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New Ideas for Client Segmentation
We’re struggling to decide which factor should determine our categories for client segmentation. Do we base it purely on asset size? Or do we do a profitability analysis? One of my advisors wants to categorize by “irritation factor;” those clients who call too much and ask for the world without paying for it would drop to the bottom of the list first.
The Curious Case of Dollar Strength
by Russ Koesterich of BlackRock,
U.S. equities finished in the red last week. The Dow Jones Industrial Average fell 1.79% to 17,373, the S&P 500 Index slipped 1.28% to 2,077 and the tech-heavy Nasdaq Composite Index dropped 1.66% to close the week at 5,043. Meanwhile, the yield on the 10-year Treasury fell from 2.20% to 2.17%, as its price correspondingly rose.
Did Barron’s Number-One Ranked Fund Family Add Value for Its Investors?
by Larry Swedroe,
If any actively managed fund family were able to deliver superior results, surely it would be the one chosen by Barron’s as its top performer during the last decade. Thus, we clearly should expect to see Waddell & Reed’s funds outperform relative to passively managed alternatives.
Recession Probability Models - August 2015
by Ted Kavadas of StratX, LLC,
There are a variety of economic models that are supposed to predict the probabilities of recession.
While I don’t agree with the methodologies employed or probabilities of impending economic weakness as depicted by the following two models, I think the results of these models should be monitored.
What Drives Risk Tolerance
by Daniel Solin,
To be a successful advisor, you need to understand how risk affects the decisions investors make and what you can do to make those decisions more objective and responsible. Demonstrating value at a time when investments are becoming more of a commodity is a popular topic in advisor-industry circles.
A Look at Reported Results, and Subsequent Price Performance
by Jennifer Thomson of GaveKal Capital,
With slightly more than half of the constituents in the MSCI World Index having reported 2Q results, we thought it would be useful to take a look at the trend in sales and earnings so far. In the developed world, about 54% of those companies that have reported sales results have surprised positively, led by the Health Care and Financials sectors. The most negative sales surprises have been concentrated in the Consumer Staples, Materials, and Industrials sectors.
GDP, the ECI, and the FOMC
by Scott Brown of Raymond James,
Following Fed Chair Janet Yellen’s monetary policy testimony in mid-July, the odds of a September rate hike seemed about even. That doesn’t mean that the Fed’s decision would be a toss-up at the time of the meeting. When the September 16-17 policy meeting rolls around, it should be pretty clear what the Fed will do (or not do). Rather, that policy outlook reflected the uncertainty in the economic data that would arrive between now and the September FOMC meeting. However, just two weeks later, the evidence is pointing to a likely delay.
Gold on Sale, Says the Rational Investor
The leveraged gold futures derivatives market is knocking down the precious metal, yet in massive contrast, this drop has ignited a shopping frenzy according to gold coin dealers. I spoke with several friends and industry experts this week who confirmed the record sales numbers for the month. In fact, American Gold Eagle sales reached 161,500 ounces in July, the highest monthly figure since April 2013. What gives?
A Midyear Look at Global Real Estate
There are many drivers of recent short-term price changes for publicly traded real estate companies in the current market environment. These include changes in the market’s outlook for economic growth, for interest rate movements, for central bank actions and even the issues surrounding Greece and Ukraine.
Why High Performing Individuals Fall Apart in a Team
I have hired the best individual contributors anyone could find. Individually, they are strong performers, but they trip over one another whenever they have to agree on ways to meet client needs. Are there incentives or punishments I can dole out to change this dynamic?
Why Most Quantitative Investing and Trading Systems Fail
Most, if not all, quantitative systems are designed by selecting factors that were present in successful investments/trades over a selected back-test period. That process, however, too often results in strategies that fail to produce results that are as successful as in the historical data. Here’s why.
Don’t Let the Noise Keep You Up at Night
Three subjects have concerned the markets recently: a Greek debt default and possible exit from the European Union (Grexit), the Federal Reserve’s (the Fed’s) normalization of interest rate policy and potential bond market illiquidity following a rise in interest rates. The first two are binary outcomes, which have been debated in the marketplace for years. While discussing these possible outcomes ad nauseam may be a palliative to some, in our view it doesn’t really provide much meaningful, incremental information until more definitive actions are taken.
Europe: Running on Borrowed Time
by John Mauldin of Mauldin Economics,
Rather than wander deep into the weeds looking at financial indications, however, we are going to explore what I think is a very significant nonfinancial factor that will impact the future of Europe. If it was just money, then Prodi would be right – they could just create new economic policy instruments, whatever the heck those might be. But what we’ve been seeing these last few months is symptomatic of a far deeper problem than can be addressed with just a few trillion euros, give or take.
Tocqueville Gold Strategy Investor Letter: Q2 2015
What is required to restore investor interest in gold? In our opinion, a prolonged bout of financial-market adversity would suffice. After all, the cornerstone of coordinated central-bank policy since 2008 has been the levitation of financial assets via Zero Interest-Rate Policy (ZIRP) and Quantitative Easing (QE) by forcing investors into risky assets. We believe that nothing would serve better to undermine confidence in central bankers than a bear market in bonds and equities. The roof above the dollar gold price has been built brick by brick from confidence in central bankers.
Who's Right - Commodities Or Fed?
by Lance Roberts of Streettalk Live,
I have been suggesting for quite some time that the Federal Reserve is stuck in a "liquidity trap" which makes it very difficult for monetary policy to be effective. More importantly, beginning in January of this year, I have suggested that the Fed is being forced to choose between the "lesser of two evils."
The BOJ’s Policy: What’s Next, More Easing? Or Something Else?
by Tomoya Masanao of PIMCO,
Investors are now debating what the next step will be for the Bank of Japan. It is a dramatic turn, isn’t it? Earlier this year, the consensus view was that the BOJ would move forward with additional easing – the question was ‘when’, not ‘if’.
The Opportunity in Municipal Closed-End Funds The Value in the 9th Inning of the Great Bond Rally
by Michael Lebowitz,
For the last five years, bond market experts have unfailingly and wrongly predicted a rise in interest rates. If the current rate-hike fears prove unfounded again, municipal-backed closed-end funds (M-CEFs) is an asset subclass likely to perform well. Here are eight such funds to consider.
Jobs, Inflation, and Wage Pressures
by Scott Brown of Raymond James,
In her monetary policy testimony to Congress, Fed Chair Janet Yellen made it clear that the central bank remains on track to begin raising short-term interest rates later this year. However, she gave herself an out, indicating that Federal Reserve officials’ projections of the federal funds rate are “based on the anticipated path of the economy, not statements of intent to raise rates at any particular time.”
Do The Gabelli Funds Add Value for Investors?
by Larry Swedroe,
Mario Gabelli is one of the highest paid executives in America, having earned $88.5 million in 2014 – more than the leaders of all other publicly traded asset-management firms. But have the investors in his mutual funds been as richly compensated when compared to what they would have earned in comparable, passively managed funds?
What is the Best Portfolio Size for Value Investing?
Many traditional value investors have concentrated portfolios of less than 50 names. Many index funds that tilt toward value factors have portfolios that consist of hundreds of names. This begs the question: What is the best portfolio size for value investing?
Northern Trust Perspective
by Jim McDonald of Northern Trust,
Last month we said that the odds favored some sort of “kick the can down the road” agreement between Greece and its creditors, and it looks like that may be coming to pass. While there’s still much work to be done, the tone of the current agreement seems focused on avoiding a euro exit and debt write-downs, while ignoring growth-oriented policies. With the hard decisions yet again put off for another day, this should be euro-weakening, all else equal.
If the Fed Raises Policy Interest Rates in 2015, It's Likely to Be One and Done
by Paul Kasriel of The Econtrarian,
Last week, Fed Chairperson Yellen indicated that the Fed was likely to raise its policy interest rates sometime before year end. Given the behavior of the sum of commercial bank credit and depository institution reserves at the Fed in the past three quarters, it is a mystery to me why the Fed would be contemplating a policy interest rate increase at this juncture. But if this is something the Fed just has to get out of its system, then the first increase is unlikely to be followed by a second interest rate increase for some time.
China's Rebalancing Continues
by Andy Rothman of Matthews Asia,
The rebalancing of China’s economy continued in the second quarter of this year, as services and consumer spending drove more growth than industry and construction. The inevitable deceleration of most year-on-year (YoY) growth rates also continued, but a booming stock market provided a temporary lift to headline GDP growth.
ECRI Weekly Leading Index: "Recoveries Remain Resilient"
ECRI currently features an article suggesting that concern over negative trend growth is no reason to panic. Recession is not imminent as we are not yet in a "window of vulnerability." The article also discusses Spain's recent cyclical upturn and warns that one shouldn't assume that a cyclical upturn also means positive long-term trend growth. The overall message is not to "fret about recession just yet".
Common Sense Trumps Smart Beta
by Kendall Anderson of Anderson Griggs,
Every few years or so the powerful money men of Wall Street come up with a new idea they believe will lead to unimaginable wealth for their clients and themselves. These ideas often stem from rigorous statistical studies which attempt to confirm that a particular idea offers better than average returns to investors. Of course, in the world of academia, any believable idea originally promoted by one researcher will quickly be followed by additional research from academics around the world expanding on, reinforcing, or contradicting the original study.
The View from the Fed
by Scott Brown of Raymond James,
Federal Reserve Chair Janet Yellen will give her semiannual monetary policy testimony to Congress this week. In the past, this has been an important event for the financial markets. However, Fed communication is a lot more open these days. For example, we have the forecasts of senior Fed officials and the minutes of the June policy meeting in hand. However, there is still scope for financial market participants to learn a bit more.
Innovation – Too Much, or Too Little of a Good Thing?
by Michael Lebowitz,
New innovations save us a lot of time and effort but, believe it or not, they do little to generate sustainable economic growth. Sustainable economic growth depends on productivity. Despite these new innovations, domestic productivity is flat lining.
US Equity and Economic Review For the Week of July 6-10: The Fed Speaks, Edition
by Hale Stewart,
Aside from two Federal Reserve releases, the only major news announcement was the ISM services index, which printed a very strong 56% headline number. New orders were a bullish 58.3 while employment was 52.7.
ECRI Weekly Leading Index Continues With Little to No Change
ECRI's most recent article suggests that wage inflation does not support the case for a rate increase. "The recent rise in wage inflation, having become an obvious fact, is increasingly being used to support the case for rate hikes – including by Fed Chairman Janet Yellen, who now sees these “tentative signs of stronger wage growth” as a harbinger of inflation."
Global Investors: You Should Be Paying Attention to this Economic Indicator
In addition to our own macro models, BCA Research , a highly respected independent research company, pointed out that PMIs in developing economies have plunged to new lows. The International Monetary Fund also revised downward its global growth forecast for 2015. On this account, bad news is good news, as central bankers are scrambling to stimulate economic growth.
How We View the Big Picture
by Team of Litman Gregory,
We are regularly asked for our take on the broad macroeconomic topics of the day. Two of the more noteworthy big-picture subjects we have been asked about recently are the Greek debt crisis and the timing of the U.S. Federal Reserve rate hike. In most cases, we don’t believe we have new insights to add beyond the reams of commentary these topics typically inspire, and given the dynamic nature of these two topics, it is quite possible that new information will unfold as we publish this or shortly thereafter.
More of the Same
by Scott Brown of Raymond James,
The U.S. economic data reports have remained mixed, consistent with a moderately strong pace of growth in the near term. The June jobs data suggest that a September Fed rate hike may be a closer call than thought earlier. Meanwhile, Greece’s economy is in tatters. The country has to face the burden of further austerity or the chaos of a euro exit.
Funds Gone Mild The Role of Cash in Value Managers’ Performance
by John Coumarianos,
While many well-known value funds have been poor performers lately, their long-term records remain excellent. Their cash positions have, in part, caused their recent underperformance, but cash has also fueled their longer-term outperformance.
A Greek Play
The second quarter of 2015 experienced heightened bond market volatility in anticipation of the Fed’s first rate increase as well as international equity volatility involving Greek debt and Chinese equities. Despite whipsawed volatility, the major domestic and international equity indices ended close to where they started.
Results 5,001–5,050
of 6,446 found.
