. In addition, lower-than-usual volatility within the asset class and a decline in the cost of capital spurred by the Fed?s monetary stimulus programs have created an unfriendly environment for active stock pickers such as ourselves. Our latest research, however, suggests that some of these conditions were abating late in 2014, which might benefit those investors who focus on fundamentals and try to use volatility to create longer-term opportunities.
2015-01-29 00:00:00 A Very, Very, Very, Very Black Swan? by Jay Leopold of Columbia Management
Nassim Taleb’s book "The Black Swan" effectively demonstrates that seemingly highly improbable events are much more common than expected, often with significant consequences. In fact, experts are often blind to these occurrences because past data is not necessarily a good predictor of the future. Most investors are aware a black swan event hit the Swiss franc earlier this month.
2015-01-28 00:00:00 Black Cypress: Ignore the Bears; The Force(s) are with Us by Alan Hartley of Black Cypress Capital Management
The U.S. economy should continue to expand and that bodes well for stocks. The next bear market will likely start due to a recession or geo-political conflict and not from the start of Fed interest rate increases or time elapsed. The current economic landscape is favorable to growth. Stock markets are priced for low returns.
2015-01-27 00:00:00 Looking Back at James Montier's "Perfect" Value Investors by Larry Swedroe (Article)
Is there such a thing as a "perfect" value investor? And if so, what does that investor's fund look like? James Montier thought he knew the answers when he penned his 2006 article "The Perfect Value Investor." Let's look back and see how that portfolio did.
2015-01-20 00:00:00 The Swiss Release the Kraken! by John Mauldin of Mauldin Economics
In an era when central bankers are supposed to be more open, collaborative, and communicative, what would make the Swiss National Bank decide to turn on a dime and shock the markets ? to release the Kraken, as it were? Note that in fact all hell did break loose. Rather than delivering hints accompanied by a few well-placed leaks, the Swiss decided it would be best to completely surprise the markets. It will be a long time before we get the full story on what must have been going through their heads as they reached the decision.
2015-01-18 00:00:00 Weighing the Week Ahead: The Message from Fourth Quarter Earnings by Jeff Miller of New Arc Investments
I do not know how earnings season will play out this week. My list of things to watch is good, but the market seems to be demanding a parlay of positive indications: Beating the whisper number for earnings; Beating the revenue expectations; Business growth ?organic, not from mergers or purchases; Solid ?quality of earnings? with no gimmicks or accounting moves; A credible, positive outlook.
2015-01-06 00:00:00 Evaluating the Arguments for the Dollar's Demise by Seaborn Hall (Article)
From the great financial crisis and the massive escalation of sovereign debt and QE to the threat of currency wars to cries from pundits to exit the dollar and buy gold, it requires a discerning advisor to sift through the din and decide whether the dollar's reserve status is slipping. Could the dollar look strong and still be in danger? Several recent books, and papers from the BIS, IMF and Fed delineate the noise from the reality.
2015-01-06 00:00:00 Ben Graham's Mr. Market 2015 by William Smead of Smead Capital Management
As we enter 2015, we at Smead Capital Management would like to separate how unsuccessful investors use Mr. Market and how successful investors use his "voluntary" participation in the stock market.
2015-01-06 00:00:00 Oil, Currencies, and the Fed by Richard Michaud of New Frontier Advisors
Fourth quarter headlines included volatility spikes, dramatic declines in oil prices, and positive views of the economy by the Fed. Oil declined 41% this quarter and 46% for the year. The dollar continued to gain against some major developed global currencies. For the year, the dollar gained 13.6% against the euro and 13.8% against the yen while gold was down 2%.
2015-01-04 00:00:00 Why the World Needs the US Economy to Struggle by John Mauldin of Mauldin Economics
In this weeks letter, my associate Worth Wray explores what a rising dollar means for emerging markets and what central banks are likely to do in response. Can they smooth the ride, or will it be the worlds scariest roller coaster? This letter will print long because of the number of fabulous charts Worth provides. I might make a brief comment or two at the end. Heres Worth.
2014-12-24 00:00:00 Credit Spreads: Relative vs. Absolute Levels by Bob Andres of Andres Capital Management
Following a yearlong environment of relatively stable corporate bond spreads, we are beginning to see increased market volatility and a widening of these credit spreads. The plunge in oil prices, the rise in the U.S. dollar, and geopolitical uncertainty all contribute to wider spreads as they represent a proxy for market risk.
2014-12-23 00:00:00 Could an Energy Bust Trigger QE4? by Peter Schiff of Euro Pacific Capital
In a normal economic times falling energy costs would be considered unadulterated good news. The facts are simple. No one buys a barrel of oil to display above the mantle. No one derives happiness from a lump of coal. Energy is simply a means to do or get the things that we want
2014-12-23 00:00:00 Canary in a Coal Mine? by Dennis Rhee of AdvisorShares
With the collapse of oil, market participants are logically discussing which assets are vulnerable to more selling and which are value buys.
2014-12-22 00:00:00 Could an Energy Bust Trigger QE4? by Peter Schiff of Euro Pacific Capital
In a normal economic times falling energy costs would be considered unadulterated good news. The facts are simple. No one buys a barrel of oil to display above the mantle.
2014-12-21 00:00:00 2014 In Review: A Good Year to Avoid Performance Envy by Robert Isbitts of Sungarden Investment Research
2014 has been an odd year in many ways. Easy money has continued to be the rule for central governments across the world, and this has created false sense of security that is going on six years (following the end of the financial crisis-induced stock market decline that ended in March, 2009). To us, it was a year of waiting: for an end to the suppression of interest rates to aid retirees, for the U.S. Congress to do something productive, and for investors to start taking risk more seriously and stop falling for Wall Street come-ons.
2014-12-16 00:00:00 Allocating to Alternative Investment Strategies by Nathan Rowader of Forward
Following the market declines in 2008 and 2009, many investors have shown interest in alternative investment strategies such as hedge funds and mutual funds that employ hedge fund-like strategies. These types of strategies have been around a long time, but until recently their use among individual investors has been somewhat limited.
2014-12-15 00:00:00 A Sensible Proposal and a New Adjective by John Hussman of Hussman Funds
The FOMC is well-served by Richard Fishers proposal to consider terminating the current policy of reinvesting proceeds from Fed balance sheet holdings as those securities mature. That shift would not imply any rush to raise the federal funds rate or otherwise normalize policy rates.
2014-12-03 00:00:00 A Brave New World by Niels Jensen of Absolute Return Partners
In the the last two Absolute Return Letters I have argued why one should expect global GDP growth to be below average over the next decade or so, why interest rates should, as a consequence, remain low and why equity returns should also disappoint. Not as in negative returns but below the levels we have grown accustomed to over the past 30 years. If you have read those two letters, none of this should come as a surprise.
2014-12-02 00:00:00 Strangers Passing in the Night by William Smead of Smead Capital Management
The economies of China and the United States appear to be headed in the opposite direction. Chinas economy is decelerating fast and the U.S. looks right on the cusp of having its economic growth accelerate, as evidenced by the revised quarterly GDP number of 3.9% released on November 25th, 2014.
2014-12-02 00:00:00 Learning From Mistakes Made By Pension Funds by Roger Nusbaum of AdvisorShares
Forbes took a look at How Pension Funds Make Investing Too Complex. The issue was hedge funds and private equity funds that tend to be expensive, opaque or both. These types of direct investments also tend to be illiquid in terms of having long waiting periods before investors can get their money out.
2014-12-02 00:00:00 The Worlds Dumbest Idea by James Montier of GMO
In a new white paper today, James Montier of GMO's asset allocation team "explor(es) the evidence that shareholder value maximization (SVM) has been an unmitigated failure and contributed to some very undesirable economic outcomes."
2014-12-01 00:00:00 Monetary Tectonics by John Hathaway of Tocqueville Asset Management
John Hathaway, manager of the Tocqueville Gold Fund (TGLDX), examines in his latest piece "the very meaningful difference between the dollars relative and absolute strength, and look(s) at the widening fissures beneath the faade of strength fissures that, as yet, appear to have had little impact upon the investment consensus."
2014-11-23 00:00:00 Weighing the Week Ahead: Are Investors Too Complacent? by Jeff Miller of New Arc Investments
There is no investment edge from repeating what you read in the morning paper. Here was my list still worth watching: Geo-political that is not on the current radar a true black swan. An increase in the PCE index that was not accompanied by strong economic growth. Wage increases that were not accompanied by strong economic growth. Declining profit margins that were not accompanied by strong economic growth and increased revenues. An increase in the chances for a business cycle peak (the official definition of a recession). Remote at this point. An increase in financial stress t
2014-11-18 00:00:00 Is This Purgatory, Or Is It Hell? by Ben Inker of GMO
GMO is often accused of being a glass half empty investor, and I admit that in a year that has seen the S&P 500 rise 8.3%, MSCI All-Country World rise 3.7%, and the Barclays U.S. Aggregate rise 4.1% through the third quarter, the words Purgatory and Hell are unlikely to come to mind to most investors when opening their brokerage statements. It has been a dull year, perhaps, but certainly not a hellish one. So what is bringing Danteesque visions of damnation into our slightly warped minds?
2014-11-18 00:00:00 How AQR's New Fund Adds Value - An Alternative Approach to Alternatives: Investing with Style by Larry Swedroe (Article)
The conventional justification for alternative investments has been their ability to effectively diversify against core equity and fixed-income allocations. But, in many cases, the empirical data doesn't support that view. A new fund provides a different way to obtain returns from sources that have low to negative correlation to stocks and bonds, as well as each other - an alternative to alternative investment vehicles.
2014-11-12 00:00:00 Four Questions on Investors Minds Today by Chris Engelman of Cedar Hill Associates
From the strengthening U.S. dollar to Bill Gross departure from Pimco, a few common questions have been coming up in Cedar Hills meetings with clients during the past few months. In this article, Managing Director Chris Engelman shares the firms thoughts on these timely issues.
2014-11-11 00:00:00 Factors: An Essential Part of Any Nutritious Portfolio by Adam Butler, Mike Philbrick, Rodrigo Gordillo of Dundee Goodman Private Wealth
We recently posted a piece on factor investing so we were thrilled to have an opportunity to see Dr. Andrew Ang and Don Raymond discuss factor investing at a seminar in Toronto last week.
2014-11-07 00:00:00 Quarterly Letter by Ron Muhlenkamp of Muhlenkamp & Company
My first draft of this letter, which I wrote three weeks ago began with: Europe has not solved its problems; Nor has Japan; Nor has China; Nor has the U.S. The rest of that draft is now obsolete. Since mid-September, several items have changed-some economic, some market-related, some psychological.
2014-10-31 00:00:00 Trick or Treat? Slow Global Growth Hits Cyclical Sectors Hardest by Francis Gannon of The Royce Funds
As of October 13, the small-cap Russell 2000 Index was down 12.9% from its 2014 high on July 3a double-digit correction not seen in more than three years. With the U.S. economy slowly improving and Fed tapering winding down as scheduled, what is driving this pullback? Co-Chief Investment Officer Francis Gannon talks about economic growth beyond our borders and how it has been playing a role in shifting investor sentiment.
2014-10-30 00:00:00 Got Loans? by Mark R. Kiesel, Elizabeth (Beth) MacLean, Rudy Pimentel of PIMCO
?We believe select investors looking to reposition portfolios may benefit from a move to senior secured floating rate loans. CLOs have been an important source of demand in the market, and even with more strict risk retention rules just announced under Dodd Frank, we think demand will remain strong. While the Fed has criticized some banks for not following their leveraged lending guidelines, Fed members themselves, in our view, do not appear concerned about loans having a major impact on financial stability.
2014-10-23 00:00:00 Quarterly Letter by Ron Muhlenkamp of Muhlenkamp & Company
Since mid-September, several items have changedsome economic, some market-related, some psychological.
2014-10-23 00:00:00 How Consensus Thinking Works Against Investors by Bob Andres of Andres Capital Management
Over the past several years we have used this newsletter to voice our concerns regarding the macro-economic landscape, while attempting to provide practical solutions for investors. Since our venture into financial commentary, we have questioned the veracity of consensus opinion and how it tends to be wrong, especially in regards to interest rates.
2014-10-14 00:00:00 Bill Sharpe on Retirement Planning by Robert Huebscher (Article)
Bill Sharpe discusses topics at the forefront of financial-planning research: The role of annuities in a retirement portfolio, the proper glidepath for target-date funds, if investors should anticipate mean reversion in market returns and whether ESG- and SRI-oriented portfolios make sense.
2014-10-14 00:00:00 Sea Change by John Mauldin of Mauldin Economics
The final chapter and conclusion pretty much end as you would expect: the demise of monetary policys ability to soothe the soul of the markets and the return of volatility. We hopefully get a full-fledged restructuring of the sovereign debt markets. The Fed and sister central banks will try the same tired tools they have been using. Except they have already been to the zero rate boundary and have wasted the opportunity they had to increase rates so that they could lower them later. Another round of quantitative easing?
2014-10-14 00:00:00 You Ain't Seen Nothin Yet by William Smead of Smead Capital Management
Someone recently asked a group of us which band we saw at our first rock concert. My answer was the Canadian band, The Guess Who, in 1975. With hits like No Time, Undun and These Eyes, The Guess Who hit the perfect balance between my 17-year old testosterone driven aggressiveness and my urge to romance the woman of my dreams. The key members of the band in the 1960s and 1970s were Burton Cummings and Randy Bachman.
2014-10-10 00:00:00 Are Hedge Funds the Great Diversifier? by Team of Milliman Financial Risk Management
The California Public Employees Retirement System (CalPERS) announced on September 15th that it would divest its entire $4.5 billion hedge fund investment. With a market value of $298 billion, a move by Calpers may be a bellwether for the industry. The decision comes at a time when many pensions are reconsidering hedge fund investments as a risk management tool.
2014-10-09 00:00:00 Warren Buffett on Buying Businesses by William Smead of Smead Capital Management
Wed like to ask a self serving and much nuanced question: is your active equity portfolio manager buying businesses for you or are they trying to guess what the stock market will do in the next month or few years? Much like Samuel L. Jackson asks, Whats in your wallet? in television commercials, wed like to ask, Whats in your portfolio?
2014-10-08 00:00:00 Nervous Investors, Choppy Markets by Richard Michaud of New Frontier Advisors
It was a choppy third quarter for global asset classes. Domestically, Large Cap equities rose slightly but Small Cap US stocks fell.
2014-10-07 00:00:00 How M&A Resurgence May Unlock Value by Francis Gallagher, Peter Drippe of Visium Funds
Growth is a strong motivator for initiating mergers and acquisitions (M&A). For years, businesses created progressively more complex organizations, acquiring or expanding into unrelated business lines, consequently often suppressing overall company valuations. The complexity of melding disparate corporations appeared to make it exceedingly difficult for investors to evaluate companies true worth. In the present period of slow U.S. economic growth, a new trend in M&A has emerged, as many companies are reversing these moves, benefiting stock prices, investors and, potentially, the
2014-10-06 00:00:00 New Updates at Crestmont Research by Doug Short (Article)
Note from dshort: My friend Ed Easterling, whose Crestmont Research P/E valuation is a regular feature on this website, has published collection of periodic updates to his ongoing analysis. The commentary below is based on his latest distribution email to subscribers.
2014-10-04 00:00:00 The Wayback Machine Birthday Tour by John Mauldin of Mauldin Economics
Ive been writing this letter for some 15 birthdays now, well over 10,000 pages of collected work. Every word is still at my website a history, if you will, of what I was thinking at the time. I asked my longtime (and long-suffering) editor, Charley Sweet, to go back over this past decade and a half and give us a review of what I was saying my birthday week.
2014-10-03 00:00:00 Metastability? by Jeffrey Bronchick of Cove Street Capital
We remain cheerfully bearish on fixed income and slightly less so on equity markets. The combination of volatility and confusion produces opportunities and since we have had a lot less of the former, we have seen a lot fewer of the latter. Not much of this has changed this year...but things do change-sometimes for reasons we can "see" and sometimes due to factors we can't. We remain utterly convinced that Federal Reserve policy is our greatest known unknown and we remain extraordinarily skeptical that the Great Monetary Experiment will end with a purely beneficial outcome. This quart
2014-09-27 00:00:00 The Elephant Leaves the Room by Robert Isbitts of Sungarden Investment Research
The news was greeted with shock by some, while others wondered what took so long. In perhaps the first of many shoes to drop on the hedge fund industry, the largest U.S. pension fund, Calpers announced it will sell all of its hedge fund investments within 12 months. Media stories on this announcement were quick to cite lagging performance of these funds over the past year, but it appears Calpers was more concerned with the level of fees and lack of transparencythat is, they did not know what the heck was going on inside of many of the funds.
2014-09-17 00:00:00 America in the Driver’s Seat – Enjoy the Ride by Doug MacKay, Bill Hoover of Broadleaf Partners
Like clockwork, earnings season has drawn to a close, creating an information vacuum for the stock market, one in which the media spends more time "making" the news than perhaps reporting it. The marginal dollar at trade - or the price maker in a high frequency dominated trading world - is one more likely to be concerned about the Fed's words over the next two days than the stream of earnings produced by corporate America over the next few quarters.
2014-09-15 00:00:00 Understanding the Potential Risks and Rewards of Alternative Investments by Bob Andres of Andres Capital Management
Today, Investors are confronted with constructing or restructuring an asset allocation model in an environment where traditional equity and fixed income securities are fully valued. As a result, investors may be facing a period of nominal or negative returns from both of these traditional asset classes. In this environment, alternative investments may play a pivotal role in providing investors with broad diversification, lower correlations, and as a result, enhanced downside protection.
2014-09-14 00:00:00 Whats on Your Radar Screen? by John Mauldin of Mauldin Economics
So lets look at whats on my radar screen today. First up (but probably not the most important in the long term), I would have to say, is Scotland. What has not been widely discussed is that the voting age was changed in Scotland just a few years ago. For this election, anyone in Scotland over 16 years old is eligible. Think about that for a second. Have you ever asked 16-year-olds whether they would like to be more free and independent and gotten a no answer? They dont think with their economic brains, or at least most of them dont.
2014-09-09 00:00:00 How Rare are Housing Bubbles? Understanding the Case-Shiller Index and its Counterparts by Cesar A. Orosco and Laurence B. Siegel (Article)
Do house prices experience periodic bull and bear markets like the stock market? Or are they stable in real (inflation-adjusted) terms most of the time, with big disruptions once or twice in a century? Two popular house price series tell these very different stories. Knowing which is better will lead to superior investment outcomes and improved policy decisions.
2014-09-09 00:00:00 The Risk of Permanent Loss by William Smead of Smead Capital Management
Since the stock market has done extremely well from its abyss-like low in March of 2009, many investors are worried about the risks associated with owning U.S. large-cap stocks. A cacophony of articles have been written which not only look for the stock market to correct, but also have an expectation of the kind of bear market decline which would set investors back for five years, like the declines in 2000-02 and 2007-09. Those declines each hit the S&P 500 Index for a loss of 40% or more.
2014-09-02 00:00:00 Ranking the Top 10 "Differentiators" for Advisory Firms by Bob Veres (Article)
If we have a clear idea of what foregrounds one advisory firm ahead of others, then we can deliberately cultivate those characteristics. The problem is, nobody has ever compiled a comprehensive list of differentiators, much less ranked them according to importance. So, to fill that obvious void, I've ranked the top 10 differentiators that I've personally seen advisors use in their positioning and marketing.
2014-08-26 00:00:00 Event Driven Managers Encounter a Short-Term Hiccup by Chris Maxey, Brian Payne of Fortigent
After a period of very strong deal activity during the first half of 2014, traders and investors were hit with arbageddon in early August. Arbageddon struck after a series of large deals fell apart, sparking concern that the pickup in activity from earlier in the year was coming to an abrupt halt. Activity since that time would suggest otherwise, and it appears that the M&A train is back on course.
2014-08-16 00:00:00 Weekly Economic Commentary by Carl Tannenbaum of Northern Trust
I have to digest a great deal of written material to keep up with the global economy. When I have free time to read, I often choose to decompress by enjoying the cartoons in The Authoritative Calvin and Hobbes Treasury or the food pictures in Bon Apptit. I know that sounds shallow, but it helps keep me sane.
2014-08-11 00:00:00 Low and Expanding Risk Premiums are the Root of Abrupt Market Losses by John Hussman of Hussman Funds
Compressed risk premiums normalize in spikes. Day-to-day news stories are merely opportunities for depressed risk premiums to shift up toward more normal levels, but the normalization itself is inevitable, and the spike in risk premiums (decline in prices) need not be proportional or justifiable by the news at all.
2014-08-06 00:00:00 Global Dividend Insights by Nathan Fischer, Louie Nguyen of Soledad Investment Management
For many foundations and individual investors, the usefulness of a portfolio lies in its ability to provide cash flow to support charitable activities or to cover living expenses. Like a wise orchard farmer, investors are looking to harvest apples from the branches without damaging the orchard. This article will explore how dividend is the key to managing wealth in terms of sustainable spending and how global dividend paying stocks, in particular, are a great equity investment for a sustainable spending strategy.
2014-08-05 00:00:00 Avoiding the Unintended Migration from Investor to Speculator by Bob Andres of Andres Capital Management.
The identification of value/price in the allocation of capital is essential to successful investing. Assets purchased at levels above intrinsic value reflect an approach based on hope and momentum not sound risk/reward analysis and normally portend negative results.
2014-08-04 00:00:00 US Stocks Make 31 Record Highs in 2014, But Investors Panic During 3% Selloff by David Edwards of Heron Financial
US stocks as defined by the S&P 500 made 31 record highs in 2014, most recently on July24th. Through Friday afternoon, stocks declined 3.3%, which is to say less than the decline of 4.2% we saw in April of this year, and decline of 5.6% in January.
2014-07-31 00:00:00 The Chinese Wall of Worry: Uncertainty Rhymes with Opportunity by Francois Sicart of Tocqueville Asset Management
In his latest piece, Francois Sicart, Founder and Chairman of Tocqueville Asset Management, looks at the over-valued global market environment and points out that "While we wait for the day of reckoningwe should not be oblivious to potential opportunities, wherever they may exist. China may be a case in point." Digging deeper, Sicart looks at the negative media perception of China and believes "Many of the problems invoked in the headlines are real. But they are neither new nor, I believe on investigation, as catastrophic as implied."
2014-07-29 00:00:00 How Much Tilt? What Kind of Tilt? by William Bernstein (Article)
The first question is whether tilting towards small and value stocks still carries a premium.
2014-07-28 00:00:00 Yes, This Is An Equity Bubble by John Hussman of Hussman Funds
Make no mistake this is an equity bubble, and a highly advanced one. On the most historically reliable measures, it is easily beyond 1972 and 1987, beyond 1929 and 2007, and is now within about 15% of the 2000 extreme.
2014-07-26 00:00:00 Weekly Economic Commentary by Carl Tannenbaum of Northern Trust
Re-regulation has diminished market liquidity. Updated U.S. budget projections are improved but not comforting. The EU searches for the right response to Russia.
2014-07-24 00:00:00 Instability is the New Normal? by Axel Merk of Merk Investments
Once upon a time, there were safe havens in this world, places where investors could hide when the going got rough. If you believe this fairy tale world will persist, pinch yourself. In our assessment, not only are there no safe havens left, but instability may be the new normal. Is your portfolio ready?
2014-07-22 00:00:00 2014 Another Ho Hum Year from Hedge Funds by Ryan Davis, Brian Payne of Fortigent
Through the first six months of the year, hedge funds have generated a positive, albeit somewhat modest return. According to data compiled by Hedge Fund Research, the Fund Weighted Composite of hedge funds in their universe had generated a 3.2% return, compared to the S&P 500s 7.1% gain. While not terrible on a standalone basis, many investors had greater hopes for the asset class following five straight calendar years of underperformance versus the broad equity markets.
2014-07-18 00:00:00 Lack of Corporate Hubris Means Elongated Cycle by Richard Bernstein of Richard Bernstein Advisors
When we started Richard Bernstein Advisors roughly five years ago, we thought the US was entering one of the biggest bull markets of our careers. Today, we are likely in the midst of this long bull market. Despite the general consensus that a bear market is on the horizon and investors ongoing interest in protecting potential downside risk, we do not think the Fed, investors, or corporations are yet sowing the seeds for the next recession.
2014-07-18 00:00:00 Physics Envy by Matthew Page of Guinness Atkinson Asset Management
Economists have long sought to identify a deterministic "natural law" of markets in the same way that physicists have discovered natural laws such as gravity and electromagnetism. This is sometimes referred to as "physics envy". If economists could identify a deterministic natural law of markets then we would be able to make useful and accurate predictions. Sadly no such law exists. Human actions are not governed by simple predictable laws.
2014-07-18 00:00:00 Free Lunches and the Food Truck Revolution by Ben Inker of GMO
Over the past year or so, there has been a welcome change to the culinary landscape of the Boston financial district. After two decades of wandering to largely the same old haunts for lunch, I am now faced with a whole new set of inexpensive and tasty choices literally outside our door, changing daily as the food trucks perform their mysterious nightly dance.
2014-07-17 00:00:00 Municipal Market Perspectives by Team of SMC Fixed Income Management
Financial market conditions were as good as could be expected during the first half of the year, as evidenced by positive investment performance across all asset classes.
2014-07-15 00:00:00 The New Neutral: Investment Implications for Insurance Companies by David Braun of PIMCO
Low rates are unhelpful to an industry with legacy long-term liabilities containing rigid embedded credited rates; they exacerbate asset-liability mismatches and pressure earnings margins. Insurers may want to recalibrate their expectations of future interest rates, as well as broad bond and equity market returns. In The New Neutral, with beta from stocks and bonds likely to be relatively low, insurers should look to enhance buy-and-hold return potential via active management.
2014-07-02 00:00:00 Alternative Investments: The Right Expectations by Roger Nusbaum of AdvisorShares
Every year around this time we hear about the fiscal year investment results for the various college endowments and typically there is much written about the endowments and 2014 is no exception but this year most of the attention seems to be on the extent to which various forms of alternative investments have been a drag on endowment results after years of their having provided outsized gains.
2014-06-30 00:00:00 The New Normal of Healthcare Spending by John Mauldin of Mauldin Economics
A rather interesting shockwave came across the newsfeeds this week. I was actually doing a TV interview when the host announced that GDP was down 2.9% for the first quarter. There was not much else I could do but note that that was a really bad, ugly, terrible, not very good number.
2014-06-25 00:00:00 Self Sufficiency and Resourcefulness Over Complaining by Roger Nusbaum of AdvisorShares
There were several interesting and related articles from the last few days that could make for an interesting discussion.
2014-06-24 00:00:00 Hexavest Viewpoint: Neutral on Japan by Frederic Imbeault of Eaton Vance
Macroeconomy: With little traction from fiscal policy and structural reforms, the pro-growth policies of Prime Minister Shinzo Abe known as Abenomics will continue to rely on the Bank of Japans loose monetary policy to maintain economic momentum. Valuation: Rising profits and the 2014 correction have pushed down P/E ratios on Japanese equities into more attractive territory. Investor sentiment: As contrarians and as the crowd has become less bullish on Japanese stocks, we have become more constructive about investor sentiment.
2014-06-24 00:00:00 The Over-Capitalization Curse by William Smead of Smead Capital Management
At Smead Capital Management we are conscious of the few, but significant pitfalls which we believe exist for the long-duration common stock investor. One of the main pitfalls we want to avoid is the over-capitalization curse. This is a situation where investor enthusiasm gets very high, prices get historically high and investors drown the company, industry or sector with capital. In our experience, it pays to avoid the over-capitalized areas for as long as five to ten years as they work their way back to being hated and contentious.
2014-06-10 00:00:00 How Hedge Funds Destroy Value by Robert Huebscher (Article)
All you really need to know about hedge fund performance is evident from the fact that Simon Lack could not produce the pie chart below in 2012. The chart shows how hedge-fund returns have been divided among manager fees, fund-of-funds fees and investor profits.
2014-06-10 00:00:00 The Orphaned Bull Market by William Smead of Smead Capital Management
Howard Gold is an inquisitive writer for Marketwatch.com and we think has done us all a great favor in his latest column titled, Not even a bull market can interest people in stocks. He points out via the chart below thatdespite a huge rebound the last five years in US common stocksequity holdings as a percentage of global investable assets just climbed to levels only seen at major stock market low points. Relative to the past 50 years, this stock market has been abandoned and orphaned even as it had made participants wealthy.
2014-06-05 00:00:00 The Investor Screwtape Letters by William Smead of Smead Capital Management
We at Smead Capital Management have been discussing some of the follies common to human nature and what we see as some pervasive trends in the investing world. These conversations got us imagining what C.S. Lewiss, The Screwtape Letters, might sound like if they were applied to todays investment environment. The satirical letters are written by an advice-giving bureaucrat in Hell named Screwtape, to his nephew Wormwood, a young demon who is learning how to lead humans astray. Taking some liberty with Lewiss work, we present what we believe Screwtape might say if he were tr
2014-05-31 00:00:00 Looking at the Middle Kingdom with Fresh Eyes by John Mauldin of Mauldin Economics
China has the potential to become a real problem. It seemed to me that almost everyone who addressed the topic was either seriously alarmed at the extent of Chinas troubles or merely very worried. Perhaps it was the particular group of speakers we had, but no one was sanguine. If you recall, a few weeks back I introduced my young colleague and protg Worth Wray to you; and his inaugural Thoughts from the Frontline focused on China, a topic on which he is well-versed, having lived and studied there. Our conversations often center on China and emerging markets (and we tend
2014-05-29 00:00:00 CEFs: The Present Featuring Cecilia Gondor by (Article)
The power of the Internet and the quest for income are driving the CEF industry today, says Cecilia Gondor of Thomas J. Herzfeld Advisors.
2014-05-24 00:00:00 In a Flash, China Looks Strong by Frank Holmes of U.S. Global Investors
If you want to know where the world economy is headed, there is one number that I believe investors should focus on: the HSBC China Manufacturing Purchasing Managers Index (PMI). On Thursday, the preliminary flash PMI for May came in at 49.7, beating Bloombergs consensus of 48.3.
2014-05-20 00:00:00 Bonds Rally, But Stocks Still More Attractive Long Term by Russ Koesterich of BlackRock
Stocks have floundered, while bonds continue to rally. Markets are showing a sharp reversal from 2013, when stocks were up strongly while bonds struggled. We maintain our long-term preference for equities and suggest investors exercise caution before adding to positions in bonds.
2014-04-30 00:00:00 Achoo! by William Gross of PIMCO
There?s nothing like a good sneeze; maybe a hot shower or an ice cream sandwich, but no ? nothing else even comes close. A sneeze is, to be candid, sort of half erotic, a release of pressure that feels oh so good either before or just after the Achoo! The air, along with 100,000 germs, comes shooting out of your nose faster than a race car at the Indy 500.
2014-04-29 00:00:00 How to Help Business Clients Unlock Wealth by Bob Veres (Article)
Is there a way to help your business clients diversify their holdings, take some risk off the table and create a side investment portfolio that will sustain them if their business runs into trouble? Is there a way you can help your clients find capital when they need it most?
2014-04-29 00:00:00 Why Are Hedge Funds Struggling in 2014? by Chris Maxey, Ryan Davis of Fortigent
2014 has been a year marked by shaky equity markets and relatively higher volatility than observed in 2013. With falling equity market correlations and increased stock dispersion, it was presumably a more favorable environment for hedge funds. Unfortunately, that has not been the case as most alternative investment approaches are posting less than stellar results so far this year.
2014-04-29 00:00:00 First Quarter Commentary by John Prichard of Knightsbridge Asset Management
In investing, certain things are viewed as worth paying a lot for, if you "know" you're going to get them. Akin to Socrates, we speculate that it may be wiser to admit that you do not know the future and therefore are unwilling to pay for these positive outcomes, than to falsely believe you can know the future with certainty and are justified in paying a high price...
2014-04-28 00:00:00 Resisting the Sirens by Mark Oelschlager of Oak Associates
There has been an interesting shift in the market over the past several weeks, as high-growth stocks (an area to which we have limited exposure, given our preference for more fairly-valued growth opportunities) have suffered a significant correction after being the darlings of the market since June of last year.
2014-04-25 00:00:00 "The 10 Plagues" of Retirement Investing by Robert Isbitts of Sungarden Investment Research
Last Tuesday marked the end of the Passover holiday, in which Jews around the world celebrate the exodus from Egypt in biblical times (see the classic movie ?The Ten Commandments? for a visual version of the story). One highlight of the ?Seder? dinner conducted on the first two nights of the holiday is for all gathered to recount a part of the story known as ?The 10 Plagues.? Biblical references aside, it got me thinking about 10 plagues that today?s retired and retiring investors must grapple with. Here they are, sans the Matzoh Ball soup.
2014-04-17 00:00:00 Equity Outlook by Team of Osterweis Capital Management
Short term, we would not be surprised if the market took a breather after its strong gains last year. Additionally we may see volatility related to news coming out of the Middle East and Russia. But longer term, we remain very optimistic on the outlook for U.S. equities. In addition to the reasons we discussed above we believe U.S. equities are very attractive relative to the alternatives. The great bull market in bonds appears to be over. The great decades of emerging market growth appear to be behind us.
2014-04-16 00:00:00 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn
Stocks fell last week upset by the growth sectors of biotechnology and social media stocks. Energy issues and related infrastructure were largely unaffected. It is clear that hedge funds and others have become forced sellers as their macro bets on being long growth areas, but being short the bond market have blown up in their faces. Until this settles down the overall market is likely to continue its correction.
2014-04-15 00:00:00 Credit Availability Underpins Recovery in Commercial Real Estate Prices, But Also Poses Risks to CMB by Bryan Tsu of PIMCO
Credit availability, low interest rates, limited new construction and improving economic conditions have contributed to the recovery in commercial real estate (CRE) prices. We expect a strong 2014 in the commercial mortgage-backed securities (CMBS) market, which has been a primary source of CRE credit expansion. Increasingly aggressive loan underwriting is a concern. CMBS investors need to speak with their wallets and push back on either valuations or underwriting standards if recent trends continue.
2014-04-15 00:00:00 Complacency Makes Volatility Markets a Dangerous Place by Chris Maxey, Ryan Davis of Fortigent
With a dissipation of economic stress in Europe, and a general strengthening of economic conditions in the U.S., equity market volatility has plunged to new lows. Some would argue that market intervention by central banks is acting as an unnatural dampener to market volatility, raising the question as to whether a gradual removal of those policies will cause volatility to resurface. So far, the answer is up for debate, but current positioning suggests many investors are becoming complacent and will be caught off sides if such a scenario emerges.
2014-04-14 00:00:00 US Stock Markets Surprisingly Steady - First Quarter Review by David Edwards of Heron Financial
Surprisingly steady! How can we say that? Because compared to the price swings of the last six years, the recent 3.9% decline in US Stocks (from a record set April 2) barely registers relative to the powerful uptrend since mid 2011.
2014-04-12 00:00:00 Every Central Bank for Itself by John Mauldin of Millennium Wave Advisors
Whether the FOMC can actually turn the taper into a true exit strategy ultimately depends on how much longer households and businesses must deleverage and how sharply our old-age dependency ratio rises, but markets seem to believe this is the beginning of the end. For now, that?s what matters most. Under Fed Chair Janet Yellen?s leadership, the Fed continues to send a clear message to the rest of the world: Now it really is every central bank for itself.
2014-04-09 00:00:00 How High-Frequency Trading Benefits Most Investors by Gary Halbert of Halbert Wealth Management
A controversial new book came out in late March that lambastes so-called ?high-frequency trading? on the major stock exchanges and claims that such computerized trading robs retail investors of good executions and profits on their stock orders. The book, ?Flash Boys: A Wall Street Revolt,? was written by former bond salesman turned author, Michael Lewis, who appeared on CBS? 60 Minutes on March 30. Since then, his book has stirred up quite the controversy among stock market investors.
2014-04-01 00:00:00 Investing is Hard by David Wismer of Flexible Plan Investments
Or better put, successful investing is hard. So says author, speaker, and CIO Robert Seawright of Madison Avenue Securities in a recent series of ?Investment Belief? columns on his award-winning blog, Above the Market.
2014-03-28 00:00:00 Hotchkis & Wiley: Frequently Asked Questions by Team of Hotchkis & Wiley
In Hotchkis & Wiley's 2014 1Q Newsletter, Ray Kennedy, Mark Hudoff, and the rest of Hotchkis & Wiley's high yield team examines the high yield market and attempt to answer the questions it they get asked most frequently, or ones they believe to be particularly relevant in the current market environment.
2014-03-28 00:00:00 Four Areas Revved Up for a Resources Boom by Frank Holmes of U.S. Global Investors
Commodity returns vary wildly, as experienced resource investors can attest and our popular periodic table illustrates. This inherent volatility can spell opportunity for the nimble investor who can look past the mainstream headlines to identify hot spots. Our global resources expert, Brian Hicks, CFA, identified four we believe are revved up for a resources boom.
2014-03-25 00:00:00 Four Inevitable Changes that Threaten Your Business by Dan Richards (Article)
If you step back and look at the status quo in the advisory business and ask yourself what things simply don’t make sense and are unsustainable as a result, you will come up with a surprisingly long list. Today’s article focuses on inevitable changes in the investing environment.
2014-03-18 00:00:00 What's So Great About Private Equity? by Robert Kleinschmidt of Tocqueville Asset Management
In his latest piece, Robert Kleinschmidt, CEO and CIO of Tocqueville Asset Management, looks at how private equity has gained cachet among investors over the last few decades. He discusses the tendency of the investing public to view it as a "new" asset class, but notes many of its limitations can be seen as reasons the public equity markets were created.
2014-03-18 00:00:00 Market Update by Team of Castleton Partners
With military tensions rising over the Ukraine saga and geopolitical posturing dominating the headlines, Treasury rates rallied across the yield curve last week, with 10 year yields falling 13 basis points to 2.66%. Though Cold War-era rhetoric remains high, there are indications that the threat of military action is becoming less likely. As such, we suspect markets will become more comfortable with the situation and expect it to become less of a focus. Nonetheless, we concede that headline risk remains and the primary influence on the Treasury market this week may well be external.
2014-03-15 00:00:00 Like Houdini, the Markets Escape Again and Again by Stephen C. Sexauer of Allianz Global Investors
Like the great escape artist Harry Houdini, the markets have repeatedly escaped a series of potential catastrophes. Central banks around the world have coordinated policy making these escapes possible, but the end result is another trap from which we need to escape - seemingly permanent low interest rates for savers ("financial repression"), slow growth, and high asset prices. Financial repression is better than an outright debt deflation, but it causes its own problems. The outlook is for low returns.
2014-03-12 00:00:00 The Importance of Beta Management by Richard Bernstein of Richard Bernstein Advisors
Morningstar recently released ?Mind the Gap-2014? which demonstrated that investors are generally very poor beta managers. The Morningstar data showed that investors? performance lagged that of their funds by about 250 basis points per year for the past ten years because of poor beta management, i.e., investors tend to be very poor allocators of capital.
2014-03-10 00:00:00 Tech Bubble 2.0? by Chris Maxey, Ryan Davis of Fortigent
The $19 billion acquisition of WhatsApp by Facebook in late February put an exclamation point on several high profile takeovers in the technology space in recent months. Sizeable deals such as Google?s $3 billion acquisition of Nest and Facebook?s $3 billion offer for SnapChat have fueled the idea that an indiscriminate buying spree in the technology space a la 1999 could set up financial markets for another valuation bubble.
2014-03-06 00:00:00 The Dollar's Long Term Decline by Axel Merk of Merk Investments
The cleanest of the dirty shirts doesn?t necessarily preserve your purchasing power. Sure, the U.S. dollar has beaten the Russian Ruble and some others of late, but when it comes to real competition, the U.S. dollar has taken a back seat. The U.S. dollar?s long-term decline may be firmly in place and investors may want to buckle up to get ready for the ride.
2014-03-05 00:00:00 The Renminbi's New Normal by Teresa Kong of Matthews Asia
The gyrations in Chinese money markets in the last few weeks have caused much alarm in the financial press. The moves in these markets are not only inline, but healthy for an economy looking to increase the role of the market in allocating resources. Those who believe these moves indicate financial stress, or draw parallels between the recent volatility and that which preceded the subprime crisis in the U.S., might be looking through the wrong end of the telescope.
2014-03-05 00:00:00 The Renminbi's New Normal by Teresa Kong of Matthews Asia
The gyrations in Chinese money markets in the last few weeks have caused much alarm in the financial press. The moves in these markets are not only inline, but healthy for an economy looking to increase the role of the market in allocating resources. Those who believe these moves indicate financial stress, or draw parallels between the recent volatility and that which preceded the subprime crisis in the U.S., might be looking through the wrong end of the telescope.
2014-03-01 00:00:00 Black Swans and Endogenous Uncertainty by John Mauldin of Millennium Wave Advisors
John is in Florida and feeling a bit under the weather, so this week were bringing back one of his most popular letters, from December 2007. In the letter he discusses the work of Professor Graciela Chichilnisky of Columbia University, one of whose key insights is that the greater the number of connections within an economic network, the more the system is at risk. Given the current macroeconomic environment, it is important to remind ourselves of how complacent we were back in 2007 and how it all fell apart so quickly, just as John outlined in this rather prescient piece.
2014-02-28 00:00:00 Weekly Economic Commentary by Carl Tannenbaum of Northern Trust
The sensitivity of emerging markets complicates the Fed?s exit plans; Raising the minimum wage is not the only way to aid low-income workers; Brazil?s economy is faltering as the World Cup approaches.
2014-02-25 00:00:00 Why Our Firm Uses DFA Funds by Dougal Williams, CFA (Article)
Research shows that 80% of active fund managers underperform their benchmarks. Index funds virtually eliminate this risk of underperformance. DFA, however, has engineered an even better mutual fund. This article explains key tenets of DFA’s approach and why our firm chose it over both active and index mutual funds.
2014-02-25 00:00:00 Weekly Market Update by of Castleton Partners
Interest rates were relatively range-bound last week, despite a string of disappointing economic releases. With severe weather across the country having an outsized impact on the economy of late, market participants have been treating the weak data with a high degree of skepticism. We suspect there is further room for data to disappoint relative to expectations, believing a clear reading on the state of the economy cannot be determined until the spring.
2014-02-14 00:00:00 What Harvard Can Teach Us About Portfolio Management by Roger Nusbaum of AdvisorShares
The takeaway for advisors is the need to make sure clients truly understand their time horizons and that their portfolios are being navigated toward their time horizon versus responding to short term events like a Green Mountain Coffee (NASDAQ:GMCR) popping 30% on a deal with Coca Cola (NYSE:KO) or a stretch of poor returns for emerging markets.
2014-02-05 00:00:00 Emerald Economic Commentary by Team of Emerald Allocation Strategies
As Yogi Berra once said, "You got to be careful if you don?t know where you?re going, because you might not get there." As we look back on 2013 and look ahead to 2014,we want to share our thoughts on the road traveled and more importantly, the possible road ahead.
2014-02-04 00:00:00 The Albatross of MPT Thinking by Michael Edesess (Article)
The January/February issue of the Financial Analysts Journal includes an article titled "My Top 10 Peeves" by Clifford Asness, who was trained in modern portfolio theory (MPT) and its underlying assumptions. Many of Asness peeves are directed at people who depart from the MPT worldview. In discussing his peeves, I will offer counter-arguments and explain why I think the MPT perspective is flawed.
2014-02-04 00:00:00 Challenging the Consensus by Niels Jensen of Absolute Return Partners
Investors are overwhelmingly bearish on bonds going into 2014. In this months Absolute Return Letter we challenge that view and look at various reasons why the bond market may surprise most people and deliver a positive return this year.
2014-01-31 00:00:00 A Surprising Gift for Chinese New Year by Sherwood Zhang of Matthews Asia
Beijing-based China Credit Trust Company, a firm that operates as a non-banking financial institution in China, announced this week it reached an agreement to restructure a risky high-yield product that had earlier ignited worries over the health of Chinas trust industry. Just in time for the Lunar New Year, investors in the troubled trust may receive a big (metaphorical) red envelope-a monetary gift traditionally given during Chinese New Year or other special occasions-or at least avoid a financial hit.
2014-01-31 00:00:00 Do Portfolio Diversifiers Belong in Client Portfolios? by Roger Nusbaum of AdvisorShares
The big idea is that the stock market goes up more often than not but when it does go down it scares the hell out of clients. During these large declines some advisors will use tools like gold, hedge fund replicators, absolute return, market neutral, funds that sell short or any other products that tend to not look like the stock market to try to spare clients from the full effect of the decline.
2014-01-30 00:00:00 Getting Comfortable With Volatility by Mark Mobius of Franklin Templeton
Over the past few weeks, weve seen significant volatility in the markets, which has spooked some investors, but is also something we have become accustomed to. Markets generally (not only emerging markets) have become much more volatile during the last 20 years as a result of massive flows of money from not only institutional investors and long-only mutual funds but also hedge funds and high-frequency trading. We see such selloffs as potential opportunities to pick up bargains in select stocks if, in fact, the prices move low enough to draw our interest.
2014-01-28 00:00:00 Harvard’s Post-Crisis Endowment Strategy by Justin Kermond (Article)
Jane Mendillo took the helm as CEO and president of Harvard Management Company (HMC) in 2008, after the endowment suffered a devastating $10 billion loss, which depleted its worth by more than 27%. Under her leadership, HMC has emerged from the crisis with innovative changes in its policies and processes regarding asset allocation and risk management of alternative assets.
2014-01-28 00:00:00 An Active Management Turning Point? by Chris Maxey, Ryan Davis of Fortigent
Active managers faced a difficult road in recent years, leading to many questions about the efficacy of active versus passive investment management. There are signs that the tide is once again changing in favor of active managers and the road ahead could offer happier times.
2014-01-28 00:00:00 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn
My caution last week unfolded into a market sell off related to both disappointing earnings and concern over emerging markets affecting the foreign exchange markets.
2014-01-23 00:00:00 Can Equities Continue Their Rise? Equity Investment Outlook: January 2014 by Matt Berler, John Osterweis of Osterweis Capital Management
2013 marked the fifth year of recovery following the near-death experience of the 2008 global financial system meltdown. From a low of 677 in 2009, the S&P 500 Index (S&P 500) finished 2013 at 1,848, delivering a stunning 203% total return from the low. Over the same period, the total return for the Dow Jones Industrial Average was 188%. The tech-heavy and arguably more speculative NASDAQ logged a 249% total return. These very large equity returns reflect both a strong recovery in corporate profits and a dramatic clean-up of our financial system.
2014-01-22 00:00:00 Commodities Remain a Source of Frustration by Chris Maxey, Ryan Davis of Fortigent
The environment following the global financial crisis has been a challenging one for asset allocators, as long held relationships shifted and traditional idioms were turned on their head. As we detailed last week in "The Diversification Obituary," investors have seen little work in their portfolios other than US stocks, while supposed diversifiers have offered little more than muted beta and unusually high correlations.
2014-01-22 00:00:00 The Virtualization of Everything by Francois Sicart of Tocqueville Asset Management
In his latest piece, Francois Sicart, Founder and Chairman of Tocqueville Asset Management, looks at the motivations of participants in capital markets, and how with the advent of synthetic investments and complicated derivatives products, he is concerned that "the stock market has lost its close link to the "real" economy and has become more of a gigantic casino."
2014-01-17 00:00:00 Getting Lucky by Howard Marks of Oaktree Capital
Sometimes these memos are inspired by a single event or just one thing I read. This one - like my first memo 24 years ago - grew out of the juxtaposition of two observations. Ill introduce one here and the other later on. Contrary to my wife Nancys observation that my memos are "all the same," the subject here is one Ive rarely touched on.
2014-01-14 00:00:00 What Have We Learned from the Financial Crisis? by Michael Edesess (Article)
Why do we need yet another discussion of the 2007-09 financial crisis and its aftermath? That question is asked and answered by Alan S. Blinder in his new book, After the Music Stopped: The Financial Crisis, the Response, and the Work Ahead. Blinder provides new details about this harrowing chapter in our financial history and valuable insights about the effectiveness of potential regulatory policies.
2014-01-10 00:00:00 High Yield and Bank Loan Outlook- January 2014 by Team of Guggenheim Partners
Improving U.S. macroeconomic conditions should spur additional investor demand for high-yield bonds and bank loans, particularly with defaults exceptionally low. Still, investors should monitor trends pointing to an erosion of safety in leveraged credit.
2014-01-07 00:00:00 Ten Predictions for Advisors in 2014 by Bob Veres (Article)
Nobody can predict the markets. But it is possible to forecast the challenges that financial advisors and planners will face in the next 12 months, or at least provide a warning system for impending threats. Here are my top 10 issues to think about as we enter 2014 - offered with humility and respect for the world’s ability to surprise us.
2014-01-07 00:00:00 Turn the Page: Outlook for Economy/Stocks in 2014 by Liz Ann Sonders of Charles Schwab
In this comprehensive (read: long...sorry!) 2014 outlook report, we assess the likelihood a correction is in the offing given the strong gains since 2009.
2014-01-06 00:00:00 2013: A Review of the Past, the Present and the Future by Ron Surz of PPCA Inc
This commentary is divided into three sections. I begin with a review of current U.S. and foreign stock markets, examining the year 2013 and the past six years, including the crash of 2008. This perspective serves as a launch point into the future, specifically 2014 and the remainder of this decade. I conclude with a review of the past 88 years of U.S. stock and bond markets.
2013-12-26 00:00:00 Newsletter by Harold Evensky of Evensky & Katz
I admit it, I do occasionally pick on Money Magazine and other consumer financial publications, but as Ive written in the past, for the most part, Money does a great job of educating consumers. Its story on Lessons from the Crash "Lehman Brothers collapse in September 2008 sent stocks on a terrifying ride. A year-by-year look back reveals five key takeaways you need to heed today" is an excellent example. Here are Moneys "Lessons."
2013-12-20 00:00:00 Let's Get Physical: Gold Bullion and Bitcoin by John Hathaway of Tocqueville Asset Management
John Hathaway, manager of the Tocqueville Gold Fund (TGLDX), discusses in his latest insights piece the disparity in price direction between gold bullion and Bitcoin, in spite of the strikingly similar rationale for holding the two. He notes that the "Bitcoin-Gold incongruity is explained by the fact that financial engineers have not yet discovered a way to collateralize bitcoins for leveraged trades."
2013-12-17 00:00:00 The Monster That Is Europe by John Mauldin of Millennium Wave Advisors
This week, Geert Wilders and his Party for Freedom in the Netherlands and Marine Le Pen of the Front National (FN) of France held a press conference in The Hague to announce that they will be cooperating in the elections for the European Parliament next spring and hope to form a new eurosceptic bloc.
2013-12-13 00:00:00 Hedged Dividend Investing: The Best Strategy You've Never Heard Of? by Robert Isbitts of Sungarden Investment Research
Our industrys challenge: How to deal with that via creation of intelligent investment strategies that allow advisors and their clients to follow through on their desire to skirt both the bond and stock bubbles of the future, while still striving for a competitive yield for their retirement portfolios.
2013-12-10 00:00:00 Christmas by Jeffrey Saut of Raymond James
Well it is official, Christmas has begun. For me it began with the private wine and dinner party at Morrell, arguably the finest wine store I have ever seen, and anyone that knows me knows I have seen a lot of wine stores! Morrell is located at 1 Rockefeller Center between 5th Avenue and 6th Avenue overlooking the Christmas tree at Rockefeller Center. I had done a gig on Bloomberg radio at Morrell last Tuesday with my friends Carol Massar and Pimm Fox and got invited to the party the next evening to watch the lighting of the Christmas tree.
2013-12-09 00:00:00 Fed Creating More Financial Market Uncertainty by John Browne of Euro Pacific Capital
Although the U.S. stock market continues to hit new nominal highs on a nearly daily basis, the U.S. economy bumps along at a lackluster pace. This disconnect has been achieved by a massive Fed experiment in monetary stimulation.
2013-12-06 00:00:00 Like a Shakespearean Script by Richard Bernstein of Richard Bernstein Advisors
Shakespearean plays follow a pattern. The underlying plots and storylines change from play to play, but the five-act construction is a common overlap. Market cycles tend to follow a similar pattern cycle after cycle. Like the different plots in various Shakespearean plays, the catalysts that begin and end each cycle, and the events during the cycle are always different. However, market cycles seem to follow a script and, so far, this cycle seems to be following the script almost perfectly.
2013-12-05 00:00:00 No Silver Bullets in Investing by James Montier of GMO
In a new white paper today, James Montier of GMOs asset allocation team reviews recent "innovation in our industry." He argues, "one of the myths perpetuated by our industry is that there are lots of ways to generate good long-run real returns, but we believe there is really only one: buying cheap assets."
2013-12-03 00:00:00 Turning Over Rocks by Herbert Abramson, Randall Abramson of Trapeze Asset Management
The S&P 500 is at a record high and we believe the markets generally are fully valued. Corporate revenue growth is anemic, profit margins are stretched, and the prospect of earnings rising meaningfully is not high. And, the outlook for the U.S. and global economy is still uncertain. Market psychology is at a level suggesting the market is overbought. Margin debt is at record levels and the current popularity of stocks by retail investors at market highs is in itself a red flag.
2013-12-03 00:00:00 On the Wings of an Eagle by William Gross of PIMCO
Ive always liked Jack Bogle, although Ive never met him. Hes got heart, but as hes probably joked a thousand times by now, its someone elses; a 1996 transplant being the LOL explanation. Hes also got a lot of investment common sense, recognizing decades ago that investment managers in composite couldnt outperform the market; in fact, their alpha would be negative after fees and transaction costs were factored in.
2013-11-19 00:00:00 Asset Class Allocation and Portfolios: Critique and Complication by Adam Jared Apt (Article)
In Part 1 of this essay, I explained that for asset class allocation to become an investment practice, it required a foundation of theory. And Modern Portfolio Theory was that foundation. But today, most financial journalists and investment advisors who proffer advice centered on asset class allocation are?if I may judge from their writings?oblivious of this. And why shouldn’t they be? Theory is abstract and difficult to apprehend.
2013-11-19 00:00:00 Howard Marks: Equities are Under-owned and Un-loved by Robert Huebscher (Article)
According to Oaktrees Howard Marks, U.S. equities are under-owned and un-loved, and I like to buy assets like that.
2013-11-19 00:00:00 Levitate: Dismiss Bubble Talk for Now by Liz Ann Sonders of Charles Schwab
Its premature to be calling this market a bubble. Rolling 10 year returns havent even reached a long-term mean. Valuation still well below prior bull market peaks.
2013-11-13 00:00:00 Twenty Five by Doug MacKay, Bill Hoover, Mike Czekaj of Broadleaf Partners
I am not a particularly good salesman. From the time I first meet a prospect to when they become a full-fledged client, it can often take two years even when they initiate the first meeting. Fortunately, growing the firm isnt one of my primary roles, a responsibility that does fall to Bill Hoover, my business partner. The beauty of our relationship is that while Bill devotes his time to our firms outside efforts, I am able to spend almost all of my attention tending to the portfolios of those who have already hired us. (View a printable version of this Economic
2013-10-24 00:00:00 Trying to Stop a Bull Market Has Risks by Frank Holmes of U.S. Global Investors
U.S. stocks have been on a tear. The S&P 500 Index has climbed a surprising 20 percent so far this year, as a global synchronized recovery takes shape and funds flow back to equities. As I often say, investors take risks when they try to stop a bull run, and plenty of data suggest you might regret taking that action this year.
2013-10-24 00:00:00 Putting Tax-Deferred Accounts to Best Use by Kathleen Fisher, Tara Thompson Popernik of AllianceBernstein
The common wisdom about retirement planning is to fund tax-deferred vehicles such as 401(k) plans and IRAs to the maxand we agree. But how to put these accounts to best use is more complicated.
2013-10-24 00:00:00 Glory Days: Could They Come Back for US Equities? by Liz Ann Sonders of Charles Schwab
A "great rotation" may not be underway by individual investors; even amid record-breaking outflows from bond funds this summer. But fund flow data do show some shift in preferences and highlight the sensitivity of investors to any rise in longer-term interest rates. A more interesting place to look is at the fiduciary community; that has decidedly shifted its attention away from traditional equities (and fixed income) over the past decade.
2013-10-22 00:00:00 How Many Monkeys Does it Take to Find a Successful Strategy? by Michael Edesess and Kwok L. Tsui (Article)
Give a monkey enough darts and she will eventually hit the bulls-eye on a dartboard. We wouldn’t dare consider that monkey an expert dart thrower, but investment professionals have been using essentially that same logic to assert that their strategies ? often called “smart betas” ? will outperform the market. New research exposes the faulty mathematics upon which such claims are based.
2013-10-18 00:00:00 Trying To Beat The Market Is A Fool's Errand by Chuck Carnevale of F.A.S.T. Graphs
Proponents of indexing as the best investment strategy seemed to take great delight in reporting how the vast majority of professionally managed portfolios (mutual funds, separately managed accounts, hedge funds, ETFs, etc.) fail to outperform the S&P 500. Therefore, they argue, it is best not to even try. Investors should simply invest in index funds and forget about it.
2013-10-17 00:00:00 Investing in Retirement: Bonds Aren't Enough by Kathleen Fisher, Tara Thompson Popernik of AllianceBernstein
What should you invest in after the spigot of earned income is turned off? Its a vexing question, especially since we expect lower stock and bond returns going forward.
2013-10-17 00:00:00 Huey Lewis and the News! by Jeffrey Saut of Raymond James
Thirty years ago Huey Lewis and the News released their smash hit album titled Sports. It was an instant hit with every song on the album a winner. And last week Huey was playing on the Street of Dreams as participants danced to his hit tune This Is It. Of course, the It in question is a potential deal between the House of Representatives and the President on the debt ceiling and the government shutdown.
2013-10-15 00:00:00 Letters to the Editor by Various (Article)
Readers respond to Robert Huebscher’s article, The Futility of the Endowment Model, which appeared last week.
2013-10-08 00:00:00 The Futility of the Endowment Model by Robert Huebscher (Article)
In the past two decades, the so-called endowment model has been adopted by hundreds of endowments, foundations and advisors ? particularly those serving ultra-high-net-worth clients. By aggressively allocating to illiquid alternative asset classes, those investors hoped to duplicate the results of Yale and other top-tier institutions. New research exposes the futility of those efforts.
2013-10-05 00:00:00 Pinch Yourself. U.S. Stock Markets Have Grown 145% in Four-Plus Years by Ron Surz of PPCA
Thankfully, 2008 has become a distant memory. Weve made back its 37% loss and a lot more. Things are good, but are they going to stay that way? We still face anemic economic growth, burgeoning debt, global social unrest and more. The S&P 500 has returned 145% in the past 55 months (4.5 years).
2013-10-02 00:00:00 ProVise Bullets by Ray Ferrara of ProVise Management Group
Effective October 1st, the health exchanges are open for business and enrollment can occur over the next 90 days. It will be interesting to see just how many people feel compelled to sign up under the individual mandate. While the premiums are not inexpensive for most of the eligible people, many will receive tax credits to help offset the cost. Nonetheless, others will find it a significant burden to the budget, and there is great debate over just how this will affect the economy long-term.
2013-09-30 00:00:00 The Global Sea Change Continues by Richard Bernstein of Richard Bernstein Advisors
Most investors will readily admit the global credit bubble is deflating, yet continue to favor credit-based asset classes within their portfolios. Whereas many investors still believe that the emerging markets are a growth story, the data tell us that U.S. investors can find growth in their own backyard.
2013-09-21 00:00:00 The Best, Brightest, and Least Productive? by Robert Shiller of Project Syndicate
In the US, 7.4% of total compensation of employees in 2012 went to people working in the finance and insurance industries. Whether or not that percentage is too high, the real issue is that the share is even higher among the most educated and accomplished people, whose activities may be economically useless, if not harmful.
2013-09-14 00:00:00 Nothing But Bad Choices by John Mauldin of Mauldin Economics
Crises in government funding dont simply arrive on the doorstep unannounced. Their progress toward the eventual Bang! moment is there for all the world to see. The root cause is almost always the same: debt. And whether that debt is actually borrowed or is merely promised to the populace, when the market becomes worried that the ability of the government to fund its promises is suspect, then the end is near. Last week we began a series on what I think is an impending crisis in the unfunded pension liabilities of state and local governments in the United States.
2013-09-11 00:00:00 Underwriters Lose No Time Pumping Out New Shares after Labor Day by Minyi Chen of AdvisorShares
The monthly flows of Mutual Fund and ETF volatility continued as a roller coaster trend was apparent in the last three months. Read this investor insight by Minyi Chen, CFA, Chief Operating Officer of TrimTabs Investment Research and Portfolio Manager of AdvisorShares TrimTabs Float Shrink ETF (NYSE Arca: TTFS) to learn about the variable trend flows.
2013-09-06 00:00:00 Float Research: Fund Flows Swing Wildly for Third Consecutive Month by Minyi Chen of AdvisorShares
The monthly flows of Mutual Fund and ETF volatility continued as a roller coaster trend was apparent in the last three months. Read this investor insight by Minyi Chen, CFA, Chief Operating Officer of TrimTabs Investment Research and Portfolio Manager of AdvisorShares TrimTabs Float Shrink ETF (NYSE Arca: TTFS) to learn about the variable trend flows.
2013-08-28 00:00:00 ING Fixed Income Perspectives August 2013 by Christine Hurtsellers, Matt Toms, Mike Mata of ING Investment Management
While it?s been said that a picture is worth a thousand words, some pictures are just not that complicated. Take the current U.S. yield curve, for example, our interpretation of which can be boiled down to just a handful of syllables: ?zero interest rate policy? and ?taper?.
2013-08-27 00:00:00 Choose Your Door Wisely.. by Blaine Rollins of 361 Capital
If I was being forced to choose a side for year end 2013 performance, I would have to agree with Mr. Plant. While September is historically a difficult month for the markets, we also know that the Q4 tends to reward the equity markets.
2013-08-23 00:00:00 Float Research: Fund Outflows Surge Amid Bond Market Anxieties by Minyi Chen of AdvisorShares
Stock and bond funds have given up a net $32.4 billion in August thanks to strong outflows from ETFs and mutual finds alike. Read this investor insight by Minyi Chen, CFA, Chief Operating Officer of TrimTabs Investment Research and Portfolio Manager of AdvisorShares TrimTabs Float Shrink ETF (NYSE Arca: TTFS) to learn about the recent fund flow trends.
2013-08-22 00:00:00 Summer Whale Watching by David Wismer of Flexible Plan Investments
One of our familys most memorable and pleasant vacations took place years ago when we visited Cape Cod, Massachusetts for the first time. I thought of this trip in pondering some of the market news this week, where Wall Street was practicing its very own version of whale watching.
2013-08-15 00:00:00 Correlation and Portfolio Construction by Dean Curnutt of Macro Risk Advisors
We review recent periods of financial market stress, which bring about elevated levels of asset volatility and during which investors are vulnerable to incurring substantial loss of capital. We illustrate that risk is determined both by the volatility of individual investments in a portfolio and the degree to which they are correlated. Often overlooked, correlation is a critical factor. Because assets become more correlated at the same time they become more volatile, we argue that the benefits of diversification often are difficult to achieve when they are most needed.
2013-08-13 00:00:00 Envisioning the Planning Firm of the Future by Bob Veres (Article)
Virtually all advisors operate with a value proposition built on bettering their clients financial future through management of their assets. But trends in the workforce and capital markets will force advisors to rethink those assumptions and, if Richie Lee is right, the planning firm of the future will adapt a four-factor service model that places much greater emphasis on helping clients maximize their human capital.
2013-08-09 00:00:00 A Surprising Way to Play a Europe Rally by Frank Holmes of U.S. Global Investors
After a lengthy period of stagnant growth and lackluster results, the gradual crescendo of improving economic data that?s been coming out of Europe lately certainly commands attention.
2013-08-08 00:00:00 Absolute Strategies Fund Portfolio Commentary by Jay Compson of Absolute Investment Advisers
In our last quarter commentary we posed a simple question: "Why does the economy need so much stimulus and quantitative easing for so little growth?" Over the last two years or so, we feel that we have identified and explained the structural issues and risks very clearly. But in the second quarter, the equity and credit markets may have done a better job offering investors a true glimpse of the realities facing global markets.
2013-08-08 00:00:00 What is Risk? by Chris Engelman of Cedar Hill Associates
There are no rewards from investing without some measure of risk. Risk management, a process for recognizing, assessing and prioritizing a variety of risks, is an essential part of managing a portfolio successfully. Cedar Hill takes a holistic approach to risk management by identifying each clients objectives, preferences and constraints, then creating specific asset allocation and implementation strategies to minimize the effects of negative events.
2013-08-08 00:00:00 The Role of Confidence by Howard Marks of Oaktree Capital
The so-called wealth effect plays an important and well recognized part in the functioning of an economy. When assets appreciate in value, the owners translate their increased wealth into increased spending. While at first glance this is unsurprising, it should be noted that this is true even if the appreciation is unrealized, and thus the increased wealth exists solely on paper. The relationship can be stated as follows: the richer people feel, the more they spend. Changes in confidence have an impact on behavior similar to the wealth effect. Thats what this memo is about.
2013-08-07 00:00:00 Adapt or Die... by Blaine Rollins of 361 Capital
Bond king Bill Grosss $261.7 billion Total Return Fund at Pacific Investment Management Co. suffered a $7.5 billion net outflow last month, according to data from fund tracker Morningstar Inc. on Friday. It is the third straight monthly outflow for the Fund, on the heels of nearly $10 billion in redemptions in June. Clients have yanked $15.6 billion from Grosss Fund in 2013 through July. Jeffrey Gundlachs $37.9 billion DoubleLine Total Return Bond Fund suffered $580 million net outflow in July, according to Morningstar.
2013-08-07 00:00:00 Thoughts on the Long/Short Space by Kurt Voldeng of AdvisorShares
This insight from Kurt Voldeng highlights performance in the long/short fund universe.
2013-08-06 00:00:00 What Doesn't Kill Gold Makes it Stronger by Peter Schiff of Euro Pacific Precious Metals
Ive been emphasizing for months that the current correction in the gold price is a result of speculative money fleeing the market and not any reflection of golds long-term fundamentals. Unfortunately, there is so much money to be made (and lost) by day trading that my cautions have once again fallen on deaf ears.
2013-08-01 00:00:00 Alternatives for Today's and Tomorrow's Market Challenges by Jennifer Bridwell, Sabrina Callin of PIMCO
Investors should consider alternative investment strategies, which could enhance diversification and the potential for alpha, or risk-adjusted returns, because returns from traditional asset classes in coming years may be lower and more volatile than those realized historically.
2013-07-30 00:00:00 Economic & Capital Market Summary by Gregory Hahn of Winthrop Capital Management
We are approaching the five year anniversary of the beginning of the Financial Crisis. By this time in 2008 we had already experienced the complete seizure of the Auction Rate Preferred securities market and the takeover of Bear Stearns by JP Morgan Chase. In August of 2008, we would see the collapse of Lehman Brothers and the government takeover of AIG. We stand here today, shoulders slumped, and heads bowed mourning the lack of real progress in addressing the structural problems that are impeding sustained economic growth and private credit expansion.
2013-07-17 00:00:00 Canadian Secular View: Into Darkness? by Ed Devlin of PIMCO
Many investors are buying Canadian federal government bonds, shorting Canadian bank stocks and selling Canadian dollars in anticipation of a prolonged downturn. While significant risks are clearly facing the Canadian economy, our baseline forecast does not justify positioning our portfolios for a prolonged Canadian downturn.
2013-07-16 00:00:00 Hedge Funds Can Advertise...But Should They? by Chris Maxey, Ryan Davis of Fortigent
In April 2012, the Jumpstart Our Business Startups (JOBS) Act was signed into law. The legislation eased a number of regulatory burdens on small businesses and private industry in a bid to boost job growth. The bill made additional headlines for lifting an 80-year ban on solicitation for private placements, the restriction that prevented hedge funds from advertising their wares to the general public.
2013-07-16 00:00:00 The Great Rotation Continues Forward... by Blaine Rollins of 361 Capital
Fed Chairman Ben Bernanke grabbed the mic on Wednesday and gave a performance that garnered a standing ovation from Stock, Bond, and Commodity investors. Only U.S. Dollar longs went home dragging their programs and spilling their popcorn. As a result, U.S. equity markets ended the week at all-time highs as stocks remained the darlings of the asset classes.
2013-07-12 00:00:00 Making Sense of the Bond Market by Phelps McIlvaine of Saturna Capital
The great challenge for investors and advisers today is to forecast where interest rates and bond prices will be once the influence of radical central bank intervention dissipates. Measures of inflation expectations are declining, and deflation remains the dominant influence on interest rates. In assessing whether to trim bond allocations, it is important to revisit the reasons for selecting a particular asset allocation before modifying or abandoning it.
2013-07-10 00:00:00 What is Happening to Gold? by John Hathaway of Tocqueville Asset Management
John Hathaway, manager of the Tocqueville Gold Fund (TGLDX), examines in his latest Tocqueville Gold Strategy Investor Letter the dramatic developments in the gold market over the last six months. The letter goes on to discuss the impact the Fed continues to have, and suggests that todays valuations represent a compelling entry point.
2013-07-09 00:00:00 The Five Best New Investment Ideas: New Age Paradigms for the Post-MPT World by Bob Veres (Article)
Over the past four years, Ive been collecting the most tangible, concrete post-Modern Portfolio Theory insights offered by professional investors.
2013-07-02 00:00:00 The Practical Application of Behavioral Finance by Mitchell D. Eichen and John M. Longo (Article)
From the Dot-Com bubble onward, traditional investment models have repeatedly disappointed those who relied on them. When compared to mathematically based models, behavioral finance provides a superior foundation. Here is an alternative investment paradigm, grounded in behavioral finance, that is practical and effective over time periods that are relevant for a significant portion of investors.
2013-06-27 00:00:00 Welcome Back, Mr. Bond by Jeffrey Saut of Raymond James
Weve been expecting you Mr. Bond. The phrase is itself a variant and joins the phrase Play it again Sam as a phrase attributed to a film or TV series. I have used said quip over the past few years, having been wrong-footedly expecting a backup in interest rates. While I did finally target the yield low of last July, the ensuing rate rise has been far slower than I would have thought, that is until the past few weeks.
2013-06-21 00:00:00 Austerity is a Four-Letter French Word by John Mauldin of Millennium Wave Advisors
The France that I see as I look out from the bullet train today is far different from the France I see when I survey the economic data. Going from Marseilles to Paris, the countryside is magnificent. The farms are laid out as if by a landscape artist this is not the hurly-burly no-nonsense look of the Texas landscape. The mountains and forests that we glide through are glorious. It is a weekend of special music all over France, and last night in Marseilles the stages were alive and the crowds out in force.
2013-06-19 00:00:00 Efficient Pension Investing by Jared Gross of PIMCO
Adapting the Sharpe ratio to pension portfolios can help plan sponsors choose among a multitude of investment options designed to achieve the same goal. In our experience, the most significant efficiency gains have come from shifting from intermediate bonds to long-term bonds and introducing lower-volatility substitutes to equities.
2013-06-18 00:00:00 Fed Zombification by Cliff Draughn of Excelsia Investment Advisors
The enthusiasm of our culture for Zombies is estimated to contribute a tidy $5 billion dollar a year to GDP, and that doesnt even include the too-big-to-die zombie banks. In my opinion, the acute interest in zombies and horror (and escapism in general) says something about our countrys mental health.
2013-06-14 00:00:00 The Evolution of Emerging Market Corporate Bonds for U.S. High-Grade Fixed-Income Investors by Todd Kurisu, Thomas Brennan of William Blair
Emerging market (EM) investment-grade corporate bonds are an important and growing segment of the core ?xed-income universe. These bonds have evolved to be more like U.S. investment-grade corporate bonds than high-yield or traditional emerging market debt (EMD) securities. This sector has demonstrated favorable risk, return, and diversi?cation bene?ts in the context of a broad market ?xed-income portfolio. Todays ?xed-income investors must have a framework for evaluating new opportunities subject to prudent risk management
2013-06-12 00:00:00 Bond Realities: The Changing Landscape for Fixed Income and the Death of the Agg' by Andrew Johnson of Neuberger Berman
Earlier this year Andrew A. Johnson, Neuberger Berman?s Chief Investment Officer for Investment Grade Fixed Income, led a series of discussions with institutional clients about the state of the fixed income market and key ideas in approaching opportunistic fixed income investing in the current environment. Here, Mr. Johnson has adapted, and elaborated on, the concepts described at those meetings.
2013-06-11 00:00:00 And Like Clockwork... by Blaine Rollins of 361 Capital
And like clockwork, stocks bounced both from their very short term oversold point and off the 50 day moving average on Wednesday...
2013-05-31 00:00:00 The Great Reflation by Peter Schiff of Euro Pacific Capital
This week economists, investors and politicians were treated to some of the "best" home price data since the frothy days of 2006 when home loans were given out like cotton candy and condo flipping was a national pastime. The Case-Shiller 20 City Composite Home price index was up a startling 10.9% for the 12 month period ending in March. Prices in all 20 cities were up, with some (Las Vegas, Phoenix, and San Francisco) notching gains of more than 20%. Meanwhile the National Association of Realtors announced that April pending home sales volume reached the highest level in nearly three years.
2013-05-30 00:00:00 Understanding Gold Market Dynamics by John Browne of Euro Pacific Capital
To an extent that reveals a thorough misunderstanding of the market forces, the financial media has failed to consider the different motivations and beliefs that drive the different types of investors who are active in the gold market. By treating the gold market as if it were comprised of just one type of investor, analysts have drawn false conclusions about the recent volatility.
2013-05-28 00:00:00 Solving the Public Pension Plan Funding Crisis by John T. Hausladen (Article)
Current proposals to address public pension underfunding will not provide any significant relief because of the continued assumption of investment and longevity risk by plan sponsors. I propose a combination of liability-driven investing and a risk-transfer mechanism to gradually eliminate plan liabilities.
2013-05-24 00:00:00 After the Sell Off in Japan: 2 Reasons Not to Panic by Russ Koesterich of iShares Blog
Russ explains why Thursdays market correction in Japan hasnt changed his view that investors should consider a market weight to Japanese stocks.
2013-05-23 00:00:00 Investing in Gold: Does It Stack Up? by Team of Knowledge@Wharton
Gold has a timeless allure -- especially if you worry about stock market volatility, inflation, a decay of ordinary currency or the collapse of civilization. Yet not everyone agrees that gold offers the safe haven its promoters describe. How reliable can demand be for a commodity that very few people actually need? What is the proper role for gold in an investment portfolio? Why has its price been falling?
2013-05-22 00:00:00 If You Didn't Buy That Powerball Ticket... by Blaine Rollins of 361 Capital
So onward and upward. What signals should Bulls be on the lookout for? Change in breadth (Up v. Down Volumes, Advancers v. Decliners), Signs of distribution (Sharp down days accompanied by large % increases in trading volumes), Change in leadership away from RISKON sectors (dont want SmallCaps, Financials, Industrials, Transports or Housing to lag)...
2013-05-22 00:00:00 The Benefits of Diversifying the Funding of a Gold Position by Team of AdvisorShares
The recent sell off in gold has sharpened the focus of even the most committed gold bugs, and has highlighted one of the key risks that many investors face when they access the gold market. Do you purchase Gold in dollar terms or something else? How do you look at Gold, as a currency or something else? For the purposes of this analysis, Treesdale Partners took a look at a gold transaction in foreign exchange terms.
2013-05-18 00:00:00 All Japan, All the Time by John Mauldin of Millennium Wave Advisors
This week we again focus on Japan. Their stock market has been on a tear, and their economy grew 3.5% last quarter. Is Abenomics really the answer to all their problems? Is it just a matter of turning the monetary dial a little higher and voila, there is growth? Why doesnt everyone try that? And what would happen if they did?
2013-05-17 00:00:00 Opportunistic Investing: Making the Most of Your Cash in Today's Market by Chris Engelman of Cedar Hill Associates
With the Standard and Poors 500 Index rising more than 20% since last June, some people are reluctant to invest now, fearful that stocks are poised to tumble again. By focusing on their long-term investment objectives rather than short-term market fluctuations, however, investors can plan for a sound financial future. Here, Cedar Hill Managing Director Chris Engelman offers strategies for building a portfolio that helps to limit market risks and increases the likelihood of achieving your long-term goals.
2013-05-14 00:00:00 It's Not That Bad Out There by Brian Wesbury, Bob Stein of First Trust Advisors
Certain things, like the sun rising, or the tides shifting, can be counted on. Its also true that when government shrinks as a share of GDP, things start to pick up.
2013-05-10 00:00:00 Weekly Research Briefing by Blaine Rollins of 361 Capital
This weeks focus was squarely on central bank policy decisions and the U.S. April payrolls data. Mid-week the FOMC reinforced the "Bernanke put" by stating explicitly that quantitative easing can be increased if conditions worsen.
2013-05-07 00:00:00 Niall Ferguson: Four Reasons Why the U.S. is Failing by Robert Huebscher (Article)
Niall Ferguson is the champion of anti-Keynesian economists. Last week, he explained why America’s pursuit of Keynesian policies is leading to disastrous consequences.
2013-04-30 00:00:00 Stockman to America: Sinners, Repent! by Laurence B. Siegel (Article)
In a massive volume that melds economic history and social criticism, the former Reagan administration budget director David Stockman has documented countless ways in which America went astray over the last century. Most notably, he decried the corruption of free-market capitalism by those seeking effortless profits at the public?s expense. This is the source of his book?s title, The Great Deformation.
2013-04-30 00:00:00 ProVise Bullets by Ray Ferrara of ProVise Management Group
With the passage of the American Taxpayer Relief Act of 2012, a lot of people felt that things were set as it related to estate taxes. Apparently everyone believed that except the President, who has proposed several changes to estate tax law in his fiscal 2014 budget.
2013-04-30 00:00:00 Beware of the New Systemic Risk by Ashwin Alankar, Michael DePalma of AllianceBernstein
It felt like there was nowhere to hide from the market declines last Monday, April 15, when stocks, bonds and commodities fell in unison across the world, well before the Boston bombings that day. We believe that this failure of diversification was instigated by increasingly powerful multi-asset funds, many of which use leverage, which may have become a new source of systemic risk for investors.
2013-04-22 00:00:00 The Endgame is Forced Liquidation by John Hussman of Hussman Funds
Rule o Thumb: When the cover of a major financial magazine features a cartoon of a bull leaping through the air on a pogo stick, its probably about time to cash in the chips.
2013-04-18 00:00:00 The Lure of Hedge Funds by John West of Research Affiliates
Investors often buy what they think is exciting, sophisticated, and complex with the embedded assumption that all of these attributes will lead to greater returns. We see this today where we witness the continued explosive growth of hedge funds. But, a careful examination of the data reveals that these fancy lures fail to hook as much in excess, after-fee returns as more time tested strategies.
2013-04-17 00:00:00 The Interest Rate Environment: Comparing High Yield Bonds and Bank Loans by Team of Hotchkis & Wiley
In its first quarter 2013 newsletter, "The Interest Rate Environment: Comparing High Yield Bonds and Bank Loans," Hotchkis & Wileys high yield team analyzes the behavior of the high yield market and the bank loan market in different interest rate environments to determine whether they can make sensible assumptions about the future.
2013-04-16 00:00:00 Using Behavioral Data to Earn Superior Returns by C. Thomas Howard, PhD (Article)
Emotional crowds dominate pricing; that was the first basic principle, which I demonstrated last week. This would seem to indicate that BDIs earn superior returns by taking positions opposite the crowds. But this is not necessarily the case.
2013-04-15 00:00:00 The Counter-Inflation Playbook Part 1 by Jeffrey Jones of Cornice Capital
One of the most important lessons I learned during my days at UCLA came from my freshman philosophy professor. He told us that should you find yourself engaged in a debate, the surest way to defeat your opponent is to attack his base principles. If those base principles arent fundamentally sound, any case built on top of it, no matter how convincing, is at risk of crumbling all at once.
2013-04-08 00:00:00 The Theology of Inflation by John Mauldin of Millennium Wave Advisors
We begin this week with a simple pop quiz. Is inflation good or bad? Answer quickly. I?m sorry your answer is wrong. Or rather, we can?t know if your answer is right or wrong because we are not sure what is meant by the question. We may think we know and we may be right but we can?t be sure, because the word inflation has different meanings for different people in different places and different times. In fact, even the same people in the same place and time can?t agree on a precise definition.
2013-04-01 00:00:00 U.S. Stock Market: Too Good to Be True? by Dawn Bennett of Bennett Funds
There is nothing worse than buying at the top of the market. Think back to the last two economic cycles. If you bought the US stock market or real estate in late 2007, you are way under on those purchases and that is after sweating it out for the last 5 years. Even with the 2009-2012 rebound, we have not seen real estate values or the Dow Index back to even. You have to ask yourself, how can this be?
2013-03-26 00:00:00 Adapting the Yale Model for Clients by C. Thomas Howard, PhD and Lambert Bunker (Article)
The Yale University endowment fund is one of the most successful in the country, with a 10-year return besting the endowment universe average return by 300 basis points and the Wilshire 5000 return by 400 basis points. David Swensen is the architect of this program, and his guiding principles are widely used to manage large endowments. They are equally useful for client portfolios.
2013-03-20 00:00:00 Investors Need to Pivot by William Benz of PIMCO
Fixed income investors need to think differently in the current environment. Investors may want to consider pivoting to strategies that are less focused on traditional benchmarks and more oriented to generating income and providing greater flexibility to hedge against rising rates, widening credit spreads or higher inflation.
2013-03-15 00:00:00 Reducing the Risk from Adding Stock Exposure by Seth Masters of AllianceBernstein
Adding other sources of diversification could significantly reduce the risk from increasing stock exposure, our research suggests.
2013-03-13 00:00:00 What's Your Advantage? by Bill Smead of Smead Capital Management
In the March 9, 2013 issue of Barrons, writer Jonathon Laing wrote an excellent piece about Howard Marks. This article provides the base from which we can discuss the main components of investment portfolio composition. These components are information, analysis of information, and decisions made from information and analysis. In doing so, we will bring to light why we believe todays best opportunity is in long-duration common stock investing.
2013-03-12 00:00:00 We Made It. Now What? by Christian Thwaites of Sentinel Investments
What looks like a fairly settled policy in Europe is fast becoming a very dangerous situation, according to Christian Thwaites in his latest "Thought of the Week" -- "We Made It. Now What?" -- adding that the outlook for the world's second largest economic bloc is pretty week.
2013-03-06 00:00:00 Smooth Returns by Bill Smead of Smead Capital Management
Harry Markopolos was working for a hedge fund of funds and attempting to put a portfolio together that would "smooth" long-term returns. In the process of marketing what his company was doing, he ran into a client who already had a money manager doing that for him. The money manager the client used was Bernie Madoff. When Markopolous looked at the long-term track record of Madoff's client, he instantly knew that it was mathematically impossible to have a return that high with as little year-to-year variance in the return. We at Smead Capital Management would like to ask a few questions.
2013-03-05 00:00:00 Is Now the Time to Diversify? by Chris Maxey, Ryan Davis of Fortigent
The use of global diversification in constructing client portfolios has come under fire in recent years due to the underperformance of many risk assets. Traditionalists who stuck to their familiar S&P 500 and BarCap Aggregate Bond index blends generally outperformed their diversified peers in 2011 and 2012, as historic risk premiums failed to materialize and various alternative investment strategies faced headwinds.
2013-03-05 00:00:00 Absolute Return Letter: Expect the Unexpected by Niels Jensen, Nick Rees,Tricia Ward of Absolute Return Partners
With real interest rates being negative in many countries we expect low returns on both equities and bonds going forward. Many investors have responded to that by allocating more and more of their assets to passive strategies such as ETFs. We believe it is the wrong approach for this type of environment.
2013-02-26 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 Asset Class Allocation and Portfolios by Adam Jared Apt (Article)
Asset class allocation has been so thoroughly absorbed into the culture of investing that today, most investment guidance is built around it, and you may even have heard that it is the foundation of an investment plan. And like nearly all respectable investment ideas, it is misunderstood and abused. One misconception is that asset class allocation and portfolio management are the same thing. I'll explain why they aren't later, but let's start by considering another misconception.
2013-02-19 00:00:00 Jesse Livermore by Jeffrey Saut of Raymond James
"There were times when my plans went wrong and my stocks did not run true to form, but did the opposite of what they should have done if they had kept regard for precedent." So said Jesse Livermore, as chronicled in the brilliant book Reminiscence of a Stock Operator by Edwin Lefever; and, stock market historians will recall that Jesse Livermore is still considered one of the most colorful market speculators of all time.
2013-02-14 00:00:00 Understanding Derivative Overlays, in All Their Forms by Markus Aakko, Rene Martel of PIMCO
Passively managed overlays are typically based on a simple formula, while active approaches involve more complex algorithms or decision-making. Overlay examples include portable alpha, LDI, currency, completion, rebalancing, and tactical asset allocation overlays -- as well as tail-risk hedging and hedge fund replication. Potential benefits include the ability to effectively manage cash, reduce costs and risk exposure, simplify manager transitions and express tactical views.
2013-02-06 00:00:00 Too Active, Too Passive: Too Little Understanding by Bill Smead of Smead Capital Management
The wealth management and institutional consulting communities have allowed indexing to be called "passive" investing and stock-picking disciplines to be called active management. This implies a mindless approach to indexing and a great deal of busyness to stock picking. We at Smead Capital Management believe these labels are at the heart of a great deal of confusion about what works and what doesn't work in both equity mutual funds and separately managed accounts.
2013-02-01 00:00:00 Fiscal Cliff: Making Decisions in Crisis Part III by Brian Singer of William Blair
The December 31 fiscal cliff was averted, but by the narrowest of conceivable margins. The resolution is consistent with our November analysis, but the narrowness leaves much to be resolved and prolongs uncertainty through March.
2013-01-31 00:00:00 Fiscal Cliff: Making Decisions in Crisis Part II by Brian Singer of William Blair
Having set a framework using strategic decision theory to interpret the choices of US politicians in response to their incentives around the "?scal cliff," we now similarly turn our attention to the incentives (or disincentives) around the choices facing investors. While the general rise of uncertainty around changes to the rules of a game slow down the decision making process of investors, we consider the implications of a shifting tax burden on longer run equity valuations.
2013-01-31 00:00:00 Elliott's Paul Singer On How Money Is Created ... And How It Dies by Team of TimeCapital
When we launched our series into the US Shadow Banking system in the summer of 2010 we had one simple objective: to demonstrate just how little the process of modern (and by modern we mean circa 2004 not 1981) money creation was understood.
2013-01-30 00:00:00 Fiscal Cliff: Making Decisions in Crisis Part I by Brian Singer of William Blair
Having lost touch with mainstream America, neither the Republican nor the Democratic Party enjoys much governing ability. Second, politicians struggle to function as leaders, regardless of competence, as a result of party disengagement. Third, left to their own devices, politicians will respond to their individual incentives. Bringing these observations together, neither party platform nor leadership vision will provide as much guiding force as the incentives of each politician, sometimes individually and other times in coalition.
2013-01-28 00:00:00 A Few Things to Consider. Plus a Look at Maine and Illinois by Gregg L. Bienstock of Lumesis
This week's commentary is a slight departure from our standard format. It's been a few weeks since we mentioned the fiscal cliff, sequestration and the like. This is due to our collective saturation and the perspective of so many that the problem was solved. Well, we want to provide a reminder or two and throw a few thoughts at you to kick around. We conclude with a quick look at Maine and Illinois.
2013-01-25 00:00:00 Prisoner of the Bureaucracy by John Mauldin of Millennium Wave Advisors
I wrote some time ago that Greece had a choice between Disaster A: staying in the euro; and Disaster B: leaving the euro. I have recently come back from four days in Greece, meeting with lots of people at all levels of society, and will share with you in this letter my analysis of their choices and the results. I'll also have a few things to say about what the developments in Greece might mean for the rest of Europe and the developed world.
2013-01-22 00:00:00 Keep Your Eye On The Ball - 2012 Year End Letter by Team of Sloan Wealth Management
The members of the Portfolio Management Team at Sloan Wealth Management (SWM) coach two baseball teams, two soccer teams, one T-ball team and one basketball team for our collective young children. Thus, we find ourselves stressing the basics. Learning the fundamentals of how to catch a pop-up will eliminate some of the fear of getting hit in the face. In 2012, we found many parallels to the capital markets as our portfolios posted high double digit returns in the face of fear.
2013-01-15 00:00:00 Forecast 2013: Unsustainability and Transition by John Mauldin of Millennium Wave Advisors
As we begin a new year, we again indulge ourselves in the annual rite of forecasting the year ahead. This year I want to look out a little further than just one year in order to think about the changes that are soon going to be forced on the developed world. We are all going to have to make a very agile adaptation to a new economic environment (and it is one that I will welcome). The transition will offer both crisis and loss for those mired in the current system, which must evolve or perish, and opportunity for those who can see the necessity for change and take advantage of the evolution.
2013-01-10 00:00:00 Market Perspectives Q4 2012: Politics vs. Economics by Richard Michaud of New Frontier Advisors
The major news of the quarter was that a fiscal cliff deal passed in the final hours of the 112th Congress and was signed by President Obama. The deal averts tax increases on most Americans and prevents large indiscriminate cuts in spending in many government programs. It also averted, by nearly universal consensus among macroeconomists, tipping the American economy into recession with attendant global implications.
2013-01-08 00:00:00 Another Lost Year for Active Management by Chris Maxey, Ryan Davis of Fortigent
There is no doubt that 2012 will be remembered by many investors, for reasons both good and otherwise. One group less likely to remember the good of 2012 is active managers. Across the universe of hedge funds and mutual funds, relatively few were able to outperform their comparative benchmarks. This continues a long running trend of active managers lagging their less active counterparts and raises many questions about the efficacy of active management.
2013-01-02 00:00:00 Somewhere Over the Rainbow by John Mauldin of Millennium Wave Advisors
We are 13 years into a secular bear market in the United States. The Nasdaq is still down 40% from its high, and the Dow and S&P 500 are essentially flat. European and Japanese equities have generally fared worse. The average secular bear market in the US has been about 11 years, with the shortest to date being four years and the longest 20. Are we at the beginning of a new bull market or another seven years of famine? What sorts of returns should we expect over the coming years from US equities?
2013-01-02 00:00:00 How Much Hedge Fund Exposure Makes Sense? by Daniel Eagan of AllianceBernstein
Our research suggests that a well-diversified allocation to hedge funds might improve portfolio returns, but their greatest benefit is the risk reduction that comes from their low correlation to stocks. Here's why.
2012-12-20 00:00:00 Hedge Funds: Identifying Alpha and Mitigating Risk by Daniel Eagan of AllianceBernstein
Hedge funds have historically generated higher returns than stocks with less volatility, but they also pose several significant risks that volatility alone doesn't capture, our research suggests. That makes careful due diligence and diversification of managers crucial.
2012-12-15 00:00:00 Rooting Out Biases in Hedge-Fund Data by Daniel Eagan of AllianceBernstein
In a recent article, I discussed the conclusions about hedge funds historical returns and risk we reached after rooting out biases in the data available. Heres how we sought to eliminate those biases.
2012-12-13 00:00:00 Hedge Funds: Separating Fact from Hype by Daniel Eagan of AllianceBernstein
It's easy to understand the allure of hedge funds and the fear they inspire. After conducting rigorous research aimed at separating fact from hype, we have concluded that hedge funds historically have had an attractive risk/return profile.
2012-12-11 00:00:00 Fine Wine - Why it's for More than Just Drinking by Mark E. Ricardo, JD, LLM, AAMS (Article)
For many investors, an ideal asset class would combine superior long-term absolute and risk-adjusted returns with a hedge against inflation and stock market volatility. There's a way to get all of that, in an asset class you might never have thought of until now: fine wine. Investment-grade wine deserves careful consideration, particularly now that - unlike other collectibles, such as art and rare books - it can be traded on a regulated exchange.
2012-12-04 00:00:00 Surprising Choices in the Search for Safety Near-Certain Loss of Purchasing Power versus Short-Term by Jason Petitte, CFA (Article)
Risk, in its many guises, is unavoidable, and investors today are taking on significant amounts of credit risk, duration, and leverage to obtain high yields from many presumably safe bonds. But certain types of risk are often mispriced. By overweighting one's portfolio to those sectors that currently offer attractive risk-adjusted returns, investors will be better positioned to meet their long-term goals.
2012-11-13 00:00:00 David Rosenberg on Obama's Victory by David Rosenberg (Article)
The election is behind us. The Fed has spent its last bullet. We are at an inflection point of the earnings and sales cycle. The fiscal cliff, the Chinese political transition and the spread of the euro zone recession to the north lie ahead.
2012-11-13 00:00:00 Voyages by Michael Lewitt (Article)
Anything short of drastic entitlement reform, serious cutbacks in defense spending, and serious tax reform that alters incentives away from speculation in favor of production will leave this country stuck on the dangerous path it is on today.
2012-11-13 00:00:00 Bank Loans: Looking Beyond Interest Rate Expectations by John Bell and Kevin Perry (Article)
Portfolio managers of Bank Loan Strategies, John Bell and Kevin Perry, outline the major advantages and risks of bank loan investing and the roles that a bank loan allocation can play in a fixed income portfolio.
2012-10-24 00:00:00 Voluntary Exile by Bill Smead of Smead Capital Management
We at Smead Capital Management (SCM) believe that institutional and individual investors have moved their asset allocation away from large cap US stocks. Institutions are in exile in private equity, hedge funds and all things commodity and BRIC-trade related.
2012-09-11 00:00:00 Can Our Retirement System be Fixed? by Robert Huebscher (Article)
Google 'Teresa Ghilarducci' and you'll find countless references to her as the most dangerous woman in America. That dubious distinction stems from her 2008 book, When I'm Sixty-Four, in which she advocated replacing voluntary 401(k) plans with government-mandated savings accounts. Ghilarducci was attempting to address a problem that thus far has eluded solution, so it's important to consider her arguments, which have drawn praise from some quarters, too.
2012-09-05 00:00:00 The Lending Lindy by Bill Gross of PIMCO
Our entire finance-based monetary system led by banks but typified by insurance companies, investment management firms and hedge funds as well is based on an acceptable level of carry and the expectation of earning it. In a New Normal economy where lenders dance to the Blue Danube instead of the Lindy, how should we move our own feet? Carefully, I suppose, and with recognition that historic returns are just that historic.
2012-08-28 00:00:00 Who?s Fooling Whom? by Michael Lewitt (Article)
Equity markets are exhibiting a remarkable degree of complacency. The VIX is currently at extremely low levels and it can maintain those levels for a long period of time. The worse things get in terms of the economic data, the higher the market goes on hopes of central bank stimulus. At this rate, the Dow will peak just as the world is coming to an end!
2012-08-21 00:00:00 Letters to the Editor by Various (Article)
A reader responds to the commentary, Maybe This Time is Different, by Andrew Redleaf of Whitebox Advisors, which was published on August 14, and a reader responds to Michael Edesess' article, Why Hedge Funds Destroy Investor Wealth, which was published last week.
2012-08-07 00:00:00 Why Hedge Funds Destroy Investor Wealth by Michael Edesess (Article)
If all the money that's ever been invested in hedge funds had been put in Treasury bills instead, the results would have been twice as good. So claims Simon Lack - a former JPMorgan executive whose job was once to help steer billions into hedge funds - in his recent book, The Hedge Fund Mirage: The Illusion of Big Money and Why It's Too Good to Be True. You'd think hedge fund advocates would immediately pounce on this and refute it; but it's irrefutable.
2012-07-24 00:00:00 High Yield and Low Risk: Finding the Best Closed-End Funds by Geoff Considine (Article)
Yield-starved investors have ventured into exotic - and often risky - assets, including hedge funds, non-traded REITs and private placements. But an asset class that has been around since 1893 offers a compelling combination of low risk and high income. A carefully selected portfolio of closed-end funds (CEFs) will yield 8% with less volatility than the S&P 500.
2012-07-12 00:00:00 Fed Intervention and the Market: Historic 30-Year Mortgage Low by Doug Short (Article)
Note from dshort: I've updated the charts in this commentary in commemoration of yet another all-time low in the 30-year fixed-rate mortgage as tracked by Freddie Mac. Note also that the last chart now reflects the July WSJ forecasts for the 10-year note yield. Today's closing yield of 1.50% is just three basis points off the record low of June 1st, and the 30-year is just four basis points off its June 1st low.
2012-07-10 00:00:00 Benchmarking Your Retirement Portfolio With a Risk-Free Strategy by Laurence B. Siegel (Article)
Making the savings from 35 or 40 years of work pay for a retirement of the same length is a real challenge. At a zero real rate of return, you would have to save half of your income to enjoy a retirement that long without taking a cut in your living standard. There is, of course, a better way - judicious use of TIPS and annuities. A riskless strategy using those asset classes can safeguard one's retirement assets and can serve as a benchmark against which riskier portfolios can be measured.
2012-05-29 00:00:00 The Bargains in Europe's Great Oversell by Bob Veres (Article)
When was the last time we saw negative headlines drive valuations as low as they have in Europe? Evermore's David Marcus, who succeeded Michael Price as manager of the Mutual European Fund, says this period of obsession with Greek debt, bank restructuring and single-digit P/Es may be known as The Great Oversell.
2012-05-08 00:00:00 Richard Bernstein: US Assets will Outperform over the Next Decade by Robert Huebscher (Article)
Prior to founding the firm that now bears his name, Richard Bernstein was the chief investment strategist at Merrill Lynch & Co. In this interview, he discusses why he expects US assets - both equities and fixed income - to be the outperformers among global markets over the next decade.
2012-04-24 00:00:00 Is 2012 the Year for Hedge Funds? by Chris Maxey of Fortigent
Prior to the financial crisis, hedge funds were largely viewed as alpha generating, high return seeking, portfolio diversifiers. In 2008, that model came under attack from multiple angles fraud, illiquidity, and poor returns being the primary culprit. Ever since that time, the value proposition of hedge funds and alternative investments remains in question, causing some to wonder if this is a make or break year for the space. There is reason to think the environment for hedge funds and active managers is improving.
2012-04-10 00:00:00 HBS Research: The Role of Business in Society by Michael Edesess (Article)
Many people believe that society needs to change for market capitalism to be sustainable - and it turns out a surprising number of business leaders are among them. That's the finding of a recent series of forums, organized by three Harvard Business School professors. Based on these discussions, the HBS professors advance a bold proposal - that business itself - not government, or even public-spirited nonprofits - should lead the charge to make the necessary changes to our capitalist system.
2012-03-13 00:00:00 The Gutenberg Economy by Michael Lewitt (Article)
As commentators near and far speculate on what 2012 will bring to the global economy and markets, there is little question that one factor will be decisive: the central banks' printing presses. Both the Federal Reserve and the European Central Bank (ECB) will keep printing dollars and euros around the clock until their presses run out of ink.
2012-03-09 00:00:00 Long-Short Funds Lead Greenwich Indices in February by Clint Binkley of Greenwich Alternative Investments
Hedge funds turned in another month of gains across all major strategies, notes Clint Binkley, Senior Vice President. Results from Long-Short Equity funds show that managers are increasing net exposures as they become more confident about economic conditions. Although some managers continue to expect a market correction, most believe it will be mild as institutional investors are still waiting for opportunities to add to their positions.
2012-03-07 00:00:00 The Labors of Hercules Were Never This Tough by Neil Dwane of Allianz Global Investors
Theres no shortage of insight on the ever-expanding debt drama in Europe. Despite the deluge of information, there are still a few key points to consider. Banks and hedge funds could file lawsuits against Greeces government. Protection against the ISDA declaring a default on Greeces debt could prove to be inadequate. This could mean that things may be worse than we imagine. Markets have rallied this year on positive sentiment that Greeces default has been contained. Are we being too complacent? Still, with solutions being drafted, now might be a good time to buy European equities.
2012-02-10 00:00:00 Indices Show Hedge Funds Off to Strong Start in January by Clint Binkley of Greenwich Alternative Investments
"US equities rallied significantly to begin 2012 and Long-Short managers are the best performers thus far. Hedge funds focused on Market Neutral strategies were also surprisingly strong as both Arbitrage and Event-Driven managers posted their best results in months. Despite investors being drawn into risk-on sectors of the market, most funds remain cautious with the economic situation in Europe still unresolved, notes Clint Binkley, Senior Vice President.
2012-02-07 00:00:00 Jeremy Siegel, Rob Arnott and Other Experts Forecast Equity Returns by Laurence B. Siegel (Article)
A forecast of the equity risk premium (ERP) tells you how much to save, how to allocate assets between equities and fixed income, and how much you can consume. Given its great importance, the CFA Institute recently convened a group of top-level academics and practitioners to forecast future ERPs - and to reflect on similar predictions they had made a decade ago.
2012-01-11 00:00:00 Greenwich Global Hedge Fund Index Slips 15 Points in December by Clint Binkley of Greenwich Alternative Investments
US equities ended 2011 essentially unchanged but endured significant volatility throughout the year. Hedge funds focused on market neutral strategies were above average performers for the month and the year as they were able to withstand the market uncertainty. Looking forward, we expect Directional and Long-Short strategies to have better performance as the global economy continues to stabilize
2011-12-20 00:00:00 Dennis Gartman Explains His Call on Gold by Robert Huebscher (Article)
Dennis Gartman has been publishing his daily commentary, The Gartman Letter, since 1987. He's been in the news lately because of a call he made last week on the price of gold. In this interview, he discusses the reasons behind that forecast.
2011-12-19 00:00:00 The Volcker RuleAn Exercise in Confusion by Milton Ezrati of Lord Abbett
This past October, a group of four regulatory bodies jointly released draft proposals of the so-called Volcker Rule. Part of the Dodd-Frank financial reform legislation set to go into effect this coming July 2012, this rule would forbid banks any substantial interest in either hedge funds or private equity firms and also prohibit banks from doing any proprietary trading on their own account in securities of any kind. Apart from the legitimate concerns and arguments on both sides, the most threatening and dangerous aspect is the debilitating lack of clarity.
2011-12-13 00:00:00 Letter to the Editor by Various (Article)
A reader responds to Michael Edesess' article, The Unspoken Truth about Hedge Funds, which appeared last week.
2011-12-09 00:00:00 Greenwich Hedge Fund Indices Post Modest Losses in November by Clint Binkley of Greenwich Alternative Investments
Hedge funds as measured by the Greenwich Global Hedge Fund Index posted losses in November, losing ground during the latter half of the month on weak fundamentals in European markets. The GGHFI shed 1.05% compared to global equity returns in the S&P 500 Total Return (-0.22%), MSCI World Equity (-2.69%), and FTSE 100 (-0.70%) equity indices. European headlines continue to dictate the mood of global markets and cause increased volatility in equities. Hedge fund managers have decreased leverage and exposure to mitigate market risk but are still exposed to broader moves
2011-12-06 00:00:00 Why Shiller and Soros May Be Wrong about Farmland Investing by Robert Huebscher (Article)
Earlier this year, Yale's Robert Shiller identified farmland as an asset class in the early stage of bubble formation. George Soros, Jim Grant and Jim Rogers have espoused similarly bullish views. But advisors - even those managing the assets of very wealthy clients - shouldn't bet the farm on these expert forecasts just yet.
2011-12-06 00:00:00 The Unspoken Truth about Hedge Funds by Michael Edesess (Article)
The popularity of the endowment model among advisors has been driven by the belief that hedge funds have produced positive risk-adjusted returns. But the basis for that notion has been statistics gleaned from hedge fund databases, and new research shows returns from those databases are even more upwardly biased than previously thought; the supposed alpha never really existed.
2011-11-29 00:00:00 Do You Really Understand Rates of Return? Using them to look backward - and forward by Michael Edesess (Article)
The basic quantitative building block for professional judgments about investment performance is the rate of return. How well do we really understand it? And how can we use past rates to assess the prospects for future performance? You may be surprised to learn that 'expected return' may not be what you think.
2011-11-22 00:00:00 Investment Trends in the Financial Advisory Profession by Robert Huebscher (Article)
Advisors are optimistic about the returns Treasury bonds will provide over the next decade, but they are less sanguine about the projected performance of US equities. Their inflation expectations are consistent with the historical data. These findings and many others arise from our study, Investment Trends in the Financial Advisory Space: Key Implications for the Investment Management Industry, a research report now available from Advisor Perspectives.
2011-11-22 00:00:00 A Bond-Based Financial Planning Framework by Stan and Hildy Richelson (Article)
Plain vanilla bonds have proven themselves to be the best investments available, and we wholeheartedly agree with Andrew Mellon's prescient late-1920s observation that 'gentlemen prefer bonds.' We believe that ladies should, too.
2011-11-09 00:00:00 Greenwich Global Index Hedge Funds Bounce Back in October by Clint Binkley of Greenwich Alternative Investments
Hedge funds as measured by the GGHFI posted strong results in October, benefitting from a rebound in equity prices during the month. The GGHFI gained 2.27% compared to global equity returns in the S&P 500 Total Return +10.93%, MSCI World Equity +10.26%, and FTSE 100 +8.10% equity indices. 67% of constituent funds in the GGHFI ended the month with gains. Concerns over Europe began to lift in October and hedge funds were able to benefit from the rise in equity prices. Long-Short managers performed well given their cautious stance entering the month.
2011-11-01 00:00:00 Regulatory Armageddon by Bob Veres (Article)
Suppose you were somehow able to convince 40 advisors, who are all well-known thought leaders in the profession, to gather in the same room for a six-hour brainstorming session. The goal: to identify the single most important thing that the financial planning profession should be thinking about now. What do you think they'd come up with? Fasten your seat belts, because this may be the most important report you'll read all year.
2011-11-01 00:00:00 Why Invest? by Adam Jared Apt (Article)
Investing has its rational justifications, but like any human activity, it's contingent upon history. American society has come to regard investing in stocks and bonds as a matter of personal responsibility and even an obligation, which in part explains why we invest.
2011-09-22 00:00:00 Talking Our Way to Recession! by David Edwards of Heron Financial Group
The Europeans do not yet have a political structure for engineering a rescue, and that will be the over-hang in Europe. They will figure it out - eventually. The risk remains whether Italy, Spain, Portugal, Ireland will require equivalent rescues. The largest unknown risk is: of all the banks and hedge funds that sold Credit Default Swaps on Greek bonds, do any have enough capital to pay off their exposure. Remember that the US Treasury directed $62 billion to AIG to cover CDS exposure at that firm in 2009. We doubt that the European central banks are prepared to do the same.
2011-09-20 00:00:00 The Irrational Optimist by Michael Lewitt (Article)
'Most past bursts of human prosperity have come to naught because they allocated too little money to innovation and too much to asset price inflation or to war, corruption, luxury and theft,' writes Matt Ridley. These words hit the proverbial nail on the head. The misallocation of capital in today's economy is a severe threat to future prosperity and perhaps survival itself.
2011-09-13 00:00:00 The Handicap of Experienced Investors by J.J. Abodeely, CFA, CAIA (Article)
In the investment business, assets under management are concentrated with the largest and most established firms. Understandably, investors tend to allocate capital to managers after they've established a good track record. Unfortunately, for many, the analysis stops there. By failing to separate good results from identification of what makes a great investment manager, investors are primed for disappointment.
2011-09-13 00:00:00 An Uncritical Glorification of Hedge Funds by Michael Edesess (Article)
Sebastian Mallaby's book, More Money than God, sheds some light on interesting events in hedge fund history and is strewn with a few valuable insights. Mostly, though, it is a work of serial hagiography. It seems designed to attract worshipers like those who drive by celebrity homes in Beverly Hills.
2011-09-09 00:00:00 Hedge Funds Minimize Losses in August by Team of Greenwich Alternative Investments
Hedge funds turned in an excellent month of relative performance when compared to equity market benchmarks, notes Clint Binkley, Senior Vice President. Macro, Futures and Short Biased managers produced positive returns in spite of severe market declines. We continue to expect hedge funds to outperform long only strategies in this volatile market environment. Hedge Fund Strategy Highlights: Directional Trading funds are the best performing group of funds in August, gaining 0.3%. Market Neutral funds provide protection from market swings, declining only 2.9% on average for the month.
2011-08-11 00:00:00 Ron Muhlenkamps Market Commentary by Ron Muhlenkamp of Muhlenkamp & Co.
Sovereign debt problems and the possibility of a European-led banking crisis are the focus of the markets, because effective action isnt being taken. You see this in the velocity of money, which has fallen dramatically, and the move into U.S. Treasury bills, bidding their prices up and creating the negative yield mentioned earlier. Banks are having difficulty making money on depositors funds so they are passing those costs along to their depositors. Yesterdays decline was accelerated by some margin calls on leveraged hedge funds, but the market is primarily concerned about Europe.
2011-08-09 00:00:00 New Insights on the Role of Alternative Investments in High-Net-Worth Portfolios by Scott Welch, CIMA (Article)
Trends and developments over the past five years allow greater access to alternative strategies and dictate a different conversation with investors about the purpose and trade-offs of such strategies, as well as appropriate ways to incorporate them into well-diversified portfolios.
2011-07-26 00:00:00 Income Opportunities in Municipal Bonds and Stocks by Robert Huebscher (Article)
In this interview, Brian McMahon and Chris Ryon of Thornburg Investment Management assess the opportunities for income-oriented investors, particularly in the municipal bond market. They answer questions such as when a separate account is better than a fund, and why a barbell is inferior to a laddered portfolio.
2011-07-11 00:00:00 Hedge Funds Outperform Equity Benchmarks in Turbulent Markets by Clint Binkley of Greenwich Alternative Investments
Hedge funds navigated volatile markets to finish the month with a slight loss. ?Market Neutral and Long-Short Equity funds both outperformed broad equity market indices for the month,? notes Clint Binkley, Senior Vice President. ?Managers were fully occupied in negotiating the risk trade as investor sentiment changed dramatically over the course of the month. We continue to believe that in volatile markets actively managed hedge fund portfolios will provide superior results to index investing.?
2011-06-21 00:00:00 The ?Great Recalibration? by Team of Columbia Management
Investors who have participated in the municipal market over the last several years are keenly aware of the volatility that the market has experienced. Increased market volatility has resulted from the reaction to subprime exposure; downgrades and eventual disappearance of monoline insurers; the exit of hedge funds and arbitragers from the municipal market; fiscal strains on state governments; and changes in demand dynamics with the intro and eventual elimination of Build America Bonds. As each of these issues came to bear, they were often the subject of sensational headlines.
2011-06-14 00:00:00 The Consequences of Policy Failure by Michael Lewitt (Article)
Investment performance for the rest of the year will be determined by the macro-economic views of investment managers. While microeconomic factors are always extremely important in charting investment strategies, they are particularly important today as the U.S. and global economies continue to fight their way through the detritus of the global debt crisis. A compelling case can be made for weaker 2Q112 growth based on a combination of factors.
2011-06-10 00:00:00 Why Bill Gross Doesn?t Like Stocks (or Treasury Bonds) by Sam Parl (Article)
Stocks have come to the end of a ?wonderful journey,? according to PIMCO's Bill Gross, and are now on their own, like ?a baby bird just released from the nest.? The journey Gross spoke of is the multi-decade decline in real interest rates, which have fueled bull markets across ?risk assets,? especially in equities and bonds.
2011-06-07 00:00:00 New Challenges for the Endowment Model by Robert Huebscher (Article)
The multi-billion dollar endowments of elite institutions like Harvard, Yale, and Princeton are supposed to never be strapped for cash, but that's not how things played out during the financial crisis, when all those schools and many others were forced to raise liquidity under adverse market conditions. The endowment model, despite those failures, is still basically sound, according to Luis Viceira, but it needs several key improvements before institutions and individuals can rely on it.
2011-05-17 00:00:00 Pippa Malmgren on Inflation and its Geopolitical Impact by Robert Huebscher (Article)
The Cold War may have been over for a quarter century, but the inflation-driven challenges that characterized that historical era are heating back up. Today, global volatility is back, according to Pippa Malmgren, who says that commodity-driven inflation will lead to political instability in emerging markets.
2011-05-10 00:00:00 Hedge Funds Led by Managed Futures Funds in April by Clint Binkley of Greenwich Alternative Investments
Hedge funds, as measured by the Greenwich Global Hedge Fund Index (?GGHFI?), gained across all major strategies in April. The GGHFI gained 1.69% compared to global equity returns in the S&P 500 Total Return +2.96%, MSCI World Equity +4.02%, and FTSE 100 +2.73% equity indices. 78% of constituent funds in the GGHFI ended the month with gains. ?Hedge funds continued to move higher in April driven by strength in equities and commodities,? notes Clint Binkley ?Nearly all hedge fund strategies are at new highs for the year and continue to be successful in a market dominated by headline risk.?
2011-05-03 00:00:00 P/E: Future on the Horizon by Ed Easterling (Article)
Most people expect P/E to measure current valuation and to show historical patterns. But more features are available from some versions of P/E. The methodology behind the Crestmont P/E enables investors to anticipate the future. It may not precisely predict the market ten years away, but it frames within a relatively tight range the likely outcome. One component from determining the Crestmont P/E is a means to assess the future trend line for EPS using estimates of future economic growth (GDP).
2011-04-19 00:00:00 Gangs of New York by Jeffrey Saut of Raymond James Equity Research
I love New York City! Still, as I walked from the airplane into the terminal last Monday, I got the feeling I was traveling back in time, La Guardia is in need of a refresh. All in all, I felt like I was in a third-world country, not the greatest city in the world. Nonetheless, my trip started with a couple of hedge funds. At noon a segment on Breakout." From there, it was off to see some PMs before the next media hit at Fox Business with, Brian Sullivan. While I am kindred spirits with these media anchors, by far the highlight of last Monday was dinner with President Bill Clinton.
2011-04-08 00:00:00 Hedge Funds Show Mixed Results Among Strategies in March by Clint Binkley of Greenwich Alternative Investments
Most hedge funds advanced in March, but losses in Directional funds dragged down the group. The Greenwich Global Hedge Fund Index shed 10 basis points compared to global returns in the S&P 500 Total Return +0.04%, MSCI World Equity -1.24%, and Barclays Aggregate Bond +0.06% indices. 58% of constituent funds in the GGHFI ended the month with gains. ?The whipsaw action in the market during March led many trend following funds to suffer losses latter in the month,? notes the Sr VP ?The outlook for managers is positive as increased volatility tends to work in favor of most hedge fund strategies.?
2011-03-22 00:00:00 Consensus: Groundhog Decade for Stocks by Ed Easterling (Article)
Just as Bill Murray woke up to the same thing day after day in the movie 'Groundhog Day,' it's likely that your outlook foretells a groundhog decade for the stock market that will repeat its near-breakeven returns from the past decade.
2011-02-22 00:00:00 Bruce Berkowitz on the Exceptional Value in the Financial Sector by Robert Huebscher (Article)
Fairholme's Bruce Berkowtiz, US stock-fund manager of the decade, discusses his large position in the financial sector and why he believes the big bets he is making do not amount to Russian roulette. He also comments on his recent nomination of former Florida Governor Charlie Crist to the board of St. Joes.
2011-02-22 00:00:00 Stop Wasting Time and Money on Client Communication by Dan Richards (Article)
The world has changed in all kinds of ways. What worked in terms of client communication as recently as five years ago doesn't work nearly as well today. As a result, you need to fundamentally change how you communicate with clients.
2011-02-11 00:00:00 Reiterating Our Investment Thesis for 2011 by David A. Rosenberg of Gluskin Sheff
For 2011, not only do I still favor credit, especially the spread compression left in the high-yield space, but relative value portfolios, hybrids with a decent running yield and exposure to Canadian dollars. The resource sector is also attractive, especially oil, with a long-term view towards buying these companies on dips and not just for the commodity price uptrend. Corporate bonds, especially BB-rated product. Hedge funds, with low correlations with the direction of the market or the economy. And precious metals as a hedge against periodic bouts of currency and monetary instability.
2011-01-11 00:00:00 The Two Elephants Facing the US Economy by Michael Lewitt (Article)
The consensus has reached the conclusion that financial markets will enjoy a strong start to 2011. This is reason enough to approach the markets with caution as the year begins. When everybody is leaning to one side of the boat, the vessel is far more likely to tip over, particularly if it hits an unexpected wave.
2010-11-30 00:00:00 Why Bubbles Inflate and How to Avoid Them by Robert Huebscher (Article)
In this interview, Meir Statman discusses the psychological underpinnings behind the creation of bubbles in the financial markets, why some bubbles are good and others are not, and how investors should frame their decisions when facing a potential bubble.
2010-11-23 00:00:00 Five Words that Get Emails Opened by Dan Richards (Article)
The escalating volume of email means that fewer and fewer emails are being opened. A key challenge is creating a sense of urgency around opening your emails - something that can be achieved with five key words in the subject line.
2010-11-23 00:00:00 Why Diversify? by Adam Jared Apt (Article)
Although diversification is commonly regarded as a good thing, there are nonetheless those who regard it as a guarantee of mediocrity. It isn't, but there are right ways and wrong ways to go about diversifying a portfolio. Let's explore how diversification works.
2010-11-09 00:00:00 New Strategies in Alternative Investments by Robert Huebscher (Article)
Alternative investments, broadly speaking, and hedge funds, more specifically, have performed as intended over the last 20 years, modestly increasing returns and significantly reducing risk when added to a traditional stock-bond portfolio. Selecting the appropriate vehicle is the challenge, and that task has been made easier by the introduction of new exchange-traded strategies.
2010-11-02 00:00:00 The SEC?s 12b-1 Proposal is Based on Misguided History, Flawed Economics by John H. Robinson (Article)
The SEC's stated aims of its proposed Rule 12b-1 reform are laudable: increasing transparency, reducing investor fees, and increasing competition among mutual funds. However, John Robinson's review of its 278-page proposal found major flaws, including a misinformed historical pretext and naïve economic analysis.
2010-10-29 00:00:00 Asset Allocation in an Uncertain Economy by Robert Huebscher (Article)
Advisors should not bet on whether the recession will be L-, V-, or W-shaped. Instead, Ron Albahary said they should use strategic asset allocation and overweight or underweight those asset classes that have historically done well at certain points in the economic cycle. Albahary is the CIO of Convergent Wealth Advisors, a Washington, DC-based wealth manager.
2010-10-26 00:00:00 What Drives High-Yield Bonds (and Why You Should Listen to the Ratings Agencies) by Robert Huebscher (Article)
High-yield bonds are attractively priced - or they aren't - depending on how likely you think a double-dip recession is and how severe you think it might be. What drives the high-yield market was the subject of a talk last week by Martin Fridson, a global credit strategist with BNP Paribas Asset Management who is a highly regarded expert on distressed debt.
2010-10-14 00:00:00 Who's Doing the Buying? by David A. Rosenberg of Gluskin Sheff
So who's buying equities right now? Good question. We know it's not the retail investor and private clients - they have been selling into this entire bear market rally and rebalancing their asset mix in favor of income. It's not the mutual funds, because institutional private managers already have cycle-low cash ratios. There would seem to be three principal buyers right now: pension funds struggling to reach their 8 percent assumed annual returns, hedge funds, and the proprietary trading desks at big commercial banks.
2010-09-28 00:00:00 The Future of Oil by Robert Huebscher (Article)
No commodity impacts the global economy more than oil. When geopolitical threats loom, two questions often dominate discussion: Will the price of oil rise? And what will be the economic consequences? We review the key drivers of recent, current, and forecast oil prices, including a template for the necessary eventual alignment of supply and demand.
2010-09-14 00:00:00 The Centre Cannot Hold by Michael Lewitt (Article)
"A refusal to shed discredited monetary and fiscal policies and embrace creative and politically bold solutions is keeping our economy mired in high levels of structural unemployment and below-trend growth," writes Michael Lewitt in the latest edition of the HCM Market Letter. He also believes that "misguided faith in Keynesian solutions to debt crises, a near-religious belief that mild deflation must be avoided... and uninformed media hype about the alleged benefits of mergers and acquisitions" should be added to the list of bad ideas that lead economic policy and markets astray.
2010-08-24 00:00:00 What Investors Really Want by Robert Huebscher (Article)
Using a mean-variance optimizer to construct a retirement portfolio that sits on the efficient frontier is tantamount to dining on a well-prepared meal that was pureed in a blender, believes Meir Statman, a professor of finance at Santa Clara University. Statman's research focuses on behavioral finance, and how advisors can help investors make smarter decisions.
2010-08-17 00:00:00 Cerulli Survey Results: New Themes in Advisors? Portfolio Strategies by Bing Waldert (Article)
New ideas, such as tactical asset allocation and the use of alternatives, have seen some uptake even before the market crisis, particularly within large institutions, but they are receiving increased attention as solutions for risk-averse clients. This article examines some of the evolutions, using data from a Cerulli Associates survey of Advisor Perspectives readers conducted in June and July of 2010.
2010-08-10 00:00:00 When Active Management Matters by Kenneth R. Solow, CFP and Michael E. Kitces, MSFS, MTAX, CFP (Article)
Financial planners have eagerly awaited any research that could finally, definitively prove - or disprove - the pesky notion that active management is effective. Though no one has yet risen to that challenge, past academic studies have been improperly interpreted to show that portfolio policy, or asset allocation affects portfolio returns far more than active management. As Ken Solow and Michael Kitces write in this guest contribution, the most recent study to tackle the active management debate, by Yale professor Roger Ibbotson, shares two weaknesses with previous research.
2010-08-10 00:00:00 Is the Market Efficient? by Adam Jared Apt (Article)
After Marxism, no economic theory today may be as derided and despised as the hypothesis of market efficiency. The idea is often misunderstood, sometimes willfully. So what does "market efficiency" mean? In the latest installment of his series for the educated layman, Adam Jared Apt provides some answers.
2010-08-03 00:00:00 Woody Brock: How to Achieve Growth without 'Bad' Deficits by Robert Huebscher (Article)
Of all the challenges facing our nation, none is as daunting as trying to achieve economic growth and reduce unemployment without adding layers of debt to our already bloated deficit. Legislators and economists have debated the merits of stimulus measures, changes in tax rates, and monetary policies, but they are no closer to a consensus than they were at the onset of the financial crisis. H. 'Woody' Brock, however, says a genuine solution is possible.
2010-07-20 00:00:00 Martin Leibowitz? Failed Defense of the Endowment Model by Michael Edesess (Article)
The latest book from Martin Leibowitz, one of the most respected thinkers in the investment industry, attempts to justify the endowment model of investing. As Michael Edesess writes in this review, Leibowitz's defense is highly problematic, and that should concern any advisor utilizing a Yale-like strategy.
2010-06-15 00:00:00 Asset Allocation Matters, But Not as Much as You Think by Robert Huebscher (Article)
The market downturn has caused a rethinking of many core principles underpinning investment advice, chief among them the role of asset allocation. We talk with Yale's Roger Ibbotson about the impact of market returns and active management in explaining return variance and the role of asset allocation going forward.
2010-06-08 00:00:00 Why Wall Street Won't be Reformed by Robert Huebscher (Article)
Michael Lewitt, author of the highly respected HCM Market Letter, has just released a new book, The Death of Capital. In this interview, he identifies the challenges facing those who seek to regulate Wall Street, and why most of the proposed reforms are likely to fail.
2010-06-08 00:00:00 The First Thing We Do, Let?s Kill All the Quants by Michael Lewitt (Article)
In the latest issue of the HCM Market Letter, Michael Lewitt draws the parallels between the Gulf of Mexico oil spill and financial reform - both, he says, demonstrate our inability to learn from our mistakes. Lewitt also comments on quantitative trading strategies, economic recovery and the capital markets.
2010-05-18 00:00:00 Jeremy Grantham Guarantees Gold will Crash by Robert Huebscher (Article)
Jeremy Grantham, the investor celebrated for his ability to spot and exploit bubbles in asset classes, guaranteed yesterday that the current bull market in gold will end. His proof? He bought some - for his own account - at the end of last week. That comment was tongue-in-cheek, but he went on to identify two asset classes likely to go into bubble territory.
2010-05-11 00:00:00 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.
2010-04-13 00:00:00 Are Public Employees Bankrupting the Nation? by Charlie Curnow (Article)
While markets may be recovering, public debts are still mounting. Charlie Curnow reviews Plunder, the new book by Steven Greenhut, which blames public sector unions for a large portion of these debts. To Greenhut, we the taxpayers are helpless villagers, while corrupt public employee unions are barbarians at the gate, raiding government treasuries and leaving us with nothing but unfunded liabilities.
2010-04-13 00:00:00 Shameless by Michael Lewitt (Article)
The fiscal train wreck in the United States has not been set back on the tracks, and the global imbalances that led to the financial crisis have not gone away. Quite to the contrary, writes Michael Lewittin Shameless, the latest edition of his HCM newsletter. In fact, if progress isn't made with respect to these issues, and if intelligent financial reform is not enacted, future instability is guaranteed.
2010-04-09 00:00:00 Reform We Can Believe In by John Mauldin of Millennium Wave Advisors
Appointments to positions of power in the Federal Reserve system should be independent of the political process and party politics. Credit default swaps should be regulated by requiring that they be traded on an exchange. Commercial and investment banking should be separated, so that commercial banks cannot engage in speculative activity such as running hedge funds. Leverage use by large banks should be restricted. "Fix the big things. Credit default swaps. Too big to fail. Leverage. Then worry about the details. And leave the Fed alone."
2010-03-18 00:00:00 Dollar: Beleaguered No More? by Komal Sri-Kumar of TCW Asset Management
After weakening for most of the past decade, the dollar has appreciated significantly against the euro and the pound sterling, the two major European currencies, over the past three months. This is due more to the weakness of European currencies than to the strength of the dollar. Fears of stagnation in Europe, uncertainties over upcoming U.K. elections, and concerns that Portuguese and Spanish debt sovereign may come under attack by hedge funds have all dragged on European currencies. Compared to this turbulence, the U.S. economy seems like a safe haven.
2010-03-16 00:00:00 Greeks Bearing Gifts by Michael Lewitt (Article)
We are again privileged to publish the most recent edition of Michael Lewitt's HCM Market Letter, Greeks Bearing Gifts. Lewitt comments on Goldman Sachs' derivative transactions that helped Greece hide its debt and its larger implications for the financial system, for the European periphery and for Spain in particular. Lewitt also addresses the state of decline of the US economy and other topics.
2010-03-11 00:00:00 going active by Tom Brakke of the research puzzle
A study by Martijn Cremers and Antii Petajitso makes a persuasive case for using active share as a benchmark for determining how active a fund manager is. It concludes that the most active managers, as measured by active share, deliver the best performance. In a way, this comes as no surprise. The popularity of hedge funds derives from their tendency to hold positions regardless of their presence in an index, and a less scientific view of mutual funds holds that good performance over time tends to come from managers who stand apart from what the rest of the market is doing.
2010-02-26 00:00:00 The Multiplication of Money by John Mauldin of Millennium Wave Advisors
Mauldin begins with a review of the situation in Greece, highlighting recent social unrest, and concluding that the most likely resolution will be relief from the IMF. Next, he rejects recent reports that hedge funds will short the euro and cause it to decline relative to the dollar. He then argues that the reported expansion of M0, M1 and M2 money supply is inconsequential (for inflation), because it is more than offset by a decrease in the velocity of money.
2010-02-16 00:00:00 Boom and Bust by Michael Lewitt (Article)
The US and global economies are "trapped in a cycle of boom and bust as a result of fiscal and monetary policies from which there is no easy escape," says Michael Lewitt of Harch Capital Management. Lewitt believes the S&P will rally to 1,200-1,250, but says the long-term prognosis is "somewhere between grave and terminal." We are privileged to provide this excerpt from Lewitt's monthly newsletter and encourage our readers to subscribe to it directly.
2010-01-26 00:00:00 Using Alternative Investments to Build a Stronger Portfolio by Robert M. Hussey (Article)
Traditional asset classes may no longer provide sufficient portfolio diversification, but there's a new wave of mutual funds that offer alternatives strategies previously available only to large institutions. Robert Hussey of Natixis Global Associates describes how alternative strategies can be used in a mutual fund package. We thank them for their sponsorship.
2010-01-25 00:00:00 The Volcker Rule & AIG: Hedge Funds and Prop Desks Are Not the Problem by Christopher Whalen of Institutional Risk Analyst
?Neither prop trading nor the size of the largest banks are the causes of the financial crisis. Instead, opaque over-the-counter (OTC) markets, deliberately deceptive structured financial instruments
2009-11-10 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.
2009-09-22 00:00:00 The Financial Market Solution to Carbon Emissions by Robert Huebscher (Article)
While health care remains the hot topic on Capitol Hill, another piece of legislation is poised to gain similar attention. Regulating carbon emissions to address the threat of global warning is a top priority of the Obama administration, and its favored approach is to create a "cap-and-trade" market. John Parsons, an expert in the field, explains how this financial market solution might work.
2009-09-15 00:00:00 The 'Cash For Clunkers' Economy by Michael Lewitt (Article)
We are once again privileged to offer the latest edition of the HCM Market Letter, edited by Michael Lewitt, titled The 'Cash for Clunkers' Economy. Lewitt examines the drivers behind the current market rally, the health of the banking system and the housing industry, the the future for derivatives regulation. If you enjoy this newsletter, we encourage you to subscribe directly though the link provided with our article.
2009-08-18 00:00:00 Turbulence Can Improve Portfolio Diversification by Susan B. Weiner, CFA (Article)
Classic diversification has failed, Mark Kritzman says, because traditional, independent measures of volatility and correlation don't provide enough information to indicate which portfolios will deliver the lower risk or higher returns that, at least theoretically, should come with investing in imperfectly correlated asset classes. Kritzman offers the concept of turbulence as an alternative way to approach diversification, and provides his latest research on the subject.
2009-08-11 00:00:00 At the Risk of Repeating Ourselves by Michael Lewitt (Article)
We have said before that Michael Lewitt's newsletter is a must-read, and this edition is no exception. Lewitt questions whether we are witnessing a summer calm before the storm, comments on the secured and unsecured debt asset classes, and opines on the abuses of unregulated dark pools of capital. We encourage you to subscribe to this valuable publication through the link we provide.
2009-08-04 00:00:00 Uncovering the Mayhem in 2008 in the TIPS Market by Robert Huebscher (Article)
In an interview two weeks ago, Yale Endowment manager David Swensen singled out TIPS as the best way to protect against inflationary and deflationary scenarios. We review a comprehensive study of the history of the inflation-indexed bond market, including an explanation for the extreme volatility in TIPS last year.
2009-07-14 00:00:00 Behavioral Finance ? A Three-Part Model for Client Relationships by Susan B. Weiner, CFA (Article)
Behavioral finance can improve your client relationships during market turmoil, if you recognize your clients' emotional right-brained reactions before you offer insights based on your analytical left-brained analysis. By applying a three-pronged process of Recognize-Reflect-Respond, you can adapt to new information in a thoughtful and effective framework.
2009-06-16 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.