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Advisor Perspectives
Insights into the world of high- and ultra-high net worth investing
December 30, 2008- Vol 2, Issue 53
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We wish all our readers a Happy New Year!
We have the top 10 most widely
read articles for 2008, chosen from the nearly 300 articles we
published this year. Our interviews
with the thought leaders of the industry were among the top
hits, along with a number of articles about endowments and their investment strategies. Our top
10 list is determined electronically by our web site monitoring system.
Guest contributor Vitaliy Katsenelson looks at a number of signals showing
the Chinese economy is rapidly
decelerating, and examines what this means for China - poverty and political instability - and the US - higher interest rates and a weaker dollar.
A solid investment program evolves from the integration of various
interrelated disciplines, or puzzle pieces. Guest contributor Ron Surz
explains why asset allocation is
paramount and involves not only the assignment to asset classes
but also the make-up of asset classes, specifically the types of stocks,
bonds, etc. The active-passive decision -
allocating between active managers and passive indexes - is an important
part of the investment program, and constitutes a second level of the
portfolio construction puzzle that needs to be solved.
Two readers reply to John Robinson's article two weeks ago, "In Defense of Faux Planners," and
one reader responds to Bob Veres' article last week, "The Empire Strikes Back."
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The Top 10 Most Read Articles for
2008
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Here is our list
of the most read articles for 2008, as determined by our web site
measurement system, starting with our most widely-read article:
(1) Wharton Professor Jeremy Siegel says stocks are "dirt cheap" based
on current P/E ratios. He discredits "normalized" P/E
analysis that is based on 10-year averages of earnings data, because it
does not take into account changes in dividend payout ratios that have
taken place over the last two decades. Siegel also provides his
thoughts on
bailing out the automobile industry and why he turned down an offer to
serve as a Federal Reserve Governor. (11/18/08)
Jeremy Siegel on why Equities are
"Dirt Cheap"
(2) Mohamed El-Erian is co-CEO and co-CIO of PIMCO, and previously managed
the $36 billion Harvard endowment. He discusses why advisors should reduce US equity allocations and how
the crisis in the financial sector will
ultimately unfold. (7/22/08)
Our Interview with Mohamed El-Erian
(3) 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. (12/2/08)
Dan Fuss: The 50-Year Opportunity in
Bonds
(4) PIMCO CEO and co-CIO Mohammed El-Erian provides a comprehensive
analysis of the current credit crisis, along with guidance for investment
strategy. Traditional rebalancing
is not the way to go, he says, and investors should go up the capital structure instead of
increasing equity positions. (12/9/08)
Mohammed El-Erian: "Resist the
Temptation to Automatically Rebalance"
(5) Nouriel Roubini is known
for his often-prescient economic forecasts, most notably in 2006 of the
current credit crisis and housing market collapse. We speak with him
about the collapse of Lehman Brothers,
why he believes the GSE bailout was
botched, and what policy makers can do to avoid the worst recession since the Great Depression.
(9/16/08)
Our Interview with Nouriel Roubini
(6) Peter L. Bernstein is one
of the most respected authorities on the markets and financial theory, and
we were privileged to interview him last week. He shares his thoughts
on the credit crisis, active management, and
why he now owns gold in his
portfolio. Peter has also studied the investment techniques used by
the Yale Endowment, and
explains how they can and cannot be applied by advisors. (1/29/08)
Our Interview with Peter L.
Bernstein
(7) Harvard, Yale, and other top
endowments have generated impressive returns over the last
couple of decades. A new study examines the secrets to their success - it is more
than just asset allocation - and explains why their performance will be
hard to duplicate in the years ahead. (10/7/08)
Why It's Hard to Copy Harvard and
Yale
(8) We've seen a lot of
explanations of the volatility of the oil
markets, but none have been as clear as that provided by the
highly prominent economist Woody Brock. Brock spoke about this topic
last week at a conference, and we had a chance to speak with him about his forecast
for the markets and the economy in general. (9/2/08)
Woody Brock: Oil Prices in the Era
of Thugocracy
(9) Super-endowments, like Harvard and Yale, have achieved
spectacular returns over the last decade, in part due to innovative asset
allocation strategies. Richard Brazenor, with UK-based Frontier
Capital Management, provides research showing how advisors can utilize similar allocation models. (7/1/08)
Investing Like the Harvard and Yale
Endowment Funds
(10) With a peak-to-trough
decline of nearly 30%, we look at whether
P/E ratios are under- or overvalued by historical standards.
Our analysis looks at historical 1- and
10-year normalized earnings, as advocated by Robert
Shiller. The analysis is part of an interview with Vitaliy
Katsenelson, who offers his projections
for the US and global economies. (10/21/08)
Our Interview with Vitaliy
Katsenelson
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The
Coming Crisis in China (and Implications for the US)
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China
is unlikely to escape the fate of developed economies, says author and fund
manager Vitaliy Katsenelson. Without a well-developed safety net,
poverty and political unrest will be its next challenges. For the US,
this ultimately will lead to higher interest rates and a weaker dollar,
placing further strain on Chinese exports and their economy.
Read the article
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Getting All the Pieces of the Puzzle
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The challenge in solving the portfolio construction puzzle is defining the puzzle
pieces. Current practices, such as shoving every manager into a style box,
amount to jamming square pegs into round holes. Better solutions emerge
when puzzle pieces fit together, and utilize mutually exclusive and
exhaustive style indexes that explicitly include core.
Read the article
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Letters to the Editor - In Defense of "Faux
Planners" and "The Empire Strikes Back"
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Two readers respond to the article two weeks ago by John Robinson, In Defense of "Faux
Planners", which contended that the CFP certificate should not be
required to use the title Financial Planner, and one reader responds to Bob
Veres' article, The Empire Strikes Back, which
raised red flags over Mary Schapiro's nomination as SEC chairperson.
Read the Letters
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Advisor
Perspectives
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