ACTIONABLE ADVICE FOR FINANCIAL ADVISORS: Newsletters and Commentaries Focused on Investment Strategy

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2014-04-15 Complacency Makes Volatility Markets a Dangerous Place by Chris Maxey, Ryan Davis of Fortigent

With a dissipation of economic stress in Europe, and a general strengthening of economic conditions in the U.S., equity market volatility has plunged to new lows. Some would argue that market intervention by central banks is acting as an unnatural dampener to market volatility, raising the question as to whether a gradual removal of those policies will cause volatility to resurface. So far, the answer is up for debate, but current positioning suggests many investors are becoming complacent and will be caught off sides if such a scenario emerges.

2014-04-08 Labor Markets Looking for a Spring Blossom by Chris Maxey, Ryan Davis of Fortigent

With an unusually harsh winter finally ending, economists were excited to see if labor markets would rebound in March. By many accounts, they were left wanting for more, but the underlying theme in the March report was consistent, steady job growth.

2014-04-01 A Look at First Quarter Market Performance by Chris Maxey, Ryan Davis of Fortigent

As the first quarter draws to a close, equity markets appear poised to finish in positive territory despite a somewhat tumultuous news environment. As noted by Bloomberg, save for a sharply negative Monday period, the S&P 500 will close out a fifth consecutive quarter in positive territory for the first time since 2007.

2014-03-25 Janet Yellen Enters the Picture by Chris Maxey, Ryan Davis of Fortigent

After bursting onto the scene earlier this year, Janet Yellen held her first official FOMC meeting last week. Rather than upset the apple cart, she held a largely status quo stance, but several comments raised more than a few questions.

2014-03-18 Currency Markets Heat Back Up, and Will Likely Remain that Way by Chris Maxey, Ryan Davis of Fortigent

Long dormant after the financial crisis, foreign exchange markets are beginning to heat up, offering ample trading opportunity for asset managers. The U.S. dollar was widely viewed as being the best long trading opportunity for 2014, but so far, that has not played out, with activity in the Euro, Chinese Yuan, and other currencies impeding dollar strength.

2014-03-10 Tech Bubble 2.0? by Chris Maxey, Ryan Davis of Fortigent

The $19 billion acquisition of WhatsApp by Facebook in late February put an exclamation point on several high profile takeovers in the technology space in recent months. Sizeable deals such as Googles $3 billion acquisition of Nest and Facebooks $3 billion offer for SnapChat have fueled the idea that an indiscriminate buying spree in the technology space a la 1999 could set up financial markets for another valuation bubble.

2014-03-07 Tensions between Russia and Ukraine Worry Investors by Gene Goldman of Cetera Financial Group

Over the weekend, tensions escalated between Russia and Ukraine as Russian forces invaded and took complete operational control of the Crimean peninsula.

2014-03-04 A Consumer Releveraging Renaissance? by Chris Maxey, Ryan Davis of Fortigent

After a long period of deleveraging, there are appearances that consumers are entering a stage of releveraging. The devil is always in the details, though, and this releveraging cycle is likely to play out vastly different than those of previous expansions.

2014-02-25 Time to Worry About Europe Again? by Chris Maxey, Ryan Davis of Fortigent

The European sovereign debt crisis has all but faded from investors minds since ECB President Mario Draghis famous pronouncement on July 26, 2012 that he would do whatever it takes to save the monetary union. Since that time, equity markets in Europe rallied sharply as accumulated risk aversion fell away.

2014-02-19 Checking in on Earnings by Chris Maxey, Ryan Davis of Fortigent

Earnings season is nearing its finale, and the latest results show plenty of reason to be bullish, but the longer-term trend remains an outstanding question for markets.

2014-02-12 Was the labor report positive, or negative, anyone? by Chris Maxey and Ryan Davis of Fortigent

Stocks were modestly positive last week following three straight weeks of negative performance. Markets crawled back following an ugly Monday in which the S&P 500 suffered its worst loss in more than seven months. For the week, the S&P rose 0.9% while the Dow Jones Industrial Average added 0.7%.

2014-02-09 A Most Dangerous Era by John Mauldin of Millennium Wave Advisors

This week we were confronted with a rather troubling appendix in the Congressional Budget Office (CBO) analysis of the Affordable Care Act, which suggests that the act will have a rather profound impact on employment patterns.

2014-02-04 Investors Should Focus on Wages, Not Jobs by Chris Maxey, Ryan Davis of Fortigent

This Friday investors receive the first official labor market report of 2014. Following a highly disappointing jobs figure in December, many market participants hope to see a rebound - particularly one that will help justify the Fed’s decision last week to continue tapering its asset purchases.

2014-01-28 An Active Management Turning Point? by Chris Maxey, Ryan Davis of Fortigent

Active managers faced a difficult road in recent years, leading to many questions about the efficacy of active versus passive investment management. There are signs that the tide is once again changing in favor of active managers and the road ahead could offer happier times.

2014-01-07 Is 2014 the Year That Alternatives Matter Again? by Chris Maxey, Ryan Davis of Fortigent

In the wake of the financial crisis of 2008, investors piled into alternative investments en masse to help insulate their portfolios from another dramatic market decline. For those who had not yet bought into the idea of improving portfolio risk-adjusted returns, the 50% drawdown in the S&P 500 provided all the convincing needed.

2013-12-26 Newsletter by Harold Evensky of Evensky & Katz

I admit it, I do occasionally pick on Money Magazine and other consumer financial publications, but as I’ve written in the past, for the most part, Money does a great job of educating consumers. Its story on Lessons from the Crash "Lehman Brothers’ collapse in September 2008 sent stocks on a terrifying ride. A year-by-year look back reveals five key takeaways you need to heed today" is an excellent example. Here are Money’s "Lessons."

2013-12-17 Will 2014 Bring an End to Central Bank Intervention? by Chris Maxey, Ryan Davis of Fortigent

Nearing the final two weeks of the year, it is customary to look forward to the trends and events that will shape the coming year. A theme that may come to the fore in 2014 revolves around central bankers, specifically the diverging fates in various economies of the world.

2013-12-09 Gauging Tapering Post November Jobs Report by Chris Maxey, Ryan Davis of Fortigent

With another month down in 2013, last week came time to dissect the latest report on employment. If the market reaction was indicative, the highly anticipated November labor report did not disappoint, sending stocks up more than 1% on Friday.

2013-12-05 10 for \'14 by Richard Bernstein of Richard Bernstein Advisors

Each December we publish a list of investment themes that we feel are critical for the coming year. We continue to believe the US stock market will continue its run through one of the largest bull markets of our careers. Our positive outlook extends to the following areas: US Equities, Japanese Equities, European small cap stocks, high yield municipals.

2013-12-03 Fixed Income Markets Slog Forward by Chris Maxey, Ryan Davis of Fortigent

The past five years have seen a dramatic influx of investor capital into corporate credit markets. As investors jumped into the market, there is growing concern that credit markets are nearing stretched valuations. Those concerns are likely premature, particularly with central bank intervention in place.

2013-11-19 Where Will the Holiday Shopping Season Lead Us This Year? by Chris Maxey, Ryan Davis of Fortigent

The unofficial start to the holiday shopping season kicks off in a few short days. Economic uncertainty abounds, raising fears that consumers will pull back from spending, but some positive developments suggest consumers will be just fine.

2013-11-14 This May Sting Just a Bit: Global Diversification by Jeff Hussey of Russell Investments

Russell Investments’ global chief investment officer argues that times when global diversification falls out of favor might provide opportunities for investors.

2013-11-12 Currency Markets Show Signs of Reversal by Chris Maxey, Ryan Davis of Fortigent

A mixture of surprising economic data and changing central bank policy led to sharp moves in currency markets last week. This came after several gyrations in FX markets earlier this year. Looking forward, volatility is likely to remain, but many signs point towards a strengthening U.S. dollar.

2013-11-05 Ex-US Property Bubble Peaking? by Chris Maxey, Ryan Davis of Fortigent

For several years now, a common storyline on China was the immense overcapacity in the country’s housing market. A mixture of easy credit policies and officials’ explicit economic growth plans based on capital investment yielded construction on a massive scale across the countryside. So-called ghost towns emerged as the pace of building and the migration of rural citizens into these cities fell out of sync.

2013-10-24 The Pillars of Commodities Investing by Miguel Perez-Santalla of BullionVault

As an advisor your job is to know the most secure places to invest one’s money. This difficult task only becomes more difficult when confronted with demands for an alternative investment.

2013-10-08 The Death of Fixed Income? Not so Fast . . . by Giordano Lombardo of Pioneer Investments

Recent market movements have reminded investors that the fixed income market is facing a secular change, after a 30-year-long bull market driven by a continuous decline in interest rates. I believe the announcements of the death of fixed income as an asset class are greatly exaggerated, and in order to face the new reality, fixed income investors and asset allocators need to adopt a significant change of approach.

2013-09-27 Achievement Awards Announced at the 2013 Insider’s Forum Conference and Leadership Forum by Bob Veres (Article)

The first annual Insider’s Forum conference attracted more than its share of industry leaders. But two of its more prominent attendees received special recognition for their contributions to the financial planning/investment advisory profession.

2013-09-21 Rich City, Poor City by John Mauldin of Millennium Wave Advisors

This week we will conclude our look at pension plans for the nonce with a 30,000-foot overview of the states and then take a deeper dive into one city: mine. This will give you at least one version of how to do your own homework about your own hometown. But fair warning, depending on your locale, you may need medical help or significant quantities of an adult beverage after you finish your research.

2013-09-14 Nothing But Bad Choices by John Mauldin of Mauldin Economics

Crises in government funding don’t simply arrive on the doorstep unannounced. Their progress toward the eventual Bang! moment is there for all the world to see. The root cause is almost always the same: debt. And whether that debt is actually borrowed or is merely promised to the populace, when the market becomes worried that the ability of the government to fund its promises is suspect, then the end is near. Last week we began a series on what I think is an impending crisis in the unfunded pension liabilities of state and local governments in the United States.

2013-09-10 Check or Checkmate... by Blaine Rollins of 361 Capital

The White House’s goal is to persuade Congress to authorize a limited military strike against Syria to punish it for a deadly chemical weapons attack. But after a frenetic week of wall-to-wall intelligence briefings, dozens of phone calls, and hours of hearings with senior members of Mr. Obama’s war council, more and more lawmakers, Republican and Democrat, are lining up to vote against the president.

2013-09-04 Fixed Income - Where to Now? by Chris Maxey, Ryan Davis of Fortigent

Since the end of the Global Financial Crisis (GFC), investors moved aggressively into fixed income asset classes. They were quickly rewarded in the years following the crisis with a combination of falling interest rates and tighter credit spreads, which led to positive absolute returns. The easy money in fixed income is gone, however, and now is the time for careful asset class selection.

2013-09-04 Weekly Market Review Notes by Team of Tuttle Tactical Management

In August the US Stock Market had its worst month since May 2012 and there are a bunch of interesting issues going into September, including Syria, Problems in Emerging Markets,and Fed tapering.

2013-09-03 So Step Right Up, Pick Your Favorites... by Blaine Rollins of 361 Capital

So with the backing of The White House, the State Department, the Senate & The Economist, the United States is going to launch Tomahawks on Syrian targets. The President did say that he will let Congress vote on a strike, but both he, Secretary Kerry and Senator Reid let it be known that they will be lighting fuses soon. So as a refresher as to who is supporting whom in Syria, the chart below will both assist and thoroughly confuse you...

2013-08-23 What Does an Improving Economy Mean for Stocks and Bonds? by Charlie Dreifus of The Royce Funds

With the economy improving, inflation tame, and a Federal Reserve meeting approaching in September, Portfolio Manager and Principal Charlie Dreifus believes that small-caps remain an attractive option within the equities market.

2013-08-20 Target-Date Funds: Why Higher Equity Allocations Work by Joe Tomlinson (Article)

Following the 2008 financial crisis, target-date funds (TDFs) were criticized for exposing investors nearing retirement to excessive equity allocations. Were those criticisms justified? How well do TDFs stack up against the venerable strategy of matching one’s bond allocation to one’s age? My research has yielded surprising answers to those questions and to the proper role of single-premium immediate annuities (SPIAs) alongside TDFs.

2013-08-17 Signs of the Top by John Mauldin of Millennium Wave Advisors

The investment media seems obsessed with the question of whether the Fed will taper. The real question should be not about "tapering" but about credibility. What happens when fundamentals become the narrative as opposed to what the central bank is doing? What happens if the Federal Reserve throws a liquidity party and nobody comes? Today we look at some of the fundamentals. The market is in fact overvalued, but that doesn’t mean it can’t become more overvalued. Is this August 1987 or August 1999?

2013-08-08 What is Risk? by Chris Engelman of Cedar Hill Associates

There are no rewards from investing without some measure of risk. Risk management, a process for recognizing, assessing and prioritizing a variety of risks, is an essential part of managing a portfolio successfully. Cedar Hill takes a holistic approach to risk management by identifying each client’s objectives, preferences and constraints, then creating specific asset allocation and implementation strategies to minimize the effects of negative events.

2013-07-30 Revisiting “The Cost of Socially Responsible Investing” by Paul A. Ruud (Article)

Endowments have been warned that socially responsible investing incurs a financial cost, based on research by two prominent academicians. But that research which has been presented and debated in this publication is based on a tenuous model that is highly sensitive to its assumptions. Change those assumptions reasonably, as I did in my research, and the cost of SRI becomes trivial.

2013-06-26 Sock Puppet Kabuki; Nikkei Today Parallels Dot-Com Bust by Peter Schiff of Euro Pacific Capital

The Japanese stereotype of excessive courtesy is being confirmed by the actions of prime minster Shinzo Abe who is giving the world a free and timely lesson on the dangers of overly accommodative monetary policy. Whether or not we benefit from the tutorial (Japan will surely not) depends on our ability to understand what is currently happening there.

2013-06-21 Austerity is a Four-Letter French Word by John Mauldin of Millennium Wave Advisors

The France that I see as I look out from the bullet train today is far different from the France I see when I survey the economic data. Going from Marseilles to Paris, the countryside is magnificent. The farms are laid out as if by a landscape artist this is not the hurly-burly no-nonsense look of the Texas landscape. The mountains and forests that we glide through are glorious. It is a weekend of special music all over France, and last night in Marseilles the stages were alive and the crowds out in force.

2013-06-11 Risk Parity - New Thinking or New Packaging? by Chris Maxey, Ryan Davis of Fortigent

Ever since Harry Markowitz brought forth the notion of mean-variance optimization in 1952, academics and practitioners alike have sought ways to build more robust asset allocation methodologies. Recently, the most talked about approach in the institutional world is risk parity, which seeks to focus on risk as its primary input. Risk parity is intuitively appealing, but suffers many pitfalls that investors need to consider.

2013-06-03 Does Sector Shift Spell A Continued Rally? by Chris Maxey, Ryan Davis of Fortigent

Unlike most robust equity rallies, however, 2013 performance was initially led by traditionally defensive sectors, such as health care, utilities, and consumer staples. Through the first quarter, those three sectors posted an average return of 14.5%, while traditional cyclicals averaged just 9%. While some speculated this trend was due to investors’ reach for yield amid a frothy fixed income environment, the magnitude of this sector leadership (in an up move) was certainly unusual.

2013-05-29 Is the Fed in the Home Stretch? by Chris Maxey, Ryan Davis of Fortigent

Global equity markets stammered through a choppy environment last week following increased fears that certain central banks were considering the possibility of pulling stimulus sooner than anticipated. Markets have long been dependent on central banks, but the notion that policymakers could head for the exits leaves investors unsure how to react.

2013-05-21 Why the Lack of Inflation Is a Problem by Chris Maxey, Ryan Davis of Fortigent

Given the outsized role central banks are playing in today’s financial markets, inflation watching has taken on increased significance.It is widely assumed that continued easy money policies are only possible as long as price increases remain under control.At the same time, for a global economy trying to escape an extended period of weak growth and burdensome debt loads, low inflation is a double-edged sword.

2013-05-14 Housing Finally Breaks Free by Chris Maxey, Ryan Davis of Fortigent

Housing, which for so many years represented everything bad about the credit crisis, is finally beginning to have its day back in the sun. Trends in housing markets around the country are improving, to the benefit of the overall economy. It appears that trend is set to continue.

2013-05-07 Central Banks Steal the Spotlight Once Again by Chris Maxey, Brian Payne of Fortigent

Central banks around the world continue to provide increased stimulus to their respective economies. Increased conviction over pro-stimulus policies comes in light of recent flaws found in the Reinhart, Rogoff January 2010 paper, which suggested that government debt of more than 90% of GDP is detrimental to economic growth. The latest week brought another round of news in the world of central banking, although it seems the number of options left on the table is running short. What central bankers hope for now is that economies will finally enter recovery mode.

2013-04-30 Is May Really the Time to Go Away? by Chris Maxey, Ryan Davis of Fortigent

As investors near the witching hour of May, the oft-asked question once again comes to the foreground is it best to sell in May and walk away? This year could prove the exception to recent history, but a number of trends are beginning to take shape inside the market’s inner workings.

2013-04-23 Q1 Earnings Leave Much To Be Desired by Chris Maxey, Ryan Davis of Fortigent

Following the strongest first quarter in 15 years, it is not surprising to see equity markets faltering in April. Last week’s decline of 2.1%, however, may reflect deeper concerns about corporate fundamentals amid a mixed earnings season.

2013-04-16 Tax Day as Polarizing as Ever by Chris Maxey, Ryan Davis of Fortigent

Tax season is once again upon the American population, and this year, just as in years past, people are less than enthusiastic. It is estimated that the average taxpayer contributed slightly more than $11,000 dollars to federal taxes in 2012 and those figures are on the rise. As might be expected in the current backdrop, however, not everyone shares the same opinion on taxes.

2013-04-09 Labor Markets Stumble in March by Ryan Davis, Chris Maxey of Fortigent

In an unexpected development, labor markets fell flat during March. Following several months of healthy job growth, the economy was only able to muster 88,000 new jobs in March, well below economists’ expectations for nearly 200,000 jobs.

2013-04-02 Is the Vix Still an Adequate Measure of Risk? by Chris Maxey, Ryan Davis of Fortigent

The 30-day implied volatility index for the S&P 500 calculated by the Chicago Board of Options Exchange (CBOE), known as VIX, has long been used as an indicator of market sentiment. Commonly referred to as the “fear index,” the VIX often portends periods of stress in equity markets, as options traders price in higher volatility in the future. The shape of the VIX futures curve, in particular, has historically been used as an indicator of future volatility levels.

2013-03-26 Reacting to All Time Highs by Jeff Knight of Columbia Management

The financial press has been all a-flutter, of late, with talk of new highs across U.S. stock markets. Indeed, the Dow Jones Industrial Average set a new all time closing high in March. Meanwhile, the S&P 500, as of this writing, sits less than one percent below its all time high. The surge in these well known market bellwethers in recent months feels good, and no doubt tempts investors to bask in their portfolio gains, and to ease back in their fussing over the nuances of investment strategy.

2013-03-26 Throw the Book at Him by Jerry Wagner of Flexible Plan Investments

On February 2, Ground Hog Day, Punxsutawney Phil failed to see his shadow forecasting, and as legend has it an early spring. Yet on the first day of spring, I looked out my back window at a lake still more than half frozen with my view partially obscured by a wicked little snow flurry. So much for forecasts!

2013-03-13 What's Your Advantage? by Bill Smead of Smead Capital Management

In the March 9, 2013 issue of Barron’s, writer Jonathon Laing wrote an excellent piece about Howard Marks. This article provides the base from which we can discuss the main components of investment portfolio composition. These components are information, analysis of information, and decisions made from information and analysis. In doing so, we will bring to light why we believe today’s best opportunity is in long-duration common stock investing.

2013-03-12 Finally, a Jobs Report Worth Reading by Chris Maxey, Ryan Davis of Fortigent

Surprisingly, the February employment report showed a labor market growing at a reasonably healthy rate. Concerns that the sequester would spill into the broader economy have yet to materialize and if recent trends hold, the economy may finally be approaching a point of robust and sustainable job growth.

2013-02-27 Potential Threats to Equity Rally by Chris Maxey, Ryan Davis of Fortigent

Equity markets started a third consecutive year in rather impressive fashion, gaining more than 6% to date. With so much optimism in the investment community, it is always worth keeping an eye open for risks possibly overlooked. By now, it is apparent that investors are increasing their exposure towards equities with arms wide open. Data from the Investment Company Institute (ICI) estimates $39 billion flowed into equity mutual funds this year through February 13. Following outflows of $153 billion in 2012, the sudden reversal has been impressive.

2013-02-27 The Healthcare Blues by John Mauldin of Millennium Wave Advisors

It has been some time since we peeked into my worry closet. A few questions this weekend prompted me to think about things I am paying attention to but have not written about, and one thing that I am not worried about at all, despite the apparent media hysteria.

2013-02-20 Event Driven Investors Receive Their Wish by Chris Maxey, Ryan Davis of Fortigent

For several years, investors have wondered why M&A activity has been so benign.Corporate management teams cited uncertainty about the economic outlook as a primary reason for the depressed activity.With the latest round of tax increases and revenue cuts determined, companies finally appear willing to free their animal spirits and embark on the path of acquisition.

2013-02-12 Consumers Less Enthused to Bail Out the Economy by Chris Maxey, Ryan Davis of Fortigent

Following recent recessions, it was commonplace to rely on American consumers to bail out the economy. The reliance on the American consumer was widely understood as the best remedy for an ailing economy. We are not as fortunate this time around and our dependence on consumers is one reason for the sluggish rate of recovery since 2008.

2013-02-05 In Uncertain Environment, Jobs Grow Tepidly by Chris Maxey, Ryan Davis of Fortigent

For the 35th consecutive month, private payrolls registered positive growth. It was hardly the robust report economists would prefer, but the labor market continues to mend. However, there are still plenty of reasons to be concerned, especially with sequestration on the horizon.

2013-02-01 Fiscal Cliff: Making Decisions in Crisis Part III by Brian Singer of William Blair

The December 31 fiscal cliff was averted, but by the narrowest of conceivable margins. The resolution is consistent with our November analysis, but the narrowness leaves much to be resolved and prolongs uncertainty through March.

2013-01-31 Fiscal Cliff: Making Decisions in Crisis Part II by Brian Singer of William Blair

Having set a framework using strategic decision theory to interpret the choices of US politicians in response to their incentives around the "fiscal cliff," we now similarly turn our attention to the incentives (or disincentives) around the choices facing investors. While the general rise of uncertainty around changes to the rules of a game slow down the decision making process of investors, we consider the implications of a shifting tax burden on longer run equity valuations.

2013-01-30 Fiscal Cliff: Making Decisions in Crisis Part I by Brian Singer of William Blair

Having lost touch with mainstream America, neither the Republican nor the Democratic Party enjoys much governing ability. Second, politicians struggle to function as leaders, regardless of competence, as a result of party disengagement. Third, left to their own devices, politicians will respond to their individual incentives. Bringing these observations together, neither party platform nor leadership vision will provide as much guiding force as the incentives of each politician, sometimes individually and other times in coalition.

2013-01-29 In Japan We Trust by Chris Maxey, Ryan Davis of Fortigent

In fewer than 60 days, one country has made a splash larger than all the others. No, we are not referring to the US, where Barack Obama was re-elected to a second term. Nor are we referring to China's recent transition of power. Instead, the country we reference is Japan. After decades of malaise, Japanese officials moved to embrace policies previously only accepted by Western officials.

2013-01-23 Is the European Crisis Over? by Chris Maxey, Ryan Davis of Fortigent

The European sovereign debt crisis that first erupted in 2010 and stoked almost three years of intense market volatility has all but faded from the front pages. Overshadowed by domestic policy issues and European Central Bank (ECB) President Mario Draghi's pledge to do "whatever it takes" to save the Eurozone, fears that the monetary union would crumble and unleash a maelstrom of financial distress appear to have dissipated.

2013-01-16 Tax-Deferral Becomes More Urgent As Congress Seeks Fiscal Solutions by Mitchell Caplan of Jefferson National

Many Americans began the New Year relieved that the "fiscal cliff" had been averted, if only temporarily. But there is no escaping their biggest fearthat an increase in their federal tax bill is inevitable. Congress continues to hammer out the final details, but one thing is certain: anyone drawing a salary or receiving other income will be hit with more taxes. And the higher their income, the bigger the bite.

2013-01-15 Are Investors Buying into the Equity Story? by Chris Maxey, Ryan Davis of Fortigent

Last week we discussed the debate over active versus passive management. We believe active managers can add tremendous value in particular segments of the market, despite recent challenges. Outside of the active management discussion, many investors are deciding whether equities are a prudent place to allocate capital at this point in the market cycle. The first week of the year answered investors' opinions on that question loud and clear.

2013-01-08 Another Lost Year for Active Management by Chris Maxey, Ryan Davis of Fortigent

There is no doubt that 2012 will be remembered by many investors, for reasons both good and otherwise. One group less likely to remember the good of 2012 is active managers. Across the universe of hedge funds and mutual funds, relatively few were able to outperform their comparative benchmarks. This continues a long running trend of active managers lagging their less active counterparts and raises many questions about the efficacy of active management.

2012-12-18 What's Going Right? by Chris Maxey, Ryan Davis of Fortigent

Discussions of the fiscal cliff are capturing investor's attention, largely at the expense of trends pointing in the right direction. Year-end is synonymous with future prognostications, but current indicators suggest there is reason to be optimistic about the turn of the calendar this holiday season.

2012-12-05 Argentinas Trials & Trubulations by Chris Maxey and Ryan Davis of Fortigent

Equity markets climbed higher for a second straight week, extending a rally that began November 16. For the week, the S&P 500 rose 0.6% and the Dow Jones Industrial Average gained 0.2%. In the post-mortem on Q3 earnings season, much has been made of the first quarter of negative earnings growth in three years. However, analysis by Morgan Stanley reveals an even more disturbing picture of corporate America: just 10 companies in the S&P 500 delivered 88% of the indexs earnings growth. Of those 10, four accounted for more than half and Apple alone made up nearly one-fifth of the indexs growth.

2012-11-27 Are Equities Still Cheap? by Chris Maxey, Ryan Davis of Fortigent

Since reaching a near-term top in mid-September, the S&P 500 Index fell more than 7%. After a 4% rally in the last five trading days, there are reasons to believe equity markets are poised to extend recent performance despite headline concerns.

2012-11-27 Beta The One Trick Unicorn by Liam Molloy, Bethany Carlson of Galway Investment Strategy

For a long time investors have been told the only free lunch is diversification. In a hurry to buy into the mythical free lunch investors jumped in without asking enough questions, like what is diversification. Instead everyone hurried to fill buckets and cover the style boxes with about as much thought as someone filling out a March Madness office bracket.

2012-11-20 Companies Grapple With Pressure from All Sides by Chris Maxey, Ryan Davis of Fortigent

As we move closer to closing the books on another earnings cycle, it is time to look back at the hits and misses for the quarter. Unfortunately, this quarter brought more misses than investors have seen in quite some time, despite a greatly reduced bar. The outlook also leaves something to be desired, with companies cutting forward guidance and analysts ratcheting down estimates for the next two quarters.

2012-11-13 China's Transition Occurring at a Critical Time by Chris Maxey, Ryan Davis of Fortigent

While the presidential election in the U.S. was on the forefront of most investors' minds, current events in China could be equally important to the global economy. China is going through a political transition at the same time as it seeks to re-balance its economy. Whether those efforts will be successful remains a great unknown.

2012-11-05 Three Men Make a Tiger by John Mauldin of Millennium Wave Advisors

In a few hours we will know the outcome of the US elections (hopefully without a repeat of 2000!). So, given that eventuality, why should we bother to explore the rather significant disparity in the models being used to create the polls to predict the outcome of the elections? Because doing so will help us understand why the models we use to predict the effects on our investments of market behavior and macroeconomics so often fail us, and why we should approach the use of such models with a full measure of wariness and skepticism.

2012-11-05 Election's Impact on Investors by Chris Maxey, Ryan Davis of Fortigent

Next Tuesday's election will bring some clarity to the types of policies that will shape the fiscal and economic future of America. President Obama and Mitt Romney certainly share different visions on how the US should tackle middling growth, while addressing the longer-term issues of the US fiscal deficit and seemingly unsustainable entitlement programs.

2012-10-29 Waiting for Treasuries to Reverse Course by Chris Maxey, Ryan Davis of Fortigent

In the years since the global financial crisis, investors have funneled money into fixed income securities. This year alone, more than $260 billion found its way into fixed income mutual funds. In an environment desperate for yield-oriented solutions, such demand is not surprising. What might be considered surprising, however, is investors' willingness to embrace such yield with extraordinary risk attached.

2012-10-19 House of Mirrors by Jeremy Boynton of Laureate Wealth Management

Did you ever try to navigate the "House of Mirrors" as a kid at your local carnival? You know the one I mean ---- where you walk through a labyrinth of mirrors designed to confuse your orientation while mocking you with various distortions of your body? If you were particularly skilled, you could use the mirror to your own advantage. What a compelling metaphor for the current state of the financial markets.

2012-10-09 A Small Business Complex by Chris Maxey, Ryan Davis of Fortigent

Despite the release of the September labor report on Friday, small business owners seemed to take the biggest proportion of the spotlight last week. According to the Huffington Post, Romney and Obama mentioned the phrase "small business" a total of 29 times throughout the Presidential debate. The issues and importance placed on small business are unlikely to be as cut and dry as both candidates made them seem.

2012-09-29 Uncertainty and Risk in the Suicide Pool by John Mauldin of Millennium Wave

Investors in the stock market, especially professionals, are obsessed with risk, your humble analyst included. We try to measure risk in any number of ways, looking for an edge to improve our returns. Not only do we try to determine probable outcomes, we also look for the 'fat tail' events, those things that can happen which are low in probability but will have a large impact on our returns.

2012-09-27 How Can Balanced Investors Mitigate Their Equity Risk? by Daniel Loewy of AllianceBernstein

Over the past three decades, bonds have provided balanced investors with the best of both worlds. As 10-year Treasury yields fell from a high of 13.7% in 1980 to less than 2% today, bonds provided both strong returns and a great cushion in times when equities were weak. Bonds are still important, but investors shouldn't expect more of the same.

2012-09-24 Who Deserves Blame (Or Credit) For Current Tax Policy? by Ryan Davis of Fortigent

U.S. Presidential candidate Mitt Romney received sharp criticism this week for his comments regarding the "47% of people who pay no taxes." Regardless of one's political stance, Romney's comments were instructive in highlighting a very real problem. The notion that Republicans or Democrats deserve blame for the current challenges is shortsighted, however, because both parties were contributing members to the current legacy.

2012-09-17 A Fed Fueled Rally by Chris Maxey of Fortigent

The week was overshadowed by policy actions from the Federal Reserve, which led to a 2.2% gain in the Dow Jones Industrial Average and a 1.9% increase in the S&P 500 Index.

2012-09-10 Are Labor Markets the Key to Fed Easing? by Chris Maxey of Fortigent

Widely reported last week was anemic labor market growth in August. Some talking heads took this news in stride, assuming this would guarantee further market intervention by the Fed, but there is a danger in assuming any form of quantitative easing will alleviate the intermediate-term concerns of the market.

2012-09-04 All QE, All the Time by Chris Maxey of Fortigent

In a week of relatively light trading to wrap up the summer, equity markets trickled lower, as the Dow Jones Industrial Average lost 0.5% and the S&P 500 Index fell 0.3%. It was a mixed week of economic data in the U.S., but markets were clearly locked in on Ben Bernanke's speech in Jackson Hole, Wyoming. News on housing seems to confirm that a bottom is in place, while manufacturing data continues to move in all different directions.

2012-08-25 Boomers are Breaking the Deal by John Mauldin of Millennium Wave

We look at the trends in employment as well as take note of a signpost we passed on the way to finding out that we cant pay for all the future entitlements we have been promised.

2012-08-22 5 Counterintuitive Reasons Why the Investment Vehicle of the the Decade is ... Stocks by Rob Isbitts of Sungarden Investment Research

These days there are more varieties and combinations of investments than selections on a Starbucks menu -- but that's not necessarily a good thing. Now, you can invest in emerging markets, dividend-paying stocks, bonds from Africa and commodities that only farmers and professional speculators used to traffic in. Heck, clients can even tell an advisor they would like a double-long, midcap equity ETF.

2012-08-21 Inflation Subdued, But Will It Last? by Chris Maxey of Fortigent

As the economy continues to grind along at a sub-optimal rate of growth, many pundits are calling for additional quantitative easing measures from the Federal Reserve. Recent inflation data keeps the door open for further easing, but pockets of higher prices exist, keeping the Fed at bay.

2012-08-17 How Change Happens by John Mauldin of Millennium Wave

This is an encore appearance of the letter that is clearly the most popular one I have ever written, updated with a few thoughts from recent times (it was also part of a chapter in Endgame). Numerous reviewers have stated that this one letter should be read every year. As you read, or reread, Ill be enjoying a week off.

2012-08-11 And Then There Is Disaster C by John Mauldin of Millennium Wave

I have contended for some time that Europe is faced with two choices: Disaster A, which is the break-up of the eurozone, or Disaster B, which is the creation of a fiscal union, which keeps the euro more or less intact. Over the last few months I have come to realize that there is indeed a third option, which now looks increasingly possible. European leaders might do nothing more than deal with the problem immediately in front of them, moving from crisis to crisis in a slow-motion drift toward fiscal union.

2012-07-28 Gambling in the House? by John Mauldin of Millennium Wave

The problem that gave rise to the LIBOR scandal is the lack of transparency. Why would banks want to reveal how much profit they are making? The last thing banks want is transparency. This week I offer a different take on LIBOR, one which may annoy a few readers, but which I hope provokes some thinking about how we should organize our financial world.

2012-07-24 Optimal Strategies for Secular Market Cycles by Michael Kitces (Article)

With alternative investments and active management strategies growing ever more popular, an advisor recently told me, 'It's just a fad and will end with heartache as all investment fads do. I've watched it play out over and over during my 30-year career.' But I am not persuaded. The secular market cycle today is different from the bear market 30 years ago, and not all market cycles favor the same investment strategies.

2012-07-09 The 4 Biggest Investment Performance Myths - and How They Can Torpedo Advisor-Client Trust by Robert Isbitts of Sungarden Investment Research

In 26 years in the investment industry, I have seen investor and advisor behavior from many different angles: as an advisor, portfolio manager, strategist, author and proprietor. Two things have been quite consistent during that quarter-century: 1) That clients and advisors both care deeply about investment performance and 2) that investment performance is rarely evaluated with proper perspective.

2012-07-07 Into the Matrix by John Mauldin of Millennium Wave Advisors

What does the current environment of earnings and valuations tell us about the prospects for the US stock markets in general over the next 3-5-7-10 years? This week we have part two of "Bull's Eye Investing Ten Years Later," which we started last week. These two letters have been co-authored with Ed Easterling of Crestmont Research. We take a look at research we did almost ten years ago as part of my book Bull's Eye Investing, updating the data and asking,"Are we there yet? When will we get to the end of the secular bear market?"

2012-07-02 Nightmare on Wall Street: This Secular Bear Has Only Just Begun by Ed Easterling of Crestmont Research

Secular bull markets are great parties. Investors arrive from secular bears really wanting to take the edge off. As the bull proceeds, above-average returns become intoxicating. By the time it is over, the past decade or two has delivered bountiful returns. In contrast, secular bears seem like hangovers. They are awakenings that strip away the intoxication, leaving a sobering need for an understanding of what has happened.

2012-07-02 Has Housing Stabilized? by Ryan Davis of Fortigent

In the past two weeks, several important indicators have illustrated a market that, while not quite in a state of recovery, appears to be stabilizing. This sentiment was echoed in the latest Beige Book released by the Federal Reserve, which reported, several Districts noted consistent indications of recovery in the single-family housing market, although the recovery was characterized as fragile.

2012-06-30 Bull's Eye Investing (Almost) Ten Years Later by John Mauldin of Millennium Wave Advisors

The current valuation of the stock market is relatively high, but it is not overvalued, considering today's conditions. Low inflation-rate conditions should be accompanied by relatively high P/Es. But if deflation or high inflation (or both) are likely upcoming, the market is very expensive. On the other hand, if the inflation rate happens to remain near price stability, then this secular bear could remain active a while longer but how likely is that?

2012-06-16 The Bang! Moment is Here by John Mauldin of Millennium Wave Advisors

We know that money is simply flying out of Greek banks. A number of them are clearly insolvent, yet they are meeting demands for withdrawals. Where is the cash coming from? The answer is in the form of yet another acronym from Europe, called the ELA.

2012-05-31 Charting the Benefits of a Diversified Approach by Team of American Century Investments

Weve written quite a bit about diversification recently. Rather than tell you about the potential benefits of a diversified approach, we thought wed use this initial issue of Chart of the Week to show you how a diversified portfolio can potentially smooth out performance and improve cumulative returns over time.

2012-05-22 Finding Alpha with Active Managers by Jay Feeney of Robeco Investment Management

Many investors are convinced that alpha has disappeared from U.S. equity markets and prefer to use passive investment tools such as exchange traded funds (ETFs) to broadly gain exposure to these markets. The problem with this approach is that it gives up any chance of outperformance and forces an investor to settle for benchmark returns minus fees. It also ignores the fact that alpha potential does exist. Although many active managers have not done a good job in capturing alpha, there are many who have outperformed over time, producing very sizeable excess returns.

2012-05-21 Markets Fall on Negative Europe Sentiment by Chris Maxey and Ryan Davis of Fortigent

Worries over the European sovereign debt crisis worsened this week as Greeces political instability increased concern that the country could depart the Eurozone. Greece saw a virtual run on its banks during the week, as depositors withdrew 1.2 billion in two days on fears of massive devaluation from a return to the drachma. While this represented just 0.75% of Greek deposits, it foreshadows a potentially larger crisis if a Greek Eurozone departure becomes imminent.

2012-05-15 Earnings Seasons Recap: Is Corporate Strength Fading? by Chris Maxey and Ryan Davis of Fortigent

Strength in the corporate sector since the recession ended has been well documented. In the face of general economic malaise, record profits have been achieved through aggressive cost-cutting and low financing costs. This phenomenon has been one of the major pillars propping up the markets (with the other being central bank policy). Now with Q1 earnings season all but over, it is not unreasonable to question whether that corporate strength is fading. Initial impressions of first quarter earnings season were very favorable after the first big wave of earnings releases.

2012-05-08 Sentiment Readies for a Tumultuous Fall by Chris Maxey and Ryan Davis of Fortigent

Market sentiment has oscillated quite rapidly in recent months on the heels of dramatic market intervention by the ECB and shifting views of global economic stability. Sentiment is likely to remain unstable in the months ahead as investors grapple with any number of events, from elections in Europe and the US to the end of recent monetary easing efforts domestically. While markets have rallied substantially over the past six months, retail investors are maintaining a somewhat neutral view on their allocations.

2012-05-01 Is Now The Time To Brace For Another Volatile Summer? by Chris Maxey of Fortigent

In the latest week, the Federal Open Market Committee reiterated its stance that economic conditions are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014. While rates will remain low for now, the Fed will need to fend off other challenges in the months ahead, ones that could send investors racing for the beach sooner than normal. The biggest challenge for the Fed and the economy in the coming months is in the form of Operation Twist. The hope was that such actions would drive down interest rates and encourage borrowing of all forms.

2012-04-17 Earnings on a Hot Plate by Chris Maxey of Fortigent

While the economy has displayed fits and starts of entering a sustained recovery over the past several years, there has been no doubt about the ability of companies to reshape their balance sheets and refocus their businesses. In the midst of first quarter earnings season, there are some concerns that the corporate hot streak will come to an abrupt end, but the reduction in earnings expectations since late last year appears to be favoring another positive earnings season.

2012-04-12 Diversification 201: Implications of Diversification for Investor Behavior by Team of American Century Investments

Here we look at diversification as a tool to address many classic failings identified by the science of behavioral finance. Earlier we explained the rationale behind diversification and how it can be used for structuring a portfolio to help manage risk and maximize risk-adjusted performance. We also provided an Intro to Alternatives meant to highlight the types of strategies that can be used to diversify a traditional portfolio. In future months well address such topics as diversification in a post-Financial Crisis world, and what types of diversification strategies make the most sense.

2012-04-10 China Experiencing Growing Pains by Chris Maxey and Ryan Davis of Fortigent

For most of the past two years, investors have been pre-occupied with the fiscal catastrophe in Europe and with good reason. However, the relative health of the worlds second largest economy arguably deserves more headline space. A year ago, Chinas stock market led the broader emerging markets down due to pervasive inflation concerns. Official figures reached as high as 6.5%, and some reports of pork and other food price inflation reached double-digit levels. Chinese authorities were forced to slow down the pace of their economy by raising bank reserve ratios and key lending rates.

2012-04-03 Fewer, Richer, Greener: Why Jeremy Grantham is (Partly) Wrong by Laurence B. Siegel (Article)

Is the human experience getting better or worse? This is a big question investors are rarely asked to confront, yet its answer has profound consequences for market returns.

2012-04-03 The Value of Sentiment Polls by Bill Smead of Smead Capital Management

In our opinion, those who are very bearish about the US stock market need a substantial price increase to trigger historically extreme newsletter writer sentiment. Those who are optimistic should prefer a temporary correction or sideways movement to reinforce fear on the part of the crowd. This would cause the bullish and bearish readings to gravitate to toward each other and remove the risk of having some temporary hell to pay for those of us who seek to practice long-duration common stock investing.

2012-04-03 Have Investors Moved Past Europe? by Chris Maxey of Fortigent

At the end of 2011, the Long-Term Refinancing Operation brought a modicum of stability to financial markets in Europe.When coupled with the orderly default of Greece, the situation in Europe is seemingly on a road to more pleasant ground. Just as soon as investors place Europe in their periphery, however, problems once again begin bubbling to the surface.In recent weeks, the spotlight has turned to Spain, where unemployment is near 24% and the government is expected to run a 5.9% budget deficit for 2012.

2012-03-27 Buy Commodities, Sell Brands by Bill Smead of Smead Capital Management

Warren Buffett was quoted the other day saying, We like companies which buy a commodity and sell a brand. We thought it would be very helpful to unpack his thought and put it into the context of today. We believe these current circumstances are framed by the historical over-pricing of commodities, the coming economic contraction of China, the successful cleansing of the income statements of US households and the inevitable rebound in housing in the US. We will look at the makeup of our portfolio companies which buy a commodity and sell a brand to consider their upside in this environment.

2012-03-20 An Actively Passive Debate by Chris Maxey of Fortigent

The debate surrounding active versus passive investment management continues to attract a growing share of investor interest. After several years of underperformance, active managers are finally outperforming their benchmarks YTD, but it may be too late. Investors, frustrated with the underperformance and higher fees, are piling en masse into exchange-traded funds (ETFs) and other low cost solutions. The time for an all-passive solution may not be right now, but active managers are undoubtedly concerned about what the future may hold.

2012-03-17 Where Will the Jobs Come From? by John Mauldin of Millennium Wave Advisors

We will look at why employment is so critical. How are jobs created and what policies can be adopted to help foster more jobs? Should the US try and keep jobs that are going overseas, or develop whole new industries? Who exactly is the competition globally for jobs?

2012-03-15 Diversification 101 by Rich Weiss of American Century Investments

In this edition of Weekly Market Update, Rich Weiss, discusses diversification-the rationale, the benefits, and ways to apply this approach. This is the first in a series of monthly write-ups on the topic with future pieces devoted to topics such as the state of diversification in a post-financial crisis world; portfolio rebalancing; and when and what types of diversification strategies make the most sense, among other topics. Outfitted with this information, investors can make better investment choices, improving portfolio diversification and risk-adjusted performance now and into the future.

2012-03-09 Earning Real Income With Real Estate by Team of Emerald Asset Advisors

The oldest mantra about investing in real estate holds that the key to success is location, location, location. While there is always the chance that real estate investments will produce capital gains (or losses), we believe a better reason to consider real estate investments is for income, income, income. That's especially true in today's ultra low rate environment. While the words "real estate" conjure images of the woeful state of the residential real estate market, the commercial real estate market is in much better fundamental shape.

2012-03-09 Long-Short Funds Lead Greenwich Indices in February by Clint Binkley of Greenwich Alternative Investments

Hedge funds turned in another month of gains across all major strategies, notes Clint Binkley, Senior Vice President. Results from Long-Short Equity funds show that managers are increasing net exposures as they become more confident about economic conditions. Although some managers continue to expect a market correction, most believe it will be mild as institutional investors are still waiting for opportunities to add to their positions.

2012-03-06 Continued Struggle Between Borrowing and Lending by Chris Maxey of Fortigent

Nonfarm payrolls and the unemployment rate headline the weeks economic data. Consensus expects another 200K+ gain in payrolls and no change in the unemployment rate. Other major economic data of note includes the ISM Non-Manufacturing index and the US trade balance. Abroad, there are important releases on tap including Q4 EU GDP and EU retail sales. Both the ECB and Bank of England meet this week, but neither is expected to adjust their key interest rates. Other central banks meeting include Russia, Australia, Brazil, Poland, New Zealand, Indonesia, South Korea, Canada, Peru, and Malaysia.

2012-03-02 Positioning Your Portfolio When You Dont Have All the Answers by Josh Thimons of PIMCO

Faced with difficult questions like the European debt crisis, portfolio managers have two possible courses of action: feign omniscience and seek to position portfolios for one outcome, or admit to not knowing the answer and seek to position portfolios to prosper in the most likely scenarios and hold ground in the least. We believe the latter is the better course because two extreme outcomes appear increasingly likely for almost all asset classes, which increases the risk involved in choosing the wrong answer.

2012-02-28 Oil Prices, Mixed Data Slow Market Gains by Chris Maxey and Ryan Davis of Fortigent

The continued march higher in oil prices is filtering its way down to consumers in a less-than-favorable way. By the end of the week, the average price for a regular gallon of gas was $3.65, 30 cents higher than the price one year ago. Consumers are all too familiar with the taxing effect of higher gas prices, particularly given the extreme run up early last year. Interestingly, the number of Google searches for gas prices recently overtook those for Greece, suggesting that the domestic economic situation is trumping consumers concern about an overseas shock.

2012-02-25 Tax That Other Guy by John Mauldin of Millennium Wave Advisors

Last week's letter on taxes drew more response than any letter I have written in years. Questions that were raised simply beg for an answer, and some of the replies were very thoughtful, well-written suggestions for alternatives. This week I am going to do something I can't ever remember doing, and that is to use the entire letter to involve and respond to my readers.

2012-02-22 Tick, Tock Goes the Inflation Clock by Chris Maxey of Fortigent

Despite this short-term good news, the cloud hanging over Europe promises to remain for some time. As expected, the first glimpses of fourth quarter GDP reveal a region under severe economic pressure. Growth in the European Union contracted 0.3%, the first such decline since the recession. Most member countries saw their economies shrink, including Germany (-0.2%), Italy (-0.7%), and Spain (-0.3%). On the bright side, France actually surprised consensus with a 0.2% expansion.

2012-02-16 Weekly Market Update: Introduction to Alternative Investments by Team of American Century Investments

Alternative investments (or alts as they are commonly known) have exploded in popularity in recent years. What began as specialty investment strategies utilized by only the most sophisticated institutional investorssuch as pension plans and university endowmentsare now readily available to retail investors through a number of mutual funds and exchange-traded funds. Here we try to explain alts appeal in broad terms, discussing how these strategies are used and what role alts may play in an individual investors portfolio.

2012-02-14 A Dejected Asset Class Finds Its Way in 2012 by Chris Maxey of Fortigent

Investor interest is acutely focused on the developed world, specifically Europe and the US. All the while, developing countries continue to be better positioned fiscally, with lower debt and better long-term growth prospects. Despite the outlook, stock markets in emerging markets are largely at the mercy of their counterparts in Europe and the US, suffering in lockstep as opposed to embracing the decoupling phase that was supposed to have begun in 2007. According to the IMF, emerging and developing economies grew 6.2% in 2011, compared to a 1.6% growth rate in advanced economies.

2012-02-10 Indices Show Hedge Funds Off to Strong Start in January by Clint Binkley of Greenwich Alternative Investments

"US equities rallied significantly to begin 2012 and Long-Short managers are the best performers thus far. Hedge funds focused on Market Neutral strategies were also surprisingly strong as both Arbitrage and Event-Driven managers posted their best results in months. Despite investors being drawn into risk-on sectors of the market, most funds remain cautious with the economic situation in Europe still unresolved, notes Clint Binkley, Senior Vice President.

2012-02-10 A Stock for its Dividends - Revisited by Jesper Madsen of Matthews Asia

Since investors often turn to Asia looking for growth, they may overlook that the region offers a well-diversified universe of dividend-paying companies in terms of sectors and countries. This month Jesper Madsen revisits the notion that the Asia Pacific region should play an essential role for investors seeking yield and growth in income.

2012-02-09 Q411 Portfolio Commentary by Jay Compson of Absolute Investment Advisers

We continue to stress that investors remain patient. Given that we are likely in the 1% of money managers that look beyond the next 30 days, it is inevitable that the markets will move counter to our positioning. This is to be expected and is consistent with the Fund's historical performance.We continue to remain disciplined and receive counsel from the investing bible: Graham and Dodd's Security Analysis. For those few true value investors left, it's worth noting that nowhere is the phrase "margin of safety" defined by quantitative easing, government stimulus, or bank bailouts.

2012-02-07 Corporate Earnings Hit a Rough Patch by Chris Maxey of Fortigent

The week started slow, however, with a mixed personal income and outlays report from the Bureau of Economic Analysis. While consumer spending was flat in December, incomes grew 0.5% above expectations and the biggest gain since March. The lack of spending growth is concerning, but somewhat expected given stagnating wage growth. Spending to this point has largely been financed through savings, making Decembers income boost a much welcome improvement for consumers.

2012-02-04 Who Took My Easy Button? by John Mauldin of Millennium Wave Advisors

There is no way enough money can be found to fund our entitlement programs, given the current system, even under the best of assumptions. Things must change. Either we will make the difficult choices or those changes will be forced by the market. The longer we put off the difficult choices, the more painful the consequences. This week we begin a series on the choices facing the US. We need to understand the consequences of the choices we make. Cut spending, say some. Tax the rich, say others. Cut out waste and corruption is always a popular choice. Do all of the above, intone others.

2012-01-31 America's Economic Engine Still Healing by Chris Maxey of Fortigent

A thin week of economic data and renewed focus on the European sovereign debt crisis may have prompted profit taking by some investors. Arguably, the biggest development last week was the Federal Open Market Committees (FOMC) press release on Wednesday. For the first time, the central banks decision makers released forecasts for the federal funds rate and the timing for the first rate increase. In that release, the FOMC unexpectedly announced that it expected to hold rates near zero until at least late 2014. This far exceeded previously stated expectations of a mid-2013 rate hike.

2012-01-24 Risk Off, Risk On...? by Chris Maxey of Fortigent

Since the start of 2012, global risk markets have all but ignored the overhang of pessimism that frustrated the markets in 2011. For the most part, equity indices already surpassed their gains for all of last year. While such gains may ultimately prove sustainable, there remains a modicum of uncertainty that could rear its head quite suddenly, and quite viciously. In the meantime, an assessment of the investment landscape shows investors may have a legitimate reason for bullishness in the short term.

2012-01-17 A Society Moving Toward The Brink? by Chris Maxey of Fortigent

With economic growth stagnating, global indebtedness remaining stubbornly high, and unemployment refusing to budge, pressure on governments and ordinary citizens is mounting. Financial crises are notoriously difficult to recover from, but the longer-term sociological problems created by such severe declines in output pose a major headwind to the economy in 2012 and beyond.

2012-01-11 Greenwich Global Hedge Fund Index Slips 15 Points in December by Clint Binkley of Greenwich Alternative Investments

US equities ended 2011 essentially unchanged but endured significant volatility throughout the year. Hedge funds focused on market neutral strategies were above average performers for the month and the year as they were able to withstand the market uncertainty. Looking forward, we expect Directional and Long-Short strategies to have better performance as the global economy continues to stabilize

2012-01-10 How an Advisor Doubled New Clients by Dan Richards (Article)

It's not always the bold strategic initiatives that pay dividends; rather, executing the little things makes a big difference. In the fall of 2010 I ran a workshop for advisors in which I discussed a regular focus on a short list of high priority prospects. An attendee described how he'd used this idea last year as the jumping off point to add 15 minutes to his Monday morning team meeting - and doubled the number of new clients.

2012-01-09 Corporate Profits Hit a Wall, But Stocks a Buy? by Chris Maxey of Fortigent

Equity markets finished their first week of the New Year with positive gains, with the S&P 500 and Dow Jones Industrial Average rising 1.6% and 1.2%, respectively. Those gains, and more, occurred in the first 30 minutes of trading on Tuesday, the first trading day of 2012. From there, markets traded choppily through the remainder of the week, as lingering problems in Europe dampened risk appetites. Investors returning from holiday break received more positive news regarding the US economy, particularly within manufacturing and employment.

2011-12-24 Your Three Investing Opponents by John Mauldin of Millennium Wave Advisors

Recently I have been having a running conversation with Barry Ritholtz on the psychology of investing (something we both enjoy discussing and writing about). Since I am busily researching my annual forecast issue (and taking the day off), I asked Barry to share a few of his thoughts on why we do the things we do. He gives us even more, exploring the three main opponents we face when we enter the arena of investing.

2011-12-21 Seeking Absolute Return: Finding Opportunity in Overly Hyped Alternatives by Team of Litman Gregory

This commentary references and updates views originally shared in our 2003 whitepaper on hedge-fund strategies. Today, we have similar concerns about a low-return environment for stocks in the years ahead. As we concluded eight years ago, hedge-fund strategies do have the potential to add value to a portfolio. However, finding funds that are skillfully managed and offered at a reasonable cost remains a difficult challenge.

2011-12-20 Economy Happy to Close Out a Forgettable 2011 by Chris Maxey of Fortigent

There are several economic indicators on tap for next week, highlighted by the third and final estimate for Q3 real GDP.No change is expected from Novembers estimate of 2.0%. Other items of note include housing starts, existing home sales, new home sales, personal spending, and the durable goods report. As mentioned previously, Wednesdays existing home sales report from the NAR will provide clarity on the size of the agencys five-year revision to home sales. This is a potentially significant event, depending on the size of the adjustment.

2011-12-17 The Center Cannot Hold by John Mauldin of Millennium Wave Advisors

We'll leave aside the politics of the payroll tax extension and look at the economic implications, and then go on to examine the deficit in the US. That will give rise to some thoughts about Europe and what would have to happen for a country to leave the euro. We'll finally close with some thoughts and graphs about the more controversial part of the tax cut extension, the Keystone XL Pipeline. Just how radical is it to build such a pipeline in the US? And what are the implications for the deficit?

2011-12-13 What Happens If A Rising Tide Sinks Some Ships? by Chris Maxey of Fortigent

A multi-day summit in Brussels by European policymakers yielded an expected fiscal union between euro member countries. However, a key refusal by Britain undermined the credibility of the pact. Without unanimous agreement, the original European Union treaty cannot be altered, so a new intergovernmental agreement was created. Some question whether such an arrangement has the teeth to enforce budgetary discipline.

2011-12-10 A Player to Be Named Later by John Mauldin of Millennium Wave Advisors

There are two main points to be taken away from this week's European summit. First, the Germans really took control. This has been coming for a long time, and it's not like we haven't discussed it in these letters. Second, Britain either opted out or was shown the door, depending on your point of view. That is the real game-changer, long-term, for more than the obvious reasons.

2011-12-09 Greenwich Hedge Fund Indices Post Modest Losses in November by Clint Binkley of Greenwich Alternative Investments

Hedge funds as measured by the Greenwich Global Hedge Fund Index posted losses in November, losing ground during the latter half of the month on weak fundamentals in European markets. The GGHFI shed 1.05% compared to global equity returns in the S&P 500 Total Return (-0.22%), MSCI World Equity (-2.69%), and FTSE 100 (-0.70%) equity indices. European headlines continue to dictate the mood of global markets and cause increased volatility in equities. Hedge fund managers have decreased leverage and exposure to mitigate market risk but are still exposed to broader moves

2011-12-06 What Are Investors Up To? by Chris Maxey of Fortigent

With markets ebbing and flowing and making it virtually impossible to differentiate up from down, it has become all the more difficult to determine what qualifies as an attractive investment. While equity markets rallied into the end of November, volatility remains well above its long-term average, causing most investors to question their equity allocations. It should come as no surprise, then, that individual investors are anything but confident in the latest rally. Macroeconomic headlines and excessive volatility are dampening even the most hardened investors faith in financial markets.

2011-11-19 Print or Perish by John Mauldin of Millennium Wave Advisors

I do not think the euro will survive with the current mix of countries, nor do I think that Germany thinks so either. Greece is likely to go, as is Portugal. Can Spain really get its deficit under control in time? Do we see a two-euro world, one in the northern states and one in the southern? And to which one does France go? Looking at the politics, one might think the answer is obvious, but if you just look at the numbers, it is clearly not. France is in many respects a Mediterranean country. So many choices and none of them good.

2011-11-12 Where is the ECB Printing Press? by John Mauldin of Millennium Wave Advisors

There is too much debt in many southern countries; France is not far from having its own crisis if they do not get back into balance. And if they lose their AAA rating, then any EFSF solution is just so much bad paper. The path of least resistance, and I use that term guardedly, is for the ECB to find its printing press. Perhaps they can borrow one from Bernanke.

2011-11-10 Alternative Investments in Focus by Team of American Century Investments

We recently conducted a survey of financial professionals to better understand their view and use of alternative investments. Alternative investments are defined as those outside the traditional big three of cash, bonds, and stocks. These alternatives include commodities, real estate, and inflation-linked securities, among many others. Alternatives have surged in popularity in recent years, as investors and their advisors seek out new and potentially more effective ways to diversify and reduce risk in traditional balanced stock, bond, and cash portfolios.

2011-11-09 Greenwich Global Index Hedge Funds Bounce Back in October by Clint Binkley of Greenwich Alternative Investments

Hedge funds as measured by the GGHFI posted strong results in October, benefitting from a rebound in equity prices during the month. The GGHFI gained 2.27% compared to global equity returns in the S&P 500 Total Return +10.93%, MSCI World Equity +10.26%, and FTSE 100 +8.10% equity indices. 67% of constituent funds in the GGHFI ended the month with gains. Concerns over Europe began to lift in October and hedge funds were able to benefit from the rise in equity prices. Long-Short managers performed well given their cautious stance entering the month.

2011-11-08 Is One Better than Three? by Dave Loeper, CIMA, CIMC (Article)

One way to 'juice' a portfolio is by increasing allocations to small- and mid-caps, as one recently published paper contends. But a careful analysis - properly adjusting for risk - shows how that seemingly appealing approach can destroy client wealth.

2011-11-08 An Uneventful Week If You Forget Europe by Chris Maxey of Fortigent

Trading was volatile this week as news that the situation in Greece was not as clear-cut as originally thought sent the markets sharply lower. Those concerns eased somewhat in the last two trading days of the week on news that Greece, and more broadly, Europe, were making progress. Ultimately, it was another month of sub-par employment growth, but there were signs that labor markets remained steady, despite severe headwinds from Europe and concerns about growth prospects for the US. Although 80,000 jobs is nothing to be ecstatic about, the ability of the economy to stay out of negative is.

2011-11-05 Where Will the Jobs Come From? by John Mauldin of Millennium Wave Advisors

What is the role of government in creating jobs? To answer that, let's look at the data that shows us where jobs come from. And we find that net new jobs for the last 15 years came from new business start-ups. Big business is a net drag on job creation, and small businesses are a wash. Governments have seen job growth, but where does the money come to pay government employees?

2011-10-11 Managed Futures are not a New Asset Class by Michael Kitces (Article)

The focus on finding investments that have a low correlation to equities has grown to such an obsession that we're willing to name anything that has a low correlation as 'a new asset class.' While some alternatives truly have their own investment characteristics unique from stocks and bonds, other alternatives - like managed futures - simply represent an active manager buying and selling existing asset classes.

2011-10-08 An Irish Haircut by John Mauldin of Millennium Wave Advisors

But here is the issue for Europe. The amount of money needed for Ireland is going to be a lot more than they now think, or at least are willing to admit. When Eurozone politicians worry about 'contagion,' or one country wanting the debt relief that another country gets, it is a very real worry. And rightfully so, as voters in Portugal or Spain or (gasp) Italy who are burdened by debt that is seemingly intractable will also want relief. It is not just an Irish condition, it is a human trait.

2011-09-09 Hedge Funds Minimize Losses in August by Team of Greenwich Alternative Investments

Hedge funds turned in an excellent month of relative performance when compared to equity market benchmarks, notes Clint Binkley, Senior Vice President. Macro, Futures and Short Biased managers produced positive returns in spite of severe market declines. We continue to expect hedge funds to outperform long only strategies in this volatile market environment. Hedge Fund Strategy Highlights: Directional Trading funds are the best performing group of funds in August, gaining 0.3%. Market Neutral funds provide protection from market swings, declining only 2.9% on average for the month.

2011-09-08 Bleak Outlook? MLPs May Help Cushion Against Market Volatility by Team of Emerald Asset Advisors

Professional investors spend a lot of time studying probabilities. That is because, just as the direction of the recent Hurricane Irene featured a "cone of uncertainty," the financial markets often change course without warning and can wreak havoc on investor portfolios. Alternative investments, including Master Limited Partnerships, may help limit damage from the inevitable financial storms that investors may face. In today's uncertain economy and volatile markets, MLPs - while not immune - can provide attractive yields and relatively low correlation to the stock and bond markets.

2011-08-13 The Beginning of the Endgame by John Mauldin of Millennium Wave Advisors

In short, there are no easy solutions. We have just about used up all our rabbits in the hat as far as fiscal and monetary policy are concerned. We now need to focus on what we can do to get out of the way of the private sector, so it can find ways to create new businesses and jobs. And that means figuring out how to get money to new businesses, because that is where net new jobs come from. But that takes time...

2011-08-03 Converging On The Horizon by Ed Easterling of Crestmont Research of Advisor Perspectives (dshort.com)

By the end of this year, the earnings cycle is likely to be well above its typical thresholds of duration and magnitude. Although earnings could again rise in 2012, the magnitude of excess margins portends a fairly significant decline when the earnings cycle reverts. In addition, the profile of cyclical cycles in the stock market may have also run its course. The market may sustain or extend its gains for 2011 by year-end, but another up-year in 2012 would make history. Not only is duration stretched, but also the magnitude of cumulative gains has now matched the historical average.

2011-08-02 Crestmont Market Valuation Update by Doug Short of Advisor Perspectives (dshort.com)

The recent article P/E: Future On The Horizon by Advisor Perspectives contributor Ed Easterling provided an overview of Ed's method for determining where the market is headed. His analysis is quite compelling. Accordingly I have added the Crestmont data to my monthly market valuation updates. The first chart is the Crestmont equivalent of the Cyclical P/E10 ratio chart I've been sharing on a monthly basis for the past few years.

2011-07-30 An Economy at Stall Speed by John Mauldin of Millennium Wave Advisors

The economy is at stall speed, it is quite possible well see further downward revisions to the already anemic growth numbers, and Congress and the President are dithering over the debt ceiling. It will not take much to push us into an outright recession. We can go a few days, I think, with the latter problem, but not too long or the markets will throw up.

2011-07-23 Kicking the Can Down the Road One More Time by John Mauldin of Millennium Wave Advisors

I hope Europe pulls it off. I really do. They have done the US a huge favor by adopting this latest plan, as it keeps their banking system from imploding; because their banks are essentially insolvent with all the sovereign debt on their books. Such a banking crisis, which would be worse than 2008, in my opinion, would no doubt plunge a world already slowing down back into recession and pull our own slow-growth economy down into recession with them. How long can they kick the can down the road? My guess is that it will be longer than we suspect.

2011-07-16 Back to the Basics by John Mauldin of Millennium Wave Advisors

This week we are going to revisit some themes concerning the problems of the debt and the deficit. I am getting a number of questions, so while long-time readers may have read most of this in one letter or another, it is clearly time for a review, especially given the deficit/debt-ceiling debate. I will probably offend some cherished beliefs of most readers, but that is the nature of the times we live in. It is the time of the Endgame, where things are not as black and white as they have been in the past.

2011-07-11 Hedge Funds Outperform Equity Benchmarks in Turbulent Markets by Clint Binkley of Greenwich Alternative Investments

Hedge funds navigated volatile markets to finish the month with a slight loss. Market Neutral and Long-Short Equity funds both outperformed broad equity market indices for the month, notes Clint Binkley, Senior Vice President. Managers were fully occupied in negotiating the risk trade as investor sentiment changed dramatically over the course of the month. We continue to believe that in volatile markets actively managed hedge fund portfolios will provide superior results to index investing.

2011-07-02 My View on the Last Half of the Year by John Mauldin of Millennium Wave Advisors

The economy should be in Muddle Through range (around 2% growth), absent any shocks. For instance, today we had the June ISM number, which was stronger than most analysts expected, at 55.3. There was a lot of whispering that it could dip below 50. Some of the internal components were a little soft, though. New Orders were barely above 50. And Backlogs fell below 50. Exports fell to the lowest level in two years (more on that below). Of the 18 industries surveyed, only 12 reported growth. But Muddle Through is not going to allow us to really cut into the unemployment problem.

2011-07-01 Crestmont Market Valuation Update by Doug Short of Doug Short

The recent article P/E: Future On The Horizon by Advisor Perspectives contributor Ed Easterling provided an overview of Eds method for determining where the market is headed. His analysis is quite compelling. Accordingly I have added the Crestmont data to my monthly market valuation updates. The first chart is the Crestmont equivalent of the Cyclical P/E10 ratio chart Ive been sharing on a monthly basis for the past few years. The Crestmont P/E of 19.3 is 41% above its average of 13.7. This valuation level is almost identical what we saw in my latest S&P Composite regression to trend update.

2011-06-10 Time to Get Outraged by John Mauldin of Millennium Wave Advisors

This week we look at data from the Bank of International Settlements, by which (if someone does a lot of work) you can figure out how much US banks have written in credit default swaps to banks in Europe on Greek, Irish, and Portuguese debt. The details should not make you happy. I meditate on whether one should buy a house now, and then discuss the way out of all this mess and why we will Muddle Through.

2011-06-08 Gold at $1,500 an Ounce: Speculation or Fundamental Demand? by Team of American Century Investments

We believe golds performance in recent years and current price above $1,500 an ounce reflect solid fundamental demand, rather than speculative fervor. A key driver of gold demand in the current environment is buying by central banks around the world. In addition, it appears that investors looking for a hedge against both the falling dollar and broader economic uncertainty have been buying gold for its diversification benefits. Jewelry demand in India and China are other, underappreciated positives.

2011-06-07 Nasty Week Leaves Economy With More Than A Few Bruises by Chris Maxey of Fortigent

At the start of the week, regional and national manufacturing reports showed a deceleration in the manufacturing growth rate. It was widely expected that manufacturing activity would slow after reaching a peak of 61.4 in February, but few economists realized the severity of the slowdown in May. The ISM PMI dropped from 60.4 in April to 53.5 in May. In the past decade, no other month-to-month decline was as large as the one in May. The second largest fall occurred just after September 11, 2001 (-5.4) However, at that time, the economy was already in the midst of a recession, not a recovery.

2011-06-01 Recovery Shows Signs of Cracking by Chris Maxey of Fortigent

There was a limited amount of economic data released last week, and most of it turned out to be disappointing. The second revision to GDP showed the economy growing at an annual rate of 1.8% in the first quarter. Though the headline figure was unchanged, several important changes occurred in the data. Specifically, the Bureau of Economic Analysis stated that consumer demand actually rose at a 2.2% annual pace in the quarter, down from the 2.7% annual rate reported. Overall, GDP was weaker than feared in the first quarter as higher inventories and not consumer spending drove expansion.

2011-06-01 Crestmont Market Valuation Update by Doug Short of Doug Short

The recent series of articles by guest contributor Ed Easterling triggered a great deal of interest in the Crestmont P/E ratio. Accordingly I have added the Crestmont data to my monthly market valuation posts. The first chart is the Crestmont equivalent of the Cyclical P/E10 ratio chart I've been updating monthly for the past few years. The Crestmont P/E of 20.2 is 47% above its average of 13.7. This valuation level is almost identical what we saw in my latest S&P Composite regression to trend update and somewhat higher than the 40% above mean for the Cyclical P/E10.

2011-05-24 Economy Enters A Soft Patch by Chris Maxey of Fortigent

Another volatile week resulted in the S&P 500 Index losing 0.3% and the Dow Jones Industrial Average falling 0.7%. Economic data last week continued to confirm that housing markets are sluggish and that manufacturing is entering a weak patch. Existing home sales unexpectedly fell in April. Economists expected sales of existing homes to reach 5.2 million in the month, but the actual tally for April was 5.05 million, down 0.8% from the previous month.

2011-05-17 Is Inflation in the Process of Peaking? by Chris Maxey of Fortigent

Investors turned away from the equity markets last week, as the S&P 500 Index fell 0.2% and the Dow Jones Industrial Average shed 0.3%. Stocks started the week in positive fashion, but an uptick in risk aversion on Wednesday weighed on markets. Market participants were caught off guard by unfavorable inflation statistics from China, a tightening of monetary policy in China and recent strength in the US dollar. At the beginning of May, the US dollar was nearing oversold territory and traders would likely capture profits in the weeks ahead. That is exactly what occurred.

2011-05-17 What 'Secular Cycle' Means by Ed Easterling of Doug Short

There is a skeptical gremlin perched on the left shoulder for many investors. He often sneers at notions of "cycles" and other presumably predictable periods. When the word "secular" accompanies the word "cycle," that gremlin becomes even more scornful. Why do we use the term "secular cycle" with the stock market and what does it mean? Figure 1 presents a view of the stock market over the past century. You will note periods of above-average returns (i.e., the green bar periods) and periods of below-average returns (i.e., the red bar periods).

2011-05-14 Kicking the Can to the End of the Road by John Mauldin of Millennium Wave Advisors

A crisis is brewing in the US and one is coming to a slow boil in Europe. We visit Greece and Ireland and ponder how this will end. It is all well and good to kick the can down the road, but what happens when you come to the end of the road? The European answer seems to be to haul in the heavy equipment and extend the road. In short, we are watching the biggest bubble of all time, the bubble of government debt, try to keep from popping. My bet is that it cant. And while the ride will be bumpy, the world our kids get will be better off at the end of the process.

2011-05-10 The Financial Impact of an Aging Demographic by Chris Maxey of Fortigent

A volatile week of trading resulted in the S&P 500 Index losing 1.7% and the Dow Jones Industrial Average falling 1.3%. However, those losses were tame relative to the rout experienced in commodity markets. According to the Wall Street Journal, crude oil dropped 14.7% last week, while the Dow Jones-UBS Commodity Index lost 9.1%. There was no single cause for the sudden risk aversion, but it appears that recognition of a slowing US economy, along with tighter monetary policy in developing economies, contributed to the renewed caution.

2011-05-10 Hedge Funds Led by Managed Futures Funds in April by Clint Binkley of Greenwich Alternative Investments

Hedge funds, as measured by the Greenwich Global Hedge Fund Index (GGHFI), gained across all major strategies in April. The GGHFI gained 1.69% compared to global equity returns in the S&P 500 Total Return +2.96%, MSCI World Equity +4.02%, and FTSE 100 +2.73% equity indices. 78% of constituent funds in the GGHFI ended the month with gains. Hedge funds continued to move higher in April driven by strength in equities and commodities, notes Clint Binkley Nearly all hedge fund strategies are at new highs for the year and continue to be successful in a market dominated by headline risk.

2011-05-07 Muddle Through, or Crisis? by John Mauldin of Millennium Wave Advisors

This week I finish the two-part letter on the Endgame and give you my thoughts on the economy over the next five years. This is the second part of a speech I gave last week at the Strategic Investment Conference in La Jolla. It is a rather bold forecast, and fraught with peril and likely errors, but that is my job here. I must offer one large caveat! If the facts change so will my forecast, but this is the view into my very cloudy crystal ball as I see it today. As always, remember that those of us in the forecasting world are often wrong but seldom in doubt. Read accordingly.

2011-05-03 P/E: Future on the Horizon by Ed Easterling (Article)

Most people expect P/E to measure current valuation and to show historical patterns. But more features are available from some versions of P/E. The methodology behind the Crestmont P/E enables investors to anticipate the future. It may not precisely predict the market ten years away, but it frames within a relatively tight range the likely outcome. One component from determining the Crestmont P/E is a means to assess the future trend line for EPS using estimates of future economic growth (GDP).

2011-05-03 Financial Markets Offer Conflicting Opinions by Chris Maxey of Fortigent

Another week of encouraging corporate earnings reports allowed the equity market to continue its recent strong run. On the housing front, the disappointing streak continued. New home sales increased from a seasonally adjusted annual rate of 270,000 in February to 300,000 in March, according to the Department of Commerce. Although the gain was sizeable at 11.1%, new home sales are mired at abjectly low levels. Homebuyers are finding favorable opportunities in the form of distressed properties, reducing the chance of a significant rebound in new home sales in the months ahead.

2011-04-29 The Endgame Headwinds by John Mauldin of Millennium Wave Advisors

By Endgame I mean the period of time in which many of the developed economies of the world will either willingly deleverage or be forced to do so. This age of deleveraging will produce a fundamentally different economic environment lasting anywhere from 4-6 years. Now, whether this deleveraging is orderly, as now appears to be the case in Britain, or more resembles what I have long predicted will be a violent default in Greece, it will create a profoundly different economic world from the one we have lived in for 60 years.

2011-04-26 No Child Left Behind... Until They Are Teenagers, At Least by Chris Maxey of Fortigent

News of a potential downgrade to the US credit rating caused a sudden sell off in the equity markets, but positive earnings reports led to a rebound. By the end of the week, the S&P 500 index and the Dow Jones Industrial Average both closed higher by 1.3%. S&P took the unusual step of placing the US on credit watch negative, indicating that there is now a 1-in-3 chance of an outright downgrade to the US credit rating in the next two years. The announcement by S&P resulted in a severe equity market sell off on Monday morning before investors remembered S&Ps previous track record.

2011-04-19 The Bell Tolls in Washington by Chris Maxey of Fortigent

Earnings season brought about a week of choppy trading in the equity market, resulting in the S&P 500 index falling 0.6% and the Dow Jones Industrial Average dropping 0.3%. Economic data throughout the week was mixed, but the impact of higher gas prices is being felt across the economy. Small businesses recorded a severe hit to sentiment last month after the small business optimism index sank from 94.5 to 91.9. A host of concerns, from declining sales expectations to trepidation about the future of the economy, were culprits behind the weakening.

2011-04-12 Sentiment Creeps Back into Overly Bullish Territory by Chris Maxey of Fortigent

Over the past six months, actions by the Federal Reserve to purchase assets through its quantitative easing program played a major role in driving market prices. As the markets prepare to transition away from quantitative easing, investors are facing the prospects of a tougher market environment. The upcoming earnings season will go a long way in determining whether this recovery is ready to stand on its own.

2011-04-08 Hedge Funds Show Mixed Results Among Strategies in March by Clint Binkley of Greenwich Alternative Investments

Most hedge funds advanced in March, but losses in Directional funds dragged down the group. The Greenwich Global Hedge Fund Index shed 10 basis points compared to global returns in the S&P 500 Total Return +0.04%, MSCI World Equity -1.24%, and Barclays Aggregate Bond +0.06% indices. 58% of constituent funds in the GGHFI ended the month with gains. The whipsaw action in the market during March led many trend following funds to suffer losses latter in the month, notes the Sr VP The outlook for managers is positive as increased volatility tends to work in favor of most hedge fund strategies.

2011-04-05 Employment Manufactures Another Month of Positive Growth by Chris Maxey of Fortigent

Equity markets surged into quarter end, with the S&P 500 index rising 1.4% and the Dow Jones increasing 1.3%. For the first time since Feb the S&P 500 increased in two weeks. After hitting a trough on Tuesday morning, several positive employment reports encouraged the equity markets to move higher. As expected, manufacturing activity had a deceleration, as the ISM Purchasing Managers Index fell from 61.4% in February to 61.2% in March. Readings above 50% are representative of expansion in the manufacturing sector. Although the index fell, it is still the third highest reading since 1990.

2011-04-02 The Plight of the Working Class by John Mauldin of Millennium Wave Advisors

Although the headline unemployment number went down to 8.8%, the only way you can get to that number is by not counting the millions who have dropped out of the employment pool, too discouraged to look, but who will take a job if they can get one. If you go back and take the number of people in the labor force just two years ago, the unemployment picture is back over 10% (back-of-my-napkin math).

2011-03-28 A Central Bank Match by Chris Maxey of Fortigent

Equity markets donned the rally cap last week as the S&P 500 index finished higher by 2.7% and the Dow Jones Industrial Average experienced a 3.1% gain. Stability in the price of crude oil and improvement in Japan lent a helping hand to the markets, as did the announcement that AT&T would buy T-Mobile. On the domestic front, investors turned a blind eye to the slew of negative economic data. Housing, in particular, experienced the brunt of the disappointment. Existing home sales offered the first piece of bad news after falling 9.6% to 4.88mln on a seasonally-adjusted annual rate in February.

2011-03-22 Consensus: Groundhog Decade for Stocks by Ed Easterling (Article)

Just as Bill Murray woke up to the same thing day after day in the movie 'Groundhog Day,' it's likely that your outlook foretells a groundhog decade for the stock market that will repeat its near-breakeven returns from the past decade.

2011-03-21 Inflation Ready To Make Its Grand Entrance by Chris Maxey of Fortigent

Stock markets struggled in recent weeks due to a host of macroeconomic concerns, from earthquakes in Japan to uprising in the Middle East. This is causing a move in the markets that is similar, but different to what is typical during the third year of a Presidential cycle. Generally, markets rally in the first portion of the year before trading essentially flat in the second half. In the first two months, markets were adhering to this same pattern, but the aforementioned macro concerns derailed that rally. This does not mean markets will be unable to stage a recovery.

2011-03-15 Consumers Right the Ship by Chris Maxey of Fortigent

A confluence of macroeconomic events created selling pressure during the week, sending the S&P 500 Index lower by 1.3% and the Dow Jones Industrial Average down 1%. Releases on the domestic economic situation continued to show positive momentum, ranging from improvement in retail sales to a pickup in consumer credit. There was some concern about weaker consumer confidence figures and deterioration in weekly jobless claims, but it was clear last week that consumer balance sheet deleveraging continues. Retail sales for Feb increased 1% from Jan for a total increase of 8.9% in 12 months.

2011-03-05 Are Booming Economies Good for the Markets? by John Mauldin of Millennium Wave Advisors

The important question is whether booming growth is always good for equity markets. On that, the data is mixed. While strong growth usually leads to higher earnings, it typically leads to tighter liquidity. The most dangerous periods for equity markets are typically strong economic activity combined with rapidly rising oil prices. In 34% of the years since 1950 with economic growth have experienced declining EPS growth. A doubling in the oil price is not good for markets. If we begin to work on the deficit with cuts and tax increases, it will be a headwind for economic growth and earnings.

2011-02-28 When Inflation Fuels Deflation by Chris Maxey of Fortigent

Global macroecon concerns led to the sharpest weekly sell off in the S&P500 Index in three months. For the week, the S&P 500 Index was down 1.7% and the Dow Jones Industrial Average fell 2.1%. A multitude of catalysts were behind the selloff, including concerns about the situation in Africa and the Middle East, surging commodity prices, in particular crude oil, and finally, a feeling that equity valuations were moving into overbought territory. There were only a handful of important domestic economic releases last week, including several data points on housing and the state of the consumer.

2011-02-26 When Irish Eyes Are Voting by John Mauldin of Millennium Wave Advisors

Mauldin reviews the Irish economy, citing a recent Vanity Fair article by Michael Lewis. Ireland's housing bubble caused prices to rise approximately 500%. More than 20% of the Irish workforce was employed in construction. Irish banks financed this, using selling bonds to other European banks. The Irish government made good on those debts, burdening its taxpayers. The end results is excessive debt for the EU, which appears to be unsupportable. On the crisis in the Middle East, Bahrain is the key country to watch out for.

2011-02-23 A Laughable Attempt at Cutting the Budget by Chris Maxey of Fortigent

In a sadly fitting tribute to the fiscal mismanagement occurring in Washington, D.C. these days, the National Christmas Tree, which stood in the same spot since 1978, was felled by high winds Saturday morning. Not to fear, park authorities had a contingency plan in place and a new tree is on the way. Unfortunately, politicians are not known for the same degree of contingency planning and last weeks budget proposals proved that we are in for a torrent of trouble.

2011-02-22 Stop Wasting Time and Money on Client Communication by Dan Richards (Article)

The world has changed in all kinds of ways. What worked in terms of client communication as recently as five years ago doesn't work nearly as well today. As a result, you need to fundamentally change how you communicate with clients.

2011-02-19 A Random Walk Around the Frontlines by John Mauldin of Millennium Wave Advisors

Today we do a Random Walk Around the Frontlines, surveying whats going on in the world. The US economy continues to improve in fits and starts. Inflation for the last six months has risen rather smartly. And for the last three months inflation on an annualized basis is running over 3%. The recent drop in the unemployment rate was entirely due to rather dramatic drops in what is known as the participation rate - fewer people looking for jobs. The Fed needs to end its program of quantitative easing.

2011-02-04 An Excerpt from Endgame by John Mauldin of Millennium Wave Advisors

Growth does not look that great, and people dont feel the recovery. This is unlikely to change. The U.S. and most developed economies are currently facing many major headwinds that will mean that going forward, well have slower economic growth, more recessions, and higher unemployment. Three large structural changes have happened slowly over time that we expect to continue going forward. The U.S. economy will have higher volatility,lower trend growth, and higher structural levels of unemployment (The United States here is a proxy for many developed countries with similar problems.)

2011-01-29 A Bubble in Complacency by John Mauldin of Millennium Wave Advisors

The just released Q4 GDP of 3.2% may be overstated by 0.5% to 1.0% as a result of statistical adjustments. Consumer spending advanced, but that must be tempered by the support from fiscal and monetary policies. The growth in the deficit poses imminent danger of another recession, and the political landscape makes it unlikely a solution will emerge. Mauldin would like to see 'thought leadership' in the upcoming presidential election cycle, in order to build support for viable policies to revive the economy.

2011-01-22 The Unsustainable Meets the Irresistible by John Mauldin of Millennium Wave Advisors

States are the largest component of US GDP, and states' revenues have declined 10% from their peak. On top of that, federal stimulus support for states is running out. Congress should allow states to declare bankruptcy and force unions to come to the bargaining table. The US is on an unsustainable path. Absent very serious fiscal remedies, long before we get to 2019 the bond markets will have taken away our ability to finance our debt at low rates.

2010-12-03 Texas, Ireland and Ten Little Indians by John Mauldin of Millennium Wave Advisors

Mauldin contrasts the plights of Iceland and Ireland in dealing with excessive leverage. Iceland devalued its currency, while Ireland must accept a bailout package. Iceland's economy is recovering; Ireland's may take years. Mauldin compares the situation in Spain and Portugal to those two countries. The stronger EU countries must rescue the weak, just as Texas is being asked to rescue fiscally troubled states like California.

2010-11-28 Recessions are on the Margin by John Mauldin of Millennium Wave Advisors

We had a slate of good news over the past few weeks, including data on business confidence, housing, and unemployment. GDP growth is slowing, but it is still north of 2%. The economy may be able to handle only taking away the tax cuts for those with over $250,000 in income. It will slow things down, but probably not enough to cause a recession. Given that government spending is going to go down (at least I hope so), unemployment is going to take time to get under control; and with the whole developed world in a mess, it is hard to see an environment where we can average 3.5% for this decade.

2010-11-23 Five Words that Get Emails Opened by Dan Richards (Article)

The escalating volume of email means that fewer and fewer emails are being opened. A key challenge is creating a sense of urgency around opening your emails - something that can be achieved with five key words in the subject line.

2010-11-20 O Deflation, Where is Thy Sting? by John Mauldin of Millennium Wave Advisors

The economy growing between one and two percent. That is better than recession but not good enough to really bite into the unemployment rate, which means trouble. Mauldin examines the construction of the BLI's CPI index and specifically the role of housing: inflation, when you take out housing costs, is a jaunty 1.9%. Right in the Fed target range of 1.5-2%. The Fed's QE program may create inflation where we can least afford it - in energy and food.

2010-11-13 First, Let's Lower the Bar by John Mauldin of Millennium Wave Advisors

Mauldin responds to criticisms of a recent email he sent regarding healthcare reform. Next, he notes that for the last 18 months the trade-weighted yuan has dropped well over 10%, which he calls extraordinary. On the recently announced unemployment results, he says government "fiddling" with seasonal adjustments distorted the numbers. Last, he comments on the Irish sovereign debt issue.

2010-11-12 A Bull in China by Christian Thwaites of Sentinel Investments

On a recent trip to China, we saw encouraging and inexorable signs that the Chinese consumer is becoming a very potent force in the world economy. It wont be without volatilitybut it is happening. Heres how: demographics, changes in consumer behavior and a number of other factors.

2010-11-09 New Strategies in Alternative Investments by Robert Huebscher (Article)

Alternative investments, broadly speaking, and hedge funds, more specifically, have performed as intended over the last 20 years, modestly increasing returns and significantly reducing risk when added to a traditional stock-bond portfolio. Selecting the appropriate vehicle is the challenge, and that task has been made easier by the introduction of new exchange-traded strategies.

2010-10-29 Be Careful What You Wish For by John Mauldin of Millennium Wave Advisors

Q3 GDP numbers were unimpressive, and it would not surprise Mauldin to see GDP growth be closer to 1% in the 4th quarter, unless we start to see evidence of more inventory building. That is not good for jobs, personal income, tax collections needed to cover deficits at all levels, or consumer confidence. A further threat is posed by large numbers of people whose 99 weeks of unemployment will soon expire. Republicans face big challenges once they gain power, and Mauldin says a VAT is the only way to reduce budget deficits.

2010-10-24 The Subprime Debacle: Act 2, Part 2 by John Mauldin of Millennium Wave Advisors

Buyers of mortgage-backed securities may be able to join together and force issuers to buy back those securities, if the loans they contain are defective. This is further complicated by the fact that some of those buyers were non-US entities. Bank of America is badly exposed through its acquisition of Countrywide, as are "dozens" of other banks.

2010-10-12 Capitulation to Uncertainties Does a Bond Bubble Really Exist? by Frank Wei of FundQuest

The recent near-record low in Treasury yields may be largely attributable to investors' capitulation to today's unusual and uncertain economic environment. While investments in Treasury bonds involve less uncertainty than other asset classes, their valuation is typically rich when yields are low. There remains a vast amount of potential for more lucrative investment opportunities in this low-yield environment, with only slightly more risk involved.

2010-10-02 The Morality of Chinese Growth by John Mauldin of Millennium Wave Advisors

Mauldin provides highlights from a recent conference. John Hofmeister is the former president of Shell Oil. He paints a very stark (even bleak) picture of the future of energy production in the US unless we change our current policies. David Rosenberg argues that GDP growth has been helped largely by inventory rebuilding, which is not sustainable. The analysts at GaveKal discuss the tension between Chinese policies toward economic growth and the social welfare it provides for its citizens.

2010-10-01 Insolvency Too by Niels C. Jensen, Nick Rees and Patricia Ward of Absolute Return Partners

On 1st January 2013, Solvency II, a new directive governing capital adequacy rules in the European insurance and life insurance industry, will come into effect. Going forward, European insurers will have to be able to pass a 1-in-200 years' event stress test, which has been designed to give the industry enough of a cushion to withstand even the most severe of bear markets without being forced to sell. Risky asset classes such as equities, commodities and other alternative investments will be assigned much higher reserve requirements than less risky asset classes such as bonds.

2010-09-11 The Last Half by John Mauldin of Millennium Wave Advisors

Mauldin provides another excerpt from his forthcoming book. He argues that growth in government spending comes at the expense of private sector growth. Fiscal stimulus will not work in the current environment, because we are now at the end of an unprecedented debt cycle. The preferred solution is for a country to grow its way out of debt, but that requires running a trade surplus, which cannot be accomplished by all countries simultaneously.

2010-08-31 The Riskiest Pension Assets (and the Implications for Muni Bonds) by Robert Huebscher (Article)

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.

2010-08-28 The Dark Side of Deficits by John Mauldin of Millennium Wave Advisors

At the start of each bull cycle, the markets had single-digit P/E ratios, with no exception. No secular bull market ever began with high P/E ratios, even though significant rallies often started from high P/E ratios. The lesson of history is that all periods of high valuations come to an unhappy end. The most significant driver of stock market returns is the valuation embedded in the P/E ratio. We are still in a secular bear market. Valuations, while lower, are still not at what could be called historical cyclical bottoms. Patience is the order of the day. We will get there.

2010-08-21 How We Get Through This Mess by John Mauldin of Millennium Wave Advisors

Don't expect a v-shaped recovery, but GDP may still grow in Q3. Unemployment and deficits will remain high. It is going to be a tough environment for the next 6-8 years. Growth opportunities will be in entrepreneurial ventures that can adapt to this environment and to future unforeseen hurdles.

2010-08-14 The Gulf Oil Spill Disaster by John Mauldin of Millennium Wave Advisors

The ecological destruction from the oil spill that was first feared is not going to be as bad as once thought, for a variety of reasons. It is not good, but it is not the unmitigated disaster it could have been. The government should have allowed certain ships to assist in the cleanup. The ban on offshore drilling should be lifted.

2010-08-07 The Problem With Pensions by John Mauldin of Millennium Wave Advisors

A report just out from the Center for Policy Analysis indicates that state and local pension funds are drastically underfunded. By the authors' calculations, state and local pensions are underfunded by $3 trillion. Pension funding in some states will be required by law to consume 25-30 percent or more of tax revenues. That is going to mean much higher taxes or reduced services. John Mauldin also discusses a possible surprise from President Obama concerning Fannie Mae and Freddie Mac, and provides an economic update on China.

2010-07-31 Are We There Yet? by John Mauldin of Millennium Wave Advisors

The reported Q2 GDP growth was unimpressive. If we take away housing and project slower inventory growth and less government spending, we could see the GDP number for this quarter fall to the 1% range and stay there for the rest of the year. Deflation is a real fear, analogous to driving our economy "without a spare."

2010-07-24 Some Thoughts on Deflation by John Mauldin of Millennium Wave Advisors

We face the deflation of the Depression era, and central bankers of the world are united in opposition. This is due to excess capacity, high unemployment and massive wealth destruction. Deflationary pressures are the norm in the developed world (except for Britain, where inflation is the issue). The US has mild (1 percent) inflation now, but if it trends to deflation, the Fed will react by monetizing the debt.

2010-07-14 Second Quarter Commentary by William H. McAfee of WHM Capital Advisors

Gains in productivity are likely to translate into continued improvement in corporate earnings. Earnings surprises in this environment will benefit investors who have patiently invested in equities, even in the current downturn. In the mid-term, large-cap companies have done a very successful job of raising cash and paying down debt, giving them opportunities to capitalize on a slower growth environment. Smaller companies dependent on bank debt are still likely to face risks as bank lending is likely to stay depressed as real estate concerns continue to pervade bank portfolios.

2010-07-10 It's More Than Just Birth-Death by John Mauldin of Millennium Wave Advisors

Mauldin examines the methodology used by the BLS when it calculates unemployment. He reviews claims by Jeff Miller of New Arc (which we published on Thursday) that distortions caused by unreported data are greater than those of the birth/death model. Mauldin also discusses a conversation he had with Mohammed El-Erian, who said that unemployment may now be a leading (instead of lagging) indicator of economic growth.

2010-07-06 Second Half Growth Will Slow, but is a Double-Dip Certain? by Chris Maxey of Fortigent

While it is easy to remain pessimistic on the state of the economy, especially following the events of 2008, the signs of a double-dip recession are simply not there yet. Slower growth is a given at this point, but this should not come as a surprise considering that it has been well-documented that previous stimuli would become a detractor to growth in the second half of 2010 and through 2011. Further stimulus packages are already being debated, even in the face of fiscal tightening by countries across Europe, as politicians face difficult battles at the polls.

2010-06-28 On The Merits of Hedged Equity by Chris Maxey of Fortigent

Despite positive predictions for the housing market, existing home sales fell in May. This may be due to a number of first time buyers who snapped up distressed properties, requiring a longer wait between contract acceptance and closing date. At the same time, new home sales plummeted and median home sale price fell. A glimmer of hope exists in this market as home prices are in the positive over a year-over-year basis.

2010-06-26 The Risk of Recession by John Mauldin of Millennium Wave Advisors

The risk of recession is 50/50, but several things could make it less likely: if the expiration of the Bush tax cuts are not as harmful as expected, if those tax cuts are extended, or if there is a pickup in bank lending. The ECRI leading indicators and the M3 money supply numbers are indicating a recession is likely. If there is a recession, it will be deflationary and the Fed will react with another dose of quantitative easing.

2010-06-18 Be Careful What You Wish For by John Mauldin of Millennium Wave Advisors

Governments can fight deficits by cutting spending, but that has the effect of reducing growth, which reduces taxes and income, essentially forcing a recession. This is the situation facing the US. The probability for a recession in the US in 2011 is 50%.

2010-06-11 The Frog in the Frying Pan by John Mauldin of Millennium Wave Advisors

Jonathan Tepper of Variant Perception, a research firm in London, writes this column as a guest contribution. He says that Mauldin's Muddle Through Economy is the product of several major structural breaks in the economy, which have important implications for growth, jobs, and the timing of a future recession: lower GDP growth will lead to more frequent recessions and higher economic volatility; high unemployment rates will be the norm, especially for less educated workers.

2010-06-05 There's a Slow Train Coming by John Mauldin of Millennium Wave Advisors

The question before the jury is a simple one, but the answer is complex. Is the US in a "V"-shaped recovery? Are we returning to the old normal? Mauldin concludes that the fundamentals are too weak to support robust growth, as typically follows a recession. He cites data from the Consumer Metrics Institute Growth Index, which suggests there will be a 2% GDP contraction in the third quarter, which he doubts will happen, but says the consensus 3% seems quite possible. He warns that if we go back into recession, the market on average drops 40%.

2010-06-02 Whither the Regulatory Winds? by Nouriel Roubini of RGE Monitor

While reforms like eliminating the 'too-big-to-fail' card and adopting Glass-Steagall-like regulations to unbundle different types of financial activity are necessary to ward off asset bubbles and combat systemic risks, they might not be feasible for political reasons. In the event of a Glass-Steagall type separation, we would expect a divergence in credit spreads between banks with and without insured deposits, but expect the cost of credit for depository institutions to be very close to sovereign risk. On the flip side, dilution risk would be concentrated in depository institutions.

2010-06-01 Can the Consumer Continue to Drive Economic Growth? by Chris Maxey of Fortigent

Consumers shook off the cob webs and made an exceptional comeback over the past 12 months. They are still tenuously overextended, however, and are unlikely to provide a necessary boost to economic growth in the coming quarters without serious improvement in wage or credit growth. The household debt ratio remains above the long-term average, but is returning to a more appropriate level and indicates that the consumer balance sheet is slowly being realigned. Fortigent also comments on government responses to sliding stock prices, and the week ahead.

2010-05-28 Six Impossible Things by John Mauldin of Millennium Wave Advisors

You can run a trade deficit, reduce government debt and reduce private debt but not all three at the same time. Choose two. Choose carefully. The UK will likely allow the pound to devalue to reduce its deficit, but will face higher costs of imported goods. Greece, in contrast, has no good options, and ultimately will default on its debt.

2010-05-24 Macro Woes Refuse to Abate by Chris Maxey of Fortigent

Despite the $1 trillion rescue package, Greece and other small European countries will probably still default on their debts. As it stands now, Greece faces two scenarios: default or endure years or even decades of deflationary growth. The root problem for the PIGS is lack of competitiveness within the euro area - an inevitable consequence of the one size fits all interest rate policy. Even if the PIGS governments could slash their fiscal deficits, the lack of competitiveness within the euro area calls for years of relative deflation.

2010-05-22 The Case for a Fed Rate Hike by John Mauldin of Millennium Wave Advisors

Everywhere there are arguments that we are in a "V"-shaped recovery. And there are signs that in fact that is the case. Today we will look at some of those, and then take up the topic of when the Fed will raise rates. We open the case and look at the evidence. Is there enough to come to a real conviction? Mauldin thinks there is, but concludes that the Fed is "on hold" until 2011.

2010-05-15 Europe Throws a Hail Mary Pass by John Mauldin of Millennium Wave Advisors

This week's $1 trillion EU bailout is analogous to the US TARP program, and represents a "Hail Mary" last-ditch attempt to save the eurozone. The problems in the EU run deeper than government debt; when private debt is included, overindebtedness is even more striking. Mauldin says the prospects for growth in the EU are dim, the euro will go to parity with the dollar, and the EU will dissolve in the next 5-7 years.

2010-04-17 First, Lets Kill the Angels by John Mauldin of Millennium Wave Advisors

Provisions in the Dodd financial reform bill will impede angel investing in new ventures. Those provisions are the 120-day waiting period following SEC filing and the increase in minimum wealth requirements for accredited investors. Separately, the problems that Goldman now faces are "the tip of the iceberg," and at least eight other banks will face similar problems.

2010-04-09 Reform We Can Believe In by John Mauldin of Millennium Wave Advisors

Appointments to positions of power in the Federal Reserve system should be independent of the political process and party politics. Credit default swaps should be regulated by requiring that they be traded on an exchange. Commercial and investment banking should be separated, so that commercial banks cannot engage in speculative activity such as running hedge funds. Leverage use by large banks should be restricted. "Fix the big things. Credit default swaps. Too big to fail. Leverage. Then worry about the details. And leave the Fed alone."

2010-04-03 Is This a Recovery? by John Mauldin of Millennium Wave Advisors

"We will likely see a reduction in government spending (from all levels) over the next few years, a really nasty set of tax increases, which will hit small businessmen the hardest, and continued high unemployment, and all of it coming in a weakening economy by the end of the year," says John Mauldin. "I put the odds of a double-dip recession in 2011 at better than 50-50." Mauldin also offers asset allocation advice over a 10-year time frame.

2010-03-27 What Does Greece Mean to You? by John Mauldin of Millennium Wave Advisors

The potential consequences of the Greece debt crisis can be explained by chaos theory, where a small perturbation in one place (the Greek economy) can cause bigger ripples in the global economy. Greek debt is held by European banks, and a Greek default would weaken the European economy. The real crisis, though, is the impending end of a "60-year debt supercycle," which implies many years of deleveraging and a weak global economy.

2010-03-23 The Best Books on Passive Investing by Indudeep Chhachhi & Edward R. Wolfe (Article)

Two finance professors, Edward Wolfe and Indu Chhachhi, survey the literature on passive investing and offer their recommendations for authors and books. Whichever side of the active-passive debate you take, these books should be required reading. The evolution through which the literature on passive investing has gone is striking. Early writers started out with a point to prove: that passive investing is the only way to invest that makes sense. Today, the writing in this area has moved beyond "proving a point" to expanding on what is a settled issue.

2010-03-20 The Threat to Muddle Through by John Mauldin of Millennium Wave Advisors

Mauldin criticizes Krugman's call for a 25% tariff on Chinese imports, and instead predicts that China will allow its currency to appreciate 5-7% per year for the next several years. Protectionism, he says, is the biggest threat to global recovery. In defense of his argument, Mauldin says similar tariffs could be imposed if the euro, Yen and the Canadian dollar continue their current trends. The larger problem is the growing US deficit, which must be dealt with in the medium term, or there will be no long term.

2010-03-13 The Implications of Velocity by John Mauldin of Millennium Wave Advisors

Mauldin examines the relationship between the velocity of money, economic growth and inflation. After reviewing the economic theory, he shows that the velocity of money in the US has decreased since the onset of the financial crisis, and attributes this to deleveraging and the pullback from the financial innovations that accelerated the velocity of money, particularly in the 1990s. The Fed has compensated for the slowdown in velocity by increasing the money supply, and Mauldin questions whether the Fed can effectively reduce the money supply once velocity increases.

2010-03-06 Welcome to the Future by John Mauldin of Millennium Wave Advisors

Mauldin reflects on an executive program held by the Singularity University that he recently attended. He discusses the potential for new advancements in robotics, artificial intelligence, nanotechnology, water purification, biotechnology, and several other areas.

2010-02-02 2010 Off to a Tepid Start by Chris Maxey of Fortigent

This is a review of last weeks market activity and economic data announcements, with a focus on the GDP announcements from the UK and the US.

2010-01-25 Bears Rejoice by Chris Maxey of Fortigent

Some pundits saw fit to blame China for the recent pullback [in US equity markets], as a result of the monetary tightening occurring in that country, but such an accusation is unfounded in our opinio

2010-01-20 Geithner's Debt Nightmare by Chris Maxey of Fortigent

The problem for the Treasury moving forward is twofold. For one, interest rates have nowhere to go but up. At the end of 2009, the average interest rate on all outstanding US debt stood at 3.3%, a f

2010-01-11 Investors Kick Off the New Year in Quick Fashion by Chris Maxey of Fortigent

2010-01-05 Why it is Difficult to be Bearish by Mark Oelschlager of Oak Associates

2010-01-04 The Decade that Refused to go Quietly into the Night by Chris Maxey of Fortigent

2009-12-15 The Next Black Swan? Underfunded Public Pensions by Robert Huebscher (Article)

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.

2009-09-29 A Tale of Two Investors by Brian Murphy (Article)

Just as Dickens contrasted the fortunes and misfortunes in England and France in his classic novel, A Tale of Two Cities, today the divergence is painfully apparent in those who plan to accumulate wealth for their retirement and those who seek excess returns in their portfolios. In this guest contribution, advisor Brian Murphy tells the tale of two clients - one who aggressively sought alpha and the other who passively built retirement wealth.


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