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January 25, 2011 - Vol 5 Issue 4
Dear Reader, Let Dan Richards help you make 2011 a breakthrough year for new clients. On Wednesday, Jan 26, Dan Richards is starting a six-week online program to help advisors boost prospecting results in 2011. Click here to learn more. 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.
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 The Power of Dividends
By C. Thomas Howard New evidence refutes long-held beliefs about the role of dividends. Research shows that the higher a stock portfolio's dividend yield, the greater its return. And just as surprising are new findings about the relationship of dividends to volatility.
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The Case for a Retirement Plan "Reboot" Using Target-Date Funds Sponsored Content by American Century Investments Defined contribution plan sponsors have an opportunity to improve retirement readiness for participants by rebooting their existing plan using target-date funds as a qualified default investment alternative (QDIA). This is made possible by the Pension Protection Act of 2006, giving certain diversified, long-term investment products QDIA status. Senior Vice President Rich Weiss and Client Portfolio Manager Nancy Pilotte make a case for re-evaluating existing retirement plans for a potential reboot using target-date funds as a default investment option.
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Why Tactical Asset Allocation is Essential to Maintain a Stable-Risk Profile By James Colon, John Gambla and Rob Guttschow How can advisors construct portfolios that meet their clients' risk preferences across economic environments? You may be surprised to learn that tactical asset allocation has an important role to play.
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Beyond the Efficient Market Hypothesis
By Michael Edesess John Cassidy's 2009 book, "How Markets Fail," drives the final nail in the coffin of the Efficient Market Hypothesis. Well, perhaps the penultimate nail - as I'll explain. It is the most compelling argument I have read that we need a new and improved theory of markets, a theory that subsumes the efficient market hypothesis, much as Einstein's relativity theory subsumed Newtonian physics.
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Separating Prospects from Suspects
By Dan Richards What's the difference between a prospective client and someone who's just a suspect? An advisor I recently spoke to gave me the answer.
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Ten Resolutions for Greater Prosperity in 'The Year of the Fiduciary' By Jeffrey Briskin If you think selling and servicing 401(k) plans isn't easy today, ERISA is about to make it even harder. The good news is that firms that adjust to these challenges can use them to their competitive advantage Here are ten steps your firm can take to prepare for The Year of the Fiduciary.
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How Emotions Undermine Your Investing Decisions
By Dan Richards In this interview, U.C. Davis professor Brad Barber discusses his latest research, which examines how investors' behavioral biases lead to costly mistakes. Both a transcript and a video are provided.  |
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Demand Transparency in an Opaque Mutual Fund World
By Andy Rachleff Too many investors will end up in actively managed funds that fail in their mission to outperform a passive benchmark. And investors won't know until it's too late because they lack the information to evaluate which funds might consistently outperform the market.
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Go for the Long Bond: Technical Indicators are Positive
By Georg Vrba My article, Seeking Beta in the Bond Market: Update December 31, 2010, showed that my Bond Value Ratio (BVR) model indicated the beginning of an up-market for high-beta bond funds on 12/17/10. I present a further indicator here which reinforces this signal.
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Highlights from Market Commentaries
Below are the three most widely read commentaries during the last week:
 I Like Ike: A Powerful Warning Ignored, January 17, 1961
Fifty years have gone by in a flash since President Eisenhower, three days from the end of his eight years in office, pushed to give an atypical end-of-term address to the people. It was not the most memorable speech given by an American President, but it was probably the most unusual and the most unexpected. Eisenhower's speech, in contrast to most great speeches, appeared at the time to have come out of left field, and 50 years later it seems even more remarkable, unusual, and relevant. The speech gives us an opportunity to see how President Eisenhower might have graded us. I Like Ike: A Powerful Warning Ignored, January 17, 1961 by Jeremy Grantham of GMO  Borrowing Returns from the Future
It will come as no surprise that we continue to anticipate poor 10-year total returns for the S&P 500 over the coming decade. Our present estimate is about 3.3% annually, which includes dividends. That is about 1% less than the 10-year total return that we estimated just a few months ago, but this makes senses. Borrowing Returns from the Future by John P. Hussman of Hussman Funds Europe Is Running Fast to Stand Still The sequencing of Europe's debt crisis is depressingly similar - the plot stays the same, with a slightly different cast depending on the country in the spotlight. Yet, judging by the run-up to the meeting of European Union finance ministers in Brussels on Monday, European officials seem intent on repeating it over and over again. Europe Is Running Fast to Stand Still by Mohamed A. El-Erian of PIMCO
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