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May 10, 2011 - Vol 5 Issue 19
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 Howard Marks on the Human Side of Investing
By Robert Huebscher Howard Marks is widely regarded for his thought-provoking essays on the discipline and process of value investing. He is the chairman and co-founder of California-based Oaktree Capital, and he delivered the keynote address at the Value Investing Congress in Pasadena last week. 
Here are some excerpts from the Q&A session
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Inflation Field Manual: A Guide for a Changing World Sponsored Content By American Century Investments In this paper, we examine the competing forces at work that will affect inflation for the months and years to come. On the one hand, a whole host of factors are currently constraining inflation as experienced by U.S. consumers. On the other hand, U.S. monetary and fiscal policies and a number of pronounced global economic imbalances suggest an environment of high and rising inflation. The outcome of this debate is crucially important for financial assets, whose performance turns on the difference between expected and actual inflation-it is when inflation surprises to the upside that stocks and nominal bonds typically underperform and inflation-protected assets do best.
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Housing Outlook: Where Do We Go From Here? By John Burns The housing market will struggle over the next several years, but longer term there is plenty of upside. That was John Burns' message when he recently spoke to a housing industry trade group. Burns is a leading expert on the housing industry, and he shared with us his presentation. |
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Red Flags for Advisors - Communication Gaps with Affluent Clients By Dan Richards When hard facts come to light that contradict your preconceptions, it's time to sit back and reassess your thinking. That's exactly what advisors should do following a new research study of Americans with at least $3 million in investments.
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Lessons from the Farm By Michael Nairne Farmers know all about droughts. Droughts occur in nearly all climates and impair all types of crops. They are unpredictable, yet are recurring and can last for years. Likewise, performance droughts abound in the world of investing.
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What Return can we Expect from Stocks? By Adam Jared Apt What return can we expect from stocks over the long term? This sentence contains four problematic terms: 'return,' 'expect,' 'stocks,' and 'long term.' Intended for the educated laymen, this article considers each in turn.
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When You Can't Say It Nicely ... But It Still Needs To Be Said By Wendy J. Cook Perhaps because social media is so, well, social, I find it particularly painful to see someone go on a poorly rendered rant on the Internet. As Gilbert K. Chesterton says, 'A good novel tells us the truth about its hero; but a bad novel tells us the truth about its author.' How do you speak your mind about strongly help viewpoints without revealing a fool?
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Something's Fishy in the Russell Rebalancing By Mariko Gordon We humanoids think in words; it's just the way we're wired. As a result, the labels we assign to things affect our view of the world. I look at two frequently used investment labels: 'growth' and 'value.' I'll explain why both are high on my list of jargon pet peeves.
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Highlights from Market Commentaries Below are the three most widely read commentaries during the last week:  The Caine Mutiny (Part 2)
Low policy rates and the increasing negative real yields that they engender as inflation accelerates represent an immediate threat to investment portfolios. Bond prices don't necessarily have to go down for savers to get skunked during a process of "debt liquidation." PIMCO advocates a renewed vigilance, stressing bond market alternatives available globally, including developing/emerging market debt at higher yields denominated in non-dollar currencies. Tags: Investment-Grade Bonds Treasury Bonds US Inflation Sovereign Debt The Caine Mutiny (Part 2) by William H. Gross of PIMCO  Extreme Conditions and Typical Outcomes
As of Friday, the S&P 500 has advanced to a point where it is either within 0.1% or fully through its top Bollinger band on virtually every horizon. We can define an "overvalued, overbought, overbullish, rising-yields syndrome" a number of ways. The more general the criteria, the better you capture historical instances that preceded abrupt market weakness, but the more you also encounter "false positives." Still, as long as the criteria capture the syndrome, we find that the average risk profile for subsequent market performance is negative, regardless of the subset of history you inspect. Tags: Equities US Sovereign Debt Extreme Conditions and Typical Outcomes by John P. Hussman of Hussman Funds The Case for Human Ingenuity This month we take a closer look at oil and reach what many of our readers will probabaly find a surprising conclusion: We believe that we are approaching the end of the oil era and that oil prices will undergo a substantial correction over the next several years. But we cannot be very precise on timing, as there are too many variables at this stage. Our conclusion is based on 3 observations. Tags: Oil US The Case for Human Ingenuity by Niels C. Jensen, Nick Rees and Tricia Ward of Absolute Return Partners | |
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