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Bernanke's Impossible Dilemma
by Robert Huebscher,
David Wessel, economics editor of the Wall Street Journal, examines the challenge Ben Bernanke faces. His goal is to provide full employment and price stability. Yet he faces a slowly growing economy, unemployment close to 10%, consumers deleveraging and spending frugally, renewed fears of banking system instability, and the threat of an asset bubble is growing somewhere in the markets. Monetary and fiscal policy options have been seemingly exhausted, and the public is losing confidence in all aspects of government.
Misconceptions in the Great Bond Bubble Debate
by Robert Huebscher,
Interest rates, many claim, have bottomed, making bonds the latest asset class worthy of the dreaded "bubble" label. Others counter that deflationary forces will prevail and that bonds offer the best risk-adjusted returns in the market. Which side of this debate you take matters profoundly, but making that call is not simply a matter of predicting the direction of interest rates, as is the typical focus of analysts.
Does Your Marketing Match Your Business Structure?
by Kristen Luke,
Marketing strategies differ depending on the structure of a firm, writes Kristen Luke. Solos and silos focus on marketing the individual advisor while ensembles market the firm. Ensembles also tend to have more sophisticated marketing campaigns since they generally have larger marketing budgets and higher revenue streams.
The Misguided Promise of 529 Plans
by Robert Huebscher,
Along with the overall market, 529 plans suffered disastrous returns in 2008, leaving many families with insufficient funds to pay their tuition costs. The real problem, though, is not with the past performance of 529s. A misguided promise underlies the vast majority of 529 plans - that their heavy allocation to equities will provide acceptable risk-adjusted returns for the time horizons over which most parents invest.
Leadership Lessons from the Dance Floor
by Justin Locke,
The classic image of leadership is the symphony orchestra conductor, who, standing tall in front of his charges, ensures the perfect synchronization necessary to create the harmony, rhythm and melody that defines great music. That idealized artistic symbolism is not unique, though. An equally compelling example of leadership can be found on the dance floor, writes Justin Locke.
Postcard from Japan: Before the Dawn
by Andrew Foster of Matthews Asia,
Matthews Asia portfolio manager Andrew Foster recently returned from Japan, where he met with companies from a variety of industries. As in past trips, many of these companies seemed to be resting on their laurels, even as present growth was flagging. During this most recent visit, however, a subset of companies in different industries seemed to share a realistic outlook, combined with a sense of urgency to improve performance. Each of these companies cited the strength of the yen as a key factor that would allow them to execute overseas acquisitions, especially in the U.S.
It's a Break-out!
by Mike Hurley of Incline Capital,
While stocks are overbought and may well pull back over the short term, market internals are in good shape and suggest stocks will likely headed higher over the intermediate term. Specifically, both breadth and leadership are confirming the ?break-out,' with the next key question being how they compare if and when stocks will challenge their early 2010 highs. A key factor in the strength in equites has clearly been interest rates, which have moved sharply lower over the past six months. This has not only helped stocks move higher, but gold as well.
The Future of Oil
by Robert Huebscher,
No commodity impacts the global economy more than oil. When geopolitical threats loom, two questions often dominate discussion: Will the price of oil rise? And what will be the economic consequences? We review the key drivers of recent, current, and forecast oil prices, including a template for the necessary eventual alignment of supply and demand.
A Bass Player?s Perspective on Leadership
by Justin Locke,
A fascinating phenomenon pervades major symphony orchestras. Whenever a new guest conductor steps onto the podium, a musician will know - within two seconds or less - if they will be an inspiring leader. Justin Locke shares his experience as a professional bass player and the insights he gleaned as to what makes for great leadership.
Market Comment and Forecast Update
by David A. Rosenberg of Gluskin Sheff,
One can call it a 'growth recession,' but if Mr. Market wants to focus on the word 'growth' and ignore the word 'recession,' then one may well see ebullience take hold for a time. The most important factor right now is the prospect of significant downward revisions to earnings estimates in the next several months and quarters. The next great buying opportunity will be when the market has come to grips with or even overreacts to that. Therefore, patience over the near-term will be extremely important; now is not the time for impulsive buying behavior.
David Blitzer on How Indices Work
by Dan Richards,
Many investors read about the Dow Jones or S & P 500 index being up or down 200 points but don't really understand what this means. Today's interview with David Blitzer of S & P provides an explanation of how indexes work that can be shared with clients. This is a transcript of the interview.
This is No Way to Run a Railroad
by Michael Lewitt,
In the latest edition of the HCM Market Letter, This is No Way to Run a Railroad, Michael Lewitt says the railroad known as the United States economy is chasing its own tail these days. Driven by misbegotten fiscal and monetary policies that ignore the lessons of history in favor of discredited financial and economic theories, the economy is trapped in a cycle of boom and bust. Lewitt also comments on the bond market, the European stress tests, GM, and the private equity industry.
Build America Bonds Power the US States
A skeptical attitude toward new products has long served the best interests of advisors and their clients, almost without fail. However, in this guest contribution, Hildy Richelson argues that advisors should not be afraid to embrace one of the market's most prominent recent innovations: the Build America Bond (BAB).
Improving on Buy and Hold: Asset Allocation using Economic Indicators
by Georg Vrba, P.E.,
Most long-term stock market investors follow a buy-and-hold strategy, one that makes big losses unavoidable when major downturns strike the stock market. This strategy assumes that an investor cannot know when to switch from one asset to another and that if one avoids the bad days of the market, one is also likely to miss the best days. In this guest contribution, Georg Vrba presents a way to resolve this dilemma, based on various economic indicators that provide timely buy and sell signals for the S&P 500 index.
Misconceptions about Risk and Return Uncovered
Our beliefs about risk and return determine how we construct portfolios and manage risk. Research over the last decade suggests that a number of the ideas on which many investors and advisors rely lead to portfolios that are too highly exposed to market risk. In this article, we review a number of ideas that determine how we select assets and how we determine what to expect from those assets.
Cerulli Survey Results: New Themes in Advisors? Portfolio Strategies
by Bing Waldert,
New ideas, such as tactical asset allocation and the use of alternatives, have seen some uptake even before the market crisis, particularly within large institutions, but they are receiving increased attention as solutions for risk-averse clients. This article examines some of the evolutions, using data from a Cerulli Associates survey of Advisor Perspectives readers conducted in June and July of 2010.
A Proven Path to Gaining Client Assets
by Dan Richards,
When Dan Richards talks to successful advisors about their business objectives, for most increasing assets is at the top of their list. Some advisors mistakenly believe, though, that winning a greater share of assets from existing clients is driven by performance.
Is the Market Efficient?
by Adam Jared Apt,
After Marxism, no economic theory today may be as derided and despised as the hypothesis of market efficiency. The idea is often misunderstood, sometimes willfully. So what does "market efficiency" mean? In the latest installment of his series for the educated layman, Adam Jared Apt provides some answers.
Debt, Taxes and Politics
by Doug Short,
Doug Short provides charts of gross federal debt as a percentage of GDP, with estimates to 2015. As the charts illustrate, there is logic to the ratio increases within the historical context of two World Wars and the Great Depression. Likewise, the steadily decreasing ratio over the next 35 years enabled the tax cuts in 1964. With the 2001 and 2003 tax cuts expiring this year, will the gross federal debt be a factor in determining the direction of future tax rates? Who knows? This is, after all, a congressional election year.
Market Thoughts and the Long-Term Outlook for Inflation
by David A. Rosenberg of Gluskin Sheff,
The bull market in bonds will end reasonably close to the point in time that inflation (or deflation) bottoms. This is because the major economic factor that correlates consistently with the direction of market-determined interest rates, at least for long term Treasury Bonds, is CPI Inflation. Core inflation should recede from around 1 percent now to near 0 percent in the next 12-to-24 months, which would imply an ultimate bottom in the long bond yield of 2.5 percent and 2 percent for the 10-year T-note.
Why Immediate Annuities Make Sense
As they approach retirement, baby boomers are increasingly concerned about how best to manage their portfolios during the decumulation phase of their lives. One of the challenges for advisors and investors is understanding what role annuities should play, if any. Geoff Considine shows that immediate annuities should be an important part of a decumulation strategy.
The Opportunity in Build America Bonds
by Jeff Westergaard,
While the unique aspects of Build America Bonds (BABs) and recent Treasury Department actions are meaningful, the risks to investors have been over-emphasized. BABs remain an attractive vehicle for investors and issuers, and the market for them is likely to grow.
Jeremy Siegel on Why Stocks are Undervalued
by Dan Richards,
The Wharton School's Jeremy Siegel remains an outspoken proponent of stocks for the long run, as he demonstrates in this interview with Dan Richards. In the transcript of this interview, Siegel explains why equity investors should not be deterred by sour economic forecasts or by signals of apparent overvaluation based on Shiller P/E ratios.
It's Always Darkest Before the Dawn (of Earnings Reports)
The gold market looks like yet another bubble. Over the last three years gold gained 85 percent while the broader Commodities Index declined 19.8 percent. The current surge, however, is related to 'fear factor' trade compounded by huge hedge buying of gold futures. Meanwhile, even after the rally of the last week, stocks still look cheap. The S&P 500 should close out 2010 with a gain of 8 percent, which is 9 percent higher than current levels. Corporations flush with cash and with surging revenues and earnings are a buy.
Deficits Monetary and Moral
by Michael Lewitt,
"The word 'deficit' has come to epitomize not only our economic dilemmas but also our moral and intellectual failures to address them in an era that should be boasting of new breakthroughs in the social and physical sciences," writes Michael Lewitt in the latest installment of his HCM Market Letter, Deficits Monetary and Moral. "Instead, our ability to solve complex problems is weighed down by flawed and corrupted government processes and the lack of courage to forthrightly change them."
Improving on Morningstar's Ratings: Moving Beyond Past Performance
Past returns provide little or no help in choosing the best fund going forward, and Morningstar's stars are the best known example of this failure. In this guest contribution, Tom Howard presents new evidence of the failure of past performance to predict future returns, and shows how his strategy-based rating methodology offers measurably better predictive power.
Niall Ferguson on Japan, China, and the US
by Dan Richards,
Harvard's Niall Ferguson is arguably today's leading economic historian. In part two of this interview, Ferguson explains why he fears the future is bleak for Japan, why China may someday be the leading global superpower, and what all this means for the US. We provide a video and a transcript.
Debt-to-GDP, Federal Tax Brackets and Politics
by Doug Short,
Doug Short provides charts of gross U.S. federal debt as a percentage of GDP since 1900, with key historical events and presidential administrations highlighted. As the charts illustrate, the recent financial crisis and steep market decline triggered a dramatic acceleration in the ratio. With the 2001 and 2003 tax cuts expiring this year, will the gross federal debt be a factor in determining the future direction of the country's tax rates? Who knows? This is, after all, a congressional election year.
Asset Allocation Matters, But Not as Much as You Think
by Robert Huebscher,
The market downturn has caused a rethinking of many core principles underpinning investment advice, chief among them the role of asset allocation. We talk with Yale's Roger Ibbotson about the impact of market returns and active management in explaining return variance and the role of asset allocation going forward.
Why Wall Street Won't be Reformed
by Robert Huebscher,
Michael Lewitt, author of the highly respected HCM Market Letter, has just released a new book, The Death of Capital. In this interview, he identifies the challenges facing those who seek to regulate Wall Street, and why most of the proposed reforms are likely to fail.
Insight on the Current Status of the Housing Market
by Team of American Century Investments,
Both existing and new residential homes sales have seen impressive increases in volume over the past several months ending in April. Two factors will likely weigh on residential home sales for the remainder of this year, however. The first factor is the expiration of the homebuyer tax credit. The second is the rate of economic recovery and growth in employment for the remainder of this year. Over the next one to three years, little can contribute more to recovery in the residential housing market than reduced unemployment accompanied by rising incomes and increased consumer confidence.
Europe: Value or Value Trap?
by Dan Trosch, CFA,
European equities seem much cheaper than in the US, says Dan Trosch of Fortigent in this guest contribution. Europe trades at a 26% Price to Book discount and a 20% Price to Cash Earnings discount to the US. Some European industries and stocks are deservedly cheap and value traps; other industries and stocks are attractive and will benefit from global growth in exports and other macro trends.
Three Ways to Improve Safe Withdrawal Rates
Using Monte Carlo analysis, Geoff Considine examines three ways safe withdrawal rates can be increased beyond the baseline 4% guideline. He compares and quantifies the benefits of increasing diversification beyond equities and bonds, increasing allocations to fixed income, and employing tactical asset allocation.
Market Musings: Manic-Depressive Mondays
by Doug Short,
On Friday CNBC ran a piece observing that Mondays have strongly outperformed the other days of the week in 2010. Doug Short provides two pairs of tables that allow us to compare the behavior of weekdays during two nasty bear markets and the rallies that followed. Monday has indeed behaved strangely over the past decade. The key factor is whether we're in a bull or a bear market. Now that CNBC has publicized the 'buy on Friday, sell on Monday concept,' however, Short wouldn't put much 'stock' in this strategy going forward.
Correction Should Be Nearing Completion
The worst of the downturn should be behind us, but it will likely take some additional time before markets can repair themselves. Looking ahead, one positive factor is that market valuations have become more attractive in recent weeks, as prices have dropped while earnings have increased. Over time, additional clarity around the situation in Europe and financial market reform in the US should provide a measure of stability; and a sense that the economic recovery remains on track should help spark a turnaround in the recent aversion to higher-risk assets.
Search Engine Marketing for Financial Advisors
by Dan Sommer,
How do you take advantage of search engine marketing as a financial advisor? The goal of search engine marketing is to ensure that your website appears on as many results pages as possible for queries that relate to your business, and in this guest contribution Dan Somer explains the details of Search Engine Optimization (SEO) and Pay-Per-Click (PPC) advertising.
The Number One Way to Stay Motivated Breakthrough Research from the Harvard Business Review
by Dan Richards,
In a multi-year study, researchers at the Harvard Business School asked 600 managers from dozens of different companies to rank the impact of five factors that are normally associated with motivation - recognition, incentives, support from managers and colleagues, clear goals and a sense of making progress. Dan Richards discusses their findings and the takeaways for financial advisors.
Investors Face a New Health Care Landscape: An Interview with Michael Liss
After a year of intense partisan combat and fiery debates on Capitol Hill, President Obama signed a massive, nearly $1 trillion health care bill on March 23 that reshapes an industry that accounts for one-sixth of the U.S. economy. No one at American Century Investments® has followed the health care reform bill more closely than Michael Liss, vice president and portfolio manager for American Century Value, the company's flagship value portfolio, and he offers his thoughts on legislation. We thank American Century Investments for their sponsorship.
How Much is that Investment Worth in Real Money?
by Adam Jared Apt,
In the latest installment of his series of articles geared to the educated layman, Adam Apt looks at the topic of the time value of money, and how discount rates can be used to determine the value of a security. He shows the practical applications of present value calculations and its limitations.
Lacy Hunt: Keynes was Wrong (and Ricardo was Right)
by Robert Huebscher,
Underpinning the Obama administration's economic policies is the work of John Maynard Keynes, the legendary British economist who called for large fiscal and monetary interventions to counter the Great Depression. On this critical issue, Keynes was wrong, says Lacy Hunt, the internationally renowned economist with Texas-based Hoisington Investment.
Investing Insights from Doctors
by Dan Richards,
Dan Richards works out in the early mornings with a psychiatrist, who recently forwarded an article in the New York Review of Books by Jerome Groopman, a physician and frequent writer on the challenges of modern day medicine. As Dan read it, he was struck by the parallels between the things that cause doctors and investors to go wrong.
Unconventional Wisdom: An Interview with Robert Shiller
by John Heins,
"Few macroeconomic prognosticators have been as publicly right as Yale's Robert Shiller,whose first and second editions of the book Irrational Exuberance laid bare, with remarkable timing, the speculative bubbles forming first in the Internet-crazed stock market and next in residential real estate," writes the highly regarded newsletter Value Investor Insight in its preface to this interview with Shiller and excerpt from his latest book. Value Investor Insight, which bills itself as the "Leading Authority on Value Investing, offers a no-obligation, one-month free trial subscription.
Shameless
by Michael Lewitt,
The fiscal train wreck in the United States has not been set back on the tracks, and the global imbalances that led to the financial crisis have not gone away. Quite to the contrary, writes Michael Lewittin Shameless, the latest edition of his HCM newsletter. In fact, if progress isn't made with respect to these issues, and if intelligent financial reform is not enacted, future instability is guaranteed.
behavioral leapfrog
by tom brakke of the research puzzle,
Analyst projections of earnings per share values help define the market's expectations. Analysts, however, tend to factor in the estimates of other analysts when making their projections, and this leads to a game of behavioral leapfrog that can drive estimates up or down over time independent of actual performance. This leaves investors with a choice. We can adopt strategies that take advantage of the game of leapfrog that we observe, or we can do our homework and, if the time is right, get out ahead of the army of frogs by taking the biggest leap we can.
Fixed Income Short Duration Bonds
The fixed-income team at American Century Investments doesn't foresee sudden surges in inflation or interest rates in the immediate future, but they are on the horizon. "Near-term inflation concerns remain low due to lingering weak economic fundamentals," says David MacEwen, chief investment officer for fixed income. "However, looking long-term, the unprecedented levels of fiscal and monetary stimulus used to fight the recession will eventually result in higher inflation." (This is sponsored content.)
Robert Pozen on the Financial Crisis, Social Security, and the Mutual Fund Industry
by Dan Richards,
Robert Pozen is the chairman of MFS Investment Management and a senior lecturer at the Harvard Business School. In this interview with Dan Richards, he discusses the financial crisis, Social Security, and the mutual fund Industry. We provide a transcript and a video replay of the interview.
Building High Net Worth Client Loyalty with Social Security
Long dismissed as a supplemental income stream only for retirees with fewer assets, Social Security benefits can be important for clients of all asset levels, including high net worth (HNW) investors. As you are well aware, HNW clients are often particularly sensitive to government taxation and are usually interested in strategies which can help them retain or reclaim their money. We thank BlackRock for this article and their sponsorship.
Results 6,451–6,500
of 6,533 found.
