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Advisor Perspectives
Insights into the world of high- and ultra-high net worth investing
February
16, 2010- Vol 4, Issue
7
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We are pleased to announce the availability of Research Perspectives,
a newsletter that highlights the latest market and economic commentaries
from fund companies, independent research firms and advisors.
This is a free newsletter, and it is available in a daily version
(at 4pm ET) and as a weekly digest (at 4pm ET on Friday).
To subscribe to the daily and/or weekly versions, go here.
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Some of the managers supposed to be among the sharpest have cost their
clients $170 billion dollars over the last two decades. These are
"plan sponsors" who handle pension funds, endowments, and
foundations, and Scott Stewart, a former money manager who now teaches
finance at Boston University, has documented their value destruction in a
recently published study.
Patricia Ribeiro, Vice President and Portfolio Manager for the
American Century® Emerging Markets Fund, believes the emerging markets
asset class offers short- and long-term growth prospects and
diversification benefits at attractive market valuations. In a recent
interview, Ms. Ribeiro shared her views on the current state of emerging
markets, what lies ahead in 2010, and how her investment team is selecting
equities for the fund. We
thank American Century for their sponsorship.
The only individual retirement account that allows for tax-free
growth has gotten even better. The rules governing conversions to Roth
IRAs have changed -- and that's good news for your clients and for you.
Janus can help you take advantage of this ideal opportunity to connect with
your high net worth clients and to share your expertise on financial and
investment issues. We thank Janus for their sponsorship.
In this guest contribution, money manager Roger Schreiner challenges
passive management advocates. He will wager $100,000 that,
through active management, can outperform any passive buy-and-hold
portfolio net of fees.
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.
Dan Richards says many advisors started the year full of enthusiasm
and ambitious objectives, yet at the end of January felt bogged down and
out of steam. Despite starting with good intentions, the difficulty is
that we quickly get caught up in the day-to-day demands on our time, and
Richards offers a seven-step plan to overcome this inertia.
Robert Shiller, a professor of economics at Yale University and
co-creator of the Case-Shiller Housing Index, discusses several topics in
this interview with Dan Richards, including his plan for governments
to finance their debts by issuing "trills," a security
representing a fractional claim on the country's GDP.
In this guest contribution intended for the educated layman, advisor Adam
Apt discusses the process by which investment managers select individual
securities, contrasting the disciplines of fundamental and technical
analysis.
In this letter to the Editor, an advisor addresses a recent commentary which took issue with John Mauldin's
views.
Lastly, we highlight submissions to Advisor 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.
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wish to receive future newsletters, please reply to this email
with the word “unsubscribe” in the subject line.
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"Plan sponsors never make their money back," Stewart told
me. "If they simply went on vacation, they could save their
clients $170 billion - and that doesn't count transaction costs."
How to Squander $170 Billion
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2010 Outlook: More
Growth on the Horizon for Emerging Markets
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As governments
emerge from the global economic crisis, emerging markets have been on a bull
market run. Although there have been major gains in 2009, we believe there
is still significant growth potential for the asset class and that emerging
markets companies will continue to offer above-average earnings growth
potential over the next five years
2010 Outlook: More Growth on the Horizon for Emerging
Markets
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Changing the Rules:
The Roth IRA Conversion Opportunity
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Research shows most high-income individuals will consult with a financial
advisor about the Roth IRA conversion rule changes. Janus offers you helpful
tools to take advantage of this ongoing opportunity.
Changing the Rules: The Roth IRA Conversion Opportunity
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The $100,000 Challenge
to Passive Managers
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"Any passive investor who believes he or she can generate a safer and
higher return with a buy-and-hold portfolio than I can with my active
portfolio has an opportunity to relieve me of $100,000. I'm giving
the passive investor all the choices, except the one they saddle themselves
with - the burden of not managing their money."
The $100,000 Challenge to Passive Managers
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The ability of the U.S. economy to sustain economic growth will come down
to the question of whether what it was experiencing was an ordinary
recession or a depression dynamic characterized by massive debt
destruction. HCM remains of the view that there was nothing ordinary
about the recession and that it was a culmination of thirty years of
noxious fiscal, monetary and regulatory policies that were based on two
flawed assumptions.
Boom and Bust
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Seven Steps to Making
2010 a Breakthrough Year for your Business
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"The good news is that
we're only ten percent through the year," says Dan Richards.
"There's still time to put in place initiatives that will position our
business for the future, provided that we are serious about making this
happen."
Seven Steps to Making 2010 a Breakthrough Year for your
Business
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Robert Shiller on Trills,
Housing and Market Valuations
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"I sense not so much a sharp double dip [in the US economy], but
disappointing performance," says Robert Shiller. "The
unemployment rate will prove to be very hard to get down. The housing
market may continue to decline because of the shadow inventory."
Robert Shiller on Trills, Housing and Market Valuations
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How Professionals
Select Investments
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"So, on the one hand, fundamental analysis presumes that, while the
markets are imperfect, they will sooner or later rationally correct their errors
of valuation. Technical analysis, on the other hand, presumes nothing
about rational evaluations, but instead is predicated on the belief that
changes in price are determined mainly by the emotions of the market."
How Professionals Select Investments
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In this letter to the Editor, an advisor addresses a recent commentary
which took issue with John Mauldin's views.
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Highlights from
Advisor Market Commentaries
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John Hussman notes that he foresaw the market decline in his comments a few
weeks ago, and that it would be a mistake to attribute that decline to a
single piece of news. His most significant concern is a "significant
second wave of defaults," and he says those concerns (other than
issues pertaining to Greece) have not been the focus of analysts'
attention. Hussman believes the decline in the unemployment rate to 9.7% is
an "anomaly," and expects unemployment to rise to 11-12%.
"Cautiously Pessimistic" by John Hussman of
Hussman Funds
In an update to its Q1 2010 global economic outlook, Roubini Global
Economics says that world trade will grow by between 4.5 percent and 5
percent in 2010, led by fiscal stimulus spending, inventory restocking and
slight improvements to global demand. Global trade volumes shrunk by an
estimated 13 percent in 2009 in the first decline since 1982 and the
sharpest in the post-war period.
"Global Trade in Recovery Mode" by Nouriel
Roubini of Roubini Global Economics
American Century Investments says in its weekly market update that rapidly
rising delinquencies and foreclosures on residential housing could soon
eclipse unemployment as an object of focus for economists, policymakers and
the public. Delinquencies on loans secured by one- to four-unit properties,
including home equity lines of credit, have soared since the end of 2007 to
approximately 10 percent of the total value of mortgages.
Growing Problems in the Residential Housing Market by
American Century Investments
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