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August 3, 2010 - Vol 4, Issue 31


By All Accounts

Dear Reader,

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. 

The most overused, misused and misunderstood word in the investment industry is "fiduciary."  Independent advisors, trade organizations and self-styled "expert" groups have called for stockbrokers to adopt the "fiduciary" standard to achieve a grand leveling of the playing field for those who provide investment advice.  This is nothing more than unnecessary marketing hype, says securities lawyer John Lohr in this guest contribution.

These days, there's a cloud of uncertainty over markets, with questions about economic growth, government deficits, the timing and impact of interest rates increases, unemployment levels and the housing market. As Dan Richards writes, this environment is when advisors can bring value, by providing perspective on both sides of the debate about the value that stocks provide at today's levels.

Since the mid-1960s, Paul Merriman has helped people manage their money and their lives before and during retirement. He has seen the good, the bad and the downright ugly, and in this guest contribution he shares 10 retirement lessons from the smartest people he knows.

Richard Koo
is the Chief Economist of Nomura Research Institute, and has served as an advisor to the Japanese government.  In this interview with Dan Richards, Koo explains why Japan's recovery was thwarted by inadequate stimulus spending.  We provide a transcript and a video of the interview.

Kristen Luke provides the next two installments of her series on low-budget marketing for startup RIA firms.  She discusses how to develop a client referral strategy and a drip marketing program.

In a letter to the editor, a reader responds to Dave Loeper's article, Fake Diversification Exposed: Does Asset Allocation Work?, which appeared on July 13.

Lastly, we highlight submissions to Market Commentaries.

We welcome guest submissions from our readers.  For more information, here are our guidelines.

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star logoWoody Brock: How to Achieve Growth without "Bad" Deficits

It is not simply a matter of spending money on traditional public works infrastructure, Brock said.  What's needed is a new Marshall Plan, which rebuilt and created a strong economic foundation for Europe following World War II.


Woody Brock: How to Achieve Growth without "Bad" Deficits


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star logo"Fiduciary": Much Ado about Nothing!

Stockbrokers already have a legal duty to act as a fiduciary to their clients! And the various hurdles which have been suggested for them to achieve official "fiduciary" status are meaningless.

"Fiduciary": Much Ado about Nothing!


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star logoRebuilding Confidence in Stocks

By sharing the arguments on both sides of the debate with clients, using recent interviews with Jeremy Siegel and Robert Shiller, you position yourself as someone who considers all the facts before reaching conclusions and making recommendations.

Rebuilding Confidence in Stocks

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star logoTen Retirement Lessons from the Smartest People I Know

A successful retirement, like a successful life, rarely happens by accident or default. It happens by design. Paul Merriman has had the good fortune to know thousands of very smart people. Here are 10 lessons they taught him.

Ten Retirement Lessons from the Smartest People I Know


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star logoRichard Koo: Lessons from Japan's Decline

"We learned in Japan that this stimulus has to remain in place until this process is over," says Richard Koo.  "The mistake we made in Japan was that once the economy began to improve, we said, 'The budget deficit is too large.'"

Richard Koo: Lessons from Japan's Decline (transcript)
Richard Koo: Lessons from Japan's Decline (Video)

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star logoParts 8 and 9 of a Marketing Guide for RIAs

Kristen Luke provides the next two installments of her series on low-budget marketing for startup RIA firms.  She discussed how to develop a client referral strategy and a drip marketing program.

A Marketing Guide for RIAs: Part 8 - Implement a Client Referral Strategy
A Marketing Guide for RIAs: Part 9 - Create a Drip Marketing System for Prospects

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star logoLetter to the Editor

In a letter to the editor, a reader responds to Dave Loeper's article, Fake Diversification Exposed: Does Asset Allocation Work?, which appeared on July 13.

Letter to the Editor

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star logoHighlights from Market Commentaries


The economy's New Normal of deleveraging, reregulation and deglobalization will neither be aided nor abetted by a slower-growing population, or by cyclical policy errors that thrust Keynesian consumption remedies on a declining consumer base. Current deficit spending that seeks to maintain an artificially high percentage of consumer spending can be compared to flushing money down an economic toilet. It would be far better to create and mimic other government industrial policies aimed at infrastructure, clean energy, more relevant education and less costly health care services.

Private Eye by Bill Gross of PIMCO



Investors who will need to fund specific expenses within a short number of years - retirement needs, tuition, health care, home purchases etc. - should not be relying on a continued market advance. If your life plans would be significantly derailed by a major market decline, get out. In contrast, if you are pursuing a disciplined, long-term investment strategy, and you know from your own experience of the past decade that you are diversified enough to ride out periodic losses without abandoning that strategy, ignore my views (and those of everyone else) and stick to your discipline.

Betting on a Bubble, Bracing For a Fall by John P. Hussman of Hussman Funds



The bull market in bonds will end reasonably close to the point in time that inflation (or deflation) bottoms. This is because the major economic factor that correlates consistently with the direction of market-determined interest rates, at least for long term Treasury Bonds, is CPI Inflation. Core inflation should recede from around 1 percent now to near 0 percent in the next 12-to-24 months, which would imply an ultimate bottom in the long bond yield of 2.5 percent and 2 percent for the 10-year T-note.

Market Thoughts and the Long-Term Outlook for Inflation by David A. Rosenberg of Gluskin Sheff

 

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