|
|
C tant Contact
|
|
|
|
|
 July
6, 2010 - Vol 4, Issue 27
Dear Reader,
Conventional approaches to constructing income-oriented portfolios
use either bonds or high-yield stocks. In this article, Geoff
Considine explores a compelling alternative to that approach:
a carefully selected model high-yield portfolio consisting primarily
of low-beta, high-dividend stocks, against which the investor sells
call options.
Active currency management allows professional managers to extract
alpha on a consistent basis. Two members of American
Century Investments' management team explain why, despite being one
of the most liquid markets, global currencies remain inefficient.
We thank them for their sponsorship.
Traditional approaches for determining safe withdrawal rates
(SWRs) rely on back-testing portfolios with different asset
allocations using historical data. Instead, in this guest
contribution, Lloyd Nirenberg provide a new, transparent analysis
that enables investors to explicitly update their SWR based on
new beliefs about their future returns and inflation.
It's always important for clients to feel they're being kept
informed of what's happening in markets - but never more so than in
markets like we've seen in the past few months.
Dan Richards provides a template for a mid-year market
commentary to clients, adaptable to your own opinions and circumstances,
based on a recently rediscovered speech by Benjamin Graham.
As investors rush into U.S. Treasury bonds in response to
a weakening economy that may portend the onset of deflation, this
begs the question whether there is a superior deflationary hedge.
History can be instructive in this regard, as Michael Nairne explains
in this guest contribution.
Kristin Luke begins a series of articles that will provide step-by-step
instructions on how to start marketing your new RIA firm.
She assumes that your firm does not have tens of thousands of dollars
to spend on marketing. Here is an overview of the series
and part 1 - developing a market niche.
Ron Surz provides his award-winning market commentary, analyzing
performance across global markets during the first half of this year.
He also addresses several other topics, including the fiduciary
standard, developments in target date funds, and distortions in style
assignments created as a byproduct of the financial crisis.
Lastly, we highlight submissions to Market Commentaries.
We welcome guest submissions from our readers. For more
information, here are our guidelines.
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 reply to this
email with the word “unsubscribe” in the subject line.
Contact us about advertising
|
|
|
|
|
The Ultimate Income Portfolio
|
The ultimate income portfolio has many advantages over
conventional approaches. It produces more income, has less risk,
and has lower correlation to interest rates.
The Ultimate Income Portfolio
|
Currency Management Series -
Part Two: Currencies as an Asset Class and Source of Alpha
|
In the second
installment of American Century Investments' Currency Management
Series, John Lovito, vice president and senior portfolio manager, and
Federico Garcia Zamora, vice president and portfolio manager, make a
case for the value of active currency management. They believe there
are opportunities for professional currency managers to extract alpha
on a consistent basis. The article illustrates why the currency market,
although the deepest and most liquid market in the world, is
inefficient due to a majority of participants being passive investors
seeking liquidity and currency hedging to reduce risk exposure.
Currency Management Series Part Two: Currencies as an
Asset Class and Source of Alpha
|
How to Calculate Your Personal
Safe Withdrawal Rate
|
A clear problem with
these SWR approaches is the possibility that the near future will
present substantially larger return volatility. How many
investors or advisors would want to use historical portfolio
performance data to design long-term portfolios under these conditions?
Not many, says Lloyd Nirenberg, but that is just what current
approaches to the SWR problem do.
How to Calculate Your Personal Safe Withdrawal Rate
|
Template for a Mid-Year Letter -
Navigating through this Calamitous Decade
|
|
|
And the Winner Is..
|
During the Great Depression of the 1930's, a decade
where prices fell at an average annual rate of 2.1%, the winning
investment was not Treasury bonds.
And the Winner Is..
|
A Marketing Guide for RIAs
|
|
|
Stock Markets and a Sea of
Change
|
|
|
|
|
|
Highlights from Market
Commentaries
|
|
Warning: the US economy appears to be headed into a second round of
decline. Looking at lessons learned across countries and centuries,
Hussman argues that that 'the economy is again turning lower, and that
there is a reasonable likelihood that the U.S. stock market will
ultimately violate its March 2009 lows before the current adjustment
cycle is complete.' The current argument that this outcome is
'unthinkable' is not evidence but rather reflects reliance upon
incomplete data and narrow-minded perspectives.
Recession Warning by John Hussman of Hussman Funds
The lack of global aggregate demand - resulting from too much debt in
parts of the global economy and not enough in others - is the essence of
the problem. The solution, according to William Gross, may be to add the
letter 'R' to your name (as in Roubini, Reinhart, Rogoff, and Rosenberg)
or, better yet, to embrace the words 'New Normal.'
Alphabet Soup by William Gross of PIMCO
Mohammed El-Erian digests the 'unusually long communiqué from the G-20
Summit in Toronto.' El-Erian expresses his concerns about the future of a
post-global financial crisis world that is in desperate need of better
cross-border policy coordination and harmonization.
Mohamed El-Erian on a Disappointing G-20 Compromise
by Mohamed El-Erian of PIMCO
|
|
|
