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A Better Way to Invest in Gold
In the year since Geoff Considine last wrote about gold, underlying prices have risen 24%, leading to several important questions - including whether his advice of a year ago still holds today. We look closely at how a direct investment in GLD performed as compared to a bond-plus-call-option strategy, and which conditions favor each strategy.
The Riskiest Pension Assets (and the Implications for Muni Bonds)
by Robert Huebscher,
State finances are in trouble, in large part due to unfunded pension liabilities. To assess the depth of those problems, one can look at what is likely the riskiest component of states' pension assets - their exposure to alternative investments and, in particular, to private equity. We assess those risks and look at the larger question of whether unfunded liabilities can trigger municipal defaults.
Portfolio Strategy
by Bradley Turner of Chess Financial,
With most of the globe showing signs of economic recovery, and many developed countries facing heavy debt burdens, it is hard to imagine a future that does not include higher interest rates. Since bond prices move inversely to interest rates, most fixed-income investments will face a headwind sometime in the next few years. If this outlook for bonds is correct, it's likely that stocks will deliver better overall returns over the next 3-5 year market cycle. High-quality stocks offer the best risk-adjusted returns given their reasonable valuations and attractive dividends.
Martin Leibowitz's Failed Defense of the Endowment Model
by Michael Edesess,
The latest book from Martin Leibowitz, one of the most respected thinkers in the investment industry, attempts to justify the endowment model of investing. As Michael Edesess writes in this review, Leibowitz's defense is highly problematic, and that should concern any advisor utilizing a Yale-like strategy.
The Public Has Moved Out Of Stocks. Time For Wise Investors To Move In.
by Michael Golub of The Golub Group,
Today, we are at a point when the public is extremely pessimistic about the outlook for stocks, leading to very low public participation and the lowest valuations (when compared to bonds) in 60 years. The stock market is not about news. The stock market is about mass human behavior. We recommend you do what we are doing now, and buy the asset class for which public expectations are far too low ? blue chip high dividend paying stocks.
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."
Chronicle of the Quarter
by Bob Veres,
Bob Veres provides one of his Client Articles, which is a service for advisors to send to their clients; it's a daily blog about what it felt like to watch the market during the past fiscal quarter. It communicates several points: perhaps most importantly, that what seems clear in hindsight (the markets gave back their first quarter gains) is not at all clear as it is experienced.
Quarterly Commentary
by Michael Golub of The Golub Group,
Four main factors will help provide capital gains for blue-chip stocks over the next few years. The first is an over-inflated bond market, which will cause poor returns down the road. The second is a slow but steady return to an economy which has recovered to normal employment levels. The third is that corporations have more cash on their balance sheets than ever, and will use this cash to grow their businesses and hire new employees. The fourth is that due to cost-cutting and improved efficiency, leading corporations will show improved profitability, earnings and cash flow growth.
Three Questions on Behavioral Economics
by Dan Ariely of Predictably Irrational,
Unlike standard economics, behavioral economics does not assume that people are rational. Instead, behavioral economists start by figuring out how people actually behave, often in a controlled lab environment, and use this as a starting point. While the Chicago economists sometimes admit that people make mistakes, they claim that people make different types of mistakes that will eventually cancel each other out in the market. Behavioral economists argue that people will often make the same mistake, and that those individual mistakes can aggregate in the market.
A Crisper Solution
by Dan Ariely of Predictably Irrational,
There are all kinds of reasons why we eat badly, but some are more fixable than others if we only look at our behavior and uncover the nuanced forces guiding our actions. Instead of throwing the bag of grapes into the dark drawer in the bottom of the fridge, for example, we can put some grapes in a tray on the top shelf with some mixed greens and pecans, ready to grab and go. The rest of the grapes can be prewashed and stamped with a homemade expiration sticker. If we make plans to eat them within a few days and mark them as such, we are more likely to stick to our goals.
How to Create an Outstanding Culture
by Michael Golub of The Golub Group,
How do you create and nurture a truly great company culture? The answer is outstanding ingredients. That is the secret of great wines and also of great company cultures. The people the company draws to itself reflect the values of the company.
Getting Clients to Read Your Emails
by Dan Richards,
Today, we're seeing a sea change in how clients and prospects respond to information. Everyone is swamped by the sheer volume of email and communication. Dan Richards offers suggestions for how to get your emails read and your voice mail returned.
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.
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.
Anthony Boeckh on the Great Reflation
by Robert Huebscher,
Tony Boeckh has been the guiding force behind Bank Credit Analyst, and in this interview he discusses his new book, The Great Reflation. Boeckh stakes out a deflationary forecast, and explains how the flow of liquidity in the financial system will determine asset class performance.
The Rise of the Machines
The author comments on recent volatility due to automated trading programs, on unemployment data, and on the European sovereign debt crisis. "The solution appears obvious ? cut spending and reign in entitlement programs," he says. "Will that happen? Well, there certainly is political upheaval around the globe today and most of it is aimed at governments and political leaders."
European Debt Crisis Keeps Expanding
The European sovereign debt crisis will continue to wax and wane, but will stay with us until European governments take much stronger actions to reign in excessive outlays of all types, including social and military spending. The euro and British pound will continue to fall in value versus the U.S. dollar and other better-managed currencies such as the Australian, Canadian and Singapore dollars, the Chinese yuan and the Brazilian real. Guild remains bullish on the strong currencies mentioned above, oil, gold, several Asian markets and exporting companies around the globe.
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.
Gary Shilling: America?s Lost Decade
by Robert Huebscher,
The US faces 10 years of slow growth and deflation that could rival Japan's "lost decade" - two words which Gary Shilling did not utter but which unmistakably characterize his forecast. Shilling is founder and President of the New Jersey-based economic consulting firm A. Gary Shilling & Co.
Markets Resume Upward Momentum
by Chris Maxey of Fortigent,
It is clear that more and more people are becoming cautiously optimistic about the recovery unfolding around the globe, but a number of risks remain unresolved and will likely stay that way for years to come. That should provide plenty of fodder for both economic pessimists and optimists. Investors should brace for a bevy of news from every angle this week. The Federal Open Market Committee will meet on Tuesday and Wednesday to discuss the latest state of the economy. Expectations are for the fed funds target rate to remain within a range of 0 percent to 0.25 percent.
Investment Implications for Government Policy and Intervention
Government intervention has stabilized the economy, but policymakers must be careful to draw down their interventions before inflation occurs. Although residential real estate has seen its worst days, a wave of high-yield bonds and loans will soon mature, and the banking system must rebound enough to absorb that bubble. Despite these uncertainties, the range of yields and total annual returns among fixed-income sectors provide investors with multiple opportunities. We thank BlackRock for their sponsorship.
Letter to the Editor ? The Interest Rate Debate
by Various,
As a Treasury bond bear of modest conviction, advisor Martin Weil read with interest Gluskin Sheff's David Rosenberg's piece in our April 12 issue. Though providing little data to support his thesis, Rosenberg makes a solid argument for why it is inflation, not supply and demand, that drives Treasury prices and yields. In taking this position, he pits himself against, among others, Jim Grant, with whom he has been carrying on a running debate.
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.
days of dreck
by tom brakke of the research puzzle,
For whatever reason, it seems that hype is in full bloom right now. While evidence supports the view that post-crisis, the average investor has become more cautious, the claims of easily available riches seem to get wilder by the day. What is common among these schemes is that they all use some movement in price to grab the attention of the electronic village, and then the game is on. 'Some movement in price' can be remarkably easy to come by. The really sad part is that these promotional tactics are common and have been adopted to a degree throughout the investment industry.
Comments Before the Money Marketeers Club: Reflections and Ruminations
by Paul McCulley of PIMCO,
In a technical discussion of monetary policy, McCulley argues the 2 percent real federal funds rate constant in the Taylor Rule should be toast. In a world of deleveraging and cash hoarding, it makes absolutely no sense to reward holders of cash with an after-tax real rate of return. May Wall Street relearn the doctrine of profit-motivated stewardship, he says, and unlearn the false god of speculation-driven avarice.
Another Year Older... And Deeper in Debt?
by Isbitts of Emerald Asset Advisors,
Consumers continue to deleverage around the globe, as they have since 2008, and that deleveraging process is the underlying force behind financial markets. Despite the obvious short-term problems for markets everywhere, however, 2010 will be viewed in retrospect as a time for investors with long time horizons to start angling their portfolios toward a more positive long-term return than in the past decade. Continued low interest rates are starting to spark economic growth, and are making 'risk' assets more attractive.
How a Small Change Made a Big Difference
by Dan Richards,
Dan Richards says that when advisors think about ways to drive their business forward, they often look for dramatic initiatives that hit the ball out of the park. Sometimes, though, it is a seemingly mundane change to your routine that delivers the biggest successes. We also have a link to a webcast of this article.
What's Relevant and What's Not
by Michael Golub of The Golub Group,
One investment strategy stands above all others, and that strategy is to buy shares of enduring businesses at discount prices, and to wait for the underlying value to be reflected in the stock price. This is the long-term strategy followed by successful investors such as Warren Buffett and Benjamin Graham. Even though the principles of this strategy are simple, most people lack the essential trait required to follow it to success: the ability or willingness to ignore the short run.
An Open Letter to the President of the United States
Dennis R. Gibb asks President Obama in an open letter to set up a mortgage refinance workout facility administered by existing banks. Between 5 and 7 percent of homeowners are in foreclosure, while another 9 percent are in default. Many homes are now worth less than the principal of their mortgage. Gibbs also offers suggestions for job creation, financial reform and other policy issues.
The Anatomy of a Recovery
by Michael Golub of The Golub Group,
Blue-chip multinationals now face some of the best opportunities we have seen in decades, supported by high corporate cash levels, strong free cash flow generation, expanding profit margins, manageable debt levels, relatively little need to access capital markets to fund growth, attractive valuations, sound management teams and the ability to capitalize on global growth, particularly in emerging markets. Disciplined focus on business fundamentals will be crucial to investor success.
Massachusetts Pensions in Crisis
by Charlie Curnow,
We wrote in the past about the perilous situation of public pension systems nationwide, and the Massachusetts state pension system is no exception. The severe problems Massachusetts faces - created by years of generous worker benefits and declining asset values - mirror challenges faced by many other states.
2010 Outlook: More Growth on the Horizon for Emerging Markets
by Patricia Ribeiro,
Patricia Ribeiro, Vice President and Portfolio Manager for the American Century® Emerging Markets Fund, believes the emerging markets asset class offers short- and long-term growth prospects and diversification benefits at attractive market valuations. In a recent interview, Ms. Ribeiro shared her views on the current state of emerging markets, what lies ahead in 2010, and how her investment team is selecting equities for the fund. We thank American Century for their sponsorship.
The China Conundrum
by Dan Richards,
Few issues divide investors today more than the investment merits of China, despite that country's tremendous potential. China's strong economic performance through the global financial crisis has reinforced this divide. Dan Richards looks at the cases for and against investment in China, and offers his own opinion.
Buffett?s Gold
by Emilio Vargas,
Warren Buffett's valuation of Burlington Northern and his use of arguably cheap Berkshire Hathaway stock to purchase it have created a bit of a cacophony among analysts. It seems to some very un-Buffett-like to pay top dollar for an asset and to use precious equity currency to get a deal done. What does Buffett see that others do not? Oddly, the argument made by gold bugs for their asset of choice may hold the answer.
The Next Black Swan? Underfunded Public Pensions
by Robert Huebscher,
The plights of California and other states reveal an ominous threat our economy faces: underfunded public pension liabilities. We examine the size and scope of this problem, focusing on whether the underlying assumptions used to calculate liabilities are realistic.
Ten Ways to Connect with Your Clients? Children
by Nancy Opiela,
When you work with a top client throughout his or her life, you have an opportunity to ensure that the client's family stays with your firm beyond the current generation. Financial legacies are often lost when wealth passes from generation to generation, so building intergenerational connections can ensure both a successful transfer of assets - and an advisory relationship that endures after your original client passes on.
Think Like a Marine
by David Raileanu,
Retired Marine Patrick Gould has just published a book, Prudent Decision Making in an Imprudent World, and his theories prove useful for understanding decision-making in all arenas, not just those that involve life-and-death decisions. He applies many of his theories of risk, reward, preparation, security, and asset management to the financial world, working from modern portfolio theory and ultimately offering a practical decision method.
Bruce Greenwald on Positioning First Eagle?s Funds
by Robert Huebscher,
Bruce Greenwald is a professor of finance at Columbia, the Director of Research at First Eagle Funds, and a leading expert on value investing. Last week we published part one of our interview, where he discussed the structural problems in the economy and his forecast for higher unemployment. This week he discusses the positioning of First Eagle's investments, and why Warren Buffett's purchase of Burlington Northern was a mistake.
Letter to the Editor - Leveraged and Inverse ETFs
by Various,
Responding to Tom Lydon's article last week, In Defense of Leveraged and Inverse ETFs, a reader says leveraged and inverse ETFs are not aspirins to be sold over the counter; instead, they are prescription drugs that may cause serious adverse effects and thus warrant a black-box warning.
Green Shoots and Head Fakes in Housing
by Robert Huebscher,
The greenest of all green shoots - the recent rise in housing prices - is little more than a mirage, according to Whitney Tilson, founder and CEO of T2 Partners, a New York-based hedge fund and mutual fund manager. "It's likely the news of home price stabilization will turn out to be the mother of all head fakes," Tilson said. He spoke to a group of financial analysts in Boston last week.
Results 4,251–4,300
of 4,316 found.
