Dear Reader:

NewsLetter Volume 7, No. 1

March 2014


Headlines around America from Reader’s Digest

•County to Pay $250,000 to Advertise Lack of Funds

•City Unsure Why the Sewer Smells (Probably the same city that lacks funds)

•Federal Agents Raid Gun Shop, Find Weapons (Shocking!!)

•Homicide Victims Rarely Talk to Police (Unconscionable)

•Study Shows Frequent Sex Enhances Pregnancy Chances (Go figure)

•Statistics Show that Teen Pregnancy Drops off Significantly after Age 25 (Obviously the same astute academics who did the sex study)

•Hospital Resorts to Hiring Doctors (Imagine!)


More from Reader’s Digest. Sign in front of Philadelphia’s Independence Hall: “The Great Debate Program, ‘Is American Politics Broken?’ has been relocated due to Government Shutdown.” And the answer is?


Mark Balasa a longtime friend and ace Chicago planner had this to say regarding the flight from bonds. “If we sell bonds, where do we go? A bad day with bonds is a couple-percent loss, but nothing at all compared to the risk on stocks.”


Baby Boomersborn 1946-196475-80 million

Generation Xborn 1965-198145-50 million

Millennialborn 1982-200080-85 million


Want to know what the market will look like in 2014? Research Magazine asked a number of the nation’s top money managers and here’s the word:

Rob Arnott, founder-chair Research Affiliates managing $149 billion “Returns are going to be pretty anemic in mainstream stocks.”

Ken Fisher, Fisher Investments which manages $50 billion “We’re in a long bull market…”

John Buckingham, Editor of The Prudent Speculator newsletter

“Returns in line with the historical 10% to 12% average are not unreasonable…”

Robert Rodriguez, CEP-partner First Pacific Advisors (FPA funds) managing $26 billion “We do not find this an attractively valued environment.”

Now you know.


As I feel a little guilty providing you with a bunch of market predictions for 2014 that contradict each other, I thought you might feel a little better if I shared how some other gurus did in predicting 2013, mostly because I know how tempting it is to glom onto the prognostication of some expert to divine future market returns. Before you chase that pot of gold, it’s instructive to see how successful they’ve been in the past. Here are a few excerpts from last year’s predictions by a number of the world’s most famous money managers from Benzinga’s “2013 Market Predictions from 10 Top Money Managers.”

Byron Wien

As bullish as Tepper is on stocks, Wien is equally as bearish. Blackstone Advisory Partners’ vice chairman believes that the S&P 500 will fall 200 points in the first half of 2013. Also among Wien's “10 surprises for 2013” is a rally in commodity prices and a reversal in financial stocks. Blackstone has

$210 billion under management as of December 31.

S&P Gain First Half: +180.09S&P Commodity Index 2013: -1.22%

S&P 2013: +32.39%Dow Jones U.S. Financials: +34.42

Jeff Gundlach

Gundlach is primarily a bond investor. His DoubleLine Capital reached $50 billion in assets under management in November of last year. Despite Gundlach’s bond focus, he isn’t shy about voicing his opinion of stocks. He has been famously bearish on Apple shares since about April of last year, and still believes that shares could ultimately break below $400. As for the stock market in 2013, Gundlach is bearish on U.S. stocks, but not all stock markets in general. He recommended that investors sell

U.S. shares and buy Chinese stocks at the beginning of the year.

Apple: 12/31/2013 $561.02 S&P 2013: +32.29% MSCI China 2013: +3.64%

Jim Rogers

Rogers doesn’t invest others’ money anymore, but his views are still widely respected. He founded the Quantum Fund with another famous investor – George Soros. At the Quantum Fund, the pair had a ten-year stretch when the value of their portfolio gained 4,200 percent compared to an advance of around 47 percent for the S&P 500. Rogers has been consistently critical of Federal Reserve policy and has said previously that he was shorting some U.S. stocks while being long commodities. He reiterated his long commodity position during the last week, saying he “owns them all.” He also warned once again that the Fed’s easing policies, and similar monetary policy around the world, would eventually end in disaster. [Of course, as Keynes famously noted, “In the long run we are all dead.”]

S&P 2013: +32.39% S&P Commodity Index 2013: -1.22%

Robert Doll

Doll is Nuveen Asset Management’s chief equity strategist. His firm manages $117 billion in assets. He recently told Bloomberg that the Fed’s interest rate policy would allow the stock market to extend its gains. He likes U.S. and emerging market stocks but said that he was concerned about European and Japanese equities. [Good call on the U.S.; not so good otherwise.]

Emerging Mkts: -2.6%Europe 2013: +25.23%Japan 2013: +27.16%

Mario Gabelli

Speaking at the Barron’s annual roundtable, noted value investor Gabelli said that he is positive on

U.S. stocks, but he doesn’t think the market will close up more than 5 percent in 2013. Gabelli is one of the wealthiest investors in America and runs GAMCO Investors, a $30 billion global investment firm.

S&P 2013: +32.39%

Felix Zulauf

Zulauf, the founder of Switzerland-based hedge fund Zulauf Asset Management, was more bearish than many money managers when he offered up his view for 2013 at the Barron’s Roundtable. He said that the rally in risk assets is “late in the cycle” and that the market would fall between the second and third quarters as unresolved crises will re-emerge. Unlike some observers, Zalauf is not a believer in a European recovery and said that he thinks interest rates will begin to rise once again for countries like Greece, Spain, and Italy, reigniting the crisis.

S&P 6/28/2013: 1606.28S&P 9/30/2013: 1681.55

Greece 2013: +34.5%Spain 2013: 31.32%Italy 2013: 20.43%

My not so subtle conclusion: don’t make your investment decisions based on gurus’ short-term market predictions. If they really knew, they wouldn’t still be working for a living.


Of course if you don’t trust professionals, you might want to seek guidance from the average investor. According to Money magazine, this is how they see the market in 2014.

Rise 10% or More ……….31%

Rise Less than 10% …….38%

Drop Less than 10% ……10%

Drop 10% or More……….21% In other words, no one knows.


…Could come up with this:

“Securities and Exchange Commission – Interim Final Temporary Rules Update.”


Want a good read that’s not just interesting but may pay back your effort in the form of a longer and healthier life? Check out I’ve Been Thinking: And It Might Save Your Life (And Vision) by my friend and renown physician Dr. Frank Weinstock. I’ve Been Thinking is an easy-to-read patient’s handbook that offers both education and self-advocacy. As a health care management specialist, Dr. Weinstock knows the right questions to ask, and the right buttons to push. His book is more than just a general guidebook and in reality is divided into two parts: the first part is a general overview of the healthcare system; the second part is specific to Dr. Weinstock’s ophthalmology specialty and imparts a thorough understanding of how important superior eye care is and the questions that should be asked of eye-care specialists.

You can purchase it at


According to Business Week, a startup firm founded by a MIT professor, has developed LiquidGlide, a nontoxic coating for the inside of containers that makes them so slippery liquids slide out like nobody’s business. As someone who likes his ketchup but not the process of fruitlessly banging on the bottom of the bottle, I’m ready. Deliveries are expected to begin this summer.


From my friend Karla: a test from the New York Times.

See if it can tell where you’re from.


Excerpts from Warren Buffett’s shareholder letter.

“The second major category of investments involves assets that will never produce anything, but that are purchased in the buyer’s hope that someone else – who also knows that the assets will be forever unproductive – will pay more for them in the future. Tulips, of all things, briefly became a favorite of such buyers in the 17th century. This type of investment requires an expanding pool of buyers, who, in turn, are enticed because they believe the buying pool will expand still further. Owners are not inspired by what the asset itself can produce – it will remain lifeless forever – but rather by the belief that others will desire it even more avidly in the future. The major asset in this category is gold…”

Putting it in perspective:

“Today the world’s gold stock is about 170,000 metric tons. If all of this gold were melded together, it would form a cube of about 68 feet on each side. (Picture it fitting comfortably within a baseball infield.) At $1,750 per ounce – gold’s price as I write this – its value would be about $9.6 trillion. Call this cube pile A. Let’s now create a pile B costing an equal amount. For that, we could buy all U.S. cropland (400 million acres with output of about $200 billion annually), plus 16 Exxon Mobils (the world’s most profitable company, earning more than $40 billion annually). After these purchases, we would have about $1 trillion left over for walking-around money (no sense feeling strapped after this buying binge). Can you imagine an investor with $9.6 trillion selecting pile A over pile B?”

I wonder how he really feels. You can find the full story at


As some of you know, I teach the graduate Wealth Management class in the Financial Planning program at Texas Tech. An area we spend a great deal of time on is manager evaluation. One of the projects I assign is to look back at how successful managers who are extolled by the media do in subsequent years. As an example, we recently looked at a June 2006 Forbes article on Ken Heebner, manager of the CGM funds. The article called Heebner, “…one of the most successful – and original – investors of his time… And there’s no question Heebner is one of the all-time greats.” Admittedly the story did note, “When he’s wrong, he’ll grossly underperform the market… But when he’s right, the gains are astronomical.” The authors criticize Morningstar’s comment that his style is “too gutsy to be practical,” with “…that strikes us as unfair. Gutsiness has always been integral to investing greatness.”

Well, let’s see. From July 2006 to June 30, 2008, his fund CGM Focus did indeed explode, trouncing the S&P’s 2.4% annual return with a 44.9% return. However, by June 2010 the fund had given back all of its excess return versus the S&P and from June 2010 through December 31, 2013 the fund’s annual performance trailed the S&P 11.4% vs. 18.4%. From the article’s publication through December 31, 2013, the fund had an annualized return of 4.7% vs. the S&P’s 7.4%. So much for gutsiness.

My point to the class, and to my readers, is don’t fall for financial pornography, no matter how prestigious the publication and how well written the story. All too often it’s just that – a story. Also, beware of investing for the future based on past performance. It’s a warning oft repeated and even more often ignored. Remember, driving using a rearview mirror is hazardous to your health; the same is true for investing.

That’s not to say that we don’t consider the possibility of exceptional talent, so let me know if you’re aware of the exceptional manager. I have an open mind and I’m more than happy to investigate as we’re always on the lookout for good opportunities.


I’ve been invited to write reviews for many investment and planning-related books but recently I read one that is very special. Let me share what I wrote. “Over the years I’ve had the privilege of reviewing many investment books, but this is unquestionably one of the best. Every financial planner, wealth manager, broker, investment advisor, and serious individual investor owes it to themselves to carefully read this extraordinary book.” I meant every word. The book is Guide to Investment Strategy by Peter Stanyer. Published by The Economist, it’s available on Amazon at Investment-Strategy-3rd/dp/1610393910/ref=sr_1_3?s=books&ie=UTF8&qid=1392331919&sr=1- 3&keywords=guide+to+investment+strategy.


Of course it does raise the old question: “Where’s the customers’ yachts?”


Credit Martina for finding this opportunity.


Tickets to Super Bowl I at the Los Angeles Memorial Coliseum were $6 and $20. They were just a tad pricier for Super Bowl XLVIII in East Rutherford, N.J. Here are the Super Bowl ticket prices from 1967 to present.


It’s brag time again but these were so cool I couldn’t resist (again).

“Advisor Perspectives, a leading publisher serving the financial advisory community, is pleased to present the Venerated Voices awards for 2013, which rank our most popular content:

•The Top 25 Venerated Voices by Firm

E&K was ranked #6

•The Top 25 Venerated Voices by Author

I was ranked #9 And, check it out!

Read the full story in all its glory at:

Finally, for the doubters among my readers, here’s a picture of me with my official wizard hat at a recent technology conference, answering questions posed by Bob Curtis, CEO of PIEtech, developer of MoneyGuide.


On March1, 2014 we moved into our gorgeous new office at:

Suite 850, Coral Gables, FL 33146 Hope you get to visit us there soon!!

As always, I hope you enjoyed this issue of my NewsLetter and I look forward to “seeing” you when the next issue comes out.

Cordially yours,

Harold Evensky, CFP®, AIF® President

© Evensky & Katz

© Evensky & Katz / Foldes Financial Wealth Management

Read more commentaries by Evensky & Katz / Foldes Financial Wealth Management