Advisor
Perspectives
Insights into the world of high- and
ultra-high net worth investing
December 2,
2008- Vol 2, Issue
49
| |
|
|
|
|
Opportunities in the
bond market are as attractive now as they have been in at least 50
years, according to Dan Fuss,
vice chairman of Loomis, Sayles & Company. Fuss
says he has never seen as good an opportunity in investment grade bonds - either on
a relative or absolute basis.
Jeff Tyler, CFA®, senior
portfolio manager and market strategist for American Century
Investments® asset allocation strategies, provides an overview of
his economic and market
forecasts. Tyler explains why they remain underweight in equities, yet favor value
stocks and high-quality bonds. We thank American
Century Investments for their continued sponsorship of our
newsletter.
When it comes to investment strategy, no
question is as important as whether federal deficits - which are projected to
top $1 trillion next year - will be inflationary. Two
leading economists - Woody Brock and
John Williams - provide us with very different
answers.
Economic value creation in finance has undergone a
fundamental evolutionary transformation, says Financial
Darwinism: Create Value or Self-Destruct in a World of
Risk, a new book by Leo Tilman. In our interview, Tilman
discusses how risk has become the
dominant factor in how financial institutions create - and destroy -
shareholder value.
The Applied Finance Group, a
Chicago-based advisory firm, uses a discounted cash flow model to value each
company in the S&P 500. Their model indicates
companies are now valued based on an implied 6% annual contraction
in revenues, and that the index is
priced approximately 20% below its fair value.
We have
two letters to the Editor in
response to our lead story last week, How to Fix GM.
Industry consultant Ron Surz offers a quick look at how
performance and volatility in 2008,
across styles and sectors, compares to the good old days of
2007.
Lastly, we highlight some recent Advisor Market
Commentaries.
If you are experiencing problems opening or
navigating through our newsletters, we can send you a text-only
version. Please send an email to
feedback@advisorperspectives.com requesting the "text-only"
version.
If you have received this newsletter in error, or
you do not wish to receive future newsletters, please use the "Safe
Unsubscribe" button at the bottom of this email.
| |
|
Dan Fuss: The 50-Year Opportunity in
Bonds
|
"I've never seen an opportunity - relative or absolute - as good
as this to buy in the investment-grade market," according to Loomis
Sayles' bond manager Dan Fuss. Fuss also likes the high-yield
market, and we summarize his remarks at a meeting of the Boston
Security Analysts Society last week.
Read the
article
|
Extraordinary
Times for Financial Markets-and the Global Economy
|
American Century has a near-term outlook for sluggish economic
growth both in the U.S. and worldwide, and remains underweight on
stocks generally and overweight on high-quality bonds. But their
bias in stocks is toward growth because they believe we are at or
near an inflection point in the global credit crisis where investor
focus will shift from anticipating and reacting solely to bad news
to beginning to see a viable path out of the current credit market
problems.
Read the
article
|
Big Deficits Do Not (usually) Mean High
Inflation
|
With the
government announcing programs to shore up financial institutions
and halt falling asset prices almost daily and the growing
likelihood that Washington will embark on a fiscal stimulus program
of record proportions, the ultimate fear in the minds of investors
is when - and how rapidly - inflation will surface.
Read the
article
|
A New Book - Financial Darwinism - Says
Adapt or Face Extinction
|
Columbia
professor of finance Leo Tilman has a new book that says nothing
short of a tectonic shift has taken place in finance over the last
25 years. During that time, basic financial businesses became
commoditized due to globalization, increased competition, wider
availability of information, and other powerful forces. This has
resulted in margins and fees of these businesses experiencing a
significant compression.
Read the
article
|
A DCF Model Says the S&P is 20%
Undervalued
|
Rafe
Resendes of the Applied Finance Group, a Chicago-based investment
advisor, says the valuations among the companies in the S&P 500
now reflect a 6% annual contraction in revenue, and the index is as
much as 20% undervalued. Resendes also discusses how his
discounted cash flow model values a number of stocks making
headlines in today's news.
Read the
Article
|
Letters to the Editor: How to Fix
GM
|
Not
everyone agreed with us last week when we said GM could be fixed by
eliminating five of their eight product lines and transitioning
workers to pay scales similar to that of Toyota. One reader
says GM's inferior products are really the source of its problems,
and another says the Big Three should all be forced into bankruptcy,
to facilitate an industry-wide restructuring.
Read the
Article
|
A Quick Look at Where We've Come so
Far
|
We
all know that we've been slammed with a double whammy of plummeting
prices and skyrocketing risk, and industry consultant Ron Surz
provides graphical evidence of the shifts in risk and reward for
styles and sectors, comparing 2007 to 2008
Read the
Article
|
Highlights from Advisor Market
Commentaries
|
We highlight recent
submissions to Advisor Market Commentaries:
As a follow-up to
Dan Fuss' comments on the investment grade bond market, you can read
what Charles Lieberman of Advisors capital Management says about the
need for the government to unfreeze the corporate debt
market.
Read the
Commentary
Nouriel Roubini of the RGE Monitor provides an
extensive analysis of the macroeconomic issues in the US
economy.
Read the
Commentary
|
Advertise in
Advisor Perspectives
|
Our
newsletter goes to over 65,000 RIAs, wealth managers, and financial
advisors. See how you can deliver your message to our
sophisticated audience.
Read
more
|
Advisor
Perspectives
Box 380
Lexington, MA 02420
(781)
376-0050
| |
|
|
