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

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2014-07-25 Think Floating-Rate Loans Are Just a Rate Hedge? Think Again. by Scott Page, Craig Russ, Christopher Remington of Eaton Vance

The prospect of higher interest rates has many advisors and investors considering floating-rate loans. Because loans’ coupons regularly reset, these debt instruments can maintain their value even as rates rise. But the characteristics of loans, as well as their performance track record, suggest they may deserve a place in strategically allocated portfolios in any interest-rate climate.

2014-07-25 Market Valuations and the Theory of Relativity by Zachary Karabell of Envestnet

Depending on what metric you use to assess the stock market, equities could be cheap, expensive, or anywhere in between. Try not to be swayed by simplistic arguments based on selective analysis of historical valuations, patterns or averages. Advisors and investors should keep in mind that with so few opportunities today to find yield and appreciation, if long-term gains are to be had, stocks are where such gains are likely to be found.

2014-07-23 Long Commodities, Short Contango via Commodity Currencies by Rick Harper of WisdomTree

On the back of a resurgence in Chinese economic data and rising geopolitical risk in Eastern Europe and the Middle East, increases in global commodity prices have reinvigorated investor interest in allocating to commodity-based investment strategies.

2014-07-23 It’s Not Time to Pull the Portfolio Ripcord… Yet by Rick Vollaro of Pinnacle Advisory Group

The second quarter started in somewhat choppy fashion as small cap and other high flying momentum stocks continued to face pressure as investors decided to shed stocks with swollen valuation multiples. The major averages fared better than their risky counterparts, and after a brief dip stocks began their ascent towards record breaking highs on the back on improving economic data, decent earnings growth, and continuing liquidity support from global central banks.

2014-07-22 Cause and Effect: Bank of Japan Becomes Government’s Largest by Bradley Krom of WisdomTree

Although central banks often use their holdings of government debt to affect monetary policy, the meteoric rise in the expansion of the BOJ’s balance sheet is unprecedented. With the BOJ continuing to signal its willingness to aggressively stimulate the economy, we highlight here what we believe are the most significant implications of these policies.

2014-07-22 How to Choose the Best Retirement Income Strategy by Joe Tomlinson (Article)

In the competition among retirement-planning methodologies, systematic withdrawals have been winning the battle against the essential-discretionary approach. But given today's low interest rates, the essential-discretionary approach may work better for many clients, especially if SPIAs are used.

2014-07-18 Free Lunches and the Food Truck Revolution by Ben Inker of GMO

Over the past year or so, there has been a welcome change to the culinary landscape of the Boston financial district. After two decades of wandering to largely the same old haunts for lunch, I am now faced with a whole new set of inexpensive and tasty choices literally outside our door, changing daily as the food trucks perform their mysterious nightly dance.

2014-07-18 Is it Time to Prepare for Inflation? by Russ Koesterich of BlackRock

Inflation has ticked up recently, leaving many investors fearing that it’s time to prepare portfolios for rising prices. According to Russ, while this fear isn’t irrational, it’s too early to restructure a portfolio around a big shift in the inflation outlook. Russ explains.

2014-07-18 Fixed Income Outlook: Moving From Zero by Christopher Molumphy, Roger Bayston of Franklin Templeton Investments

Some prior market prognostications of rising rates have proven slow to play out as global central banks, namely the Bank of Japan and European Central Bank (ECB), have continued to ramp up easing measures and the US Federal Reserve (the Fed) has only slowly begun to lay off the gas pedal recently.

2014-07-18 Why Japan? Why Now? by James Calhoun of AdvisorShares

One of the most popular investment themes coming into 2014 was Hedged Japanese Equity (owning Japanese equities while simultaneously hedging out the risk of the Japanese Yen weakening against the US Dollar). At its core, this theme leaves investors long Japanese equities in US Dollar terms, not Japanese Yen terms. This investment turned in very poor performance for the first half of 2014. By the end of Q1 2014, Japanese equities had sold off rather sharply and the US Dollar had weakened 2.01% versus the Yen.

2014-07-18 Fireside Chats by Jeffrey Saut of Raymond James

While I was in the Pacific Northwest and Canada most of last week, I did have the privilege of listening to J.P. Morgan’s (JPM/$55.80/Strong Buy) Chief Market Strategist last Monday. Dr. David Kelly has long been known for his keen insights on the equity markets, with JPM’s senior portfolio managers like George Gatz and Tom Luddy steering their mutual funds, on said strategic views, to outsized gains for many years.

2014-07-17 The Tolling Bells of Complacency by Scott Minerd of Guggenheim Partners

A few years ago, facing a world in crisis, central banks aggressively employed monetary policy to avoid catastrophe in financial markets. Now, they must be equally aggressive in fighting complacency.

2014-07-17 Municipal Market Perspectives by Team of SMC Fixed Income Management

Financial market conditions were as good as could be expected during the first half of the year, as evidenced by positive investment performance across all asset classes.

2014-07-16 Road Kill by Edward Talisse of Chelsea Global Advisors

Ten years ago I started working in Japan as a fixed income sales-trader for an international investment bank. I was frequently called upon to travel to other parts of Asia such as Beijing, Hong Kong, Seoul, Singapore and Sydney. My mandate was to invite clients to explore the many money making opportunities available to them by trading the (G4) U.S., German, U.K. or Japanese yield curve. The touchstone recommendation always seemed to be some combination of going long or short U.S Treasuries and establishing an offsetting position in like maturity German Bunds.

2014-07-15 High-Yield and Bank Loan Outlook by Team of Guggenheim Partners

Certain areas of leveraged credit are overvalued, particularly CCC-rated bonds and bank loans, but often some of the best profits come in the final phase of a cycle. Low yields on U.S. Treasury bonds and European sovereign debt have kept the global search-for-yield theme alive and have lured more capital into U.S. credit markets, helping the ongoing rally in high-yield bonds and bank loans, which gained 2.4 percent and 1.2 percent (as represented by the Credit Suisse High Yield Index and Credit Suisse Institutional Leveraged Loan Index) in the second quarter of 2014, respectively.

2014-07-15 Weekly Market Update by Team of Castleton Partners

Geopolitical headlines, coupled with renewed stress in European markets, led to a strong rally in US Treasuries last week. Further supporting the decline in interest rates was the perceived dovish overtone to the minutes of the June Federal Open Market Committee meeting.

2014-07-15 Retirement Planning with Annual Available Spend by John Craig (Article)

Sound financial planning requires neither the determination of safe withdrawal rates nor the use of Monte Carlo simulations. Relying on the past to predict the future is unnecessary. Instead, one must focus on how much can be spent each year, given expected returns and inflation, and then consider how negative and worst-case scenarios would affect retirement planning. That is the basis for the annual available spend methodology I describe here.

2014-07-14 Strategies for Income-Seeking Investors by Ed Perks of Franklin Templeton Investments

Many income-seeking investors have traditionally centered their portfolios around government bonds, often failing to consider other asset classes. Ed Perks, executive vice president and director of portfolio management, Franklin Equity Group, believes equities can be a key part of an income-oriented portfolio, although individual stock selection is particularly important as valuations rise and interest rate dynamics may change.

2014-07-14 Economic Signals Are Improving, Which Should Help Equity Prices by Robert Doll of Nuveen Asset Management

U.S. equities lost ground last week, with the S&P 500 Index dropping just under 1%, its largest weekly loss since early April.1 Cyclical sectors lagged, while defensive areas (chiefly utilities and telecommunications) led the way. A number of factors could be blamed for the decline, including signs of slowing European growth and lingering debt problems, as well as some downward revisions in corporate earnings guidance. In our view, however, the most reasonable explanation for the pullback may simply be fatigue and consolidation following the multi-week price advance.

2014-07-10 Two Portfolio Moves to Consider after Second Half’s Strong Start by Russ Koesterich of BlackRock

Economic data showing improving U.S. growth helped the market kick off a strong start to the second half of the year. Russ believes the economic strength is likely to continue, and he shares two moves investors may want to consider to position portfolios for such an environment.

2014-07-10 The End of Quantitative Easing by Gregory Hahn of Winthrop Capital Management

During the Financial Crisis, as the capital markets seized up and interbank lending froze, traditional tools of monetary policy proved ineffective. The Federal Reserve implemented a series of initiatives called Quantitative Easing that essentially used the central bank’s balance sheet to purchase bonds in the open market and directly manipulate interest rates lower. This tool proved extremely powerful and allowed the Fed to manipulate interest rates across the yield curve which, in turn, allowed for a wave of refinancing activity that helped to lower borrowing costs.

2014-07-09 And That's the Quarter That Was by Ron Brounes of Brounes & Associates

The dismal winter weather is finally in the rearview mirror and stocks continued their record-setting ways.

2014-07-09 U.S. & European Flows: Potential Opportunity in European Debt? by Bradley Krom of WisdomTree

In discussions with our clients, we often notice their interest in hearing where WisdomTree or the industry is seeing inflows in order to gain new ideas for investment. As the market for global exchange-traded products continues to evolve, we believe that investors will increasingly look to global ETP flows for investment ideas.

2014-07-09 Making a Market Call by Jeffrey Saut of Raymond James

In last Monday’s strategy report I noted that the week before July 4th has an upward bias for the equity markets. On Tuesday I backed that up by writing, “From 1950 to 2013 the market has delivered positive returns 72% of the time during the last two days of June and the first five days of July.”

2014-07-08 An Allocation to Currencies May Provide Income and Lower an Overall Portfolio’s Volatility by Michael Cirami, Eric Stein, John Baur, Matthew Murphy, Bradford Godfrey of Eaton Vance

Most investors understand the benefits of diversification and the risks of owning just one security. But many overlook the benefits of broadening their currency exposure and have all their investments concentrated in the U.S. dollar. Investing in a mix of foreign currencies may lower the risks of an overall portfolio, provide additional sources of income and can potentially enable investors to pursue a wider array of opportunities around the world.

2014-07-07 TIPS Outperform in the 2014 Second Quarter and First Half by Stephen Percoco of Lark Research, Inc.

TIPS have been on a tear so far in 2014. While returns on straight Treasury securities have been strong, TIPS returns have been stronger. After scampering away from Treasurys last year out of fears about the winding down of Federal Reserve stimulus, bond investors seemed reassured, after the weak first quarter GDP report and statements by the Fed, that interest rates are not about to rise anytime soon.

2014-07-07 The Prudent Investor’s Approach to Retirement Income by Kendall Anderson of Anderson Griggs

Each day, ten thousand people reach the age where retirement is a possibility. For some the choice is optional, but for others it is mandatory. A lively debate is taking place among academics and professionals in the investment industry regarding what the proper approach is for meeting financial needs in retirement.

2014-07-07 Quotes on a Screen and Blotches of Ink by John Hussman of Hussman Funds

The ratio of market capitalization to GDP, which Warren Buffett (correctly) observed in a 2001 Fortune interview is "probably the single best measure of where valuations stand at any given moment" is now about 150% (not just 50%) above its pre-bubble norm, and beyond every point in history except for the final quarter of 1999 and the first two quarters of 2000. Much of what investors view as "wealth" here is little but transitory quotes on a screen and blotches of ink on pieces of paper that have today’s date on them. Investors seem to have forgotten how that works.

2014-07-05 2014 Mid-Year Outlook Update: “Living Actively” Forecast Continues by Stephen Wood of Russell Investments

Does 2014 at mid-year remain a “year of living actively” for investors as outlined in Russell’s 2014 Annual Global Outlook issued last December? In that report, my colleagues on the global team of investment strategists agreed on the macro-view that 2014 would be better represented as a year of validation than a year of appreciation. And now, as we examine the underlying fundamentals in the macro- data at mid-year, I don’t see a reason yet to alter our “year of validation” call.

2014-07-03 A Perspective on High Yield Spreads by Heather Rupp of AdvisorShares

There have been recent headlines about yields in the high-yield market hitting all-time lows. Yes, this is true, but let’s put this in some context. First, interest rates have been at or near all-time lows for years, pressuring yields in all fixed income securities as investors search for places to generate returns. Comparatively, we believe the high yield market still looks very attractive.

2014-07-02 Alternative Investments: The Right Expectations by Roger Nusbaum of AdvisorShares

Every year around this time we hear about the fiscal year investment results for the various college endowments and typically there is much written about the endowments and 2014 is no exception but this year most of the attention seems to be on the extent to which various forms of alternative investments have been a drag on endowment results after years of their having provided outsized gains.

2014-07-01 Fixed Income Markets Cruise - What's Next? by Chris Maxey, Brian Payne of Fortigent

For the better part of twelve months, fixed income markets have been in a rather benign state. After receiving a scare in early summer 2013 during the “taper tantrum,” volatility subsided, and normalcy returned to the world of fixed income. As money continues to pour into fixed income markets, there is growing concern that the investment opportunity is stretched and the time to rebalance is now.

2014-07-01 Weekly Market Update by Team of Castleton Partners

Treasury yields fell across the maturity spectrum last week, with longer dated maturities recording the largest price gains relative to shorter dated bonds and notes. With geopolitical concerns continuing to weigh heavily on investors’ minds, interest rates were propelled lower on the surprising revision to the 1st quarter GDP and the resulting downward revisions to 2nd quarter GDP estimates.

2014-07-01 Reality Check by Robert Rodriguez of FPA Funds

Bob Rodriguez, Managing Partner and Chief Executive Officer of FPA, delivered a speech titled "Reality Check" to shareholders of FPA funds on June 2, 2014, on Fed policy and federal fiscal excess.

2014-06-30 Taking a Balanced View of Equities by Lisa Myers of Franklin Templeton Investments

With the US S&P 500 Index and Dow Jones Industrial Average advancing into record territory this year and some European equity benchmarks likewise nearing new highs, some investors may be wondering whether it’s still wise to be jumping into the market at this stage. Lisa Myers, executive vice president, Templeton Global Equity Group, thinks that a long-term investment horizon, supported by bottom-up analysis, can reveal hidden value.

2014-06-26 Benefits of Optimizing Portfolio Capture Ratios by Don Schreiber, Jr., Craig French of WBI Investments

The world of investing has changed dramatically. Over the past decade, many investors have discovered that conventional passive growth stock approaches failed to meet their goals. Following a buy-and-hold approach, investors suffered losses of as much as 51% during the 2000 through 2013 period. We believe conventional portfolio theory regarding the benefits of diversification has been broadly misinterpreted to mean that market returns will bail you out, and so investors should not worry about short-term losses.

2014-06-25 Self Sufficiency and Resourcefulness Over Complaining by Roger Nusbaum of AdvisorShares

There were several interesting and related articles from the last few days that could make for an interesting discussion.

2014-06-25 Mid-Year Muni Market Update by Rafael Costas of Franklin Templeton Investments

The municipal bond market faced a rather tough year in 2013, with news of troubles in Detroit, Puerto Rico and elsewhere scaring off some investors. This year hasn’t exactly been smooth sailing for the muni market either, but the waters seem a bit calmer and many investors have returned to the sector. Rafael Costas, Co-Director, Municipal Bond Department, Franklin Templeton Fixed Income Group, could be called cautiously optimistic about the muni market. He provides an update on some key market developments, including progress in the aforementioned trouble spots.

2014-06-24 Is The Fed Underestimating Inflation? by Robert Doll of Nuveen Asset Management

Following a week in which investors took pause and focused on the negatives, they reversed course last week and pushed equity prices higher. A number of factors seemed to contribute to the positive tone, not the least of which was an indication from the Federal Reserve (Fed) that there will be no near term change to its accommodative monetary policy.

2014-06-20 June Municipal Market Commentary by Team of SMC Fixed Income Management

In order to gauge the potential impact of an interest rate hike on a fixed income portfolio’s performance, not only does the amount of the rate move have to be ascertained, but the timing and duration must also be quantified. In summary, investors should not necessarily jump to the conclusion that rising interest rates automatically result in negative total returns.

2014-06-19 Designing Balanced DC Menus: Considering Inflation-Hedging Strategies???? by Stacy Schaus, Ying Gao of PIMCO

Inflation-hedging strategies are fundamental to DC investment lineups and participants’ need to build and preserve purchasing power in retirement. Plan sponsors should evaluate these assets separately and in combination before adding them to core lineups and target-date strategies. Selected assets or blends should be designed to deliver the primary benefits of inflation responsiveness, diversification relative to stocks, volatility reduction and downside risk mitigation.

2014-06-18 Outlook on the US Dollar, Currencies & Markets: Look Out Below! by Axel Merk of Merk Investments

The FIFA World Cup and market predictions have in common that we are tempted to create a world of make-believe when it comes to predicting outcomes. While others ponder about the meaning of a round ball, we’ll focus on the implications of a make-believe world comprised of ever-higher asset prices. Our caution: look out below!

2014-06-18 Getting in Gear for The New Neutral – What Does It Mean for Investors? by William Benz of PIMCO

Smart beta is increasingly important when returns are likely to fall short of what most investors need and expect. Active managers can use multiple tools to help generate higher returns. With outcome-oriented strategies, investors can align their portfolios toward meeting specific risk and return objectives. Investors with more aggressive income or return needs may benefit from bespoke, multi-asset solutions. ?

2014-06-18 Hedged High Yield by Heather Rupp of AdvisorShares

A strategy that we have seen emerge over the past year within the high yield market has been “hedged high yield,” most recently with iShares rolling out an product last month that uses their passive, index-based HYG fund as the high yield component. The gist of the hedged high yield strategy is to go long high yield bonds and short Treasuries (or Treasury futures). The basic premise is that the strategy will hedge interest rate risk, with any bond pricing decline due to rising rates being offset with the short in Treasuries.

2014-06-18 Fed Outlook: Playing It Close to the Vest by Scott Brown of Raymond James

The Federal Open Market Committee will meet this week to set monetary policy. The FOMC is widely expected to further taper the monthly pace of asset purchases (not “on a preset path,” but continuing “in measured steps”). The bigger question is when the Fed will begin to raise short-term interest rates. The correct answer is “it depends.” Fed officials are currently debating the order of steps to be taken as they begin to normalize monetary policy.

2014-06-16 Crosscurrents and Fatigue Cause a Slight Slump in Stocks by Robert Doll of Nuveen Asset Management

Favorable monetary policy and improving economic growth have remained steady, but investors appeared to focus on some of the negatives last week. Sentiment seemed to sour due to the rising turmoil in Iraq (and subsequent rise in oil prices), as well as House Majority Leader Eric Cantor’s primary defeat, which served to highlight a more partisan environment before the November elections. For the week, the S&P 500 Index declined 0.6%.

2014-06-16 Weekly Market Update by Team of Castleton Partners

The grind toward higher Treasury yields—and June’s bearish momentum in interest rates—persisted through most of last week, only to reverse on Thursday with an escalation in geopolitical concerns, especially Iraq. After reaching a high of 2.70%, 10 year Treasury notes recovered on the selloff in risk assets and closed the week up only 1 basis point, at 2.60%.

2014-06-14 ECB Leaves the Door Open for Further Action by David Zahn of Franklin Templeton Investments

he European Central Bank (ECB) delivered a robust package of monetary policy measures on June 5 and promised more to come if needed to help stave off deflation and support the eurozone’s fragile economic recovery. Among the moves announced were interest rate cuts, including a negative interest rate on excess deposits that banks hold with the ECB, and new facilities to support bank lending to small businesses. We asked David Zahn, portfolio manager for the Franklin Global Government Bond Fund, for his thoughts on what these latest measures could mean for investors.

2014-06-13 Trading the Last Third of a Move by Scott Minerd of Guggenheim Partners

When bull markets mature, investors fear a coming crisis and today there are plenty of candidates from Europe to China to Thailand. Still, some of the best profits may lie ahead.

2014-06-13 ECB Leaves the Door Open for Further Action by David Zahn of Franklin Templeton Investments

The European Central Bank (ECB) delivered a robust package of monetary policy measures on June 5 and promised more to come if needed to help stave off deflation and support the eurozone’s fragile economic recovery. Among the moves announced were interest rate cuts, including a negative interest rate on excess deposits that banks hold with the ECB, and new facilities to support bank lending to small businesses. We asked David Zahn, portfolio manager for the Franklin Global Government Bond Fund, for his thoughts on what these latest measures could mean for investors.

2014-06-12 Central Banks Chart a Course for Overheating by Scott Minerd of Guggenheim Partners

When bull markets mature, investors fear a coming crisis. Today there are plenty of candidates from Europe to China to Thailand. But bull markets climb a wall of worry and there are reasons now not to expect a looming crisis.

2014-06-09 Bright Signs for the Economy and Equity Markets by Bob Doll of Nuveen Asset Management

The macro backdrop last week was positive for the markets. As expected, the ECB cut interest rates, highlighting the favorable global monetary policy backdrop. Closer to home, solid vehicle sales and a good May labor market report gave investors additional reasons to bid up stock prices. The S&P 500 Index advanced 1.4%, marking a third straight week of gains above 1% — the longest such streak since last September. Looking ahead, we believe the combination of an improving world economy, low levels of volatility and easy global monetary policy should continue to provide support for equ

2014-06-09 May Jobs Report: 4 Key Takeaways by Kristina Hooper of Allianz Global Investors

Allianz Global Investors US Investment Strategist Kristina Hooper analyzes the May employment report, including what it means for monetary policy, markets and investors.

2014-06-04 Weekly Market Update by James Welch of Castleton Partners

Treasury yields continued to decline to new lows over the last two weeks, with intermediate and long dated maturities reaching levels last seen in June 2013. With the ten year US Treasury note declining nearly twenty basis to 2.48%, all fixed income sectors produced strong monthly returns in May, adding further to impressive 2014 returns. On the economic front, the only release of note last week was the sharp—and surprisingly large—downward revision to first quarter GDP. The second estimate of 1Q GDP showed a decline of 1.0%, down from the previous figure of a 0.1% gain.

2014-06-03 The Pros and Cons of Target-Date Funds in the Accumulation Phase by Wade Pfau (Article)

Target-date funds are criticized for not being customized or tailored to individual situations. But this is unfair, as they are meant to serve as default investment options for individuals who are otherwise unwilling or unable to put in the effort to obtain a better result. Nonetheless, the debates around TDFs provide an opportunity for advisors to make clear how they can serve their clients.

2014-06-03 Sticking With Stocks by Russ Koesterich of iShares Blog

Both stocks and bonds have rallied and are looking expensive. BlackRock Global Chief Investment Strategist Russ Koesterich suggests that investors need to look for relative value, which is why we still prefer stocks over bonds.

2014-06-02 Equities and Bonds Diverge Amid Low Volatility by Robert Doll of Nuveen Asset Management

Another week brought another record close for equities. The S&P 500 Index increased 1.2% for the week, notching a new high, but investor attention appeared to be focused elsewhere. Low levels of market volatility, a pickup in M&A activity, a difficult revenue environment for banks and improving housing data all gathered headlines, yet the bond market garnered the most focus.

2014-05-30 The Growing Importance of Natural Gas by Skip Aylesworth of Hennessy Funds

The natural gas industry is experiencing a revolution. Fueled by advances in drilling technology, natural gas has become an abundant energy source and is quickly becoming America’s domestic energy solution. In fact, it is believed that we now have a 100-year supply in the U.S. – even with increasing demand.

2014-05-30 How Not To Get Soaked When The Bond Bubble Bursts by Steve Blumenthal of CMG Capital Management Group

As I wrote in my latest Forbes article and in my current weekly column On My Radar, most investors are unaware and ill-prepared for the impact that rising interest rates will have on their bond funds and ETF investments. There has been an unprecedented period of Fed participation (manipulation) with six years of near zero-percent interest rate policy and trillions of newly created currency.

2014-05-30 Tax-Exempt Securities Confounding the Consensus in 2014 by Michael Smith, Bob Meyer of SMC Fixed Income Management

Rarely do the financial markets provide the double treat of simultaneously rising equity valuations and falling bond yields. Almost midway through the second quarter of 2014, key stock indices reached new all-time highs while global bond yields have retreated to levels not seen in over six months. Something has to give: either stock prices retreat or yields rise. Right? At least this is the popular assumption supported by classic economic rationale for a normal investment environment.

2014-05-27 Economy Begins to Accelerate While Equities Push Higher by Robert Doll of Nuveen Asset Management

U.S. equities finished higher last week as the S&P 500 advanced 1.3%, snapping a two-week losing streak and ending at a new record high. Markets seemed to lack conviction, but the path of least resistance appeared skewed to the upside as momentum for the economic recovery was positive.

2014-05-25 Mounting Momentum? by Liz Ann Sonders, Brad Sorensen & Michelle Gibley of Charles Schwab

Although the stock market remains sluggish, with the potential for a correction elevated, the U.S. economy appears to be improving. There is probably no great rush to get into the stock market at this point, but maintaining a steady investing discipline in the face of what we think is a continuing secular bull market is key. Investors frustrated with the low yield environment should be careful about adding too much risk to a portfolio in search of higher yields.

2014-05-22 Scarce Growth - Can the Tortoises Continue to Outpace the Hares? by Robert McConnaughey of Columbia Management

For some time we have suggested that in a world slowly recovering from the 2008 financial crisis, aggregate global growth would be sub-par and that investors would benefit from seeking scarce growth, so long as that growth did not become wildly overvalued. Recent market action has tested that stance severely.

2014-05-21 Despite the “Grand Reversal,” Stick With Stocks by Russ Koesterich of BlackRock

In a reversal of 2013’s performance, stocks are struggling to hold onto gains while bond yields are plunging, leaving many investors asking: “How should I be positioning for the long term?” Russ explains why he still advocates sticking with stocks.

2014-05-21 And That\'s The Week That Was by Ron Brounes of Brounes & Associates

What goes up must come down (and then go up again). Such was the fickle week in the stock market. After soaring to new highs on the major indexes, investors went into selling mode (profit-taking for the most part?), before jumping back in for the end-of-week bargain shopping.

2014-05-21 An Inefficient Asset Class by Tim Gramatovich of AdvisorShares

The high yield and floating rate loan market are often misunderstood asset classes. Just what is the formal definition of “high yield”? High yield, or its more polite acronym, non-investment grade, is based off of the ratings grids provided by the two major credit rating agencies, Moody’s and Standard & Poor’s. All bonds rated below Baa by Moody’s are considered high yield or non-investment grade.

2014-05-20 Bonds Rally, But Stocks Still More Attractive Long Term by Russ Koesterich of BlackRock

Stocks have floundered, while bonds continue to rally. Markets are showing a sharp reversal from 2013, when stocks were up strongly while bonds struggled. We maintain our long-term preference for equities and suggest investors exercise caution before adding to positions in bonds.

2014-05-19 Three Questions Investors Need to Ask About Alternatives by Donna Chapman Wilson of Invesco Blog

The world of alternative investments includes a range of hedge fund-like strategies that typically consist of publicly traded equity and fixed income investments, but are unconventionally managed using a variety of exposures (long, short, market neutral) and financial instruments. These strategies have gained acceptance in recent years, and have become more widely available to individual investors through vehicles such as mutual funds. However, questions still remain about the best ways to incorporate them into an asset allocation strategy.

2014-05-17 Which Resource Areas Show Signs of Strength? by Frank Holmes of U.S. Global Investors

Global synchronized growth, as measured by the Global Purchasing Managers' Index (PMI), remained stable or positive for the past 12 months until Japan reversed the momentum in April with a precipitous drop in its PMI. China is contributing modest growth but, fortunately, the U.S. and Europe are rebounding. This lack of consistent global momentum has created a short-term, volatile, hot and cold, stop-and-go sentiment. Global real GDP growth peaked in 2010 at 5.2 percent then slowed for the next three years to 3 percent. Global growth in 2014 is likely to accelerate, for the first time in four y

2014-05-16 Breaking Good by Scott Minerd of Guggenheim Partners

After breaking out of their recent trading range, yields on U.S. Treasuries could now be heading significantly lower and the U.S. economy could enjoy fast economic growth in the coming months.

2014-05-16 Mixed Signals and the Road Less Traveled by Doug MacKay, Bill Hoover, Mike Czekaj of Broadleaf Partners

As the markets flirt with all-time highs and a potential shift in Fed policy, earnings season has not altered the fact that the level of investor uncertainty feels elevated. Throw in the case of a really bad winter, a geopolitical environment that rhymes with events just prior to World War I, and poor trading volumes, and it all suggests that heightened levels of unease remain.

2014-05-16 And That\'s The Week That Was by Ron Brounes of Brounes & Associates

Strike up the band! The Dow is now in positive territory for the year AND even set a record close. Who would have thunk that after the dismal January and the pessimism that reigned from the winter? The recovery continued as earnings season offered more surprises and the economic numbers show a country moving beyond the thaw of winter. Now if only China (Europe and Russia) could follow suit.

2014-05-15 Thoughts on Investing in Convertible Securities by Alan Muschott of Franklin Templeton Investments

Changes and potential changes in monetary policy across the globe, along with increased volatility in currency and equity markets, have thrown a spotlight on convertible securities, described by some as offering the “best of both worlds” in terms of stock and bond characteristics. But what are they, how do they work, and how can they play a part in a diversified investment portfolio in today’s market? Alan Muschott, portfolio manager for Franklin Convertible Securities Fund, who has been investing in convertible securities for more than a decade, provides his take.

2014-05-14 Has Dividend Investing Lost its Luster? by Paul Stocking and Dean Ramos of Columbia Management

With interest rates rising in 2013 and after a number of years of outperformance from high-yield dividend paying equities, investors want to know if dividend investing remains an attractive strategy. With corporate balance sheets looking healthy and dividend payout ratios remaining low by historical standards, we believe dividend growth will continue to be strong. In our view, high-yielding equities will continue to provide strong total returns especially relative to fixed income alternatives.

2014-05-14 Great Rotation? No, The Reverse by Russ Koesterich of iShares Blog

According to many market watchers, 2014 was supposed to be the year of the so-called Great Rotation out of bonds and into stocks. However, as Russ writes, we’re actually seeing the reverse happen lately, though the case for stocks is still quite strong

2014-05-13 The Virtues of Rebalancing by Craig L. Israelsen, Ph.D. (Article)

Does rebalancing improve portfolio performance? Yes - but it takes time for the benefits of rebalancing to be fully manifested, at least in the case of a broadly diversified 12-asset portfolio.

2014-05-13 Weekly Market Update by Team of Castleton Partners

With little escalation on the geopolitical front and no compelling data to shift broader economic expectations, interest rate markets were confined to narrow yield ranges in a rather tedious week. With intermediate and long dated Treasury rates failing to extend price gains from the prior week’s payrolls report, we suspect the path of least resistance this week for yields may be a gradual back up.

2014-05-13 Dollar Bulls Drop Their Heads in Frustration by Chris Maxey, Ryan Davis of Fortigent

For some time, strategists have been bullishly positioned on the U.S. Dollar, anticipating a rally that failed to materialize. The arguments were straightforward – the Federal Reserve is exiting its easing cycle, Europe is facing deflationary pressure and likely to ease further, and the economy in the U.S. is on improving footing. Those expectations, while true to some extent, are not translating into gains for the Dollar, leaving many frustrated. The Dollar is suffering from a bad case of dejection and could struggle to see a sustained breakout for some time.

2014-05-13 Market Perspective by The CCR Wealth Management Investment Committee of CCR Wealth Management

US equity markets have seen what we would describe as mild volatility over the last few weeks, mostly attributed to geopolitical tensions emanating from the Ukraine-Russia belligerence. For the first quarter, the S&P 500 rose 1.30%, while the Dow Jones Industrial Average and the NASDAQ composite were both down slightly.

2014-05-13 Equity Markets Remain Mixed as Fundamentals Slowly Improve by Robert Doll of Nuveen Asset Management

U.S. equities finished mixed last week as the Dow Jones Industrial Average was the only major index to end in positive territory. The overall macro narrative appears favorable despite the lack of market direction. Scrutiny of beaten-down momentum stocks resurfaced, although broader market spillover remained muted.

2014-05-10 What's the Game Changer for Gold? by Douglas M. Hodge of PIMCO

In the coming days, PIMCO will publish its annual Secular Outlook. A cornerstone of our investment process, it sets the direction for how we will invest our clients’ assets over the coming three to five years. Of course, we revisit our outlook and investment conclusions each year to ensure their continued resonance and efficacy. Similarly, we have a regular strategic business planning process and conduct intermittent reviews. And, like our secular process, we often invite an outside expert or two to spark our thinking and challenge our priors.

2014-05-09 Overview of the Fixed Income Market by Tim Gramatovich of AdvisorShares

“Junk bonds” are often still considered an alternative asset class and remain tremendously confusing to much of the investing public. They are considered by many to be very risky and illiquid. The truth is that the high yield market is a relatively straightforward, well developed and liquid market.

2014-05-09 Thoughts on Investing in Convertible Securities by Alan Muschott of Franklin Templeton Investments

Changes and potential changes in monetary policy across the globe, along with increased volatility in currency and equity markets, have thrown a spotlight on convertible securities, described by some as offering the “best of both worlds” in terms of stock and bond characteristics. But what are they, how do they work, and how can they play a part in a diversified investment portfolio in today’s market? Alan Muschott, portfolio manager for Franklin Convertible Securities Fund, who has been investing in convertible securities for more than a decade, provides his take.

2014-05-09 Fighting History? by Liz Ann Sonders of Charles Schwab

A lot of movement to go nowhere can characterize the major indexes to this point in the year. History suggests we're entering a potentially tough period for stocks, due to both seasonal and midterm election year tendencies.

2014-05-08 Europe, ‘Not Too Hot, Not Too Cold’ Sweet Spot for Credit Investors by Eve Tournier of PIMCO

European economies are improving, yet the region’s low growth and low inflation will keep the central bank engaged. As such, European duration should be safer versus other major developed economies. Given recent European Central Bank comments pointing to a further easing bias, we believe it makes European assets relatively attractive, especially in sectors with deleveraging fundamentals, positive technicals and attractive valuations.

2014-05-07 Behavioral Finance and the Bond Market by Jerry Paul, Zach Jonson of ICON Advisers, Inc.

Over the last decade the concept of behavioral finance has received increased recognition in both the academic world and with investors. Modern Portfolio Theory makes three distinct assumptions: investors are rational, markets are efficient, and expected returns are purely a function of risk. In contrast, followers of behavioral finance generally believe investors are less than perfect and subject to many emotional biases. Said differently, behavioral finance differs from traditional finance in that it focuses on how investors actually behave, rather than theorizing how they should behave.

2014-05-07 First Quarter Letter by Team of Grey Owl Capital Management

The broad equity market displayed a fair amount of volatility during the quarter, but essentially went sideways. This pattern continued through April; 2013’s losers became 2014’s winners and vice versa. In the broadest sense, bonds narrowly beat stocks on the heels of 2013’s thorough drubbing.

2014-05-06 The U.S. Economy Reached a Turning Point in April by Robert Doll of Nuveen Asset Management

U.S. equities finished higher last week with the S&P 500 advancing nearly 1.0%. Positive sentiment has been supported by growing traction for the economic recovery, key economic data and corporate commentary. Although the upbeat dynamics were mentioned in the latest FOMC statement, policy normalization expectations have not changed. Another widely discussed tailwind was M&A headlines. Although tensions continue in Ukraine, geopolitical risks were mostly on the back burner.

2014-05-06 Managed Futures: Positive Trends Ahead?? by Vineer Bhansali, Matt Dorsten, Graham Rennison of PIMCO

Trend-following, the primary approach used in managed futures strategies, seeks positive returns by capturing momentum across major asset classes. Despite exceptional performance in the 2008 financial crisis, trend-following strategies were less successful in subsequent years, in part because massive central bank interventions increased market correlations, suppressed volatility and curtailed left-tail events.

2014-05-06 An Improving Economy, But Lower Rates. Why the Disconnect? by Russ of iShares Blog

Despite economic data showing an improving economy, interest rates remain stuck in a low and narrow range. Russ explains why this is and what it means for investors.

2014-05-05 Economic Capital Market Summary by Gregory Hahn of Winthrop Capital Management

After the Financial Crisis and the resulting Dodd-Frank Act and Affordable Health Care Act, we knew there was no way we would go back to normal, whatever normal really was. Our world changed and we still continue to feel the uncomfortable mutations after the crisis. The management of Citigroup showed another disconnect with regulators as its 2014 capital plan was rejected. After several attempts to launch its healthcare website, the Obama administration announced that over 8 million people had signed up for health care insurance through the government exchange.

2014-05-05 Asian Currencies to Stay Calm at Center of EM Storm by Hayden Briscoe of AllianceBernstein

Emerging markets have fallen from favor, but does that mean investors should avoid them entirely? We don?t think so.

2014-05-02 Need for New Midstream Energy Infrastructure Remains Strong by David Chiaro of Eagle Global Advisors

Capital expenditures expected to surpass $640 billion by 2035, says David Chiaro, co-portfolio manager of the Eagle MLP Strategy Fund.

2014-05-02 Down Under: Commodities to Consumption by Tarik Jaleel of Matthews Asia

Ever since China's demand for commodities intensified around 1999, its increased reliance on imported energy and minerals has underpinned Australia's boom in the natural resources industry. Naturally, as China's import growth has recently slowed, materials and energy sector firms in both Australia and New Zealand have grown cautious about their business prospects.

2014-04-28 Equities Awaiting Stronger Growth Before Next Move by Robert Doll of Nuveen Asset Management

U.S. equities finished modestly lower last week with the S&P 500 nearly unchanged. Most of the damage occurred on Friday when escalating tensions surrounding Ukraine weighed on sentiment. Positive dynamics included an improvement in first quarter earnings metrics, a notable pickup in M&A activity and deal speculation. A broader macro narrative reflects better traction for the recovery and gradual policy normalization. With momentum plays under renewed scrutiny, several internet, software and biotech companies sold off despite an expected cushion from solid first quarter results.

2014-04-28 The Search for Yield: How Long Could It Last? by Russ Koesterich of iShares Blog

How long will low rates ? and the accompanying search for yield ? continue? Russ weighs in.

2014-04-23 Hasenstab: Separating the Wheat from the Chaff by Michael Hasenstab of Franklin Templeton Investments

Fixed income investors have dealt with a number of headwinds in early 2014, including unrest in Eastern Europe, the prospect of rising interest rates in the United States and fears about slowing growth in China. Michael Hasenstab, executive vice president and CIO, Global Bonds, Franklin Templeton Fixed Income Group®, has been on a global tour to assess conditions in select countries first-hand, looking beyond what the media headlines portray.

2014-04-22 Unloved Emerging Markets May Hold Value for Opportunistic Bond Investors by Kathleen Gaffney of Eaton Vance

· Emerging markets have come under pressure over the past year due to the Federal Reserve tapering its asset purchases and increased expectations of higher interest rates in the U.S. · We think investors should consider emerging markets to find opportunities that may provide a yield advantage and diversification away from U.S. interest-rate risk. · A multisector approach that uses bottom-up, fundamental credit analysis may be helpful in finding opportunities in emerging markets.

2014-04-21 Spring Checkup: Five Investment Ideas for Your Portfolio by Russ Koesterich of iShares Blog

As the second quarter of 2014 gets underway, many investors are wondering how they should adjust their portfolios given the events of the first three months of the year. Russ shares five investing opportunities that he and his BlackRock colleagues think are worth considering this spring.

2014-04-17 Hasenstab in Ukraine, on Ukraine by Michael Hasenstab of Franklin Templeton

Ukraine is a country both rich with potential and strategically well positioned. While recent events have been very difficult for many, the people of Ukraine have shown their strength. It?s also been heartening to see the proactive support from the international community. Michael Hasenstab, chief investment officer, Global Bonds, Franklin Templeton Fixed Income Group®, shares his view on the long-term potential of this unique country after a recent visit to Kiev.

2014-04-17 Fixed Income Outlook by Team of Osterweis Capital Management

Given that the Fed is likely to complete its asset purchases this year and may raise rates in early 2015, we still feel that Treasuries and investment grade bonds are unattractive. Although yields in the high yield universe are low by historical standards, they still give us a decent cushion against rising rates, especially at the shorter end of the maturity spectrum. Maintaining a shorter duration exposure in high yield and some convertible bonds, as well as a cash reserve, continues to make sense.

2014-04-17 What\'s Wrong with PIMCO? by James Bryan of South Texas Money Management

When Federal Reserve Chairman Ben Bernanke first talked about reducing or tapering the Federal Reserve’s asset purchase program back in May of 2013, the market response was dramatic. Investors started fleeing bonds, causing bond prices to drop and bond yields to rise. In a rising interest rate environment, the net asset value (NAV) of fixed income mutual funds falls as rates rise. This often leads to shareholder redemptions (they want out!), forcing these bond mutual fund portfolio managers to sell bonds in an unfavorable market.

2014-04-15 Approaching a Pause? A Market Review by Rick Vollaro of Pinnacle Advisory Group

First quarter market performance was as whippy and volatile as the weather. Unusually cold temperatures in the U.S. not only froze much of the country’s population, but it also wreaked havoc on the quality of economic data, and kept markets on edge regarding how investors should be positioned. Geopolitical issues also rose from the ashes as various emerging markets had currency issues and Russia showed poor sportsmanship and invaded the Ukraine shortly after the conclusion of the Olympic Games.

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.

2014-04-14 Why Today?s Environment Favors Active High Yield Strategies by Darren Hughes, Scott Roberts of Invesco Blog

Fixed income investors are looking for ways to prepare their portfolios for rising interest rates. While bond prices generally fall when rates rise, history shows that high yield bonds have typically held up well in rising rate environments.

2014-04-11 Equities Appear Attractive in Years Leading Up to Fed Tightening by Kevin Mahn of Hennion & Walsh

Fed Chair Janet Yellen said her expectation for the first increase in the Federal Funds Rate would come approximately six months following the end of the asset purchase program.

2014-04-11 Why China's A-Shares Matter Now by Winnie Chwang of Matthews Asia

Although we often receive questions on mainland China?s A-share equities, which trade on the Shanghai and Shenzhen Stock Exchanges, we currently invest in Chinese equities primarily via Hong Kong-listed companies and also by way of U.S.-listed Chinese firms. China?s domestic A-share market remains largely closed to foreign institutional investors. The only way for foreigners to participate in this market is to enroll in China?s Qualified Foreign Institutional Investor (QFII) program or invest via a manager who has a quota in this program.

2014-04-10 Assuage Your Fears of Rising Rates with Global Diversification by Julie Salsbery of PIMCO

?Although PIMCO believes interest rates are fairly anchored in the near term, we think investors can position their fixed income portfolios more defensively. Global diversification across developed and emerging markets can offer a defense against rising U.S. rates by reducing the concentration of risks within a portfolio, while also potentially lowering volatility and enhancing returns.

2014-04-10 And That\'s The Week That Was by Ron Brounes of Brounes & Associates

One quarter down; three to go. After a rough January, stocks rebounded to complete a solid quarter with the Dow Jones the lone main index still "in the red." The new week found decent numbers from manufacturing and labor and investors moved past the "bad weather" excuse, though still took profits from high-flying bio-techs and internet stocks. The late-week selling hindered the overall equity performance.

2014-04-08 On Cruise Control by Richard Michaud of New Frontier Advisors

The first quarter was a relatively calm start to the year. The Dow was down 0.7%, the S&P up 1.3%, and the NASDAQ up 0.5%. International equities were nearly flat as well with the MSCI ACWI ex US down 0.1%. European equities were up 1.5% and Pacific equities were moderately negative, with the MSCI Pacific down 3.3% for the quarter. Emerging market equity indices were down 0.8% for the quarter, with China down 6.7%.

2014-04-08 Moving Forward With the Normalization of Yields by Scott Mather, Michael Story of PIMCO

One response to yield normalization is to consider retaining core bonds and diversifying the specific risk factor of concern, in this case duration. In the past, global bonds have captured most of the upside but avoided a significant amount of the downside relative to domestic-only bonds. Generating capital gains from bonds in a rising yield environment requires defining concretely what yield normalization means ? where yields are going and when they will get there ? and setting these expectations against forward market pricing, country by country.

2014-04-05 Investing for Retirement: The Defined Contribution Challenge by Ben Inker and Martin Tarlie of GMO

Target date funds are rapidly becoming the workhorse for DC plans. These funds have grown substantially in recent years, partly as a result of automatic enrollment made possible by the Pension Protection Act of 2006. By and large, current target date funds resemble the old investment advisor adage that stock weight should be about 110 minus a person’s age. While this satisfies the common-sense intuition that, all things being equal, weight in stocks should go down as a person ages, there are a number of problems with this approach. In this paper we focus on two in particular.

2014-04-03 Plans are Nothing; Planning is Everything by Scott Minerd of Guggenheim Partners

U.S. investors are largely convinced that the Fed will raise interest rates in the middle of 2015 but sluggish inflation could push that eventuality back into 2016.

2014-04-02 Gain International Exposure with Small-Caps by David Nadel of The Royce Funds

Portfolio Manager and Director of International Research David Nadel discusses our attraction to international small-caps, how our investment approach translates into the international small-cap universe, how we try to avoid value traps, the effect monetary policy has had on our approach and performance, and more.

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.

2014-04-01 Equities Sag as Macro Backdrop Quiets Down by Robert Doll of Nuveen Asset Management

Last week U.S. equities struggled for direction as the S&P 500 declined 0.4%. Small cap stocks were hit harder, and macro and geopolitical issues seemed to be on the back burner. Overall, emerging markets rallied, value and contrarian plays outperformed and Japanese stocks bounced.

2014-03-31 Labor Market Clues for Bond Investors by Christopher Molumphy of Franklin Templeton

When the US Federal Reserve (Fed) began tapering early this year, the general assumption was that investors would flee en masse from fixed income investments. Certainly, there has been some volatility in Treasury yields, most recently after Fed Chair Janet Yellen suggested interest rates could start to rise around six months after tapering ends ? which would be somewhat sooner than many were expecting.

2014-03-28 Asia's E-Commerce Trends by Jerry Shih of Matthews Asia

On a recent research trip, I went to Beijing, Hong Kong, Tokyo and Melbourne and spoke with Internet companies in industries as diverse as automotives, travel and real estate. I also met with several e-commerce companies with varying Internet penetration rates. As growth rates for new Internet users across parts of Asia level off, comparing these firms offered me an interesting glimpse into the potential opportunities and challenges facing the region's newer Internet firms.

2014-03-26 Unleashing Africa?s Potential by Michael Hasenstab of Franklin Templeton

Many investors who have never traveled in Africa probably have preconceived ideas about it, perhaps as a land of safaris and political strife, rich in coveted natural resources that have failed to bring widespread wealth and development to the continent. Many also might not realize how diverse the landscape, the economies and the people are on the continent, which boasts more than 1,000 languages spoken in more than 50 countries and climates ranging from hot deserts and tropical rainforests to frozen glaciers.

2014-03-25 Low Rates for a Long Time & Preparing for the Eventual Rise by Sponsored Content from OppenheimerFunds (Article)

Interest rates, in a slow growth and only modest inflation world, are likely to remain low for the foreseeable future. Still, the fears of rising rates persist. We believe these fears may be overstated, and this Q&A covers our views on generating income in a low rate world and protecting portfolios in the event of an unexpected rise in rates.

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.

2014-03-24 Stocks Rise as Economic Backdrop Slowly Improves by Bob Doll of Nuveen Asset Management

U.S. equities finished higher last week, with the S&P 500 increasing 1.4%. Ukraine seemed to be receding in investors? minds. Despite the volatility and sharp increase in bond yields on Wednesday, the hawkish takeaways from the FOMC meeting were not a lingering overhang.

2014-03-24 Market Update by Team of Castleton Partners

Last week?s meeting of the Federal Open Market Committee (FOMC) produced a more hawkish tone than anticipated, driving interest rates higher and flattening the yield curve in the process. Between the Fed?s summary of economic projections and Chairwoman Janet Yellen?s remarks following the meeting, the FOMC suggested a shorter timeframe for rate hikes than the market had expected.

2014-03-22 We See Opportunities in Commodities by Bob Greer, Ronit M. Walny, Klaus Thuerbach of PIMCO

Fundamentals and some recent data suggest that challenging trends for commodity investing may be coming to an end. Commodities may increase their role as an important and unique source of returns, diversification and protection from unanticipated inflation. As commodity sectors are each dominated by unique factors, we see even more opportunities to add value through active management.

2014-03-21 We See Opportunities in Commodities by Bob Greer, Ronit Walny, Klaus Thuerbach of PIMCO

Fundamentals and some recent data suggest that challenging trends for commodity investing may be coming to an end. Commodities may increase their role as an important and unique source of returns, diversification and protection from unanticipated inflation. As commodity sectors are each dominated by unique factors, we see even more opportunities to add value through active management.

2014-03-21 China's Evolving Health Care Landscape by Hayley Chan of Matthews Asia

China has begun a long-term transformation of its health care industry. Much of this industry is still fragmented and in the early stages of consolidation. China?s top 10 pharmaceutical companies, for example, account for a combined market share of approximately 20% versus more than 60% in the U.S.

2014-03-19 Pockets of Opportunity in Europe, Emerging Markets by Lisa Myers of Franklin Templeton

Maintaining the right mix or balance of assets in a portfolio to achieve a desired goal can be a challenge, particularly when the markets are constantly shifting. As portfolio manager for Templeton Global Balanced Fund, Lisa Myers, executive vice president, Templeton Global Equity Group, regularly faces that task.

2014-03-18 Japan?s Rising Opportunity by Neil Hennessy, Masakazu Takeda of Hennessy Funds

After WWII, the Japanese economy began what is sometimes referred to as the ?Economic Miracle?, a three-decade long period of growth and prosperity. Japanese firms and their management teams were studied around the world as the model of efficiency and an example for all companies and leaders to strive for. In 1989, a bubble in real estate fueled by speculators burst, and the Japanese markets crashed. Since then, the Japanese economy has been in a virtual standstill with more than two decades of stagnant growth and a deflationary environment.

2014-03-18 Market Update by Team of Castleton Partners

With military tensions rising over the Ukraine saga and geopolitical posturing dominating the headlines, Treasury rates rallied across the yield curve last week, with 10 year yields falling 13 basis points to 2.66%. Though Cold War-era rhetoric remains high, there are indications that the threat of military action is becoming less likely. As such, we suspect markets will become more comfortable with the situation and expect it to become less of a focus. Nonetheless, we concede that headline risk remains and the primary influence on the Treasury market this week may well be external.

2014-03-17 And That\'s The Week That Was by Ron Brounes of Brounes & Associates

Remember when tiny Greece was a market mover? Well, now it’s tiny Crimea. With the growing global tensions and concerns about Crimea’s secession from the Ukraine to Russia, investors chose to take a week off (for the most part) and take some equity profits, while moving back into the safe haven of treasuries. With little news on the domestic economic calendar, investors looked abroad and didn’t care much for what they saw in China. (Still, the yuan must be better than the ruble these days.)

2014-03-17 Stocks Weighed Down by Ukraine, China and U.S. Economy by Robert Doll of Nuveen Asset Management

U.S. equities came under pressure last week as the S&P 500 declined almost 2.0%. Blame was primarily placed on the crisis in Ukraine and the growth slowdown and tight credit environment in China. Safe haven investments such as U.S. Treasuries and gold outperformed. Stocks may have already discounted the weather distortions on early 2014 data, and an overhang is expected to linger into first quarter earnings season. Cautiousness surfaced for investments that support the recovery, including banks and homebuilders.

2014-03-15 Heating Up and Thawing Out by Liz Ann Sonders, Brad Sorensen & Michelle Gibley of Charles Schwab

Concerns over growth and geopolitical issues have largely been set aside by investors in the United States, but complacency can be dangerous and another pullback in the near term could unfold if history holds. Investors should keep longer term goals in mind and remember that trying to time the market is an extremely difficult task. The weather is turning and economic data will be watched to see if recent softness was temporary or something more serious. We lean toward the former, but a retrenchment in bond yields would cause some concern about the potential for something more than weather.

2014-03-14 An Exhaustive Debate by Colin Dishington of Matthews Asia

Australia, which is among the largest polluters per capita in the developed world, is exploring ways to reduce its greenhouse gas emissions and has set a target for reducing emissions at 5% below 2000 levels by 2020. One of its current initiatives, the carbon pricing mechanism often referred to as the carbon tax requires polluters to pay an amount proportional to the carbon dioxide equivalent emitted during a given year.

2014-03-13 Waiting for Winter?s End by Pamela Rosenau of HighTower Advisors

Undoubtedly, the long cold winter season has many yearning for more pleasant weather. Despite a strengthening economy, the economic data over the past few months appears to have been weighed down by the snow and ice. Come springtime, I believe the data will reflect an economy that is in bloom.

2014-03-12 The Goldilocks Conundrum: A Market Review by Rick Vollaro of Pinnacle Advisory Group

When we decided to ride the central bank liquidity wave in 2013, we knew there was a chance the market could have a pretty good year, but like most investors we were pleasantly surprised with the gains that the U.S. stock market delivered. Including dividends, the S&P 500 Index soared by 32%, well in excess of what even the most optimistic prognosticators envisioned at the start of the year.

2014-03-11 Thirsty for Income? Try Dividend Growth by Frank Caruso of AllianceBernstein

Chasing yield has become a challenging mission for investors in recent years. As yields collapsed in fixed income, investors flocked to bond-like substitutes such as high dividend-yielding stocks. Now that these stocks have become a bit pricey, we think companies with strong dividend-growth potential offer a better way to source equity income.

2014-03-10 Positive Payroll Report Offsets Geopolitical Concerns by Bob Doll of Nuveen Asset Management

U.S. equities increased 1.1% last week after somewhat volatile trading due to heightened tension in Ukraine. Although the crisis dominated headlines, the market relegated the major geopolitical issue to the back burner. The broader macro narrative did not change, as concerns about dampened growth momentum continued to be pacified by the distortion from adverse weather.

2014-03-10 Happy Birthday, Bull Market by Russ Koesterich of BlackRock

March 10, 2014, could be considered the fifth birthday of the current equity bull market. Investors looked beyond mixed economic data and turmoil in the Ukraine to push stocks to further gains last week. Stocks still remain a more attractive option relative to traditional bonds and cash.

2014-03-05 2014: A Transition Year - Back to Fundamentals by Lorenzo Pagani of PIMCO

The past several years have seen multiple regime changes in financial markets in Europe, each dominated by different factors and requiring a distinct approach to fixed income investing. As spreads tighten to pre-2008 levels, it is now time to ask whether a shift in investment style is due. Macroeconomic developments and inflation expectations are likely to be key determining factors in whether 2014 will be a good year for European bond investors.

2014-03-05 Active or Passive? Multi-asset Investing Can Turn Both Valves by Jeff Hussey of Russell Investments

Investors, whether institutional or individual, face a common challenge: how to get the return they need, at an appropriate risk level, and at a fee they can afford.

2014-03-04 Market Update by of Castleton Partners

With the Ukrainian situation very much in focus, Treasury rates moved mostly lower last week. The yield curve exhibited a flattening bias, as longer dated maturities registered the biggest declines. For the week, 10 year treasury yields closed at 2.65%, a drop of eight basis points from the prior week, while two year yields were unchanged at 0.32%. As Gross Domestic Product (GDP) was revised lower to 2.5% from 3.2%, we also learned last week that the economy expanded at a slower pace in the fourth quarter of 2013 than previously estimated, giving the expansion less momentum heading into 2014.

2014-03-03 Ukraine: Geopolitical Risk Rising For Global Markets by Francesc Balcells of PIMCO

Following Russia?s military intervention in Crimea, the situation in Ukraine remains extremely fluid. The outcome will determine to a large extent the systemic nature of the crisis and its impact on global markets, not just Europe. Russia stands to lose the most if this conflict should escalate into a full-fledged military confrontation, given the country?s financial, economic and reputational stakes.

2014-03-03 Casting a Wide Asset Net in a Volatile Sea by Ed Perks of Franklin Templeton

It?s fair to say that investors will likely never be fully comfortable with market volatility. But actively managing the inevitable bumps that accompany equity investments, even in bull markets, can help make the ride a little less harrowing, according to Ed Perks, executive vice president and director of Portfolio Management, Franklin Equity Group®. He explains how understanding the fundamental dynamics behind market selloffs is key to uncovering potential opportunities in the face of a rough market ride.

2014-03-03 Equities Rise Despite Mixed Fundamental News by Bob Doll of Nuveen Asset Management

U.S. equities increased 1.3% last week as the S&P surpassed the key 1850 level and pushed to new record highs. One favorable dynamic of the rally was the upside leadership from retail stocks, as earnings were largely ahead of expectations. Fed Chair Janet Yellen suggested concern about softerthan-expected spending in a number of recent data releases, but the bar for adjusting the tapering process has not been lowered.

2014-03-03 Bond Aid: Positive Outlook for High Yield in 2014 by Darren Hughes, Scott Roberts of Invesco Blog

While most fixed income asset classes tied to interest rates saw negative returns during 2013, high yield bonds returned more than 8%, according to the JP Morgan Domestic High Yield Index. While we anticipate slightly lower returns in 2014, it looks to be a positive year for high yield markets.

2014-03-03 Stanford Wonk Argues In Favor Of Levered Equity Funds by Roger Nusbaum of AdvisorShares

A long-time reader sent a link to an article from Forbes titled Leverage Your Way To A Richer Retirement. The article considered research done by Jason Scott at Financial Engines which looked at completely revamping the 4% rule (the 4% rule pertains to the optimal withdrawal rate for a retiree take from their portfolio without exhausting their funds).

2014-02-28 Korea's Changing Consumer Patterns by Michael Han of Matthews Asia

Following a recent research trip to Korea, I was able to spend some time there with my family. Three consecutive weeks away afforded me the opportunity to observe changes in spending patterns among Korean consumers as well as the improving competitiveness of the country?s service industries.

2014-02-28 Hide and Seek by Herbert Abramson, Randall Abramson of Trapeze Asset Management

Hide and seek. A game investors played as children but should not forget these days. Currently, investors need to hide safely to protect from some unfavourable developments in an environment that could hurt them.

2014-02-28 Bounce Back by Liz Ann Sonders, Brad Sorensen & Michelle Gibley of Charles Schwab

US stocks have bounced and the market’s still attractive and in the midst of a secular bull market. But there are likely to be bumps along the way; notably given that this is a midterm election year; which are known for first-half pullbacks. A diversified portfolio is important and both European and Chinese stocks appear to have upside, while Japan continues to frustrate with a two-steps forward, two-steps back sort of approach. And a final reminder not to replace fixed income assets with equities in search of higher income without recognizing the risk profile of a portfolio has changed.

2014-02-27 Gut Check: The Outlook on Fixed Income by Colin Lundgren of Columbia Management

With nearly two months of the year behind us, we thought now would be a good time to see how the fixed-income market is faring in 2014 and assess our outlook. We asked our investment team five questions to help capture our view on the market today.

2014-02-27 Corporate Credit Charting its Own Course by Eric Takaha of Franklin Templeton

At the start of the year, equity investors were fretting about possible emerging-market contagion, while bond investors were fretting about fallout from US Federal Reserve tapering. Meanwhile, the corporate credit market seemed to be charting its own course. Eric Takaha, director of the Corporate & High Yield Group and senior vice president, Franklin Templeton Fixed Income Group®, takes a look at the corporate credit/high-yield market and explains why he currently sees supportive fundamentals.

2014-02-26 Market Perspective by CCR Wealth Management Investment Committee of CCR Wealth Management

It cost $0.32 to mail a letter, unemployment was 4.9%, O.J. Simpson was found liable in a civil suit, Hong Kong was returned to Chinese rule, Timothy McVeigh was sentenced to Death, Green Bay defeated the Patriots in the Super Bowl, Titanic came crashing into movie theatres, and Dolly, the first genetically engineered lamb was unveiled to the public; the year was 1997.

2014-02-25 Mid-Quarter Update: Good Start to 2014 for Many Categories of CEF Marketplace; Still Compelling Valu by Jeff Margolin of First Trust Advisors

Many categories of closed-end funds (CEFs) are off to a good start to the year. Investors took advantage of the big discounts to net asset value (NAV) and attractive yields available in the secondary market which helped push the average CEF up 2.57% the first 6 weeks of the year as measured by the First Trust Closed-End Fund Composite Total Return Price Index (UPCEFT) as of 2/14/14.

2014-02-25 How to Profit from the Yellen Fed by Axel Merk of Merk Funds

Janet Yellen might have the most powerful job in the world, as the Federal Reserve (Fed) she now chairs controls what may be the world?s most powerful printing press. We take a closer look at what her reign might mean for investors? portfolios.

2014-02-24 Corporate Credit Charting its Own Course by Eric Takaha of Franklin Templeton

At the start of the year, equity investors were fretting about possible emerging-market contagion, while bond investors were fretting about fallout from US Federal Reserve tapering. Meanwhile, the corporate credit market seemed to be charting its own course. Eric Takaha, director of the Corporate & High Yield Group and senior vice president, Franklin Templeton Fixed Income Group®, takes a look at the corporate credit/high-yield market and explains why he currently sees supportive fundamentals.

2014-02-24 Confusing Crosscurrents Result in Trendless Market by Bob Doll of Nuveen Asset Management

U.S. equities finished mixed after the shortened holiday week.1 The broad market narrative did not change, as additional disappointing economic data was largely attributed to the impact of adverse weather. Comfort that the recovery may be gaining traction was evidenced through Fed discussions and the January FOMC minutes, with consensus expectations for tapering to continue at a measured pace. Some renewed concerns about a growth slowdown in China surfaced but had little impact.

2014-02-21 Mid-Quarter Update: Good Start to 2014 for Many Categories of CEF Marketplace by Jeff Margolin of First Trust Advisors

Many categories of closed-end funds (CEFs) are off to a good start to the year. Investors took advantage of the big discounts to net asset value (NAV) and attractive yields available in the secondary market which helped push the average CEF up 2.57% the first 6 weeks of the year as measured by the First Trust Closed-End Fund Composite Total Return Price Index (UPCEFT) as of 2/14/14.

2014-02-20 Bond Investors Need Not Feel Powerless by Jeff Hussey of Russell Investments

Jeff Hussey, global CIO, explains the strategies investors should be pursuing when considering fixed income investments in their portfolios and how additional yield cushion while opening a door to additional security selection returns from active management.

2014-02-20 Stocks for 2014: Fairly Valued Dividend Growth Stocks with an Emphasis on Dividends - Part 4 by Chuck Carnevale of F.A.S.T. Graphs

I am a firm believer that common stock portfolios should be custom-designed to meet each unique individual’s goals, objectives and risk tolerances. With that said, I believe it logically follows that in order to create a successful portfolio, the individual investor must first conduct some serious introspection to be sure that they truly "know thyself." Therefore, I believe the first, and perhaps most critical step, towards designing a successful equity portfolio is to ask your-self, and honestly answer several important questions.

2014-02-20 Stocks for 2014: High Yield and Fairly Valued Dividend Stocks for High Current Income ? Part 5 by Chuck Carnevale of F.A.S.T. Graphs

Retired investors seeking high income to live off of during retirement, face greater challenges today than almost ever before. The days of high yields available from bonds and other fixed income vehicles are long gone. Consequently, generating an adequate level of current income on retirement portfolios is difficult to say the least. This is especially tricky for those investors with a low tolerance for risk.

2014-02-18 Global Growth Expectations Push Stocks Forward Despite Weather by Bob Doll of Nuveen Asset Management

U.S. equities finished sharply higher last week with the S&P 500 increasing 2.3% and all major U.S. averages up more than 2%.1 The rapid market recovery from the January pullback is a bigger surprise than the pullback that preceded it.

2014-02-18 Topping Patterns and the Proper Cause for Optimism by John Hussman of Hussman Funds

We would dismiss classic topping patterns we observe here if the recent market peak did not feature the "full catastrophe" of textbook speculative features, particularly the same syndrome of extreme overvalued, overbought, overbullish, rising yield conditions observed (prior to the past year) only at major market peaks in 2007, 2000, 1987, 1972, and 1929. Meanwhile, we remain encouraged. Those who follow a historically informed, value-conscious, and risk-managed investment discipline should be among the most optimistic investors in the financial markets.

2014-02-13 Bad News is Good News Again by Scott Minerd of Guggenheim Partners

Extremely cold weather in the United States, a sell-off in equities and in emerging markets, and large swings in fund flows combined for a volatile start to the year. But none of this will derail the ongoing U.S. economic expansion, and investors should take advantage of this temporary weakness.

2014-02-12 Grey Owl Capital?s Third Quarter Letter by of Grey Owl Capital Management

2013 was a banner year for the US stock market. Despite equities? meager fourteen-year record of accomplishment, investors, broadly speaking, are limited to short-term memory. Last year?s performance was enough to generate significant enthusiasm for stocks. We continue to believe, the current environment warrants a more balanced approach.

2014-02-11 Are Returns of Intermediate Bond Funds Persistent? by Michael Edesess (Article)

In the search for skillful managers, the most valued characteristic is persistence -- the ability of a manager to achieve superior returns consistently over time. Finding such managers is critical for fixed-income allocations, since the theoretical basis for indexing is weaker than it is for equities. Our study found, however, that persistence is elusive among a large sample of taxable bond funds.

2014-02-11 Equities Markets Start 2014 in Deep Freeze by Douglas Coté of ING Investement Management

By slowly normalizing policy, the Fed is passing the responsibility of pricing risk back to the markets, resulting in higher volatility. The health of the emerging markets is vital to global growth, as developing countries have doubled their contribution to global GDP over the past decade to nearly 40%. S&P 500 corporations derive half their revenue from overseas; support from global consumerism and manufacturing is on track to continue. Broad global diversification across equity and fixed income markets is the best way to protect against volatility.

2014-02-11 Leveraged Finance Outlook: Riding the Low Default Wave by Andrew R. Jessop, Elizabeth (Beth) MacLean of PIMCO

Following strong performance in 2013, we expect low (1%-3%) defaults in leveraged finance markets this year. Issuance should remain healthy, and continued slow but steady growth in the U.S. economy should offer further stability to these companies. However, careful credit selection and monitoring of sector trends remain imperative. Investors with low tolerance for volatility and more interest rate sensitivity may emphasize loans, while investors with greater risk tolerance and a more benign outlook for rates may look to high yield.

2014-02-11 Focus on Income: The Illiquidity Premium: Opportunities for Investing in Credit Today by Jack Rivkin of Altegris

At a time when many investors are seeking income for their portfolios, traditional sources of fixed income - principally government bonds and high-grade corporate bonds - look less than compelling. Yields are low and there is an increasing risk that interest rates will rise, which would cause the value of existing bonds to fall.

2014-02-10 Growth and Policy Uncertainty Cause Choppy Markets by Bob Doll of Nuveen Asset Management

U.S. equities closed with modest gains last week, as the S&P 500 overcame Monday?s decline, the largest one-day percentage loss since June 2013. The weaker-than-expected ISM manufacturing and vehicle sales data drive the sell-off on Monday, exacerbating the focus on slowing momentum for the U.S. recovery. The impact of adverse weather complicates the picture. Also, although January non-farm payroll missed expectations, there were more upbeat indications for the household survey.

2014-02-10 Volatility Should Persist, But Stick With Stocks by Russ Koesterich of iSharesBlog

Volatility rose last week and is now close to its long-term average. Economic data has softened, but we do not believe the Federal Reserve will change course. Investors may want to consider adding to equity positions during periods of weakness

2014-02-07 Two Questions for Japan Inc. by Kara Yoon of Matthews Asia

During my last research trip in November, we visited mostly consumer-facing companies in Japan where we took the opportunity to pose two key questions to the management teams we met. The first was-"Are you planning to increase prices for products or services after Japan’s consumption tax hike (scheduled for April)?" And secondly: "Will you raise employee wages?"

2014-02-07 Global Inflation: A Mixed Picture by Monty Guild of Guild Investment Management

Many investors and global macro economists have been on vigil for a ramp up in global inflation spurred by immense central bank QE and other forms monetary stimulus. All of the money printing from around the globe has helped keep the financial system functioning, and it continues to help weak developed economies get back on firmer growth footing.

2014-02-06 Divesting When Discomfited by Ben Inker of GMO

Ben Inker explains why, "for our asset allocation portfolios we generally try to trade slowly." He notes, "The slightly odd fact is that moving slowly on value-driven decisions has simply made more money historically than moving immediately would have."

2014-02-06 Year-End Odds and Ends by Jeremy Grantham of GMO

In a new quarterly letter to GMO’s institutional clients, chief investment strategist Jeremy Grantham offers "Year-End Odds and Ends": Fossil Fuels: Is Tesla a Tease or a Triumph?, Fracking and Yet More Technical Stuff on Fracking, Update on Metals, Fertilizers, and Food, Problems in Forecasting Short-term Prices for Resources, Another Look at U.S. GDP Growth, Investment Lessons Learned: Mistakes Made Over 47 Years

2014-02-05 2014 Market Outlook by Kevin Mahn of Hennion & Walsh

Some Bumps along the Road of Global Recovery

2014-02-05 The Importance of Taking a Long-Term Perspective by Jeffrey Knight of Columbia Management

For asset allocation decisions, we find great value in maintaining a long-term outlook for major asset classes. Twice a year, in fact, we conduct an extensive update of our five-year return forecasts for several asset classes. The purpose of this exercise is two-fold. First, taking a longer term perspective helps us to set strategic asset allocations and design portfolios for diverse investment goals.

2014-02-04 Volatility Prompts a More Cautious View Toward Emerging Markets by Russ Koesterich of BlackRock Investment Management

The market selloff continued last week, and emerging markets stocks are looking more uncertain in the short term. With U.S. wages under pressure, consumer-related stocks remain an unattractive option. The Federal Reserve’s tapering program is starting to remove a pillar of support for stocks.

2014-02-04 Weekly Market Update by James Welch of Castleton Partners

Taking direction from a sharp sell-off in risk assets across the globe-especially in emerging market economies, Treasury yields continued their month long decline last week.

2014-01-31 A Surprising Gift for Chinese New Year by Sherwood Zhang of Matthews Asia

Beijing-based China Credit Trust Company, a firm that operates as a non-banking financial institution in China, announced this week it reached an agreement to restructure a risky high-yield product that had earlier ignited worries over the health of China’s trust industry. Just in time for the Lunar New Year, investors in the troubled trust may receive a big (metaphorical) red envelope-a monetary gift traditionally given during Chinese New Year or other special occasions-or at least avoid a financial hit.

2014-01-31 Not All Emerging Markets Are Created Equal by Robert McConnaughey of Columbia Management

Emerging markets (EM) is a term given to a universe of countries that is extremely diverse across a wide number of variables including geography, levels of industrialization and political systems. Despite this diversity, emerging markets are often discussed as if they are a homogenous block, particularly in the context of broad asset allocation decision making. We think that’s a mistake. Instead, we see opportunity from applying a more bottom-up approach to country, industry and security selection amidst growing dispersion in outcomes across the emerging world.

2014-01-31 Weekly Economic Commentary by Carl Tannenbaum of Northern Trust

China’s shadow banking products are coming under the spotlight. Emerging markets: Be sure to differentiate. The fixed income sector’s surprising strength.

2014-01-31 High Yield: The Perfect Storm That Wasn\'t by Gershon Distenfeld of Alliance Bernstein

Investors should not focus on how rising rates may affect high yield. Instead, they should take a more thoughtful approach. This means they should not expect double-digit returns, nor should they reach for yield by buying triple-C bonds. At this point in the credit cycle, when concerns begin to develop disproportionally in lower-rated credits, investors are not getting compensated for taking this type of risk. Instead, investors should accept that single-digit returns are a realistic expectation in 2014. And in a relatively low-rate environment, we don’t think that’s a bad thing.

2014-01-29 How the Pioneer of Hydraulic Fracturing changed the MLP Landscape by David Chiaro of Eagle Global Advisors

A banner year for MLPs and the future looks bright.

2014-01-29 All Things in Moderation, Including Housing by Ed Devlin of PIMCO

In our view, the cooling housing market and other domestic factors will keep Canadian growth at a modest 1.75%-2.25% in 2014, despite a boost from higher U.S. growth. While we expect a correction in Canada’s housing market to begin this year, the macroeconomic environment and the availability of mortgage credit suggest a housing crash is unlikely. In this environment, we think the Canadian dollar should remain attractive, 10-year bonds should offer the potential for gains, and provincial bonds will likely outperform federal government and corporate bonds.

2014-01-29 Fed Responsible for EM Crisis? by Axel Merk of Merk Investments

From the bully pulpits in Sao Paulo to the blogosphere in cyberspace, the Fed is blamed for the turmoil in Emerging Markets (EM). That’s a bit like blaming McDonald’s for obesity. Blaming others won’t fix the problems in EM economies, it won’t fix investors’ portfolios and it is an unlikely way to lose weight. Investors and policy makers need to wake up and realize that they are in charge of their own destiny. Let us explain.

2014-01-28 Emerging Market Issues Weigh on U.S. Equities by Bob Doll of Nuveen Asset Management

U.S. equities finished lower last week as the S&P 500 declined 2.6% and suffered the largest weekly pullback since June of 2012. U.S. stocks are down approximately 3.0% both year to date and from all-time highs. In 2014, lack of direction in the market has been a focus, and the waning influence of macroeconomic news caused a notable shift late last week.

2014-01-28 Financial Resolutions for a New Year by Gary Stroik of WBI Investments

It’s the start of a new year; the traditional time for self-examination, reflection, and a new list of resolutions intended to help us work on those aspects of our lives we feel could use some improvement.

2014-01-28 Expect Higher Volatility to Persist by Russ Koesterich of BlackRock Investment Management

Last week’s selloff can be attributed to EM turmoil, stretched valuations and mediocre earnings. Volatility is likely to move higher to levels closer to long-term averages. We suggest investors adopt overweight positions in European and Japanese stocks.

2014-01-28 Demystifying Gold Prices by Nicholas Johnson of PIMCO

What is it about gold prices? Many people seem to believe they are impossible to predict, or even understand. At her Senate confirmation hearing in November, Janet Yellen said, "I don’t think anybody has a very good model of what makes gold prices go up or down." Ben Bernanke also said last year that "nobody really understands gold prices, and I don’t pretend to understand them either." While many factors influence the price of gold, PIMCO believes there is one that can explain the majority of changes in gold prices over the past several years: changes in real yields.

2014-01-27 Market Outlook by Scotty George of Alexander Capital

Despite projections that interest rates might enter a secular upswing if the economy continues to improve, the inescapable fact is that bonds, and other fixed-income securities, are not the place for investors to generate yield, stocks are. The way to improve upon dwindling dividend and interest investment objectives is to build a portfolio of high yield equities, and to protect against downside market volatility with select stop-loss support.

2014-01-27 Rummaging for Yield - The Case of the Insurance Investor by Eugene Dimitriou of PIMCO

Since the height of the global financial crisis in 2008, insurance companies have faced three key challenges: First, insurance companies urgently needed to address new critical risk management issues as banking sector and peripheral sovereign credit risks significantly increased in Europe. Second, the prospects of longer-term low yields forced insurers to identify alternative sources of meaningful yield. And third, insurance companies needed to prepare for pan-European insurance regulation Solvency II.

2014-01-25 Investing by Duration by Heather Rupp of AdvisorShares

Lower duration bonds would not eliminate the interest rate impact, just lessen it. We see this as a good strategy broadly speaking if you are talking the high yield asset class versus the investment grade asset class, with the high yield market naturally having a much lower duration. However, we believe this strategy is lacking when it is used to parse out the high yield space itself, investing in only the lower duration names within the high yield category.

2014-01-24 India\'s Rising Aspirations by Sudarshan Murthy of Matthews Asia

India’s newly formed Aam Aadmi Party (AAP) had a spectacular debut in recent state elections. Its leader became the chief minister of the state of Delhi. The election results seemed to indicate a fundamental change-voters now perceive politicians not as "rulers," but as professionals with a limited mandate to serve. The AAP ran on an anti-corruption agenda, and Delhi’s new chief minister seems to "walk the walk." He uses public transport to commute to work, a refreshing change from the typical politician in India who is usually seen riding in a convoy of vehicles.

2014-01-23 A Problem with the Numbers - Unemployment and the Fed\'s Timetable by Anthony Wile of J.P. Morgan Funds

Given a potentially inaccurate assessment of labor force participation, the Federal Reserve may be missing the mark on their current economic projections, which increases the potential for policy error going forward. Assuming the natural rate of unemployment is at the low end of Fed projections, the Fed can lower forward guidance thresholds without spurring an acceleration in inflation.

2014-01-23 Ordem e Progresso by Michael Gomez of PIMCO

Amid stagnant growth and high inflation in 2013, Brazil’s equity market was one of the worst performers, the real was a chronic underperformer and the corporate sector struggled. Brazil needs to anchor economic policy around a stringent and credible primary surplus target rather than run the current mix of loose fiscal policy, subsidized public credit and ever tighter monetary policy. Valuations are attractive, but unless an effective policy mix is restored, the outlook for order in Brazil’s financial markets is less certain.

2014-01-22 Crosscurrents Buffet Markets by Bob Doll of Nuveen Asset Management

U.S. equity performance was mixed last week, as the S&P 500 recovered from Monday’s sell-off that was the largest one-day decline since early November. Economic data was mostly in line or slightly better than expected, following the disappointing December unemployment report. Corporate earnings drove much of the price action. Bank earnings were fairly well received but did not always translate to good performance since the stocks ran up earlier. Negative guidance trends remain an overhang, particularly for retail.

2014-01-22 What to Expect in 2014 (And Beyond) by Jack Rivkin of Altegris

Each year, I take Alfred Lord Tennyson’s advice and "ring out the old, ring in the new" by creating a list of expectations about the markets. My list involves events that the average investor thinks have only a one-in-three-chance of happening, but which I believe have more than a 50% chance of occurring. If this approach sounds familiar, it should. It’s modeled after Byron Wien’s annual list of "surprises." Like his, my expectations are designed to provoke thought and discussion.

2014-01-21 Turning Asset Allocation Upside Down by Roger Nusbaum of AdvisorShares

After the second 50% drawdown of the US equity market in one decade, the investment industry began to reassess the idea of what asset allocation should look like. Unlike the 1980’s and 1990’s, financial professionals can no longer rely on an almost static 60/40 or 70/30, watch the equity portion triple in 15 or 20 years and then flip the whole thing to fixed income for a safe 6%.

2014-01-21 And That\'s The Week That Was by Ron Brounes of Brounes & Associates

With a few more days to digest the labor data, investors began the week on another sour note, but a sense of normalcy returned on some other better-than-expected releases. Still, the Fed’s stimulus remains atop the headlines as speculation runs amuck about how the tapering will play out. Earnings season pushes ahead and, thus far, the results are lackluster at best. Don’t forget, as January goes...

2014-01-21 Kansas by Jerome Schneider of PIMCO

In the coming year, traditional money market strategies, long viewed as safe havens, will be challenged by new regulations, near 0% returns and a lack of investable assets. Short-term bond strategies could provide the right balance between risk-taking and liquidity management, and offer the potential for positive returns. Active managers have a distinct advantage because they can manage interest rate volatility and potentially source assets by identifying underappreciated sectors.

2014-01-18 Dialing Down the Drama by Liz Ann Sonders, Brad Sorensen and Michelle Gibley of Charles Schwab

We remain optimistic on stocks for 2014, but there will likely be bumps in the road. Investor sentiment is elevated, complacency seems to be building, and the valuation story is less compelling. But waiting for a correction can be quite detrimental to portfolio performance, evidenced by last year. QE tapering will likely continue at a very modest pace and U.S. interest rates will likely drift higher throughout the year. We remain positive on Europe and our outlook toward China is improving, while we are in at wait-and-see sort of mode with Japan.

2014-01-17 Asia\'s Evolving Science and Tech Space by Michael Oh of Matthews Asia

The main growth drivers of Asia’s science and technology industries are changing to become more domestically driven and service-oriented. These changes are happening as rising disposable income enables more Asian consumers to embrace new technologies.

2014-01-17 Getting Lucky by Howard Marks of Oaktree Capital

Sometimes these memos are inspired by a single event or just one thing I read. This one - like my first memo 24 years ago - grew out of the juxtaposition of two observations. I’ll introduce one here and the other later on. Contrary to my wife Nancy’s observation that my memos are "all the same," the subject here is one I’ve rarely touched on.

2014-01-17 Bonds and Rates by Heather Rupp of AdvisorShares

Right now the topic de jour in the fixed income space is interest rate risk. The traditional thought is that as interest rates rise, bond prices fall. But looking at history, the high yield market has defied this widely held notion. Let’s examine the four main reasons why high yield bonds have historically performed well during times of rising interest rates.

2014-01-16 Keep Optimistic and Carry On by Scott Minerd of Guggenheim Partners

This is likely to be another good year for risk-on investing, as an improving economic outlook supports stocks and bonds in an environment marked by less volatility than 2013.

2014-01-16 Let the taper begin! Fixed Income Investment Outlook by Team of Osterweis Capital Management

At the December meeting, the Federal Reserve (the Fed) decided to reduce its purchases of Treasury and mortgage securities (a.k.a. quantitative easing/QE) beginning in January 2014. This answered the question of when the taper would begin, and the markets reacted predictably. Two questions remain, however: How long until the Fed completely winds down QE; and when will short rates begin to reflect the improving economy? We feel it may be sooner on the former and could be quite some time on the latter.

2014-01-15 U.S. Inflation Outlook 2014: Signs of Life by Nicholas Johnson, Mihir Worah of PIMCO

We expect headline CPI to rise to around 2.0% year-over-year in 2014, with our base case oil forecast in the $105-$110 per-barrel range and expectations for food prices to be stable. PCE, in our view, will likely remain below the Fed’s 2% target, around 1.5%. Individuals will get some relief at the supermarket, but they will feel a pinch from landlords, who will likely raise rents.

2014-01-14 The Diversification Obituary by Chris Maxey, Ryan Davis of Fortigent

According to some major media outlets, 2013 was the year diversification died. With the S&P 500 racing to a more than 30% gain (the largest since the late ’90s), it seemed as though no other asset class truly mattered last year. While it is true domestic equities had a banner year, one-asset class portfolios will never be robust, and there is reason to believe 2013 is a prime example of why diversification is incredibly important.

2014-01-14 Market Outlook by Scotty George of Alexander Capital

The stock market’s valuation expansion has left a bittersweet taste in the mouths of some who believe that this historic sequence of "new highs" is simply smoke and mirrors and accelerated expectations. Indeed, while the wealth effect is improving the lot of many, it is also exacerbating the gap between "reality" and "perceived-reality".

2014-01-13 Stocks Rise Modestly in First Full Week of Trading by Bob Doll of Nuveen Asset Management

U.S. equities finished mostly higher for the first full week of the year, with the S&P 500 gaining approximately 0.6%. There were no meaningful directional drivers behind the price action, which is a dynamic that has been prevalent so far in 2014.

2014-01-10 5 Investor Tips for 2014 by Kristina Hooper of Allianz Global Investors

While the winding down of QE signals better times ahead, investors need to be selective and focused in taking smart risks, says US Investment Strategist Kristina Hooper.

2014-01-10 High Yield and Bank Loan Outlook- January 2014 by Team of Guggenheim Partners

Improving U.S. macroeconomic conditions should spur additional investor demand for high-yield bonds and bank loans, particularly with defaults exceptionally low. Still, investors should monitor trends pointing to an erosion of safety in leveraged credit.

2014-01-10 2014 Economic and Investment Outlook by Team of Ivy Investment Management Company

Although the December 2013 U.S. budget pact between House and Senate negotiators was a welcome development, partisan battles over government spending still are possible in 2014. The agreement ends a three-year budget fight and sets government spending through fall 2015, but it does not eliminate the need to raise the nation’s borrowing limit - the "debt ceiling."

2014-01-10 Hasenstab: Fed Tapering Was Inevitable by Michael Hasenstab of Franklin Templeton

The US Federal Reserve (Fed) announced its decision to reduce its $85 billion monthly asset purchase program by $10 billion starting in January 2014. What might the eventual end of the Fed’s policy of aggressive money printing mean for fixed-income investors? Michael Hasenstab, Ph.D, executive vice president, chief investment officer, Global Bonds, Franklin Templeton Fixed Income Group, believes there’s no reason for investors to panic. He outlines why he thinks that’s the case, and where on the map he’s spotting fixed income opportunities.

2014-01-10 Exploring Ceylon Tea Country by Jodi Morris of Matthews Asia

Riding by train through the Sri Lankan highlands recently, I found it difficult not to be mesmerized by the views of mountains blanketed in tea plantings and cool mist. My days spent exploring Sri Lanka’s mountainous interior were among my favorite as a first-time visitor to the country.

2014-01-09 Seesaw Rider by William Gross of PIMCO

There’s 50 ways to leave your lover and maybe more than that to lose your money or "break the buck," as some label it in the money markets. You can buy the Brooklyn Bridge, bet on the Cubs to win the World Series or have owned 30 year Treasury bonds in 2013, to name just a few. But bridges and baseball aside, what you’re probably interested in hearing from me is how to avoid breaking your investment buck in 2014.

2014-01-08 I\'m Back by Jeffrey Saut of Raymond James

Well, I’m back after roughly a two-week hiatus where I didn’t do very many strategy calls, or strategy reports. I did, however, pen a letter regarding my forecast for 2014 dated 12/30/13. And for those who, like me, kicked back over the past two weeks to spend time with family and rejoice in the holidays, and did not read anything, I urge you to peruse my "2014" report.

2014-01-07 A Healing Economy by Richard Michaud of New Frontier Advisors

The quarter continued the theme of the year, with U.S. equities continuing their dramatic performance. For the quarter, the Dow was up 9.6%, the S&P 9.9%, and the NASDAQ 10.7%. The year’s returns substantially exceeded last year"s "expert predictions" and much of this year’s punditry with the Dow up 26.5%, S&P up 29.6%, and NASDAQ up 38.3%.

2014-01-07 Waiting for the Great Pumpkin by James Moore of PIMCO

Shortly before Thanksgiving, I had the privilege of being on an investor panel at Bank of America’s Debt Capital Markets and Derivatives Conference. On the panel before me was a trio of BofA’s chief strategists, among them Michael Hartnett, their chief investment strategist. Mr. Hartnett reminded the audience that he was the man who coined the phrase "The Great Rotation" and after much anticipation, at long last, it was here.

2014-01-07 Turn the Page: Outlook for Economy/Stocks in 2014 by Liz Ann Sonders of Charles Schwab

In this comprehensive (read: long...sorry!) 2014 outlook report, we assess the likelihood a correction is in the offing given the strong gains since 2009.

2014-01-06 Market Valuation Overview: Yet More Expensive by Doug Short of Advisor Perspectives (dshort.com)

Here is a summary of the four market valuation indicators I update during the first days of the month.

2014-01-06 ProVise Bullets by Ray Ferrara of ProVise Management Group

To say that 2013 was an interesting year would be a bit of an understatement. We learned a long time ago not to make predictions about the stock market because no matter what is predicted, it is likely to be wrong. Even if we get lucky one year, we are not likely to even get close the following year. We do try to give guidance, however. Last year we suggested that, given the late run in the market in 2012 and its 15% return, investors should be happy with a return of 8 to 10% in 2013. Obviously, investors enjoyed much better returns.

2014-01-03 Municipal Bonds: Back to Basics in 2014 by Rafael Costas, Sheila Amoroso of Franklin Templeton

Municipal bonds faced some ups and downs in 2013, falling victim to Fed taper speculation and negative press that dogged Detroit and Puerto Rico and understandably scared off some investors. Sheila Amoroso and Rafael Costas, co-directors of our Municipal Bond Department, note that while there are still some issues to work through and even despite the sometimes-shocking headlines, not all news in the world of munis is bad news. They say investors need to get back to the basics and re-examine the reasons for investing in municipal bonds.

2014-01-03 A More Market-Friendly China by Henry Zhang of Matthews Asia

My last visit to Beijing happened to coincide with the Communist Party’s Third Plenum Meeting. General business sentiment was just as upbeat as it had been earlier last autumn. But through my discussions with different businesspeople, I came away with a distinct new optimism over the leadership’s more market-oriented stance on policies.

2014-01-03 2014 Outlook: The Emergence of a Global Expansion by Team of Loomis Sayles

After years of a global recovery characterized by fits and starts, we expect more synchronized global growth in 2014. Global GDP growth will accelerate modestly from 2.7% in 2013 to approximately 3.4% in 2014, primarily driven by larger advanced economies. In particular, we are optimistic that US growth will be sustainable. The fading economic drag from government policy and the ongoing housing recovery should help boost US GDP growth toward 3% as the year progresses. The UK is poised for a similar rate of expansion in 2014, and Europe will likely post positive growth in the coming year.

2013-12-31 A Look Ahead at 2014 by Russ Koesterich of iShares Blog

Last week, Russ shared his annual look back at his 2013 economic and investment calls. Now, it’s time for his annual look forward.

2013-12-31 2014? by Jeffrey Saut of Raymond James

Year-end letters are difficult to write because there is always a tendency to discuss the year gone by or, worse, attempt to forecast the coming year. Typically, when the media asks where the S&P 500 (SPX/1841.40) will be at the end of the new year, I tell them you might as well flip a lucky penny.

2013-12-27 A Look Back at 2013 Calls by Russ Koesterich of iShares Blog

It’s time again for Russ K’s annual look back at his economic and investment calls. Find out what he got right - and what he got wrong.

2013-12-26 Creating a Reliable Lifetime Income by Ken Mungan of Milliman Financial Risk Management

With the baby boomer generation rolling into retirement, financial advisors have been faced with increased demand to assist with retirement income planning. As the financial advisory community struggles to address this demand, advisors are realizing that their traditional planning techniques must improve. In this white paper, we analyze the problem of providing a reliable lifetime income. We compare several approaches and demonstrate that risk management is a key element to a successful investor outcome.

2013-12-26 A Strong Finish for 2013 by Bob Doll of Nuveen Asset Management

For our weekly subscribers, we wanted to take an opportunity to look back on the year. We began 2013 with an outlook for the prospect of improvement for the global economy and risk assets. We thought global policymaker’s unprecedented attempts to reflate global growth would show some signs of bearing fruit, especially in the United States and China. In our forecast, equity markets would continue to be choppy in light of the fiscal cliff issues, but an inevitable political compromise would reduce the economic drag.

2013-12-24 The Price America Pays for Global Leadership by Bob Veres (Article)

America’s political debates inevitably default to finding ways to contain our federal deficits, and our investment debates focus on whether we’re facing a secular bear or bull market - and how to maneuver within that environment. I had never imagined that these two debates could be related until I heard a presentation by Bill O’Grady, of Confluence Investment Management in St. Louis, MO at the Insider’s Forum conference in Dallas.

2013-12-23 Risk Assets Take Fed Taper Announcement in Stride by Roger Bayston of Franklin Templeton

The US Federal Reserve (Fed) delivered an early holiday surprise to some market participants, announcing at its December 18 policy meeting it would start slowing its asset purchase program known as quantitative easing in January. For some thoughts on what this may mean for the markets in the new year, we turned just after the announcement to Roger Bayston. He believes the markets should be able to take the Fed’s tapering in 2014 in stride, although investors should prepare for the proposition of higher Treasury yields.

2013-12-21 Start Me Up: Fed Announces a Much-Anticipated Taper by Liz Ann Sonders of Charles Schwab

The Fed decided to begin tapering its QE-related bond purchases with a reduction of $10 billion; split evenly between Treasuries and mortgage-backed securities. In a sign that tapering was already priced in, the stock market surged on the announcement; while bond yields remained quite tame. The Fed announced slightly sunnier economic forecasts, suggesting quantitative easing could wind down within a year.

2013-12-20 The Challenges of Year-End Forecasting by Jason Hsu of Research Affiliates

Many investors piled on the equity bandwagon this year, pushing prices up to dizzying heights. With current yields for U.S. equities at record lows, is it time to get off the bandwagon?

2013-12-20 Five Resolutions for 2014 by David Kelly of J.P. Morgan Funds

Entering 2014, the global investment environment is as challenging as ever. After a super 2013 in returns, U.S. equities can no longer be considered inexpensive and yet still look attractive relative to the prospective returns on savings accounts and long-term bonds. Long-term bond yields are higher than a year ago but could still rise further as the Federal Reserve begins to reduce quantitative easing.

2013-12-19 Coal in the Fed\'s Stock-ing by Tony Crescenzi, Lupin Rahman, Ben Emons of PIMCO

Forward guidance has become an increasingly common practice among global central banks. Communicating a possible change in the policy rate could have a large effect on long-term interest rates. Capital has moved literally around the globe as a result of central bank activism in developed countries. Looking ahead, we expect 2014 to be a year of increased differentiation across emerging markets in terms of economic fundamentals, policy reactions and market outcomes.

2013-12-17 2013 A Pretty Good Year by Mike Temple of Pioneer Investments

This time last year we were bullish about equities and positive on the slow but steady strengthening of the economy. The market did not disappoint. The economy was almost heroic, you might say, with its performance enduring government sequestrations and higher taxes almost a 2% drag on GDP but comporting with our expectations of 2 - 2.5% growth. 2013 is ending with GDP and the markets coming fairly close to what we thought they’d achieve. Now the year is almost out, so let’s take stock of 2013 but look ahead to 2014.

2013-12-16 A Much Better Dilemma by Mike Amey of PIMCO

While the UK economy is likely to avoid reverting to growth levels of recent years, it must transition into a more durable recovery involving business investment, higher productivity and stronger real wages. However, headwinds for domestic demand look significant and the banking system appears to favour secured lending to consumers over businesses. We believe that much of the rise in bond yields is already behind us. With clearer value in shorter bonds, our preference lies in short and intermediate gilts.

2013-12-16 2014 Investment Outlook: Economic Growth Should Broaden by Bob Doll of Nuveen Asset Management

For the first time in several years, we approach the new year without big clouds on the horizon. In the United States, accommodative monetary policy has healed many of the wounds from the 2008-2009 crisis.

2013-12-13 Disruptive Innovations in Indian Politics by Sunil Asnani of Matthews Asia

The sweeping victories for India’s pro-business opposition party, the Bharatiya Janata Party (BJP), in recent state elections were largely expected. But more stunning, to say the least, were unexpectedly strong gains in Delhi by a nascent, novice and underfunded political party known as the Aam Aadmi Party, or Common Man’s Party.

2013-12-12 Looking Back 40 Years, What Can We Learn About This Current Corporate Debt Market? by Matt Lloyd of Advisors Asset Management

I recently wrote a blog post detailing the potential opportunity in municipals as it has historically rebounded after a negative total return. Accordingly, I have been asked if this pattern was representative in the investment grade corporate arena.

2013-12-11 AdvisorShares Weekly Market Review by AdvisorShares Research of AdvisorShares

In our last commentary, we noted the slow holiday week that did not provide us with much economic fodder. This week, the unemployment rate dropped to 7% and payrolls jumped more than expected. Third quarter GDP rose more than expected, and hit its highest mark since Q1 2012. Although the status of the U.S. budget remains up in the air, many expect Janet Yellen to maintain Chairman Bernanke’s accommodative policies. With the hectic holiday schedules nearing, it is difficult to predict what we will see this month.

2013-12-11 Year in Review: A Note from Robert Kleinschmidt by Robert Kleinschmidt of Tocqueville Asset Management

In his latest piece, Robert Kleinschmidt, President, Chief Executive Officer and Chief Investment Officer of Tocqueville Asset Management, looks back at the last year and the "remarkable" lack of impact that many economic and political events had on the markets, despite the "dire rhetoric" surrounding many of them.

2013-12-10 A Framework for Understanding Bond Portfolio Performance by Laurence B. Siegel (Article)

Investors are legitimately concerned that interest rates, after falling reliably for decades, are on their way up and that bond portfolio values are on their way down. Investors now seek interest-rate protection. I provide a framework for analyzing and, hopefully, predicting the returns on actively managed portfolios of bonds - a task different from analyzing the bond market itself.

2013-12-10 2 Unconventional Options in a Low Rate Environment by Sponsored Content from OppenheimerFunds (Article)

This paper discusses how: Global interest rates could remain low for a long time, says Krishna Memani, CIO, Fixed Income; GDP growth and interest rates tend to track each other over time, and the expectation is for slow growth; Compelling opportunities for fixed income investors willing to look beyond Treasuries.

2013-12-09 Improving Economic Data Imply Further Global Recovery by Bob Doll of Nuveen Asset Management

U.S. equities finished last week in barely negative territory, ending the positive streak for the market. Economic data concerning the post-government shutdown climate has improved. Employment data beat estimates and increased by 203,000 jobs in November, and the unemployment rate fell to 7.0%, also surpassing expectations.

2013-12-03 Looking Out on the Horizon for Equities by Bob Doll of Nuveen Asset Management

U.S. equities finished higher for an eighth consecutive week as the S&P 500 increased 0.1%, representing the longest positive streak since 2004. Inertia may have carried markets forward in a relatively quiet trading week without major headlines. Retail news appeared fairly positive in anticipation of a strong start to the Thanksgiving shopping weekend. Economic data was mixed.

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.

2013-12-03 Is the Fed Increasingly Monetizing Government Debt? by Axel Merk of Merk Investments

Fed Chair Bernanke vehemently denies Fed "monetizes the debt," but our research shows the Fed may be increasingly doing so. We explain why and what the implications may be for the dollar, gold and currencies.

2013-11-29 ING Fixed Income Perspectives - November 2013 by Christine Hurtsellers and Matt Toms of ING Investement Management

Given rich valuations globally, we remain broadly neutral on interest rate risk with the exception of Japan.

2013-11-29 \"Fixed\" Income Investing is Broken by Robert Isbitts of Sungarden Investment Research

Back in June of this year, the Fixed Income (a.k.a. bond) market may have experienced the defining moment of this generation of investors. The yield on the 30-year U.S. Treasury bond moved above 3.50% for the first time since the summer of 2011. It stands at about 3.80% now. After many fake-outs, this could be the start of a long-term trajectory higher.

2013-11-26 While You Were Sleeping: Asian Developments Loom for Financial Markets by Chris Maxey, Ryan Davis of Fortigent

Amid all the Fed talk dominating airwaves and headlines, a few key developments occurred overseas last week that could shape financial markets significantly in the quarters ahead.

2013-11-25 Solving the Income Puzzle by Christopher Remington, Michael Cirami, Kathleen Gaffney, Scott Page of Eaton Vance

Income needs may be as high as they’ve ever been, while the yield potential from many traditional investment classes has dwindled to generational lows. Investors who remain in high-priced, low-yielding core bond strategies could experience loss of principal (and mounting retirement shortfalls) if interest rates revert toward their mean. We advocate creating an integrated, multi-pronged income plan that may offer yield potential that meets investor needs, while managing key risks found in the typical core fixed-income allocation.

2013-11-25 Equities Extend Gains for the Seventh Consecutive Week by Bob Doll of Nuveen Asset Management

U.S. equities finished higher again last week as the S&P 500 increased 0.4%. The Fed continued to dominate headlines, with heightened emphasis on the distinction between tapering and tightening. Bubble speculation continued to receive attention in the press, while many articles refuted such concerns. The financial sector performed well, led by banks.

2013-11-21 Two Nobel Laureates...Two Tales of Value by Vitali Kalesnik of Research Affiliates

How can you build a better value stock portfolio? The key is discerning whether the value premium stems from mispricing or risk.

2013-11-19 Howard Marks: Equities are Under-owned and Un-loved by Robert Huebscher (Article)

According to Oaktree’s Howard Marks, U.S. equities are ’under-owned and un-loved, and I like to buy assets like that.’

2013-11-19 October 2013 Market Commentary by Andrew Clinton of Clinton Investment Management

The Fed’s decision in September to maintain it’s policy of asset purchases, better known as Quantitative Easing (QE), caught the broader market by surprise. Fed “tapering” of QE was broadly expected to begin in September. The Fed’s decision to delay the reduction of QE pushed back the date upon which anticipated tapering would begin. This resulted in a meaningful rally in Treasury bond prices in September. To the surprise of many media pundits calling for ever higher interest rates, US Treasury yields ended October at 2.55%, virtually unc

2013-11-18 Willing a Fiscal Win by Christine Hurtsellers, Matt Toms of ING Investment Management

Why can’t we just will our desired political outcomes the way the most fervent seemingly can impact ballgames? After watching Fenway Park packed to the rafters with Red Sox faithful exercising their sovereign and ethereal right to psychically encourage baseballs out of the yard and knowing that millions of others in Red Sox nation were doing the same in front of their televisions we’re left wondering if the fans of Team U.S.A. can apply a little of that classic Carlton Fisk mojo a few hundred miles down I-95.

2013-11-18 The Muddle-Through Economy and Grind-Higher Equity Market Continue by Bob Doll of Nuveen Asset Management

U.S. equities finished higher last week as the S&P 500 and Dow Jones Industrial Average closed at record highs, marking the sixth straight week of advances.1 Several macroeconomic themes are important as third quarter earnings season comes to an end. Fed Chairman nominee Janet Yellen spoke before the Senate in support of current monetary policy and suggested a similar path under her leadership. Economic data was mixed for the week, and any economic weakness continues to be perceived as supporting a delay in tapering. In turn, this can be seen as positive for equities.

2013-11-15 Has Washington Drama Taken Its Toll On MLPs? by David Chiaro of Eagle Global Advisors

“They did it! They blew it up!” shouts Charlton Heston in the iconic ending scene of the film Planet of the Apes when he finds out he has been living on a post-nuclear war planet Earth. Americans are probably having some of the same feelings about our current world resulting from the ongoing political “nuclear war” raging in our nation’s capital.

2013-11-15 “Great Rotation?” How About “Selective Rotation?” by Eric Takaha of Franklin Templeton

A few months ago there was a lot of buzz about a so-called “Great Rotation,” used to describe an investor exodus from fixed income and into equities, conjuring up images of a massive herd of wildebeest on the African plain racing for greener pastures. Oftentimes, when investors react to the market with a herd mentality, they can wind up losing sight of where they are going, and why. Eric Takaha, senior vice president and portfolio manager for Franklin Strategic Income Fund, says what he’s seen is more of a “selective rotation.”

2013-11-15 Are You Prepared for Economic Recovery? by Nanette Abuhoff Jacobson of Hartford Funds

Nanette Abuhoff Jacobson discusses how many portfolios are out of balance today and explains why investors should consider increasing their equity exposure.

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.

2013-11-14 And That\'s The Week That Was by Ron Brounes of Brounes & Associates

Data keeps coming fast and furious and (for the most part) it has been favorable. Investors remain torn between being ecstatic about the solid recovery or worried about the implications for another Fed move. Stocks were mixed throughout the week with the Dow Jones staying in record territory. Is that worth a Tweet (now that it’s public)?

2013-11-13 Why I Sell the Dollar: From Dollar Strength to Dollar Weakness by Axel Merk of Merk Investments

To those that say the U.S. has the cleanest of the dirty shirts, we would like to point out that it hasn’t helped the greenback, as evidenced by the euro outperforming the dollar both so far this year, as well as last year. Yes, we have a mess in the Eurozone that won’t be resolved anytime soon. But we also have a mess in the U.S., Japan, and many other places around the globe.

2013-11-12 Beware of Financial Planning’s Misguided Rules-of-Thumb by Joe Tomlinson (Article)

Lacking better insights, financial planners cling to rules of thumb, such as allocating a percentage of assets to fixed income based on a client’s age. More recently, those rules have been institutionalized through products like target-date funds, which maintain a fixed glide path for all investors. But new research has led to the development of software products that allow advisors to easily improve on the suboptimal outcomes to which clients were previously destined.

2013-11-12 Markets Vacillate Between Stronger Economy and Fed Accommodation by Bob Doll of Nuveen Asset Management

U.S. equities finished mostly higher last week as the S&P 500 increased 0.6%, ending higher for the fifth straight week. The return of central bank action was a primary concern. The European Central Bank (ECB) surprised investors with a 0.25% rate cut, while the debate over the Federal Reserve’s impending tapering decision continued in earnest.

2013-11-08 Bubbles Without Borders? by Vivek Tanneeru of Matthews Asia

If you are a wealthy person living in Asia, you might be tempted, with good economic reason, to look overseas to diversify your asset base. Overseas markets often offer good diversification as they are typically exposed to different economic cycles and also give exposure to different currencies. But while overseas stocks, bonds and other financial instruments all offer diversification, few asset classes seem to have the same allure as overseas propertythat is, overseas property in the right cities.

2013-11-08 Taking Stock in the Economy by Ken Taubes of Pioneer Investments

Now is a good time to take stock in the current macro environment from a market perspective. Here’s what we think could happen at the end of this year and next year.

2013-11-07 Upgrading Non-U.S. Equities by Jeffrey Knight of Columbia Management

Two performance trends have stood out across world markets during 2013. The first is the strong outperformance by equities over bonds. The second is the strong returns of the U.S. stock market relative to other stock markets around the world. The Table breaks down year to date performance for the S&P 500, Eurostoxx 50, FTSE 100, Topix and MSCI Emerging Market indices. Notice that as of the end of July, equity returns in the Unites States were handily outpacing all other regions except Japan.

2013-11-07 Global Inflation: A Mixed Picture by Monty Guild, Anthony Danaher of Guild Investment Management

Many investors and global macro economists have been on vigil for a ramp up in global inflation spurred by immense central bank QE and other forms monetary stimulus. All of the money printing from around the globe has helped keep the financial system functioning, and it continues to help weak developed economies get back on firmer growth footing. However, it has not translated to rapidly rising prices for goods and services that many expected.

2013-11-06 Permabull? by Jeffrey Saut of Raymond James

A permabull is defined as somebody who is always upbeat about the future direction of the stock market and the economy. Recently I have been called a permabull by certain members of the media, which may be true since March of 2009, but certainly not true over the past 14 years.

2013-11-05 Skepticism Still Abounds by Bob Doll of Nuveen Asset Management

U.S. equities were mixed last week as the markets were broadly unchanged. The October FOMC statement was a bit more hawkish than expected, causing concern that the recent delay in tapering may have been too aggressive. Other worries appear to be tail risks surrounding a possible Fed liquidity trap and accompanying asset bubbles. Economic data were mixed as markets struggle with the trade-offs between recovery and policy normalization.

2013-11-05 Fed in Holding Pattern, but for How Long? by Christopher Molumphy of Franklin Templeton

At its October 29-30 policy meeting, the US Federal Reserve (Fed) again put off the so-called “tapering” of its $85 billion-a-month asset purchase plan, now over a year old, until some future date. In an official statement released at the conclusion of the meeting, the Fed cited fiscal policy issues as restraining growth and said it will continue its quantitative easing program (known as “QE”) until the job market improves “substantially.”

2013-11-04 Steve Jobs Didn\'t Give a *!@% About the Debt Ceiling by Jeffrey Bronchick of Cove Street Capital

A quick nod to Bloomberg columnist Caroline Baum from whom we lifted our title. Anything else you might have been (or will be) subjected to on the subject of how the government operates pales in materiality to the headline. And as miserable as our predicament seems to anyone over the age of 13, it really and truly is old and increasingly dull news. To wit, I present the following, highly curated list of quotes-please note the timeline.

2013-11-04 Mortgage REITs: Last Chance to Exit? by Keith Jurow of Advisor Perspectives (dshort.com)

An online advertisement raises the following question often asked by your clients: Can you find me more income? In a nutshell, that is the dilemma facing high net worth investors.

2013-10-31 Third Quarter Letter by Team of Grey Owl Capital

Despite the recent shenanigans in Washington concerning funding the government and raising the debt ceiling, as well as the constant news coverage of the quantitative easing “taper” that the Federal Reserve may or may not begin, we are going to spare (at least for this quarter) both you and us another long discussion of these very real issues.

2013-10-31 Fed Outlook for the Short and Longer Run by Zach Pandl of Columbia Management

One of the ironies of Ben Bernanke’s tenure is that he set out with a goal to improve Fed communication while in office. Immediately after his first meeting as chairman in March 2006, Bernanke set up a subcommittee tasked with facilitating debate around communication issuesincluding inflation targeting, post-meeting statements and minutes and public speeches by individual Fed officials.

2013-10-30 Fed Tapering Could Be Off The Table Until 2014 by Michael Materasso of Franklin Templeton

Sometimes, hindsight is insight. The mystery of why the Federal Reserve didn’t start pulling back or “tapering” its prolonged quantitative easing program at its September policy meeting seems more clear now that we’ve experienced the fallout from the fraying of US fiscal policy soon thereafter, including a 16-day government shutdown in October. Given that the Congressional agreement reached in October only funds the government through January 15 and extends the debt ceiling through February 7, more political grandstandingand economic consequencescould lie ahead.

2013-10-29 Defining the EM Corporate Bond Opportunity by Sponsored Content from Loomis Sayles (Article)

Finance is a numbers business. Investors study prices, yields, rates of return. However, when it comes to sizing up emerging markets, we think they should also pay attention to semantics. In the past, terming a country “emerging” made it synonymous with low credit quality and higher risk. But today, many emerging markets boast strong credit profiles while parts of the developed world buckle under heavy debt loads.

2013-10-29 Equities Reach All-Time HighsYet Again! by Bob Doll of Nuveen Asset Management

U.S. equities marked another all-time high last week as the S&P 500 increased 0.9%. (1) Global equities reached new cycle highs for the second week in a row. Many investors have concerns that the gains will not last since the world economy remains lackluster and the liquidity driving the current rally will eventually stop.

2013-10-25 Environmental Awareness in Asia by In-Bok Song of Matthews Asia

I traveled to China in September, quite possibly one of the best times of the year to visit in terms of weather. The air quality in both Beijing and Shanghai was actually pleasant and was very different from how it seemed during my previous visits as well as from the typical accounts one usually hears of the notorious smog in China’s major cities. It made me think about growing up during the industrialization of my home country, South Korea.

2013-10-24 Glory Days: Could They Come Back for US Equities? by Liz Ann Sonders of Charles Schwab

A "great rotation" may not be underway by individual investors; even amid record-breaking outflows from bond funds this summer. But fund flow data do show some shift in preferences and highlight the sensitivity of investors to any rise in longer-term interest rates. A more interesting place to look is at the fiduciary community; that has decidedly shifted its attention away from traditional equities (and fixed income) over the past decade.

2013-10-23 Shifting Gears: The Fed Turns from Tapering to Tempering Expectations by Nanette Abuhoff Jacobson of Hartford Funds

Federal Reserve (Fed) Chairman Ben Bernanke surprised markets on September 18 by announcing a continuation of the Fed’s $85 billion-per-month bond purchases and more muted expectations for economic growth and inflation. With this proverbial monkey wrench thrown into the gears of financial markets, investors are now asking how the Fed’s new course changes the investment outlook.

2013-10-23 What a Yellen Fed Could Mean for Interest Rates by Zach Pandl of Columbia Management

A major question among investors after Janet Yellen’s nomination for Fed Chair is whether she will be too soft on inflation. Part of Yellen’s dovish reputation stems from a debate among the FOMC in July 1996, in which she warned the committee about the risks of pushing inflation too low. With the passage of time, however, the views Yellen expressed at that meeting now come across as very sensible. Indeed, today they would be considered uncontroversial among most economists. In reality Yellen is closer to the Fed consensus on inflation than her reputation in markets would suggest.

2013-10-23 Can Kicked Down the Road Once Again... by Blaine Rollins of 361 Capital

Donkeys 1, Elephants 0, Congress -535. The can was kicked down the road once again. We would all like to think that Congress will avoid another last minute battle in early 2014, but unfortunately we can’t put it past the current list of non-negotiators. The only thing that is certain in the future is that it will be many election cycles before a member of Congress makes it into the World Series of U.S. Presidential ballots.

2013-10-23 I Thought The Safety Was On by Liam Molloy, Bethany Carlson, Charlie Mas of Galway Investment Strategy

For the past thirty years investors could allocate a portion of their portfolio to investment grade bonds and regard that money as “safe”. Wealth preservation was easy buy a ladder of Treasuries or triple-A rated corporates and go back to bed. That perceived safety was a direct result of a continuing, if not steady, decline in interest rates.

2013-10-22 Bond Legend Dan Fuss on Rising Rates by Robert Huebscher (Article)

Having just celebrated his 80th birthday, Dan Fuss can claim a unique achievement ? his tenure in the fixed income markets has spanned a full market cycle, from the great bear market that began in the early 1950s through the equally great bull market that commenced in 1981. Fuss said today’s environment most closely resembles what he confronted in the late 1950s, when long-term rates were 3% and beginning their march upwards.

2013-10-22 Earnings Season Hides in the Government Shadow by Chris Maxey, Ryan Davis of Fortigent

Lost in all the discussion about Washington is the fact earnings season is in full swing.It is shaping up to be another interesting reporting season, on account of volatility in the markets and economy.So far, companies are beating expectations, but the broader trend is lower.

2013-10-22 After the Minimalist Debt Ceiling Deal: The Good & Bad News by Russ Koesterich of iShares Blog

Last week, investors cheered that Washington finally reached a last-minute debt ceiling deal. But despite their big sigh of relief, the debt ceiling deal wasn’t all good news. Russ provides a quick look at the good, the bad and the investing implications of the compromise.

2013-10-22 And That\'s The Week That Was by Ron Brounes of Brounes & Associates

The gov is back in biz (so get back to work). Investors were pleased (for now).

2013-10-21 Closed-End Fund Review by Jeff Margolin of First Trust Advisors

The third quarter was a challenging one for many categories of the closed-end fund marketplace.

2013-10-21 Fourth Quarter Investment Outlook by Bob Doll of Nuveen Asset Management

The macro theme of the fourth quarter and early 2014 is monetary reflation and global growth resynchronization. The Fed’s surprising decision to postpone tapering its QE program will likely encourage further risk-taking. In the meantime, we observe increasing signs of a synchronized improvement among the four important economies - the United States, Europe, Japan and China.

2013-10-21 Europe Turning a Corner? by Brandon Odenath of J.P. Morgan Funds

Since late last year, investors have seen periods of strong outperformance by assets from the most impacted parts of Europe, leaving many observers wondering if Europe is turning a corner. Intervention by the ECB and the ability of those liquidity injections to stop the bleeding in the economy has helped. The reduction of austerity and drag coming from fiscal policy should be the key to faster economic growth.

2013-10-18 Formosa: Back to Beautiful by Patricia Huang of Matthews Asia

When the Portuguese first landed on Taiwan, they called it Ilha Formosa or “Beautiful Island.” However, Taiwan’s route to success has been far more prosaicit rapidly industrialized by mass producing a wide range of consumer goods, including textiles and footwear, toys, bicycles, appliances and computer chips. It famously grew its economy via an export-driven model, making the “Made in Taiwan” label ubiquitous.

2013-10-18 Debt Limit Extended, Fed Policy in the Wings - What to Expect from the Markets by Paresh Upadhyaya of Pioneer Investments

Last night Congress reached an agreement to raise the debt limit and end the 16-day shutdown. After all the acrimony and tense negotiations, the deal passed by a comfortable margin with 81-18 vote in the Senate and 285-144 in the House.

2013-10-18 In Other News by Liz Ann Sonders, Brad Sorensen and Michelle Gibley of Charles Schwab

It will take some time to gauge the full impact of the government shutdown and data is likely to be somewhat skewed over the next couple of months. However, sitting on the sidelines isn\’t a great option and stocks still appear to us to be the best place to invest money for the longer term. International growth, although not robust, appears to be more supportive as we head into 2014 than it has since the financial crisis, and we favor developed over emerging markets for the time being.

2013-10-17 Fixed Income Investment Outlook by Team of Osterweis Capital Management

Last quarter we wrote about the confusion that can be created by the Federal Reserve’s (Fed’s) two official mandates: keeping inflation in check and ensuring full employment. We also pointed out that given the rather fragile economic backdrop, talk of letting the economy stand on its own two feet by reducing their bond buying might be premature. During the third quarter, it appeared most economists felt comfortable that the Fed would indeed begin “tapering” its purchase of Treasuries and mortgage securities after the September Federal Open Market Committee (FOMC) meetin

2013-10-14 Equity Market Review & Outlook by Richard Skaggs of Loomis Sayles

Equities generally performed well across the board in the third quarter. The S&P 500 Index’s solid 5.24% return built on strong gains from earlier in the year. The Index has returned more than 19% through September, surpassing expectations at the start of the year. Slow but steady economic growth in the US, support from the Federal Reserve (the Fed), and more recently, signs of potentially better growth in Europe and Asia have been important positive catalysts.

2013-10-14 Me and My Horse by Jim Goff of Janus Capital Group

This is not a story about getting back on the horse that throws you. It is about just staying on the horse. It is also a market story.

2013-10-14 Can Markets Remain Resilient in Light of Political Dysfunction? by Bob Doll of Nuveen Asset Management

Equities were mixed again last week, and the markets remain focused on the budget impasse in Washington, D.C., after the second week of the partial government shutdown. The S&P 500 closed the week in positive territory, increasing 0.8%.1 It is hard to ignore headlines and market volatility, but the real issues for markets are the debt ceiling debate and third quarter corporate earnings announcements.

2013-10-10 Can You Hear Me Now? by Marie Schofield of Columbia Management

Under normal circumstances, I provide insight and analysis on the monthly jobs report at the beginning of each month. This month Washington politics has interrupted my routine with the partial government shutdown postponing several important data releases this week and pessimistically next week as well. Not only that but several agencies have completely shut down their websites denying access to already released data and historical databases, which is completely unnecessary.

2013-10-09 The Squeeze Play by Jerome Schneider of PIMCO

Reductions in Treasury bill and commercial paper issuance compounded by developments on the demand side mean the “squeeze play” is on for many short-term portfolios. Investors should consider the potential for substantive changes to liquidity conditions as banks contend with increases in capital requirements due to updated Basel III regulations. Active management of short-term investments is important: Don’t rely on static regulatory frameworks or traditional indexes to determine a portfolio’s unique liquidity needs.

2013-10-09 Getting Serious About Investing Responsibly by Luke Spajic, Josh Olazabal of PIMCO

To date, much of ESG-related investing has focused on negative screening, but we believe there is a better approach. This approach rests on three pillars: identifying and analyzing key ESG issues facing a given investment sector, engaging with the issuers of securities, and supporting the development of markets for ESG investments.

2013-10-09 An Unnecessary Crisis by Scott Brown of Raymond James

With the lapse in appropriations, the federal government slipped into a partial shutdown last week. The economic impact will depend on how long the standoff lasts, which could be a couple of weeks or more. Recent economic data suggest that third quarter growth was a lot lower than anticipated. So, the crisis in Washington arrives at a particularly bad time. Lawmakers appear to be taking the debt ceiling more seriously, and we could see action on that before the budget authorization is settled but it’s unclear how the situation will be resolved.

2013-10-09 Ashes to Ashes by Jeffrey Saut of Raymond James

The phrase “ashes to ashes, dust to dust” is derived from the Biblical text of Genesis 3:19 and was adapted to its present form at an old English burial service. Last week I repeated those words as I scattered my father’s ashes next to my mother’s in the memorial garden of the church they loved so much in Richmond, Virginia. Indeed, my week was spent in Richmond, Washington D.C., and Baltimore seeing institutional accounts, consulting with political types, and speaking at various events for our financial advisors and their clients.

2013-10-09 Emerging Values by Cliff Stanton of Envestnet

The current valuations and fundamentals in Emerging Markets make for an attractive entry point, if you can stomach the increased volatility and risk associated with the asset class.

2013-10-08 The Futility of the Endowment Model by Robert Huebscher (Article)

In the past two decades, the so-called endowment model has been adopted by hundreds of endowments, foundations and advisors ? particularly those serving ultra-high-net-worth clients. By aggressively allocating to illiquid alternative asset classes, those investors hoped to duplicate the results of Yale and other top-tier institutions. New research exposes the futility of those efforts.

2013-10-08 Government Shutdown Masks Pending Debt Ceiling and Third Quarter Earnings by Bob Doll of Nuveen Asset Management

Equities were mixed last week as the markets were focused on the budget impasse in Washington, D.C., that forced the federal government into a partial shutdown. As with the 17 prior shutdowns, we do not anticipate a lasting impact on the economy or markets. While the shutdown makes headlines, the issues that will likely have the most impact are the debt ceiling debate and third quarter corporate earnings announcements, which could mean a bumpy ride for investors.

2013-10-08 Listen to the 10th Man by Kristina Hooper of Allianz Global Investors

There’s no shortage of short-term risks in today’s market or conventional wisdom on how they will play out. But prepping for the unexpected could limit the number of surprises and better insulate investors’ portfolios, writes Kristina Hooper.

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.

2013-10-07 What Should Investors Know about the U.S. Government Shutdown? by Ken Taubes of Pioneer Investments

Yesterday was the start of a new fiscal year for the U.S. federal government, but failure to agree on a spending plan in time for that deadline left federal coffers short. As a result, a partial government shutdown took effect. It’s important to emphasize that this was a partial government shutdown. Many services remain operational, such as our active military, Medicare/Medicaid, Social Security and airline travel.

2013-10-07 Defining the EM Corporate Bond Opportunity by Elisabeth Colleran, Peter Frick, Peter Marber, David Rolley, Edgardo Sternberg of Loomis Sayles

Finance is a numbers business. Investors study prices, yields, rates of return. However, when it comes to sizing up emerging markets, we think they should also pay attention to semantics. In the past, terming a country “emerging” made it synonymous with low credit quality and higher risk. But today, many emerging markets boast strong credit profiles while parts of the developed world buckle under heavy debt loads.

2013-10-04 Nowhere to Hide: Navigating Rising Rate Risk in High-Yield Markets by Gibson Smith, Colleen Denzler of Janus Capital Group

Over the past few years, investors have flocked to high-yield credit, many believing it a good way to mitigate their interest rate risk as well as capture additional yield. However, they may not realize the level of rate risk that has followed them. High-yield indices, negatively correlated to five-year Treasury bond yields over the past 15 years, have been positively correlated for the past year.

2013-10-04 The New Normalization of Fed Policy by Tony Crescenzi of PIMCO

The Fed is sending a message that the unwinding of its extraordinary accommodation will be done with great care and patience, and will take time - a long time. In delaying a taper, not only did the Fed show markets it has little tolerance for any tightening of financial conditions, it also strengthened its forward guidance considerably. The Fed’s decision to delay a taper will likely relieve some of the upward pressure on longer-term interest rates.

2013-10-04 The Economy, the Fed, and Politics by Richard Michaud of New Frontier Advisors

It was a good quarter to invest in equities, and despite a down second quarter, overall a good year as well. The Dow was up 1.5%, the S&P 4.7% and the NASDAQ 10.8%. Year-to-date returns were very positive with the Dow up 15.5%, S&P up 17.9%, and NASDAQ up 24.9%. International equities were also positive for the quarter and year with the MSCI ACWI ex US up 9.4% and up 7.5% year-to-date. While emerging market equity indices were up 5% for the quarter they remained negative -6.4% for the year.

2013-10-04 New Experiment in Shanghai by Sherwood Zhang of Matthews Asia

In an attempt to further liberalize China’s economy, central government officials have created an experimental new free trade zone, which officially opened for business this week. The zone combines four existing but smaller development areas within Shanghai that are already exempt from import and export tariffs.

2013-10-04 The Debt Ceiling Drama is Heating Up by Team of Northern Trust

The debt ceiling drama is heating up. Threatening default is reckless, but long-term budget issues require attention. Measures of policy uncertainty show a link to economic performance

2013-10-04 The Malfunctioning United States Government by Gene Goldman of Cetera Financial Group

Overall, we are entering a potentially volatile period for the financial markets. Increased uncertainty combined with below-trend economic growth will likely lead to sharp market fluctuations. To mitigate the risk of volatility, we remain committed to increased diversification. Within equities, we would begin reducing exposure to U.S. stocks and instead focus on better areas of opportunity international developed markets. Within fixed income, we would maintain a bias toward spread product, such as corporate bonds, which generally pay a higher yield compared to similar Treasuries.

2013-10-03 Buying the Shutdown by Scott Minerd of Guggenheim Partners

Volatility from the government shutdown and other political developments in Washington D.C. will likely continue to rise. Despite this, the reduction in output from this will be short-term, and investors still have several attractive options for deploying capital across asset classes in the United States and globally.

2013-10-03 More Heat Than Light by Zach Pandl of Columbia Management

Following their surprising decision to maintain the current pace of quantitative easing (QE), Fed officials provided more detailed reasoning last week in public remarks and interviews with media outlets. Unfortunately, the latest comments added more heat than light to the QE debate in our view. Much like Chairman Bernanke’s post-meeting press conference, officials expressed contradictory views on several major policy questions.

2013-10-03 Survival of the Fittest? by William Gross of PIMCO

I hate crows and my wife Sue hates bugs, but like most married couples we have learned to live with our differences. Crows eat bugs though, and bugs eat bugs, and that scientific observation sets the context for the next few paragraphs of this month’s Investment Outlook.

2013-10-03 PIMCO Cyclical Outlook for the Americas: A Slow-Moving Fed Benefits Economies on Both Continents by Mohit Mittal, Lupin Rahman, Ed Devlin of PIMCO

PIMCO expects the U.S. economy to grow 2.0%2.5% over the next year. However, a continued government shutdown would be a drag on growth. In Latin America, we see growth picking up to 3.0%3.5%, but the outlook varies by country. Mexico should fare well, but Brazil’s story is more mixed. In Canada, we believe the housing correction will be less severe than many are predicting, and we expect GDP to grow 1.5%2.0% over the cyclical horizon.

2013-10-02 Quarterly Market Commentary by Scotty George of du Pasquier Asset Management

Many of us bear emotional scars from the excesses of a debt-driven, casino-like mid-2000 decade. The last recession was punctuated by lost jobs, lowering wages, diminishing portfolio valuations, putrid returns on cash savings, and a total decimation of confidence in the so-called “Titans” who drove the Wall Street bus during that period.

2013-09-30 Teenage Melodrama and the Market's Infatuation with QE by Michael Temple of Pioneer Investments

Like a teenager caught between the decision of going to college and leaving friends behind or living in the comfort of home and going nowhere, debt markets have been reeling between taper angst and infinite quantitative easing euphoria.

2013-09-30 Long/Short Equity in Rising Rate Environments by Kurt Voldeng of AdvisorShares

The party in fixed income has been a good one. Spanning approximately 30 years and touching four different decades dating back to the Volker Era in the early 1980’s, it has been a fairly smooth ride with few, short lived, painful periods. It now appears that possibly, and the market pundits are still debating, that the party may be over. Most agree that if not over yet, the end is near.

2013-09-30 Investing In Corporate Bonds: The Compelling Case For Active Management by Ed Devlin, Michael Kim of PIMCO

Passive investment returns in the Canadian corporate bond market have been unimpressive because of the way corporate bond indices are constructed and factors unique to the Canadian market. Unconstrained by these limitations, active managers with global reach may provide superior returns. The current environment presents an attractive opportunity for Canadian investors to implement a wide discretion, active approach to managing corporate bonds.

2013-09-30 Congress Holds Equities Hostage by Bob Doll of Nuveen Asset Management

U.S. equity advances ended last week and the S&P 500 declined -1.0%.1 Markets appeared concerned about overbought conditions from a strong run up over the past three weeks and uneasy about Federal Reserve (Fed) monetary policy normalization as well as the credibility of its communication strategy. Other widespread reasons for the downturn included increased focus on the fiscal battles in Washington, D.C., heightened worries about a possible near-term government shutdown and the contentious debt ceiling debate.

2013-09-30 Fourth Quarter Outlook: A Turning Point? by Gene Goldman of Cetera Financial Group

It seems sometimes that the outlook for the global economy and the markets has been unchanged for years. Since the end of the recession, each year has commenced with forecasts that the United States economy would break out of its below-trend growth mode, only to see expectations dashed. Meanwhile, Europe has been mired in its own recession as it struggles with heavy post-crisis debt burdens. Growth has slowed in the emerging markets, ending the commodity boom of the first decade of this century.

2013-09-27 Give Me Tapering... Just Not Yet by Zach Pandl of Columbia Management

Last week Federal Reserve (the Fed) officials surprised investors by choosing not to begin slowing the pace of quantitative easing (QE) despite months of setup in their public comments. Instead, the latest iteration of the Fed’s bond buying strategy will continue at $85 billion per month. At this point our best guess is that the decision was a path of least resistance among a divided committee: there seemed to be a number of officials who were concerned about downside risks to growth from fiscal policy uncertainty and higher interest rates.

2013-09-27 Celebrate with Tokyo by Kenichi Amaki of Matthews Asia

Many in Tokyo erupted with delight and excitement following the recent news of the city’s selection as host to the 2020 Summer Olympic Games. Following a failed bid in 2016, Tokyo edged out rivals Istanbul and Madrid on its way to becoming the first Asian city to host the Games for a second time.

2013-09-27 The Weekly Speculator by Michael Shaoul, Ranita Ragunathan, Timothy Brackett, Brendan Moynihan of Marketfield Asset Management

We wrote last week on the eve of the FOMC meeting which resulted in the surprising decision not to reduce the current program of treasury and mortgage security purchases. What was to our eyes equally surprising was the volume and strident tone of the commentary that was issued following this release, ranging from the arrogant to the outraged as if anything really meaningful had changed.

2013-09-27 How to Profit from a Changing China by Frank Holmes of U.S. Global Investors

We believe China’s rebalancing is positive for investors who selectively invest in its stocks. As Jim O’Neill puts it, “When a country is embarking on a significant compositional change to its economy, stock-pickers rather than index-trackers have the upper hand.”

2013-09-25 Surprise... by Blaine Rollins of 361 Capital

Clearly, the numbers didn’t meet the Fed’s preconditions for tapering. And while the jobless rate has fallen to 7.3% (from 8.1% when QE3, the current round of quantitative easing began), Bernanke had to acknowledge what’s been obvious to all. The decline in the jobless rate hasn’t occurred just because more folks are getting jobs; it’s because many are dropping out of the workforce, which means they’re not counted as unemployed by the government.

2013-09-25 Muni Market Resurgent by Andrew Clinton of Clinton Investment Management

In light of the recent recovery in fixed income markets and the outperformance of the municipal bond market in particular, I thought I would send a note to provide a brief update since we last sent our market observations in July and August. As you may recall, we stated in the clearest terms that we felt the recent rise in interest rates provided an attractive entry point for municipal bond investors.

2013-09-24 ENERGY MLPs: A Suitable and Sustainable Asset Class by Sponsored Content from ClearBridge Investments (Article)

Key Takeaways: MLPs have provided income with little correlation to other asset classes and little sensitivity to interest rates, commodity prices or economic cycles. The market for MLP stocks has expanded greatly and offers liquidity which appeals to long-term institutional investors. The renaissance in U.S. energy production is driving sustainable growth in the infrastructure that MLPs own and operate

2013-09-24 Michael Aronstein’s Warning to Fund Investors by Robert Huebscher (Article)

Fixed-income investors may think rising interest rates are their biggest worry. But bond funds face a new risk, driven by their need for liquidity to service investors’ daily redemptions, according to Michael Aronstein.

2013-09-23 Seeking Global Growth: Our Outlook for Credit by James Balfour of Loomis Sayles

Global business and credit cycles are nothing new to investors. The familiar sequence of recession, recovery, expansion and slowdown plays out over time, influencing interest rates, credit availability, business climate and capital markets. It’s a time-honored process, but in practice, no two business and credit cycle pairings are exactly alike. Business and credit cycles tend to be driven by specific but varying factors that accumulate until an economic “tipping point” is reached, after which the business and credit climates deteriorate.

2013-09-23 Enhanced Dividend for Income by Jim O'Shaugnessy of O'Shaughnessy Asset Management

It is axiomatic in the financial planning canon that investors searching for a steady source of income should rely heavily on bonds. Stocks are for capital appreciation and bonds for income. The practice is so ingrained, that I have not heard of many investors who would make the case for using an equity portfolio to generate income. Bonds also appeal to advisors because of their inherent principal protection advantage. As a bond owner, you are a creditor, not an owner.

2013-09-23 Happy Anniversary? Perspectives on the Financial Crisis Five Years Later by Nanette Abuhoff Jacobson of Hartford Funds

Since 2008, there’s been slow but steady improvement in the global economypolicy makers’ unconventional tools have helped stabilize financial markets and bought time for economies to rebalance. Expectations are too low for developed-market growth and inflation, in our view. As such, we think this environment will be positive for developed-equity marketsparticularly in Europe and Japan.

2013-09-23 Fed Inaction Lengthens Reflationary Economy by Bob Doll of Nuveen Asset Management

U.S. equities advanced last week as the S&P 500 increased 1.32%.1 The Federal Reserve (Fed) delivered a big surprise by leaving intact the current $85 billion monthly purchase program. The Committee appears nervous about the resiliency of the economy. Chairman Bernanke pointed to three factors for postponing tapering: 1) the need for more labor market data to be confident in the outlook, 2) a desire to assess the degree to which tighter financial conditions, particularly mortgage rates, are affecting the real economy and 3) an interest in gaining clarity on “upcoming fiscal debates.̶

2013-09-21 How Did The Fed Catch Markets Off Guard? What Does it Mean for Investors? by Ken Taubes of Pioneer Investments

We think this decision prolongs the positive market environment we have seen in both equities and fixed income. With the Fed seemingly a distance away from tapering and raising rates, this could bode well for the risk sectors, where we could see further tightening in credit spreads on both high yield and investment-grade corporate bonds.

2013-09-20 Rising Interest Rates Must End Soon by Scott Minerd of Guggenheim Partners

The yield on the benchmark 10-year U.S. Treasury bond has risen by more than 84 percent from May to early September, one of the most violent and rapid increases on record. This spike has caused severe convulsions in the bond market, leading many investors to wonder how long the torment can last.

2013-09-20 Will Europe's Improving Economy Push Interest Rates Higher by Giordano Lombardo of Pioneer Investments

Gross Domestic Product (GDP) increased in the second quarter after six straight declines. Data expectations were on the optimistic side, but investors appeared to become more confident before the release, thanks to encouraging evidence from supposedly reliable forward-looking indicators.

2013-09-20 The Fed's About-Face by Scott Minerd of Guggenheim Partners

The Federal Reserve’s decision not to taper quantitative easing telegraphed a mixed signal to markets about policy guidance while tempering forward economic growth expectations. Dramatically lower interest rates can be expected.

2013-09-19 Time to Taper? by Zach Pandl of Columbia Management

The Fed debate this year has largely revolved around a single question: When will the FOMC begin to slow the pace of quantitative easing (QE)? At the start of the year, most analysts thought that the committee would continue its bond buying program at full speed all year, and only taper its purchases in early 2014. However, we began to hear hints from Fed officials as earlier as January that they may stop short of consensus expectations.

2013-09-19 When Doves Cry, \"Not Yet\" by Liz Ann Sonders of Charles Schwab

The Fed surprised markets and the consensus by maintaining its full QE bond buying program; while both stocks and bonds soared on the news.

2013-09-18 Is the Commodity Supercycle Dead? by Nicholas Johnson, Greg Sharenow of PIMCO

While commodity price appreciation won’t likely mirror the supercycle, this shouldn’t necessarily imply a negative view on commodity returns going forward. We believe commodity prices are at reasonable levels from a long-term valuation perspective. In addition, the roll yield from investing in commodities is the highest it’s been since 2005. The outlook for commodity returns today seems broadly consistent with historical returns, and commodities remain an important tool for hedging inflation risk.

2013-09-17 Investing for Real People by Sponsored content by Oppenheimer Funds (Article)

Investor goals are the same, but solutions have changed. Today, aiming to meet basic needs requires new solutions. Laser focus on investor goals will help uncover appropriate investment opportunities. Expanding the opportunity set beyond the usual suspects will be critical to long-term success.

2013-09-17 “Risk-On” Resumes as Uncertainty Subsides by Bob Doll of Nuveen Asset Management

Equity markets rallied last week with the hope of a diplomatic solution to the crisis between Syria and the United States. The S&P 500 advanced 2.03% for the week.1 Broadly, the S&P 500 is in a churning phase after witnessing an all-time high of 1709 on August 2 and then stalling.1 We believe the market has been on hold while waiting for lower oil prices, progress on Syria, further global growth and successful Federal Reserve tapering.

2013-09-16 The Next Big Challenge to Investors: Rising Rates by Mike Temple of Pioneer Investments

Many investors were conditioned to accept that the economy would be in the rehabilitation ward for the foreseeable future, rates would remain low, and monetary stimulus would continue unabated. It was an increasingly dangerous mindset. Now that’s changing with the slow but steady recovery of the economy and the Federal Reserve’s announcement in August that it may begin “tapering” its billions in monthly bond purchases designed to keep rates low and boost asset prices.

2013-09-13 Active ETF Market Share Update & Weekly Market Review by AdvisorShares Research of AdvisorShares

Last week, total AUM in all active ETFs increased by around $38.2 million.As in previous weeks, assets in “Short Term Bond” active ETFs increased, this time by almost $61.7 million, while AUM in the “Global Bond” category fell by about $39 million.The “Global Bond” category had another bad week, ending over $18.3 million below where it began.The “Alternative Income” category increased again but by less than in previous weeks; AUM increased by nearly $4.26 million. The “Alternative” active ETF category’s AUM rose by approximately

2013-09-13 Open for Business Down Under by Kenneth Lowe of Matthews Asia

Swiftly after fighting off what most observers deemed to be a fairly weak incumbent Labor opposition in the recent Australian election, the leader of the Conservative coalition and the country’s newly crowned Prime Minister, Tony Abbott, firmly declared Australia to be “once more open for business."

2013-09-12 Brave New World by Christine Hurtsellers, Matt Toms of ING Investment Management

If the monotony of high school lulled you into a catatonic state the semester you were supposed to read Brave New World, here’s the CliffsNotes summary of what you missed. Aldous Huxley imagined a futuristic utopia in which the government promotes economic and emotional stability through the plentiful use of a soporific opiate called “soma”. Soma allows the mind to take a holiday from worldly problems via a gram, or two or three. Imagine the chaos into which this fictional world would descend were the government to abandon its role as pharmacist to the masses.

2013-09-12 Unemployment, Participation and the Fed by Zach Pandl of Columbia Management

Despite a mediocre August jobs report, we still expect the Federal Reserve to announce a slowing of the pace of bond purchases when it meets next week. One reason for this view is that Fed officials care more about the level of the unemployment rate than the pace of job creation. We often write that monetary policy is about “gaps” not growth: the Fed is trying to reduce spare capacity in the economy, not bring about a rapid expansion per se.

2013-09-10 Raising the Bar on Target Date Due Diligence by Manning & Napier/Strategic Insight of Manning & Napier

Deeming whether target date fund investments are appropriate for a specific participant population is an arduous and imperfect task, made more complicated by a lack of full transparency. Fiduciaries should question whether the underlying securities of target date funds are appropriate to meet the retirement saving needs of plan participants. However, the question itself raises concern about what it would take to examine the funds in such detail.

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.

2013-09-09 Equities Advance Despite Concerns Over Weak Employment and Growth by Bob Doll of Nuveen Asset Management

U.S. equities moved higher last week, with the S&P 500 advancing 1.40%.1 In the face of another disappointing employment report, positive recovery expectations provided tailwinds. Key manufacturing and service sector data surprised to the upside, and improved corporate confidence was highlighted by merger and acquisition activity. Developments outside the U.S. supported recovery and reform, and emerging market fears lessened. A potential U.S. military strike on Syria was an overhang as President Obama’s decision to seek congressional approval raised concerns about other looming battles.

2013-09-09 Market Technicals Signal Trouble Ahead by Chris Maxey, Ryan Davis of Fortigent

Bear market enthusiasts have so far been disappointed in September after the sudden market rally last week. With equities up more than 1% on the month, many bears pointed to the historically poor performance of equity markets during this month as a reason to remain cautious. Bear enthusiasts need not fear, as markets appear to be converging toward an inflection point right around the Fed meeting in the middle of the month.

2013-09-06 The Emerging Markets Debt Evolution by Giordano Lombardo of Pioneer Investments

My colleagues Mauro Ratto, Head of Emerging Markets, and Yerlan Syzdykov, Head of Emerging Markets Bond & High Yield, offered these thoughts on emerging markets.

2013-09-06 Four Interest Rate Scenarios We Could Face by Mike Temple of Pioneer Investments

I’ve written a lot lately on the subject of “duration” and its potential impact on investor portfolios, now that the initial goals of the Federal Reserve’s “Great Monetary Experiment” appear largely accomplished and tapering of its monthly purchase of Treasuries to keep rates low is on the table. The era of lowering interest rates and rising bond prices looks finally at an end, with no place for rates to go but up. It’s vital, then, that investors think about the impact that rising bond yields could have on their portfolios. Here are a few scenarios w

2013-09-06 India - A World of Contrasts by William Hackett of Matthews Asia

Recently, I had the opportunity to join one of our Matthews Asia portfolio managers during a research trip to India, and was reminded of both the importance of such on-the-ground visits as well as the rigor required to conduct them.

2013-09-06 The Good, The Bad and The Ugly by Douglas Cote of ING Investment Management

“Good” economic news in developed markets has been overshadowed lately by the “bad” (burgeoning Asian currency crisis) and the “ugly” (Syria). Unwinding central bank support from the markets will be arduous; it is already contributing to destabilization of certain emerging market currencies. News out of Washington this autumn tapering, Fed leadership and the debt ceiling has the potential to add volatility and uncertainty. The U.S. equity market has been the place to be this year, but diversification remains key.

2013-09-06 Will Gold Follow Its Seasonal Pattern This Year? by Frank Holmes of U.S. Global Investors

There are factors beyond Syria this week driving gold. That’s the Love Trade. This group gives gold as gifts for loved ones during important holidays and festivals. This is the time of the year that we are in the midst of right now. Historically, September has been gold’s best month of the year. Looking at more than four decades of monthly returns, the precious metal has seen its biggest increase this month, averaging 2.3 percent.

2013-09-05 Seventh Inning Stretch by William Gross of PIMCO

They say that reality is whatever you wish it to be and I suppose that could be true. Just wish it, as Jiminy Cricket used to say, and it will come true. Reality’s relativity came to mind the other day as I was opening a box of Cracker Jacks for an afternoon snack. That’s right I said Cracker Jacks! I can’t count the number of people who have told me during the seventh inning stretch at a baseball game to make sure I sing Cracker Jack (without the S) because that’s what the song says. I care not. No one ever says buy me some “potato chip” or some “pea

2013-09-05 Dividends Matter by Mark Mobius of Franklin Templeton Investments

Many people think of emerging market stocks as pure growth plays, and may not realize that there is a separate potential benefitdividendsthat can also be available to investors in these markets. A prolonged period of easy monetary policies in many developed nations (particularly the US) has left income-seeking investors searching for alternatives to traditional fixed income, including dividend-paying stocks. Many investors may not realize dividends aren’t just a developed-market phenomenon.

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.

2013-09-03 As Uncertainty Abounds in September, Sideways Consolidation Continues by Bob Doll of Nuveen Asset Management

Global equities struggled last week, with the S&P 500 declining -1.39%.1 Volatility rose from geopolitical uncertainty over the military strike in Syria.2 Oil prices spiked with concerns about escalation and tension but retreated due to dampened international support and expectations that a military campaign would be short-lived. The U.S. Treasury announced its borrowing capacity will be exhausted by mid-October, exposing contentious fiscal battles. Reports mentioned former Treasury Secretary Larry Summers may be leading the succession race for Fed Chairman.

2013-08-30 Ramen for Everyone by Kenichi Amaki of Matthews Asia

Matthews Asia’s investment team members regularly travel across Asia to conduct research. Between meeting with management teams, touring factories and catching flights from one destination to the next, we do, on occasion, need to eat. Sometimes it’s room service at midnight while typing up meeting notes, other times we may try some local food. For me, as a ramen lover, the growing number of ramen restaurants across Asia has been a real treat. Apparently, I’m not alone in that thought.

2013-08-29 High Yield Bond Market Mid-Year Check In by Matthew Pasts of BTS Asset Management

After a prosperous 30-year bull market, the prospect for the future direction of High Yield bonds would seem to hinge on not whether, but when their decline starts.Dan Fuss has been managing bonds for 55 years. His multi-sector bond fund, Loomis Sayles Bond Fund, ranks in the top 10% of its peer group over the last 15- and 10- year periods as of December 31, 2012. Fuss believes that bonds are currently “the most overbought market I have ever seen in my life in the business.”

2013-08-29 Don't Lose Your Balance by Jeffrey Knight of Columbia Management

Last year in a white paper called “Engineering a better retirement portfolio”1, we demonstrated the long term benefits of investing with a balanced risk profile. Exhibit 1 shows the trailing Sharpe ratios reported in that paper for the S&P 500, a “traditional balanced” domestic 60/40 portfolio, and a “risk balanced” strategy invested to equalize the risk contribution from stocks, bonds and commodities. The message from that chart is clear: Better balance leads to more efficient portfolio performance over time.

2013-08-29 Have Emerging Markets Gotten Oversold? by Mark Mobius of Franklin Templeton Investments

At Templeton, we’ve repeatedly championed our value-driven philosophy by frequently buying at times others are most pessimistic. This is not easy to do, even for seasoned market veterans. During the past few months, emerging markets have been subject to such pessimism. These periods of short-term volatility are certainly not new to us, and don’t change our long-term conviction of the potential emerging markets hold.

2013-08-27 Policy Uncertainty on the Rise by Libby Cantrill, Josh Thimons of PIMCO

Congress seems to be digging in and ramping up the rhetoric in advance of a possible government shutdown, a debt ceiling increase and a probable selection of a new Fed chair. We think it is likely policymakers will agree to a short-term deal to fund the government and avert a shutdown, and also cobble together a resolution on the debt ceiling, although neither is likely until the last minute. The Fed chair debate will likely continue to sway markets over the next few months, leading to greater uncertainty and greater market volatility.

2013-08-27 Choose Your Door Wisely.. by Blaine Rollins of 361 Capital

If I was being forced to choose a side for year end 2013 performance, I would have to agree with Mr. Plant. While September is historically a difficult month for the markets, we also know that the Q4 tends to reward the equity markets.

2013-08-26 Inflation Update by Team of North Peak Asset Management

As can be seen in the schematic above, most portfolios are effectively a bet on a low inflation environment due to their heavy reliance on mainstream equities and fixed income securities. In order to protect a portfolio from the damage that inflation can inflict, asset classes that are sensitive to increases in inflation need to be incorporated into the asset mix. These include Inflation Linked Bonds (TIPS), Precious Metals, Global Natural Resource equities and Commodities.

2013-08-26 Equities Relatively Flat as Crosscurrents Remain by Bob Doll of Nuveen Asset Management

U.S. equities finished mostly higher last week, and the S&P 500 advanced 0.50%.1 The Dow Jones Industrial Average was the only the only major U.S. index to falter last week.1 Market sentiment was dominated by the notion that the market had become too bearish in the wake of the prior week’s sell-off in equities and credit. Continued improvement in global recovery sentiment seemed to provide a notable tailwind. The Fed dominated headlines markets appear obsessed with policy normalization and succession issues.

2013-08-23 Utilities - Today's Best Bond Alternative by Chuck Carnevale of F.A.S.T. Graphs

To refer to any stock or equity as an alternative to bonds or fixed income is sure to stir up the ire and consternation of many professional and individual investors alike who deem themselves prudent. Frankly, under normal circumstances I would tend to agree.

2013-08-23 Buckle Up by Liz Ann Sonders, Brad Sorensen and Michelle Gibley of Charles Schwab

Caution is warranted near-term. For investors that have a solid strategy of dollar-cost averaging into the market, we don’t recommend deviating from that path. However, for investors who are more tactical, better entry points are likely yet to come. Longer-term, we remain bullish on US equities and prefer developed international markets over emerging markets.

2013-08-23 Weekly Economic Commentary by Carl Tannenbaum of Northern Trust

India: Broken promise or temporary hiccup? Bond markets appear unmoved by central bank guidance. Rising mortgage rates are taking some of the steam out of housing.

2013-08-23 The Next Big Challenge to Investors: Duration by Mike Temple of Pioneer Investments

Many investors have been conditioned to accept that the economy will be in the rehabilitation ward for the foreseeable future, rates will remain low, and monetary stimulus unending. We believe this is an increasingly dangerous mindset and the next great risk for bond investors is coming into view: the return of higher interest rates. We look at the “refuge” subsectors those areas of the fixed income market that investors may believe provide “safe haven” from the gathering storm.

2013-08-22 Bernanke's Taper Tinkering by Tad Rivelle of TCW Asset Management

For at least the past five years, the Fed has cast an exceedingly long shadow over the capital markets. For this reason, understanding Fed policy has been central towards proper guidance and direction of investor capital allocations. Since Chairman Bernanke’s trial ballooning surrounding a potential “taper” of the Fed’s QE policy, longer maturity Treasury interest rates have soared over 100 basis points.

2013-08-21 The Danger of Duration: The Damage Potential of Rising Rates by Mike Temple of Pioneer Investments

The Federal Reserve’s initial goals from “The Great Monetary Experiment” are accomplished. Investors could now face the threat of rising bond yields.

2013-08-21 Weekly Market Review Notes by Team of Tuttle Tactical Management

This was a tough week for the markets as the long expected and healthy correction finally surfaced. Times like these can be a little nerve wracking is there are always now shortage of people to go on CNBC and claim that the sky is falling.

2013-08-20 The Speed of Fed Rate Hikes by Zach Pandl of Columbia Management

For the last several months, talk of tapering has dominated the Fed debate. Although there remains some uncertainty around the detailssuch as how large the initial step might bemost observers now expect the Federal Reserve to begin slowing the pace of quantitative easing (QE) at the September 17-18 meeting. Attention is now turning to another major issue on next month’s agenda: the publication of Fed officials’ forecasts for the funds rate in 2016. The Fed rolls forward the Summary of Economic Projections (SEP) by one year each September.

2013-08-19 Equity Fatigue Continues with Headwinds from Bond Sell-off by Bob Doll of Nuveen Asset Management

U.S. equities finished lower for the second straight week as the S&P 500 declined 2.04%, narrowly escaping its worst week of the year. A specific catalyst behind the pullback was not identified by us or market analysts.

2013-08-16 Preparing for Rising Interest Rates: Bond Ladder vs. Bond Fund Ladder by BMO Tax-Free Fixed Income Team of BMO Funds

The last few years have seen interest rates hold steady or drift lower, causing investors to be concerned about how their fixed income portfolios will be affected when rates eventually rise. The question is, how can investors protect themselves from rising rates while still earning income while they wait?

2013-08-16 Fixed Income Investing In a Reality Star World by Kirk Moore of Columbia Management

Reality stars are famous for being famous. We should not begrudge them for recognizing an opportunity, seizing the momentum and exploiting it successfully. However, an approach that emphasizes form over substance can neither be consistent or highly repeatable.

2013-08-16 The Case for Global Dividends: Valuations and the Impact of Rising Rates by Ehren Stanhope of O'Shaughnessy Asset Management

The S&P 500 Index has risen over 150 percent since March 9, 2009 in what could arguably be deemed the most hated equity rally of all time. The MSCI All Country World Index, one of the broadest global indices, has risen “just” 110 percent since its March 2009 nadir. Evidence indicates that United States (U.S.) investors have not participated in this rallya truly sad state of affairs. It is worthy of noting that over the last several years a number of well known market pundits have viscerally rejected the equity rally due to macroeconomic concerns.

2013-08-16 What Happens When You Tell Indians to Stop Buying Gold by Frank Holmes of U.S. Global Investors

With the government in India raising its import tax for gold to 10 percent this week, I firmly believe Indians will continue indulging in gold, even if they have to smuggle it in.

2013-08-15 To Manage Rising Rates, Consider Benching Your Benchmark by Douglas Peebles, Michael Mon of AllianceBernstein

As we enter a period of rising rates, many bond investors are growing more aware of the risks of benchmark-oriented bond portfolios. It may be time to sit the benchmark down and consider more flexible, unconstrained approaches to fixed income.

2013-08-15 Correlation and Portfolio Construction by Dean Curnutt of Macro Risk Advisors

We review recent periods of financial market stress, which bring about elevated levels of asset volatility and during which investors are vulnerable to incurring substantial loss of capital. We illustrate that risk is determined both by the volatility of individual investments in a portfolio and the degree to which they are correlated. Often overlooked, correlation is a critical factor. Because assets become more correlated at the same time they become more volatile, we argue that the benefits of diversification often are difficult to achieve when they are most needed.

2013-08-14 What Role for Emerging Markets After the Sell-Off? by Ramin Toloui of PIMCO

While history suggests that the sell-off in emerging market bonds could ultimately offer attractive buying opportunities, it is important to anchor investment decisions firmly within a forward-looking economic and market outlook. Continuing vulnerabilities in global growth suggest there is fundamental value in EM bond yields at present valuations, as interest rate hikes priced into EM yield curves are unlikely to materialize in an environment of tentative growth.

2013-08-13 Dog Days of Summer Are Upon Us by Blaine Rollins of 361 Capital

Hopefully you are reading this from the beach, because there is so little news happening in the markets that those of us in the office are about to start making news up to justify stock price movements. But while news and volumes are at August lows, here are some thoughts that might ring a bell to help you to either make some money or to set down your smartphone and get back to the water.

2013-08-12 Fight Over the Fed: Why So Ugly? by Michelle Shwarzman of Invesco Blog

When President Barack Obama let it slip in a June interview that Federal Reserve (Fed) Chairman Ben Bernanke had “already stayed a lot longer than he wanted or he was supposed to,” the quest for the next Fed chair was underway. But few anticipated it would devolve into a fairly brutal brawl - by economist standards - between two extremely competent and capable PhD candidates: Fed Vice Chair Janet Yellen and former Treasury Secretary Larry Summers, who also served as Harvard’s president and chief White House economic advisor.

2013-08-12 The Key Economic and Market Forces Guiding Equity Markets by Bob Doll of Nuveen Asset Management

This week we want to address important themes that underline our continued cautious optimism for a slowly improving global economy and signs of revenue and earnings growth momentum.

2013-08-12 Lower Your Expectations for Future Return by Cory Fulton of Mesirow Financial Wealth Management

While equities are not priced particularly well and the current environment does not bode well for future long-term expected real returns, they are currently a better choice for investors relative to the alternative. Right now, any meaningful shifts in one direction or the other could be setting the investor up for additional disappointment. At this stage in the game, equities look to offer better prospects in the long-term. However, the time is not right to abandon your long-term investment plan in the face of the positive market headlines and lofty predictions emanating from Wall Street.

2013-08-09 The Calm Before the Storm? by Liz Ann Sonders, Brad Sorensen and Michelle Gibley of Charles Schwab

Record highs in US equities have resulted thus far in only modestly elevated investor sentiment and it appears retail investors are returning to the market, which could fuel further gains. However, volatility is likely to increase with political and Fed issues on the horizon. Europe remains attractive, along with Japan, but we are watching the potential consumption tax increase closely, while China’s valuations are improved but concerns remain.

2013-08-08 Market Melt-Up Catches Defensive Investors by Surprise by Douglas Cote of ING Investment Management

Extraordinary returns in the fourth year of a bull market remind us that long-term defensiveness can’t be rationalized. July saw remarkable returns across global equity and fixed income markets, with the exception of U.S. Treasuries. Investors would be well served to ignore media drama and fear mongering and simply follow the fundamentals. Five years spent worrying about Armageddon is too long, but there’s still time to get back to a normal allocation.

2013-08-08 Bond Wars by William Gross of PIMCO

Adaptation is tantamount to survival in the physical world. So argued Darwin, at least, and I am not one to argue with most science and its interpretation of natural laws. Adaptation has been critical as well for the survival of countries during wartime, incidents of which I am drawn to like a bear to honey, especially when they concern WWI. Stick with me for a few paragraphs on this the following is not likely to be boring and almost certainly should be instructive.

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.

2013-08-08 Quarterly Letter by Team of Grey Owl Capital Management

To begin, let us state that we are tired of writing about macroeconomic issues. We suspect you are tired of reading about them. We would like nothing more than to send out a quarterly letter full of updates on the companies we own and the rationale for individual buy and sell decisions. Nevertheless, we must address the market action following Federal Reserve Chairman Ben Bernanke’s May 22nd testimony before Congress, where he merely floated the idea of “tapering” the Fed’s quantitative easing efforts.

2013-08-08 Investment Advice Technology and How to Lose Money in the Coming Years by Kendall Anderson of Anderson Griggs

Adventures are good for my soul. They create wonderful memories, both of where I have been and all the effort it took to get there. All of us have memories, both good and not so good. I am a bit worried about the near term future.

2013-08-07 Adapt or Die... by Blaine Rollins of 361 Capital

Bond king Bill Grosss $261.7 billion Total Return Fund at Pacific Investment Management Co. suffered a $7.5 billion net outflow last month, according to data from fund tracker Morningstar Inc. on Friday. It is the third straight monthly outflow for the Fund, on the heels of nearly $10 billion in redemptions in June. Clients have yanked $15.6 billion from Gross’s Fund in 2013 through July. Jeffrey Gundlach’s $37.9 billion DoubleLine Total Return Bond Fund suffered $580 million net outflow in July, according to Morningstar.

2013-08-06 Equities Grind Higher as the Economy Continues to Muddle Through by Bob Doll of Nuveen Asset Management

U.S. equities advanced last week, with the S&P 500 increasing 1.10%.1 For the month of July, the S&P gained 5.09%, and equities have increased 21.33% year to date. Second quarter earnings season is nearly complete, and there has not been a material change in estimated earnings for the balance of the year or 2014. Revenues were slightly ahead of expectations, and earnings per share were approximately 3% higher than expected, annualizing at about $110 per S&P 500 share.

2013-08-06 The ABCs of ABS: Identifying Opportunities in Asset-Backed Securities by Scott Minerd of Guggenheim Partners

In the search for yield, ABS offers an opportunity to generate higher returns through rigorous analysis, unaccompanied by additional credit or interest-rate risk.

2013-08-02 Rising Rates? Keep the TIPS, Leave the Duration by Greg Wilensky of AllianceBernstein

Treasury Inflation-Protected Securities (TIPS) have been popular in recent years with investors worried about inflation, and returns have been strong. But TIPS have benefited from a long bull market for bonds and high interest-rate sensitivity. This could be a problem aheadunless investors do something about it.

2013-08-01 Alternatives for Today's and Tomorrow's Market Challenges by Jennifer Bridwell, Sabrina Callin of PIMCO

Investors should consider alternative investment strategies, which could enhance diversification and the potential for alpha, or risk-adjusted returns, because returns from traditional asset classes in coming years may be lower and more volatile than those realized historically.

2013-08-01 July 2013 Market Commentary by Andrew Clinton of Clinton Investment Management

Fixed income investors have enjoyed a steady move higher in bond prices over the past five years. Given the consistency with which bond values have increased, it is understandable if bond investors were surprised by the just over 0.60%, or 60 basis point rise in ten year Treasury yields and corresponding movement down in bond prices during the second quarter.

2013-07-31 Calm Has Replaced Fear in the Bond Market by Tony Crescenzi of PIMCO

Calm largely returned to the bond market in July following a bout of turbulence in June. Volatility declined across the broad spectrum of fixed income assets, with interest rates and credit spreads falling from their highs, in some cases dramatically. Flows have also turned positive in many market segments, particularly for high yield and bank loan securities.

2013-07-31 The Context of Price by Pamela Rosenau of HighTower Advisors

While the stock market has enjoyed a recent rally, some investors are experiencing some “weakness in the knees” as they continue to ascend the climb. These new all-time highs in the market compound the problem for some investors as they suffer from the recency effect, or the not-too-distant memory of significant market losses.

2013-07-30 A Strategy for Reducing Volatility While Increasing Returns by Steven Farber (Article)

The product on every advisor’s wish list would have the low volatility of fixed income while providing equity-like returns. Although such a product does not exist, equity options, when used properly, will give you the ability to achieve pre-defined goals and objectives.

2013-07-30 Conflicting Crosscurrents Move Equities Sideways by Bob Doll of Nuveen Asset Management

U.S. equities finished last week narrowly mixed, with the S&P 500 falling -0.02%.1 While the second quarter earnings per share growth continues to move higher, revenue growth remains below trend. The economic calendar is focused on this week’s release of the July employment report. Global macro headlines generated more uncertainty than direction for the markets.

2013-07-30 Economic & Capital Market Summary by Gregory Hahn of Winthrop Capital Management

We are approaching the five year anniversary of the beginning of the Financial Crisis. By this time in 2008 we had already experienced the complete seizure of the Auction Rate Preferred securities market and the takeover of Bear Stearns by JP Morgan Chase. In August of 2008, we would see the collapse of Lehman Brothers and the government takeover of AIG. We stand here today, shoulders slumped, and heads bowed mourning the lack of real progress in addressing the structural problems that are impeding sustained economic growth and private credit expansion.

2013-07-29 And That\\\'s the Week That Was by Ron Brounes of Brounes & Associates

So now Prez Obama is sharing his two cents about the economy. After weeks of endless babble from the Fed Chief and his partners in crime about the economy and the longevity of the bond buying program, O is now making job creation his number one priority. Is anyone listening to his urgent messages (certainly no one in DC)? Investors (at least those not on vacation) were less than impressed with the less than impressive earnings of the week, though markets held their own.

2013-07-26 Attention 3-D Shoppers by John West of Research Affiliates

Why do retail shoppers love a sale while capital markets flee from falling prices? Investors should consider starting to fill their shopping carts while inflation hedges are cheap....

2013-07-25 A Midyear Update: Getting Back to “Normal” by Douglas Cote of ING Investment Management

Though markets were whipsawed by the announcement, the Fed’s plan to step aside and allow normalization is a good thing. Today, the primary risk for investors to hedge is economic growth and the strong equity returns it tends to produce not financial Armageddon. While risks in Europe and China persist, U.S. fundamentals look relatively strong. Two consecutive quarters of S&P 500 earnings growth prompts a forecast update.

2013-07-25 The Damage Potential of Rising Rates by Michael Temple of Pioneer Investments

The initial goals of the Federal Reserve’s “Great Monetary Experiment” to keep rates low, create negative real yields, spur consumption and cushion the budgetary consequences of fiscal stimulus have largely been accomplished. Investors could now face the threat of rising bond yields. Various bull and bear scenarios might ensue. What are they and what could trigger them? What are the risks to portfolios?

2013-07-24 Bursting of the Bond Bubble by Clyde Kendzierski of Financial Solutions Group

Our April newsletter focused on the extreme overvaluation in the bond market. I argued that money market funds (or cash) were likely to outperform bonds and bond funds over the next decade. In May I applied the same logic to US stock prices and the inherent fallacy in the prevailing TINA (“there is no alternative” to stocks) hypothesis. Although stocks are likely to outperform bonds over the next decade, both asset classes remain seriously overvalued. In a world of overvalued assets, zero return looks much better than large potential losses even when that means foregoing transitory

2013-07-24 Earnings Acceleration Likely Needed for Next Upturn in Stocks by Bob Doll of Nuveen Asset Management

U.S. equities finished mostly higher last week. For a fourth straight week, the S&P 500 and Dow Jones Industrials were up (returning 0.73% and 0.57% respectively for the week), while the NASDAQ underperformed at -0.34%. It was a busy start for second quarter earnings. More than 70% of the 100 S&P 500 companies that have reported earnings have beaten consensus earnings per share expectations by approximately 3% in aggregate.

2013-07-23 Taper Protection: Where to Go when Rates Rise by Casey Frazier, CFA (Article)

I have fielded a number of questions from advisors about the effects of rising interest rates on real estate values. The negative effect of rising rates is predictable for fixed incomes, but real estate returns vary and are dependent on a number of factors. I will start with a historical analysis that demonstrates the strength of real estate returns during periods of rising rates. Then I’ll outline the factors that drive changes in real estate values in a rising-interest-rate environment.

2013-07-22 Can China Give Credit Where It's Due? by Milton Ezrati of Lord Abbett

June was a rough month for China’s economy and its financial markets. Old concerns about sustainable growth came to the fore, as reports surfaced and resurfaced, recounting liquidity shortages, misdirected and excessive credit growth, gyrating interest rates, and signs of weakness in manufacturing. Commentators and analysts alike voiced fears of a Chinese collapse on a par with America’s subprime crisis. For the second time in as many years, several in the global financial community have prophesized a “hard” landing for China’s economy.

2013-07-22 The Purgatory of Low Returns by James Montier of GMO

This might just be the cruelest time to be an asset allocator. Normally we find ourselves in situations in which at least something is cheap; for instance when large swathes of risk assets have been expensive, safe haven assets have generally been cheap, or at least reasonable (and vice versa). This was typified by the opportunity set we witnessed in 2007.

2013-07-19 Fixed Income Outlook by Team of Osterweis Capital Management

The question we keep asking is “Will the real Fed mandate, please stand up?” The Federal Reserve (the Fed) traditionally is charged with keeping inflation in check, but it also has a second mandate to ensure full employment. This dual mandate can occasionally create general confusion as to what is the best policy at a given time and which policy goal the Fed is trying to achieve. Today, we are at a juncture where the Fed’s mandates may not clearly align with stated future monetary actions.

2013-07-19 7 Things Investors Should Know Now by Russ Koesterich of iShares Blog

Can stocks move higher? What are the best opportunities now in stocks and fixed income? Russ answers these questions and others in an update to his mid-year outlook.

2013-07-19 Fixed Income Fed Insight: It's All About Employment by Christopher Molumphy of Franklin Templeton Investments

We can try to guess what the Fed is thinking, but ultimately the Fed is driven by inflation and the labor markets. With inflation seemingly under control, it’s really the labor markets that dominate. So if you want to know what the Fed’s going to be doing, look at the labor markets how many jobs we create each month and, most importantly, the unemployment rate.

2013-07-19 Opportunity in Europe by Team of Neuberger Berman

A striking feature of this year’s global stock market rally is that international markets have significantly trailed U.S. stocks. Nevertheless, Neuberger Berman’s Asset Allocation Committee (AAC) recently made the contrarian call of upgrading its view for international developed markets, particularly Europe. In this Strategic Spotlight, we provide an update on the European economy and lay out some reasons for optimism despite the dour growth outlook.

2013-07-16 The Great Rotation Continues Forward... by Blaine Rollins of 361 Capital

Fed Chairman Ben Bernanke grabbed the mic on Wednesday and gave a performance that garnered a standing ovation from Stock, Bond, and Commodity investors. Only U.S. Dollar longs went home dragging their programs and spilling their popcorn. As a result, U.S. equity markets ended the week at all-time highs as stocks remained the darlings of the asset classes.

2013-07-15 Mid-Year Outlook: Waiting to Move Beyond a Muddle-Through Economy by Bob Doll of Nuveen Asset Management

By focusing on current economic conditions while giving due importance to the uncertainty created by Fed actions we offer thoughts for consideration in evaluating “risk-on” investments.

2013-07-15 Rock-A-Bye Baby by John Hussman of Hussman Funds

I’ve always thought that singing “Rock-a-bye baby” offers a bizarre lesson to our young, encouraging them to be lulled gently to sleep by describing a scene that should have them wide-eyed with terror.

2013-07-12 Rising Rates: Time to Position, Not Panic by Douglas Peebles of AllianceBernstein

It finally happened. After endless discussion about the potential for rates to rise, they finally didin a big way. During May and June, the 10-year US Treasury yield soared by nearly one percent, and markets reeled. Instead of panicking, investors should make sure their portfolios are positioned effectively.

2013-07-12 Bond Yields Gone Wild? by Frank Holmes of U.S. Global Investors

With the Federal Reserve’s intention to taper its easing, yields have risen quickly, causing municipal bonds to experience their worst decline since September 2008. In the second quarter, the Barclays Capital Municipal Bond Index lost nearly 3 percent, with the long end of the yield curve receiving the biggest blow, as bonds maturing in 20 years fell more than 4 percent.

2013-07-12 Hasenstab: Emerging Out of the Consensus Trade by Michael Hasenstab of Franklin Templeton Investments

Just when is a potential long-term reward worth the short-term risk? Investors are often most focused on the short-term pain of a particular event (hard to blame them), losing sight of possible outcomes farther out into the future. That could partially explain what’s going on in the emerging markets right now, at least according to Michael Hasenstab, co-director of the International Bond Department, Franklin Templeton Fixed Income Group.

2013-07-12 Opportunity Knocks for Mortgage Investors by Matthew Bass of AllianceBernstein

We don’t usually think of rising rates as being good for homeowners. That may be because we’re accustomed to thinking of financing (and refinancing) as the key to reviving sagging housing markets. And it’s true that financing availability remains tight, at least by historical standards, and isn’t going to get looser with rising rates.

2013-07-12 Making Sense of the Bond Market by Phelps McIlvaine of Saturna Capital

The great challenge for investors and advisers today is to forecast where interest rates and bond prices will be once the influence of radical central bank intervention dissipates. Measures of inflation expectations are declining, and deflation remains the dominant influence on interest rates. In assessing whether to trim bond allocations, it is important to revisit the reasons for selecting a particular asset allocation before modifying or abandoning it.

2013-07-11 TIPS Get Hammered in the 2013 Second Quarter by Stephen Percoco of Lark Research, Inc.

The beginning of the return to normalized interest rates took a big toll on straight Treasury securities in the 2013 second quarter, but TIPS got hit even harder. For the quarter, the average TIPS security lost 6.6%, worse than the average loss of 3.0% on comparable maturity Treasurys and by far the worst losses seen in the TIPS market since the 2008 financial crisis.

2013-07-10 Rising Rate: Challenge and Opportunity by Gibson Smith, Lindsay Bernum of Janus Capital Group

While the prospect of rising interest rates generally strikes fear into the hearts of fixed income investors, it’s important to remember that periods of rising rates are normal and can create opportunities for active bond managers. Since 1970 there have been 21 periods in which interest rates rose significantly. While each has had its own unique characteristics, over the past 20 years equities have rallied during these periods, which has tended to support corporate credit markets.

2013-07-10 What is Happening to Gold? by John Hathaway of Tocqueville Asset Management

John Hathaway, manager of the Tocqueville Gold Fund (TGLDX), examines in his latest Tocqueville Gold Strategy Investor Letter the dramatic developments in the gold market over the last six months. The letter goes on to discuss the impact the Fed continues to have, and suggests that today’s valuations represent a “compelling entry point.”

2013-07-10 Market Perspectives Q2 2013: Fed Fears by Richard Michaud of New Frontier Advisors

Investors have been hypersensitive to the inevitable reversal of the Federal Reserve’s bond purchasing economic stimulus program known as QE3. Signs of sustainable economic recovery have been closely monitored as a harbinger of a likely end of the program.

2013-07-09 The Five Best New Investment Ideas: New Age Paradigms for the Post-MPT World by Bob Veres (Article)

Over the past four years, I’ve been collecting the most tangible, concrete post-Modern Portfolio Theory insights offered by professional investors.

2013-07-09 High Yield Munis: Risky Business by Ryan Davis, Jingwei Lei of Fortigent

We shine a spotlight on the obscure market of high yield municipals this week. In the current fixed income selloff, the market has been among the worst performing with a drawdown of 6.1%. Investors could not get enough of the sector in 2012 as they chased yield; the Barclays high yield muni index returned over 18%. Investor sentiment has turned sharply, however, on this asset class. Funds experienced significant outflows over the last couple of months, which is especially troubling for a small and retail dominated market. Why did this onetime darling asset turn into a pariah so abruptly?

2013-07-09 So the Bulls Returned... by Blaine Rollins of 361 Capital

So the Bulls returned to Equities on a holiday shortened week with plenty of news and data to outrun. The Egyptians threw out their President and the Portuguese gave a thumbs down to their government. But dovish comments out of Draghi/ECB, strong data out of Japan, and a 3rd strong month of Non-Farm Payroll growth pushed the Russell 2000 to all-time highs as the rest of the market jumped into its slipstream.

2013-07-09 Whitney George on 2Q13: Stocks Continue to Look More Appealing Than Fixed Income by Whitney George of The Royce Funds

In addition to detailing what sectors currently look attractive to him from a valuation standpoint, Co-CIO, Managing Director, and Portfolio Manager Whitney George discusses three stocks that exemplify his approach, the current case for active small-cap management, why stocks look more attractive than fixed income, and his opinions on the market’s decline in late June.

2013-07-08 Absolute Return Letter: Much Ado about Nothing by Niels Jensen, Nick Rees,Tricia Ward of Absolute Return Partners

A 300 bps rise in bond yields across the term structure would, according to their calculations, do substantial damage to financial institutions’ balance sheets. Holders of U.S. Treasuries alone would lose in excess of $1 trillion on such a move in rates, equal to 8% of U.S. GDP. Other countries would fare even worse. Losses on JGBs would equal 35% of the Japanese GDP, effectively wiping out its banking industry in the process. Holders of U.K. bonds wouldn’t do much better, losing the equivalent of 25% of U.K. GDP.

2013-07-08 Deflationary Boom? by John Hussman of Hussman Funds

Taken together, the financial markets have priced a wide range of assets on the assumption that the U.S. is on the verge of a deflationary boom. Most likely, part of this scenario is wrong.

2013-07-03 Getting Back to “Normal” by Douglas Cote of ING Investment Management

Though markets were whipsawed by the announcement, the Fed’s plan to step aside and allow normalization is a good thing. The primary risk to hedge is now economic growth and the strong equity returns it tends to produce not financial Armageddon. While risks in Europe and China persist, U.S. fundamentals look relatively strong. It’s not too late for investors to move away from defensive positioning and back toward a standard allocation.

2013-07-03 Long Train Running: Why Stocks Are Rebounding by Liz Ann Sonders of Charles Schwab

Why the June swoon occurred and why it might already be over. Fed’s move toward policy normalization may have a lot to do with pricking perceived asset bubbles; not a more hawkish economic stance. Sentiment has improved notably; but technical conditions may need a bit more repair.

2013-07-03 A Roadmap for Rates by Scott Minerd of Guggenheim Partners

Uncertainty over the Federal Reserve’s timeline for tapering quantitative easing has resulted in increased volatility in fixed income markets. While the coming months could see the 10-year Treasury yield climb as high as 3.5 percent, the resulting economic slowdown will keep rates subdued in the medium-term.

2013-07-03 “Taper Tantrum” Grips Muni Market by Rafael Costas of Franklin Templeton Investments

The markets have been in fits since mid-May, when Federal Ben Bernanke planted the seed that the central bank’s prolonged asset buying program would start winding down. Many investors were gripped with irrational panic, a so-called “taper tantrum” that roiled equity and fixed income markets. Rafael Costas, senior vice president and co-director of our municipal bond department, believes the early summer swoon sweeping the muni markets is unfounded and should be temporary, but the core reason for investing in the sector remains solid: long-term tax-free income potential.

2013-07-02 Gundlach’s One-Word Explanation for June’s Decline by Robert Huebscher (Article)

According to Doubleline’s Jeffrey Gundlach, a single word explains the declines global capital markets experienced in June.

2013-07-02 Recent Volatility ? Noise, not Signal by Keith C. Goddard, CFA (Article)

This spasm of volatility is a normal side effect when market participants adjust their positions to a new expectation for the future of monetary policy. Even though the policy adjustment being discussed at the Fed is minor ? i.e., a gradual tapering of quantitative easing (QE) ? the timing of the change was sooner than many investors expected, so trading volume jumped.

2013-07-02 Let\'s Barbecue It... by Blaine Rollins of 361 Capital

Equity investors finished June with the first down month in 8 for the S&P500. Bond investors took a Tommy Boy two by four across the face. And yes, it did leave a mark. Two months ago the "Great Rotation" from bonds to equities was nowhere to be seen. Today the panic out of fixed income funds is happening at the highest levels seen since 2008. As we noted last week, inflection points in major rotations are volatile, scary, and unpleasant. This helps to explain the seven 100 basis point moves in the S&P500 in the month of June, which marks the most volatility in 12 months.

2013-07-02 Stay the Course as Mixed Signals Move Markets by Frank Holmes of U.S. Global Investors

Traders stampeded out of gold, emerging markets and bonds this month, setting record monthly outflows in June. Ever since the Federal Reserve hinted in May that signs of a stronger economy could allow for a slowdown of stimulus, markets have protested the news.

2013-07-02 Preparing for the Second Half of 2013 by Russ Koesterich of iShares Blog

It’s halftime halfway through the year. That means Russ is looking back at what he got right and wrong in the first half of the year, and updating his expectations for the remainder of 2013.

2013-07-01 Consider Convertibles in a Rising Rate Environment by Walter Stabell III of Invesco Blog

The recent mass exodus out of bonds in which investors pulled more than $18 billion from funds that invest in bonds over a two-week period ending June 12 may have left you searching for the best opportunities in the bond market.

2013-06-28 Labor Force Myth Sends the Wrong Signal on U.S. Growth Prospects by Brandon Odenath of J.P. Morgan Funds

We’ve seen the pundits on TV and read their op edsthe drop in the labor force participation rate is proof that unemployment is falling because many of the unemployed have simply given up the search for work. The inference of course, suggests that the economy is in much worse shape than falling unemployment rates would indicate.

2013-06-28 Riding Out Recent Volatility by Michael Hasenstab of Franklin Templeton

Major central bank policy turns are naturally going to cause some market dislocations. Hasenstab says it’s pretty clear the Fed couldn’t continue printing money forever, and while some investors are panicking about what the end of the Fed’s easy money policy will mean, Fed tapering doesn’t equate to Fed tightening.

2013-06-28 The New, Old Normal by Liz Ann Sonders, Brad Sorensen and Michelle Gibley of Charles Schwab

We believe the recent volatility will be relatively short lived and provides an opportunity for investors who need to adjust their portfolios to do sowith long-term goals in mind. The risks associated with fixed income have been illustrated over the past couple of weeks and rising yields have caused equity volatility and a pullback. But we remain optimistic about US equities as well as developed international markets; particularly relative to emerging markets.

2013-06-27 How Bonds Will Suffer Before the Fed Raises Rates by Mike Temple of Pioneer Investments

The Federal Reserve’s years-long zero-interest rate policy has flattened Treasury yields to where rising interest rates and inflation are almost assured manifestations. Investors may have to face the threat of rising bond yields. Damage to high quality, long-duration debt instruments would likely happen far in advance of a rise in interest rates with periods of significant volatility. What are the risks to portfolios? The first in a series of three papers that examines this questions is now available.

2013-06-27 Policy-Induced Volatility Continues by Scott Minerd of Guggenheim Partners

The recent bond market collapse is reminiscent of the Great Crash of 1994. Further pressure on the economy due to rising interest rates could cause the Fed to revisit its timetable for QE.

2013-06-27 Currency Wars: A Case for the U.S. Dollar by Gibson Smith, Chris Diaz of Janus Capital Group

In recent years, the U.S. dollar has tended to lose value when the global economy improves, as investors are more willing to take risks. We believe that pattern has changed and that the U.S. dollar will outperform the Japanese yen, the euro and the British pound over the medium term, even if the global economy continues to improve. In our view, current conditions justify a material deviation in currency exposure compared with certain global fixed income benchmarks, such as the Barclays Global Aggregate Bond Index.

2013-06-27 Welcome Back, Mr. Bond by Jeffrey Saut of Raymond James

“We’ve been expecting you Mr. Bond.” The phrase is itself a variant and joins the phrase “Play it again Sam” as a phrase attributed to a film or TV series. I have used said quip over the past few years, having been wrong-footedly expecting a backup in interest rates. While I did finally target the yield low of last July, the ensuing rate rise has been far slower than I would have thought, that is until the past few weeks.

2013-06-27 AdvisorShares Weekly Market Review by Team of AdvisorShares

Once again, US stock indexes declined last week based on investors’ fears of rising interest rates. While markets were rising at the beginning of the week, on Wednesday, Federal Open Market Committee Chairman Ben Bernanke said that if the economy continued on its current growth path, the Fed would scale back on asset purchases by the end of the year and attempt to end the extraordinary measures by the middle of 2014.

2013-06-27 ING Fixed Income Perspectives June 2013 by Christine Hurtsellers, Matt Toms, Mike Mata of ING Investment Management

Fears of Fed tapering are overblown; we expect global funding conditions to remain easy. We continue to favor the U.S. dollar and are bearish on the euro and the yen; we are cautious on EM local currencies, as volatility is likely to persist.Spreads are appealing at current levels, with higher-quality industrials offering the most attractive risk/reward.

2013-06-26 When I Suggested it May Be Time To Go Fishing... by Blaine Rollins of 361 Capital

When I suggested that it may be time to go fishing, I didn’t think that everyone would sell their bonds, notes, and bills to buy a new boat...

2013-06-26 Trampled By the Crowd? Logic Briefly Abandoned Creates Opportunity by Scott Colyer of Advisors Asset Management

The past two week slide in asset prices has caused a resurgence of doomsday pundits warning of impending calamity. The negative interpretation of Fed Chairman Bernanke’s comments regarding the U.S.economy’s future upgraded prospects is simply not logical. A careful review of what Bernanke said at his press conference was entirely consistent with what the Fed has said and done in the past.

2013-06-25 Letters to the Editor by Various (Article)

Adam Apt responds in the latest exchange of letters on the topic of socially responsible investing. A reader responds to Geoff Considine’s article, A Better Alternative to Cap-Weighted Bond Indices, which appeared June 11. A reader responds to Wade Pfau’s article, Retirement Income Designations ? Which Should You Choose?, which appeared last week.

2013-06-25 Is Fixed Income the New Equity? by Chris Maxey, Ryan Davis of Fortigent

After several decades of positive returns, fixed income investors are being treated to a rude awakening in the last six weeks. Recent comments from Federal Reserve officials suggest a sooner than anticipated exit from quantitative easing, raising the prospect of higher interest rates. Throughout the universe of fixed income assets, investors are questioning the future return potential, leading many to wonder, what now?

2013-06-25 Stay the Course by Douglas Hodge of PIMCO

It is that time of the year again. As school schedules give way to summer vacations, many families will be packing up the SUV to head to one of this nation’s amazing national parks. Years ago, my young family traveled to Yellowstone National Park, home of Yogi Bear and Old Faithful. The requisite float trip down the Snake River was arranged and a good time was had by all a bit of spray but nothing too jarring. Only days later, I returned to the Snake River and had the ride of a lifetime.

2013-06-25 Reframing Expectations by Aaron Reynolds of Baird Advisors

Even facing headwinds, bonds still serve important roles in a portfolio, including diversification and downside protection potential. As the heavy burden of total return falls on interest income, investors are being pulled toward higher-yield, higher-risk bond types. Investors can still benefit from the segmented bond market and the various strategies that are available. Expectations need to be reframed given the current environment of low yields and potential interest rate increases.

2013-06-24 And That\'s the Week That Was by Ron Brounes of Brounes & Associates

What is the Fed actually saying? The economy is recovering; the labor market is improving; short-term interest rates should remain low until at least 2015; the bond buying program will continue in its current form; any “winding down” (tapering) of purchases will be contingent on steady growth; the policymakers would be prepared to ramp up buying if conditions warrant. What have many investors been hearing/thinking?

2013-06-24 Quick Takes by Charles Lieberman (Article)

One of the issues being hyped these days is over the uncertainty surrounding Fed policy, which quite candidly, I don’t get. Short of laying out precise dates and amounts, the Fed has provided exceptionally detailed guidance that it will ease off the accelerator over the coming months, as long as the unemployment continues trending down. Downside risks have receded, the economy is improving, and extraordinary measures for policy are no longer needed. On the economy’s current trajectory, the Fed suggests it will no longer be engaged in QE by next summer.

2013-06-24 \"Fixed\" Income Investing Is Broken by Robert Isbitts of Sungarden Investment Research

Herb Brooks, who coached the 1980 “Miracle on Ice” U.S. Olympic Hockey Team to its unlikely win over the Soviet Union, included that quote as part of what I consider to be the best motivational speech in sports history. He was talking about his team and their Russian opponents. He might as well have been talking about bond investors on June 20, 2013.

2013-06-24 Despite Interest Rate Concerns, Muni Volatility May Offer an Entry Point by Jack Tierney of Invesco Blog

As we approach the midway point of 2013, the capital markets have many concerns: the potential end of quantitative easing (QE3), the slow rate of economic growth, the stubbornly high unemployment rate and the sorry state of affairs in both federal and state government finances. I won’t speculate on the eventual outcome of these issues, especially where politics is concerned. But I do think it’s valuable to look past the market’s fear and search for areas where smart investors can take clear-eyed action and benefit in uncertain conditions.

2013-06-24 A Timetable for Ending QE by David Kelly of J.P. Morgan Funds

In a press conference following this week’s FOMC meeting, Fed Chairman Ben Bernanke provided markets with a clearer understanding on how the Fed expects to phase out its current quantitative easing (QE) program. This timetable is justified both by economic progress and by the significant future costs which a too-large Fed balance sheet is likely to entail. Moreover, the timetable, while never previously explicitly outlined, should not have been a surprise to most market observers. Nevertheless, Mr. Bernanke’s words have been met by a sharp selloff across a wide range of financial a

2013-06-24 The Fed Unintentionally Lays an Egg by Bob Doll of Nuveen Asset Management

U.S. equities declined last week as the S&P 500 ended down 2.09%.1 The S&P suffered the first back-to-back one-day declines of more than 1% since last November. Global equities and bonds were also hit hard, with large sell-offs in emerging market assets, commodities and commodity currencies. Concerns about the fallout from dampened Fed policy accommodation are driving the weakness.

2013-06-21 AdvisorShares Weekly Market Review by Team of AdvisorShares

The major indexes finished lower after experienced another volatile week. While no major statements came out of the Federal Reserve, speculation about what the Fed chairman might after say its next meeting ends on June 19 drove a lot of market price movements early in the week.

2013-06-21 Fed Tapering Won't Cause a Bond Market Armageddon by Russ Koesterich of iShares Blog

Even if the Fed scales back its pace of bond purchases later this year, Russ explains why investors shouldn’t expect rates to finish the year much higher than where they are today.

2013-06-21 The Fear Factor in US Equities by Grant Bowers of Franklin Templeton Investments

Fear is a powerful motivator. Whether it’s a saber-toothed tiger or investment risks, it’s hard to stay calm when confronted with a perceived threat. Fear of a 2008 2009 downturn repeat, even in spite of strong performance in the US equity market in the first half of the year, has kept many investors sidelined. Grant Bowers believes fear itself could be the biggest issue holding back many investors right now, noting that in his view, short-term volatility aside, the recent US market rally is based on supportive fundamentals which he thinks should have staying power.

2013-06-20 Active ETF Market Share Update by Team of AdvisorShares

Total AUM in all active ETFs fell from $14.552 billion to $14.416 billion over the course of the week. Just like the previous week, ETFs with longer term fixed income investments are facing redemptions, while “Short-Term Bond” ETFs are rapidly expanding their asset base. AUM for active ETFs in the “Global Bond” category fell below the $5 billion dollar level.

2013-06-19 Efficient Pension Investing by Jared Gross of PIMCO

Adapting the Sharpe ratio to pension portfolios can help plan sponsors choose among a multitude of investment options designed to achieve the same goal. In our experience, the most significant efficiency gains have come from shifting from intermediate bonds to long-term bonds and introducing lower-volatility substitutes to equities.

2013-06-19 Changes in our Asset Allocation by Gregory Hahn of Winthrop Capital Management

We believe that valuations in publicly traded securities are stretched, and, although we have seen a move higher in interest rates and stocks have sold off from their high levels, investors are faced with choices that offer generally lower expected returns based on historic measures of return. Today, with the S&P 500 hitting 1650 and the yield on the 10 year US Treasury Note moving abruptly from 1.70% to 2.15%, there are generally two schools of thought on the minds of investors.

2013-06-18 Help Clients Fill the Income Void by Sponsored Content from Legg Mason Global Income Survey (Article)

Affluent investors all over the world just aren’t getting what they want from their income investments, according to Legg Mason’s recently released Global Income Survey. Yet there is good news: most say they want to become more knowledgeable about income investing, and they’re eager for financial professionals to point out fresh opportunities.

2013-06-18 High Yield Market Overview May 2013 by Team of Nomura Asset Management

The high yield market, as measured by the Bank of America Merrill Lynch High Yield Master II Constrained Index (the “Index”), was down 0.53% for the month of May, as fears of eventual Fed tapering dominated investor sentiment and put upward pressure on Treasury yields. The end result was the most substantial setback in a year for the high yield market. Despite the fears of rising rates, mildly improving economic conditions, healthy corporate earnings/balance sheets, and reduced tail risks and stagnant global growth/low inflation continue to benefit the high yield market.

2013-06-18 Unconstrained Bond Funds Fail to Deliver by Chris Maxey, Ryan Davis of Fortigent

There have been an incessant number of articles in the past year addressing a “Great Rotation” by investors the seismic shift in asset allocation predicted to result from a transition to a rising rate environment. Individual investors “spoiled” by a 30-year secular decline in interest rates, it is thought, will run to new alternatives in the face of this structural headwind for a significant chunk of their portfolios.

2013-06-18 Taking Seniority: Looking to Bank Loans in Uncertain Markets by Elizabeth (Beth) MacLean of PIMCO

Bank loans are senior secured loans to non-investment-grade corporations. They are floating rate instruments, secured by the collateral of that company and senior in the capital structure. Bank loans can be a more defensive way for investors to move into the high yield space, due to the collateral and their senior position. While we have seen yield spreads tightening among loans, on a relative basis we do think loan valuations still look attractive. PIMCO’s investment process helps us seek these attractive opportunities while managing risk.

2013-06-17 Weekly Market Commentary by Scotty George of du Pasquier Asset Management

With the markets trading at “all time highs” and investors scurrying to find alpha, much is being made about the demise of the bond market. Analysts and economists are in accord that the age of bond appreciation is over. The cause? Global austerity and national treasuries forcing (holding) interest rates down to their lowest levels in generations.

2013-06-17 The Price of Distortion by John Hussman of Hussman Funds

Corporate profits have benefited in recent years from enormous fiscal distortions that have bloated margins 70% above their historical norms. Stock prices have benefited in recent years from enormous monetary distortions that have suppressed interest rates and encouraged investors to “reach for yield.” Combining those effects, investors have been encouraged to chase stocks, placing elevated price/earnings multiples on already elevated earnings. Investors who value stocks on the basis of these distortions are likely to discover in hindsight that they have paid a very dear price.

2013-06-17 Sloppy Markets Continue by Bob Doll of Nuveen Asset Management

Last week the S&P 500 declined 0.97%,1 while many global equity averages fell for the fourth week in a row. Early in the week, discussion of tapering by the Federal Reserve was a big headwind, as discomfort over a slower pace of policy accommodation rippled through global markets. Thursday’s rally was driven by thoughts that tapering fears may be overdone. Markets were also helped by better employment and consumption data.

2013-06-14 The Sustainability of Managed Futures Returns by Robert Keck of 6800 Capital

Many investors have begun to question the efficacy of an investment in managed futures given the most recent two years of negative performance for the industry as a whole at a time when U.S. equity prices have been achieving multi‐year highs. The concern is not so much the magnitude of the losses incurred by the managed futures industry during this period; in many cases they are relatively small in comparison to the size of the drawdowns experienced by many other asset classes such as equities, real estate, fixed income, etc., during peak periods of market stress.

2013-06-14 Which Way for Bonds? Mapping a Path Forward by Bill Gross of PIMCO

In 1980, the Federal Reserve, led by Paul Volcker, tightened the quantitative noose to tame double-digit inflation, fueling an unprecedented tailwind for bond prices. Thirty years later we find ourselves at the other extreme, as central banks print money in the trillions of dollars to stimulate economic growth, and inflation is abnormally low. While we are not likely to see a repeat of that type of bull market any time soon, we also do not believe we are at the beginning of a bear market for bonds.

2013-06-14 A Taste of Rising Rates by Team of Neuberger Berman

The mantra "sell in May and go away" has taken on a new twist this year. Equity markets saw mixed returns last month but bonds took a beating, with losses materializing in nearly every fixed income segment. The reason? Interest rates rose significantlyand rather unexpectedlyover the course of the month. What implications would rising rates have for the market? We consider what’s ahead.

2013-06-14 Changing Picture by Liz Ann Sonders, Brad Sorensen and Michelle Gibley of Charles Schwab

We could be in the beginning stages of an adjustment toward a more "normal" monetary policy environment, with attendant volatility. This once again illustrates the importance of diversification and focusing on long-term goals when investing. We continue to believe the US equity markets are an attractive place for assets and recommend buying on pullbacks to the extent that you need to add to equity exposure. Additionally, continue to exercise caution around fixed income allocations and focus more on the developed markets vs. EM.

2013-06-13 Thinking About Thinking? by Jeffrey Saut of Raymond James

I think a lot about thinking in an attempt to improve my ability to make good decisions. I also work hard to avoid linear thinking, which tends to extend present conditions “linearly” into the future. Such thinking caused investors to ignore the Dow Theory “sell signal” of September 1999 with portfolio consequences that are now legend. That same thinking occurred in November of 2007, concurrent with another Dow Theory “sell signal,” with similar portfolio consternations. Ladies and gentlemen, economic changes, and for that matter stock market changes, tend t

2013-06-12 Silver Lining: Fed's “Tapering” Signals Stronger Economy by Eric Takaha of Franklin Templeton Investments

The Federal Reserve’s warning that it planned to scale back purchases of Treasuries sparked a storm on Wall Street, bringing instability to what had been a pleasant May in the US markets. Almost lost in the noise, however, is a silver lining: the Fed thinks the economy may be healthy enough to fly on its own.

2013-06-12 5 Reasons Not to Flee Non-US Dividend Stocks by Russ Koesterich of iShares Blog

“As bond yields rise, is it time to flee dividend stocks?” Russ explains why the answer is, no, at least when it comes to international dividend payers.

2013-06-12 Bond Realities: The Changing Landscape for Fixed Income and the Death of the Agg' by Andrew Johnson of Neuberger Berman

Earlier this year Andrew A. Johnson, Neuberger Berman’s Chief Investment Officer for Investment Grade Fixed Income, led a series of discussions with institutional clients about the state of the fixed income market and key ideas in approaching opportunistic fixed income investing in the current environment. Here, Mr. Johnson has adapted, and elaborated on, the concepts described at those meetings.

2013-06-11 A Better Alternative to Cap-Weighted Bond Indices by Geoff Considine (Article)

Capitalization weighting is the prevailing choice for equity index investors, who can choose from low-cost index funds constructed with theoretically proven methodologies. But capitalization weighting in fixed-income markets enjoys no such theoretical foundation, leaving investors without a clear choice for a diversified core fixed-income holding. A portfolio of bond exchange-traded funds that optimizes the tradeoff between yield and risk gives investors a commendable way to own a broadly diversified core allocation.

2013-06-11 May Flowers Bring Best Equity Market Since 1997 as Bonds Wilt by Douglas Cote of ING Investment Management

The S&P 500 has opened 2013 with its best year-through-May return since 1997. U.S. Treasury prices, in contrast, plunged last month on talks of Fed “tapering”. Don’t expect the reflation in bond yields to continue in the near term, as the Fed continues to struggle in its current war against deflation. Fundamental business activity not quantitative easing is the wellspring of sustained economic growth, creating lasting sales and profits. For investors, the two biggest self-defeating fears continue to be 1) the fear of buying equities and 2) the fear of buying bonds.

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.

2013-06-11 Crushing the Middle Class by John Browne of Euro Pacific Capital

Like a carefully memorized religious incantation, politicians and central bankers continually stress how their stimulus policies are designed to promote the interests and prosperity of the middle class. Cynical observers may note that this brave political stance may have something to do with gaining the support of the vast majority of voters who identify themselves as "middle class." However, the cumulative effect of their economic programs has achieved the opposite.

2013-06-10 2009 vs. 2013 by John Hussman of Hussman Funds

One of the most strongly held beliefs of investors here is the notion that it is inappropriate to “Fight the Fed” reflecting the view that Federal Reserve easing is sufficient to keep stocks not only elevated, but rising. What’s baffling about this is that the last two 50% market declines both the 2001-2002 plunge and the 2008-2009 plunge occurred in environments of aggressive, persistent Federal Reserve easing.

2013-06-10 DC Solutions: Adding Global Bonds to Target-Date Funds by Alison Martier, Seth Masters of AllianceBernstein

Within US defined contribution (DC) target-date funds (TDFs), whether we’re considering customized TDFs for larger plans or packaged solutions for smaller plans, our research shows that having a bond allocation that is not US-centric can lead to better outcomes and enhance the effectiveness of the glide path.

2013-06-07 Liquidity Markets Likely to Evolve Under Proposed Money Market Reforms by Jerome Schneider of PIMCO

We view the SEC’s proposed regulations on money market funds as a pivot point for cash and liquidity management. If the first proposal is adopted, prime institutional money market funds would convert to a floating net asset value share price. That conversion would likely cause some volatility in pricing. As we do not expect yields to increase in the near-to-medium term, in our view the risk-reward tradeoff would not be as attractive for investors.

2013-06-06 But We Want Goldilocks-Like Growth by Blaine Rollins of 361 Capital

While the equity markets would enjoy a bit of the great rotation out of the 20+ year outperformance in bonds and into equities, the move in May has been too much, too quick for even equity investors to stomach. So while the Long Treasury ETF (TLT) fell -6.8% in May, the size of the move even scared investors in REITs (IYR), Junk Bonds (JNK/HYG), and Utilities (XLU).

2013-06-06 More Than a Feeling by Team of AdvisorShares

Tangible signs of fundamental weakness are appearing everywhere, yet financial market participants are simply choosing to ignore these signs. There remains a significant disconnect between the real economy and financial markets. Read this paper by Peritus Asset Management to learn how to navigate the weak fundamental picture in what they believe to be the beginning of a 15-20 year positive technical backdrop, which will put yield generating assets, such as high yield bonds, in the sweet spot.

2013-06-06 Omissions of the Omen: \"Hindenburg Omen\" and the Selloff Last Week by Liz Ann Sonders of Charles Schwab

Rising US Treasury bond yields and Fed "taper talk" not to mention a "Hindenburg Omen" sighting hit stocks last week. A look inside the Omen should calm fears of impending doom. The market is likely not out of the woods, but we don’t expect an overly sinister correction.

2013-06-05 Certainty, Rates and the Year Ahead by Peritus Asset Management of AdvisorShares

The government tells us not to worry, as the Federal Reserve comes to rescue with QE-Forever. Certainty with fiscal policy doesn’t seem to change the demand equation and cheapened money doesn’t do anything if demand isn’t present. Treasury rates remain at 0% for the foreseeable future making yield hard to find. Read this position paper by Peritus Asset Management scrutinizing how all this has come to pass and what indicators are foretelling the near future effects on the high yield asset class.

2013-06-05 Will Green Shoots Flourish in U.S. and Latin America? by Josh Thimons, Lupin Rahman of PIMCO

The US economy is much further along the road to repair relative to its developed market peers, but it is still dealing with an unsustainable fiscal situation. Latin America is closely coupled to the rest of the world. What happens in the U.S., China and Europe over the secular horizon is especially critical. Our secular investment outlook calls for a more defensive posture toward risk. In U.S. fixed income, this suggests positioning for alpha rather than capital appreciation.

2013-06-05 Harleys and Leather Jackets by Jeffrey Bronchick of Cove Street Capital

We are just about done with Proxy Season and with summer in full swing, there is nothing more that we would like to do than kick back and indulge in the 75 pages of shame, greed, ignorance, and political correctness-with only the occasional bright light of shareholder friendly corporate governance-that make up SEC Form 14A, aka the Proxy Statement. I would postulate that this document remains an underrated and under-read part of the investment puzzle as it is the factual record of management’s incentives.

2013-06-04 The Role of Cash in Multi-Asset Portfolios by Ashish Tiwari, Andrew Spottiswoode of PIMCO

Determining the optimal allocation to cash is as challenging as ever in today’s unusually uncertain markets. When allocating to cash, investors should consider a multi-dimensional framework to assess the liquidity of the underlying cash instruments. In our view, the most attractive risk-adjusted opportunities for cash investors lie just outside the traditional money market space.

2013-06-04 Wounded Heart by Bill Gross of PIMCO

Joseph Schumpeter, the originator of the phrase “creative destruction,” authored a less well-known corollary at some point in the 1930s. “Profit,” he wrote, “is temporary by nature: It will vanish in the subsequent process of competition and adaptation.” And so it has, certainly at the micro level for which his remark was obviously intended. Once proud, seemingly indestructible capitalistic giants have seen their profits fall short of “everlasting” and exhibited a far more ephemeral character.

2013-06-04 Equities Hit Pause by Bob Doll of Nuveen Asset Management

Stocks and other risk assets struggled last week, with the S&P 500 declining 1.11%.1 Equities finished lower on Friday, the final trading session of May. The decline trimmed May’s gains and sealed the second consecutive weekly decline for U.S. equities. The S&P increased 2.34% for the month and has gained 4.31% this quarter and 15.37% for the year.1

2013-06-03 Defense and Selective Offense by Mark Kiesel of PIMCO

Given the market’s newfound risk appetite for credit and less attractive valuations, we are taking advantage of global credit market liquidity in an effort to reduce our overall risk posture. In our selective offense approach, we continue to favor U.S. housing and housing-related areas, in addition to select investments in the energy, pipeline, specialty finance, gaming, hospitals, and airline and auto industries, given the more positive fundamental outlook for these sectors.

2013-06-03 Is Volatility Dead? Hardly. by Paresh Upadhyaya, Michael Temple of Pioneer Investments

Certain pundits suggest we have entered a new volatility regime that volatility has been tamed by the massive amount of liquidity injected into worldwide capital markets by very accommodative central banks. We take a different view. While volatility has been declining across many asset classes, it is creeping into several that may have escaped some investors’ attention.

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.

2013-05-31 In an Era of Uncertainty and Lower Returns, It\'s Time for Alternatives by Sabrina Callin, John Cavalieri of PIMCO

The initial economic and capital market conditions of the 1980s set the stage for a multi-decade bull market for stocks and bonds. Times have changed, however, and traditional investment portfolios are unlikely to deliver returns as healthy as those enjoyed for much of the last 30 years. It’s time to think alternatively about asset allocation and index construction, sources of alpha and beta, and risk and return objectives to increase the probability of success in what we believe is a new era for investors and financial markets.

2013-05-31 The Fixation on the Fed: 3 Investing Implications by Russ Koesterich of iShares Blog

Hypersensitive investors are reacting to every utterance from central banks like the Federal Reserve and the Bank of Japan. Russ shares three investing implications of this fixation.

2013-05-31 The Great Reflation by Peter Schiff of Euro Pacific Capital

This week economists, investors and politicians were treated to some of the "best" home price data since the frothy days of 2006 when home loans were given out like cotton candy and condo flipping was a national pastime. The Case-Shiller 20 City Composite Home price index was up a startling 10.9% for the 12 month period ending in March. Prices in all 20 cities were up, with some (Las Vegas, Phoenix, and San Francisco) notching gains of more than 20%. Meanwhile the National Association of Realtors announced that April pending home sales volume reached the highest level in nearly three years.

2013-05-31 Weekly Economic Commentary by Carl Tannenbaum of Northern Trust

Is central bank communication clarifying or confusing? The European Central Bank should focus its efforts on small business lending. A look beneath the surface of housing proves revealing.

2013-05-30 UK Secular Outlook - Morphing into the Carney Era by Mike Amey of PIMCO

The UK remains in a “stable disequilibrium”, one that needs to either transform into growing economy with narrowing income differentials or risk a more aggressive policy response. Financial repression, protection of real purchasing power, tail risks of accelerated currency weakness and price sensitivity will likely dominate UK markets over the secular horizon. Investors may consider progressively reducing exposure to assets susceptible to tail risks. Higher quality short-dated income-generating, inflation-hedging and non-sterling assets remain attractive.

2013-05-30 Global DC Plans: Similar Destinations, Distinctly Different Paths by Stacy Schaus, William G. S. Allport, Justin Blesy of PIMCO

DC plans in in the U.S., Australia and the U.K. may benefit from better aligning asset allocation defaults to workers’ needed outcome: purchasing power in retirement. Focusing on needed outcomes would suggest a higher allocation to real assets, earlier de-risking and consideration of tail risk hedging.

2013-05-29 Is This the End of the World As We Know It? by Massimo Tosato of Schroders Investment Management

After five turbulent years of decline and unrelenting economic doom there are signs that change could be afoot.

2013-05-29 April 2013 Market Commentary by Andrew Clinton of Clinton Investment Management

Interest rates rose modestly during the first quarter as ten year Treasury yields increased by approximately 0.10% or 10 basis points. Seasonal tax-time municipal bond liquidations, together with a heavier primary calendar, weighed heavily on the market causing municipal bond yields to underperform on a relative basis. In our recent market opinion we thoroughly discussed our view that the relative cheapening of municipal bonds presented investors with and attractive entry point as we expect technical conditions to improve as we move into the summer months.

2013-05-29 Weekly Market Commentary by Team of Tuttle Tactical Management

Last week we talked about the market being overbought in the short term, so the three day selloff (Wednesday-Friday) was to be expected. The media will blame the Fed but they didn’t tell us anything we didn’t already know. Bottom line, when the market gets extremely overbought traders will use anything and everything as an excuse to take profits. Interestingly, last week was the first streak of three down days this year. The S&P 500 seemed to find some support at 1640.

2013-05-28 Taking Stock by Bob Doll of Nuveen Asset Management

U.S. and global equities were under pressure last week, with all major U.S. indices lower for only the fourth time this year. With discussion of the Fed tapering its stimulus, market uncertainty gained momentum. The S&P 500 was down 1.0% for the week.1 We consider the market pullback technical in nature since the mention of a Fed quantitative easing exit likely created a natural point to take profits after the recent rally.

2013-05-24 Remarkable Resilience by Liz Ann Sonders, Brad Sorensen and Michelle Gibley of Charles Schwab

We saw how the prospect of a sooner pullback in purchases in bonds by the Fed rattled the market both in the US and globally, but the picture, to us, has not changed to any great degree. A very gradual pullback, not even going to zero, in quantitative easing due to an improved economic situation doesn’t spell disaster to us. We continue to urge investors to pay attention to both sides of the risk equation when making decisions and to keep the longer-term perspective in mind. Short-term swings are inevitable, but should not be the basis for sound decision making.

2013-05-23 The Labor Force Participation Puzzle by David Kelly of J.P. Morgan Funds

Slow growth and mediocre job creation have been common themes used to describe the U.S. economy in recent years, as both the labor market and broader economy failed to produce the snap-back rebound many expected following the deep recession seen in 2008 & 2009. Despite that lackluster growth, the unemployment rate has now fallen to 7.5% after peaking at 10% in October of 2009, a much faster decline than expected, given average employment growth of less than 125,000 per month.

2013-05-22 The Right Question by Team of Tuttle Tactical Management

As the market continues to make new highs the arguments about whether stocks can go higher or the rally will end become more interesting. As usual in any debate about the market, both sides can make a great case. There are a number of factors that I could point to that suggest stocks have room to run but there are also a number of troubling signs on the horizon that could stop the rally in its tracks. Investors almost always get drawn into this debate and most of the people I talk to are pessimistic that this rally can continue.

2013-05-22 A Whiff of Confidence by David Kelly of J.P. Morgan Funds

The single biggest on-going survey of consumer confidence in the United States is conducted by Rasmussen, who survey 500 consumers every night on their views of the U.S. economy and their personal finances. Since October 2007, there has not been a single month in which the index produced by this survey has exceeded 100. However, since the start of May it has averaged well above this level.

2013-05-22 And That\'s the Week That Was by Ron Brounes of Brounes & Associates

Four times a charm. Despite lackluster earnings and economic data that raises some concerns, investors continue to play the game of “how high can we go” and stocks climbed for the fourth straight week With 15k (Dow) and 1600 (S&P) well in the rearview mirror, investors seem to have their targets set on bigger and better things. Some bullish comments by a hedge manager; a solid consumer sentiment reading; a reason for the Fed to hold off on tapering its bond buying stimulusand it’s off to the races for equities (again).

2013-05-22 Where is inflation headed? What will it mean for investors? by Russ Koesterich of BlackRock Investment Management

Slow economic growth and long-term headwinds should keep inflation contained. Low inflation should help support equity markets and high yield bonds, but may be a negative for gold prices. The inflation environment should also help prevent interest rates from rising too fast.

2013-05-21 Do Annuities Reduce Bequest Values? by Joe Tomlinson (Article)

The widely held view that annuities reduce bequest values is too narrow. Adjustments can be made in retirement portfolios to reduce retirement risk without sacrificing the value of one’s bequest. Here’s how retirees can purchase annuities, adjust allocations in remaining assets and achieve improved retirement outcomes.

2013-05-21 Federal Spending, the Deficit and Debt Ceiling by Gregg Bienstock of Lumesis

As our regular readers know, we have a level of concern with regard to the budget deficit, the debt ceiling and all things related thereto. And, while many of us have concerns regarding maintenance of the tax-exemption for muni debt and the tax-deductibility of muni fixed income interest, this week we are approaching the world from a slightly different angle. The focus: how reliant are States and counties on the Federal Government and who is most reliant.

2013-05-21 (Yawn)...As Equities Advance Another 2% by Bob Doll of Nuveen Asset Management

U.S. equities advanced again last week, with the S&P 500 increasing 2.1%. Global stocks are reaching new highs in this cycle and the U.S. market is at an all-time high. Bonds were hurt in the move, dragging credit down, while commodities fell slightly on weaker manufacturing data. The unrelenting equity rally and an environment without positive news about earnings and the economy is making many investors uncomfortable.

2013-05-21 DC Plan Sponsors Should Look Further than Their Own Backyard by Alison Martier, Seth Masters of AllianceBernstein

US defined contribution (DC) plan sponsors large and small are seeking ways to help plan participants achieve better outcomes. Over the last 30 years, compelling evidence has accumulated that suggests currency-hedged global bonds may be an important part of the solution.

2013-05-20 Still Bullish by Brian Wesbury, Bob Stein of First Trust Advisors

Like Rip Van Winkle, imagine you went to sleep on October 9, 2007 and didn’t wake up until yesterday. On 10/9/2007, equities were at record highs: 14,165 for the Dow Jones Industrial Average and 1,565 for the S&P 500.

2013-05-18 All Japan, All the Time by John Mauldin of Millennium Wave Advisors

This week we again focus on Japan. Their stock market has been on a tear, and their economy grew 3.5% last quarter. Is Abenomics really the answer to all their problems? Is it just a matter of turning the monetary dial a little higher and voila, there is growth? Why doesn’t everyone try that? And what would happen if they did?

2013-05-17 Making the Most of Equity Allocations by Andrew Pyne, Sabrina Callin of PIMCO

We believe slowing global growth and deleveraging are likely to result in lower long-term returns for equities. Traditional approaches to building equity portfolios may not be enough for investors to meet their return goals. We have found three complementary ways investors can enhance equity return potential: fundamental indexes, index-plus strategies and high active share stock selection approaches.

2013-05-17 4 Reasons to Still Hold High Yield by Russ Koesterich of iShares Blog

With high yield spreads historically tight and prices at all-time highs, some market watchers are wondering whether it’s time to jump off the high-yield bandwagon. Russ weighs in and explains why this asset class is still worth holding.

2013-05-16 Everybody Wants Some: Central Banks and Bond Funds Step up Buying of Stocks by Liz Ann Sonders of Charles Schwab

The stock market has broken out of its "triple top" formation, which started in 2000, yet remains reasonably valued. Supply within the stock market has been dwindling thanks to near-record company buybacks. Demand for stocks is coming from some seemingly unlikely sources: global central banks and bond mutual funds.

2013-05-15 Dissecting the Rally: What Sectors Look Attractive? by Russ Koesterich of BlackRock Investment Management

The current rally has been fueled by investors looking for relatively "safe" areas of the market. As such, the classic defensive sectors, such as utilities, consumer staples and healthcare, have been outperforming. This trend may be changing, indicating that sectors such as energy and technology are growing more attractive.

2013-05-15 Speaking of a Great Week... by Blaine Rollins of 361 Capital

I left the office each day thinking that I just saw another walk off game winning home run by the S&P500. The bears were given their chance in April with the weak economic data and slightly less than exciting earnings, but they just couldn’t break it. In return, the employment data was a bit better, the global central banks came out swinging (ECB, Australia, and South Korea), then the markets broke the Yen, Bonds, and Gold, and the Bulls absolutely skinned the Bears.

2013-05-15 The Great Capitulation by Pamela Rosenau of HighTower Advisors

If you were to browse the virtual bookshelves of Amazon, some of the latest titles do not seem overly optimistic about the future. In Niall Ferguson’s The Great Degeneration, he examines why civil society is in complete “free fall”. Another recent “pick me up” entitled The Great Deformation, by former Reagan budget director David Stockman, discusses the negative impacts of Washington’s political dysfunction to our democracy.

2013-05-14 Guide to Working with Monetary Napalm by Scott Colyer of Advisors Asset Management

Napalm is a highly incendiary form of jellied fuel. It was used extensively in the Vietnam War to quickly ignite massive fires over large areas of land. In the world of financial incendiaries, the Fed’s overwhelming monetary stimulus has ignited asset prices in the United States with the force and effectiveness of napalm. Is the fire short lived? Are the gains in asset prices temporary or can they be believed? Are the housing and stock markets on fire just because of the Fed’s quantitative easing (QE) or could there be a much more fundamental reason?

2013-05-14 Cyclical and Emerging Market Strength May Be Pointing to Better Growth by Bob Doll of Nuveen Asset Management

Last week U.S. equities advanced as the S&P 500 increased by 1.3%. We have been amazed bythe market’s ability to continue to rally in an environment in which sales growth has been anemic and earnings gains have been largely based on companies’ abilities to manage margins and utilize financial engineering.

2013-05-14 Changing Face of High Yield by Christian Thwaites of Sentinel Investments

High yield has been on a tear. A series of fortunate events have made this one of the best asset classes in recent years. It has outperformed the S&P[1] nine out of the last thirteen years. In those that it lagged, underperformance averaged 1.9%. Outperformance averaged 9.7%. From 1985 to 2012, high yield had five down years averaging (-8.8%). The S&P had five down years averaging (-16.6%). Over the entire period, high yield underperformed the S&P by around 180bp but with about half the risk and a 0.58 correlation.

2013-05-14 New Normal ... Morphing by Mohamed El-Erian of PIMCO

The New Normal has morphed to include consequential elements of a "stable disequilibrium." In the midst of notable multi-speed dynamics, the global economy as a whole is muddling along a road that will give way over the next three to five years to one of two stark alternatives: either sustainable global growth, institutional and political renewal in the West and safe deleveraging; or growth shortfalls that cause financial instability, fuel greater social tensions, accentuate political dysfunctions and complicate debt traps.

2013-05-10 A Tale of Two Markets: Equity Bulls and Bond Bears by Douglas Cote of ING Investment Management

Surging equity markets absent an accompanying rate rally is a red flag, as Treasury yields remain well below “normal”. While investors’ renewed enthusiasm for equities is warranted, they must be careful to avoid the “folly of gaming diversification”. Corporate earnings have impressed, though revenue has struggled due in part to a moribund Europe. Divergent markets mean investors should stay broadly diversified in equities and real bonds not near-cash and ever alert to the fundamentals.

2013-05-10 Weekly Research Briefing by Blaine Rollins of 361 Capital

This week’s focus was squarely on central bank policy decisions and the U.S. April payrolls data. Mid-week the FOMC reinforced the "Bernanke put" by stating explicitly that quantitative easing can be increased if conditions worsen.

2013-05-08 Deflation Is OverPlease Come Out by Christine Hurtsellers, Matt Toms, Mike Mata of ING Investment Management

A blooper reel of 20th century history would likely include a feature on Japanese soldier Hiro Onoda. Posted to a small island in the Philippines during the waning days of World War II, when Onoda’s mission proved unsuccessful he was ultimately forced to flee into the woods, where he survived on a steady diet of coconuts and bananasfor almost 30 years after the end of the war.

2013-05-08 Are Investors Breathing a Sigh of Relief? by Bob Doll of Nuveen Asset Management

Last week U.S. equities delivered another gain as the S&P 500 increased by 2.0%.1 On Friday, the U.S. jobs report offered relief from fears of an accelerating weakness caused by prior softness during this time in each of the last three years. However, the full set of economic data for the week supports our view of a slower second quarter in a post-sequestration environment.

2013-05-08 US Economy Should be \"Good Enough\" for Stocks by Russ Koesterich of BlackRock Investment Management

The April employment report confirms that the US is on a slow-but-positive course of economic growth. This environment should be conducive to further gains in equity prices. Europe, in contrast, continues to struggle and investors should approach that region with caution.

2013-05-07 Why Did Gold Prices Fall So Sharply? by Paresh Upadhyaya of Pioneer Investments

April’s sharp decline in gold got people’s attention. Plunging from $1,561 to $1,347/oz on April 12 and 15, it was a staggering decline of 13.7% the biggest 2-day drop since 1983. Is anything significant going on behind the scenes? We believe this price action is not a new phenomenon for gold, but a continuation of a much bigger trend that has been in place since the third quarter of 2011.

2013-05-07 Navigating Opportunities in Senior Loan and High Yield Corporate Bond ETFs by Ryan Issakainen of First Trust Advisors

In this newsletter, we will consider how senior loan and high yield corporate bond ETFs may be utilized by investors to pursue a higher level of income while seeking to mitigate the impact of rising interest rates. We’ll discuss why we believe benchmark indices are flawed investment strategies for gaining exposure to these asset classes, and we’ll highlight how First Trust utilizes active management to seek better risk-adjusted returns than passive senior loan and high yield corporate bond index ETFs.

2013-05-07 Investing for Income and Capital Appreciation by Giorgio Caputo, Rob Hordon, Ed Meigs, Sean Slein of First Eagle Investment Management

A Q&A with First Eagle Investment Management’s senior members and their market views and strategic insights.

2013-05-07 Quarterly Letter by Team of Grey Owl Capital Management

In his April 2013 commentary, PIMCO’s Bill Gross wrote, “PIMCO’s epoch1, Berkshire Hathaway’s epoch, Peter Lynch’s epoch, all occurred or have occurred within an epoch of credit expansion What if an epoch changes? What if perpetual credit expansion and its fertilization of asset prices and returns are substantially altered? What if a future epoch favors lower than index carry or continual bouts of 2008 Lehmanesque volatility ?”

2013-05-06 Beyond the Headlines: Job Growth, Exports and Housing by Gregg Bienstock of Lumesis

Congress has done something for the American public. FAA, sequester, flight delays we can fix that! While I would usually take a cynical swipe at Congress (something like, “did they act because they, too, were impacted by their own stubbornness”), I’ll let well enough alone and simply pass on a heartfelt thanks. Perhaps this is the start of something. I hear they are working closely on immigration reform and an exemption for Congress and their staff from the Affordable Care Act (aka Obamacare). Ok, so two of three initiatives garnering bi-partisan support are purely self-ser

2013-05-04 Don't Sell in May: Here are Reasons to Extend Your Stay by Frank Holmes of U.S. Global Investors

During the first week of May every year, the maxim, “Sell in May and Go Away,” gets taken out, dusted off and powered up as a reason to sell stocks. The rhyme is more than just a catchy urban legend: June, July, August and September have historically been the weakest months of the year for the S&P 500 Index.

2013-05-02 In Treasuries, the Risks Outweigh the Rewards by Russ Koesterich of BlackRock Investment Management

The 1Q GDP report was mixed, but the lack of income growth remains troubling. Oil prices are likely to remain range-bound, but that should be good enough to help energy stocks. While yields could decline further in the near-term, Treasuries look quite unappealing.

2013-05-01 While the Bears Fight... by Blaine Rollins of 361 Capital

While corporate earnings outlooks and released economic data remained soft, the world moved to declare Austerity a failure and quickly assumed that the ECB could ease further at this week’s meetings. The recent collapse in commodity prices and slowdown in China does put a high card in their hand. With these new thoughts, European equities and bonds both surged on the week...

2013-05-01 Weekly Market Review Notes by Team of Tuttle Tactical Management

he mixed economic numbers we have been seeing lately----higher than expected consumer confidence and home prices vs. lower than expected Chicago PMI---might be confusing to some. One number shows the economy improving while another shows the economy contracting. However, for investors this is actually good news as the data continues to confirm that we are in a Goldilocks economy, not too hot, not too cold.

2013-04-29 High Yield in a Rising Rate Environment by Team of AdvisorShares

We have all witnessed a major move in Treasury rates over the last couple months, causing concern for many that we may be in the early stages of a rising interest rate environment. The traditional thought is that as interest rates rise, bond prices fall. But looking at history, the high yield market has defied this widely held notion. This paper from Peritus Asset Management examines the main reasons why high yield bonds have historically performed well during times of rising interest rates.

2013-04-29 Economic Slowdown Has Not Weakened Share Prices by Bob Doll of Nuveen Asset Management

U.S. equities rebounded last week as the S&P 500 increased by nearly 1.8%,1 despite continued weak economic data. We believe recent data is not yet weak enough to change forecasts. The relative stability of data and forecasts - supported by stimulative monetary policies, an improving U.S. housing market and fading political polarization in the U.S. and Europe - sends a message of reasonably low volatility and manageable downside risks.

2013-04-26 The Sustainability of U.S. Interest Rates Rising by Paresh Upadhyaya of Pioneer Investments

Investors are growing concerned, with good reason, we think, that yields have bottomed for the 10-year Treasury and will surge as the economy gains strength. Prices, which move inversely to yields, would fall, and the question is whether rising rates in 2013 could trigger a bond bear market along the lines of the Great Bond Bear Market of 1994. We don’t think so.

2013-04-26 No Escape by Liz Ann Sonders, Brad Sorensen and Michelle Gibley of Charles Schwab

Global economic growth has weakened, while the US economy hasn’t reached "escape velocity." US stocks have held up relatively well. With few other attractive alternatives, domestic equities appear to be the best house in a rough neighborhood. With the Fed committed to easing, housing improving, and valuations reasonable, the trend should continue. Risks remain and diversification and some hedging strategies are recommended.

2013-04-26 Why The Fed's Balance Sheet Matters Neosho Capital Takes On Alan Blinder by Chris Richey of Neosho Capital

We anticipate the Fed will begin slowing, but not eliminating, its QE purchases later this year, barring another severe downturn in the intervening period. As such, we expect macro-economic factors such as currency, interest rates, growth, and inflation to continue to be a significant influence on stock market returns and that the long-term benefits of active portfolio management and individual company performance will continue to be masked by these macro influences.

2013-04-25 Like Air Out of An Untied Balloon... by Blaine Rollins of 361 Capital

Earnings hit the market like a ton of bricks this week. It wasn’t that the reported numbers were a disaster, but that the new data points did not change the trajectory of the current buying and selling patterns. Investors rewarded the defensive earners (bought more Coca-Cola, Johnson & Johnson, and Microsoft) and sold their shares in more cyclical stocks (Industrials, Semis, and Oil Services). Financial stocks survived the week, but few owners went home Friday feeling better about their bank names than at the start of the week.

2013-04-25 Value Investing and the Philosopher's Stone by Kevin Simms, Joseph Paul of AllianceBernstein

When J.K. Rowling finished her first manuscript of Harry Potter and the Philosopher’s Stone in 1995, she submitted it to 12 publishers, who all rejected the book. In time, those publishers would regret missing the chance to back an unknown author who would later take the world by storm. Like the publishers who passed over Harry Potter, we believe that many investors today risk missing a historic opportunity to invest against the grain in attractively valued stocks across the globe.

2013-04-25 Q1 2013 Market Commentary by John Prichard of Knightsbridge Asset Management

The country now in the news is tiny Cyprus, which received a bailout for its banks from the European Union (EU), but only after agreeing to steep losses for those banks’ large depositors. Hitting up bank deposits represents a new dimension to the European debt crisis and illustrates how in a crisis, leaders can and often will resort to whatever means are necessary. When the Cypriots first requested a bailout from the EU and were told their depositors had to suffer, they balked and said that was unacceptable...

2013-04-24 The 2030 Non-state World by Bill O'Grady of Confluence Investment Management

Several weeks ago we started looking at the alternative world scenarios as projected by the National Intelligence Council (NIC). The NIC issues a long-term strategic outlook every five years and projects a forecast from this analysis for the following 15-20 years. In the most recent report, Global Trends 2030, the NIC proposes four alternative world scenarios. We are now turning to the last projected outlook, the Non-state World. Under this scenario non-state actors aided by emerging technologies will have increasing influence, as the importance of traditional nation-states decays.

2013-04-24 Europe's Sovereign Debt Problem: A Call for a Clear Destination by Andrew Bosomworth, John Henning Fock of PIMCO

Without political commitment to a common fiscal destination, the long-term instability and market distortions within Europe’s capital markets are likely to intensify. To preserve the euro, the eurozone must develop federal fiscal policies that tackle significant economic, cultural and societal differences and define a credible roadmap to achieving structural reforms, a banking union, political union and fiscal union. Historical precedents in Europe may help guide the way.

2013-04-24 Weekly Market Review Notes by Team of Tuttle Tactical Management

Bulls and Bears continue to fight it out around the S&P 500 record high. There is a lot to worry about at this point----earnings and economic numbers have been somewhat disappointing, terrorism fears are back (Boston Marathon, Canada, fake Twitter posts, etc), and we continue to see a divergence between riskier areas of the market and less risky areas. On the plus side there is still nowhere else to go except for stocks. As we have said before, volatility around an all time high is normal and to be expected.

2013-04-23 Enhancing Credit Returns in 2013 by Andreas Berndt, Ryan Blute of PIMCO

While credit achieved exceptional returns in 2012, achieving such returns in 2013 will be challenging in light of less upside potential and limited spread compression. Challenged by continued loose central bank monetary policies, alpha generation plays an increasingly significant role in seeking attractive total returns within credit portfolios. Encouraging investors to provide managers with a variety of innovative approaches and flexibility may enhance the return potential of a European corporate bond portfolio without materially changing overall credit or interest rate risks.

2013-04-22 Strategy for a Second Gear Economy by David Kelly of J.P. Morgan Funds

American investors could be forgiven for feeling just a little confused. One week after the stock market posted its strongest first-quarter gains since 1998, the Bureau of Labor Statistics announced the weakest monthly job growth in nine months. Real GDP growth was just 0.4% in the fourth quarter but appears to have been much stronger in the first. So is the economy getting stronger or weaker, how is the Federal Reserve likely to react to it and what, if anything, should investors do about it?

2013-04-22 Commodity Declines and Weak Data Startle Investors by Bob Doll of Nuveen Asset Management

U.S. equities declined last week as the S&P 500 fell by more than 2.0%, which came on the heels of a new all-time high the prior week. Led by gold, commodities experienced volatility and declined over the past two weeks. Other detractors included disappointing first quarter Chinese economic numbers and somewhat softer U.S. releases.

2013-04-19 Fixed Income Investment Outlook by Team of Osterweis Capital Management

Based on the nearly 2,500-point rise in the Dow Jones Industrial Average since last June, it appears that Mr. Bernanke has been successful in increasing demand for risk assets and creating some exuberance in the stock market. Short-term volatility in the markets may be driven by questions about the Fed’s eventual exit strategy and how effectively the politicians will deal with U.S. fiscal issues. The good news is that that the U.S. economy is growing, albeit slowly, unemployment is falling, again slowly, and consumer confidence is improving.

2013-04-19 India\'s Gas Sector Dilemma by Siddharth Bhargava of Matthews Asia

In India, the fertilizer sector has long depended on gas as a key input. Over the last decade, several power plants that run on gas have been set up as well. Demand has grown 10% each year since 2002 while supplies, largely managed by state-owned enterprises (SOEs), have failed to keep pace. Inefficient capital allocation, lack of incentives and populist policies aimed at maintaining low prices have led the country to import 25% of its gas needs. This has further exacerbated India’s current account deficit, which now stands at 6.7% of GDP.

2013-04-17 In the Category of Sign Spinners by Blaine Rollins of 361 Capital

If you thought the plunge in Gold prices was tough on those long the precious metal, wait until you see the upcoming hit to the April Non-Farm Payrolls in the category of Sign Spinners...

2013-04-17 The Interest Rate Environment: Comparing High Yield Bonds and Bank Loans by Team of Hotchkis & Wiley

In its first quarter 2013 newsletter, "The Interest Rate Environment: Comparing High Yield Bonds and Bank Loans," Hotchkis & Wiley’s high yield team analyzes the behavior of the high yield market and the bank loan market in different interest rate environments to determine whether they can make sensible assumptions about the future.

2013-04-15 The (Up) Beat Goes On, Part II by Bob Doll of Nuveen Asset Management

We wrote Part I of this theme on February 11 during the first quarter rally, when the S&P 500 closed the week at 1518. This past week the S&P ended at 1589, after increasing 2.3%. Global stock prices continue to push to new highs and thus provide support for a pro-equity bias. One nuance is that the composition of the equity rally has been abnormally defensive.

2013-04-12 Asia\'s E-Commerce Evolution by Michael Oh of Matthews Asia

Korea and Japan have been trailblazers in terms of making the virtual marketplace platform, through which merchants and manufacturers of all sizes can sell goods to consumers, an e-commerce model in Asia. Unlike in the U.S. and Europe, where many retailers sell directly to customers from their own websites and handle the details of commerce themselves, most Asian e-commerce takes place on “megasites” or virtual markets.

2013-04-12 The Bank of Japan Pulls All the Stops by Raymund Uy of Invesco

The Bank of Japan (BOJ) surprised the markets by announcing a particularly aggressive round of quantitative easing (QE) designed to rid the Japanese economy of its persistent deflation. The new policy was unexpected not only in the size of the asset purchases announced, but also in the types of securities to be purchased and their maturity.

2013-04-10 Economic Slowdown Halts Equity Rally by Bob Doll of Nuveen Asset Management

The latest softness in economic indicators probably means that more consolidation in the equity markets is required before we can advance beyond the recent all-time highs. During March, nearly all of the activity for the S&P 500 was within 1% of 1550. Equities may move lower due to deteriorating technical conditions and the possibility of weak first quarter earnings reports.

2013-04-10 Don't Pay Too Much for That Bordeaux - Or That Bond by Jeff Helsing of PIMCO

The financial market’s reliance on ratings agencies and benchmarks, along with regulations, can cause distortions in the value of some securities. These price distortions can create potential opportunities for some investors. Investors should consider aligning capital allocation with outcome-oriented objectives that aren’t influenced by credit ratings or benchmarks.

2013-04-10 Weekly Market Review Notes by Team of Tuttle Tactical Management

The market continues to experience volatility around the new record high. Again, this is to be expected as this is a very psychologically important level so we shouldn’t expect the market to blow through this and never look back. There is still a lot of background "noise" in the markets. Last week’s jobs numbers were disappointing, we have had some weaker economic numbers, Cyprus, etc. None of this looks like it can change the fact that money has nowhere else to go but stocks at this point, but the economic numbers bear watching.

2013-04-09 PIMCO Cyclical Outlook for Asia: How Leadership Changes Are Shaping Asia's Outlook by Q&A with Ramin Toloui, Tomoya Masanao and Robert Mead of PIMCO

For Asia, “slow but not slowing” global growth will likely keep external demand neutral, and policy developments will therefore help shape the economic outlook. In Japan, we see a significant boost to aggregate demand coming from the concerted monetary and fiscal expansion of the new Abe government. In China, concerns about inflation, housing market excesses, and long-term financial stability are prompting policy restraint that should keep growth below 8% this year.

2013-04-09 Bond Market Review & Outlook by Thomas Fahey of Loomis Sayles

The first quarter of 2013 turned out pretty much as expected: a low volatility environment with the level of bond yields and credit spreads relatively stable. At some point, we have to be happy with earning a yield on our fixed income investments. The last several years have been a major bond bull market, particularly 2012, but with yields at low levels, there is not much room left for bond price appreciation and we should be comfortable with earning our yield and carry.

2013-04-08 A Continuing Case for Dividends by Richard Skaggs of Loomis Sayles

The investment case for dividend-paying stocks is as strong as ever. Many dividend-paying stocks continue to boast yields comparable to or higher than US Treasurys, and the case for dividend growth in the years ahead remains favorable. Dividends have a long history as a significant component of total return, and investors will likely continue to press for rising payouts since corporate balance sheets are flush with cash. What should investors consider as they survey the universe of dividend-paying companies?

2013-04-08 “Country Roads, Take Me Home,To The Place I Belong ” by David Lieberman (Article)

Recently, I was listening to a Pod Cast from This American Life about the increasing disability rolls in the United States. The story itself was excellent and I would highly recommend it, but the implications of the numbers are equally remarkable. In the past 20 years, the number of people on disability in the United States has soared, even recently when the unemployment rate has declined materially. Rather than focus on the policy decisions, causes of this phenomena, or even whether they are logical, good, or bad, I’m going to focus purely on the unemployment and economic ramifications

2013-04-05 PIMCO Cyclical Outlook for the U.S.: Back From the Brink by Josh Thimons of PIMCO

We expect the largest contributors to U.S. growth this year will be housing and related industries, increases in capital expenditures (albeit from very depressed levels), certain manufacturing sectors, such as the auto industry, and the energy sector. We see roughly 1.7 percentage points of drag on GDP coming out of Washington far less than the four to five percentage points of potential drag had there been no fiscal cliff resolution. We believe the Fed will continue with hyperactive monetary policy, which we now call “QE Infinity,” that does not have an explicit end date or progr

2013-04-05 What's Next for U.S. and European Markets? by Mike Temple of Pioneer Investments

I was asked recently to provide some color around the state of global fixed income markets as we close out the first quarter of 2013. Of course, one of the more watched situations in the global markets has been Cyprus’s banking crisis. I won’t go into too much depth on the subject here, as my colleague, Cosimo Marasciulo, has recently provided a comprehensive analysis.

2013-04-05 Could Consumers Change Japan\'s Tide? by Team of Matthews Asia

This year, investor attention has focused on Japan and its macroeconomic policy with hopes that rising inflation expectations might spur businesses to invest and consumers to spend. Since Prime Minister Shinzo Abe and Japan’s ruling Liberal Democratic Party (LDP) regained power late last year and proposed more aggressive monetary policies, including an ambitious inflation target, the yen has weakened more than 20% against the U.S. dollar and more than 15% against the euro.

2013-04-05 China's Uncertainties Won't Stop Renminbi's Rise by Hayden Briscoe of AllianceBernstein

Recent data releases and the transition to new political leadership have created some uncertainty about China’s short-term economic outlook. While positive growth surprises are unlikely in 2013, we still think nothing can stop the long-term appreciation of China’s currency, the renminbi (RMB).

2013-04-03 First Quarter Recap by Bob Doll of Nuveen Asset Management

This past month marked the fourth anniversary of the global equity market bottom on March 9, 2009. U.S. stocks have clawed back all of the losses from the Great Recession and are near historical highs. Most other major markets are still well below their 2007 peaks, but have rebounded sharply since last June and look increasingly resilient. However, there is tremendous anxiety about the economic outlook, and many investors fear equities and other risk assets are floating on a sea of liquidity rather than solid fundamentals. We are more constructive and maintain a pro-growth investment stance.

2013-04-03 When Does The Great Recession Become the Great Rotation? by Gene Tannuzzo of Columbia Management

Given the strong flows into the bond market over the past few years, many pundits have pondered the beginning of the “Great Rotation” when bond investors begin to move money into the equity market. Investors fear that this shift could cause losses in bond funds as investors flee. Indeed since the start of the Great Recession in 2008, investors have plowed into bond funds as an alternative to equity volatility.

2013-04-03 Hello 2nd Quarter and Hello Baseball by Blaine Rollins of 361 Capital

Hello 2nd Quarter and Hello Baseball. It’s ’Go’ time for both players and stat geeks... It was a very good First Quarter for U.S. Equities. As you can see from the Year to Date charts below, risky sectors did well, but so did many lower risk sectors like Health Care, Consumer Staples, Utilities and MLPs. The Q1 goal as an asset allocator was to be fully invested, but not in Gold, Long Bonds, Emerging Markets and Apple.

2013-04-03 Minor Crisis...Not Too Many Hurt by Christian Thwaites of Sentinel Investments

Cyprus proved, over the last two weeks, that markets often overlook the small stuff. Very few commentators we follow saw any of it coming and the theories that sprang up in the interim (Cyprus as vassal state to Russia, return to the Cypriot pound, imminent EU break up, twin euros in circulation, utter disaster for the economy, German intransigence and Schrecklichkeit) were absurd.

2013-04-03 Spring Economic Commentary by Larry Maddox of Horizon Advisors

The Fiscal Cliff We loudly went over the cliff and received a largely quiet and unexpected market reaction? Risk of rising interest rates After a 30 year period of declining interest rates, caution is in order. Our thoughts on portfolio fixed income positioning. The heightened awareness of uncertainty Despite lingering uncertainty investors should be committed to long term well diversified porftolios.

2013-04-03 Surprise! 2013 Rally Pales in Comparison to 2012 “Stealth” Rally by Douglas Cote of ING Investment Management

Despite the hoopla over first quarter market performance, it paled in comparison to the first three months of 2012. Driven in part by an extremely accommodative Fed, the U.S. economy is gaining traction, but Europe continues to flounder. After their first negative print in three years during the third quarter, S&P 500 companies returned to positive earnings growth in the fourth. A broad, globally diversified portfolio is the best way to balance the desire for wealth accumulation with an appreciation of volatility.

2013-04-03 Why This Economic \"Recovery\" is So Weak by Gary Halbert of Halbert Wealth Management

We start today with an excellent editorial I read last week written by Mort Zuckerman, Editor-In-Chief of U.S. News & World Report. My goal every week is to do a lot of reading and summarize what I’ve learned in these pages week in and week out. But every now and then I run across something so good that it just makes sense to reprint it in its entirety, even if it’s not my own work. Not many of my contemporaries are willing to do that, as they think it makes them look less scholarly. I don’t have that problem.

2013-04-03 Weekly Market Review Notes by Team of Tuttle Tactical Management

After hitting a record close last week the market is showing some warning signs, which is to be expected. You don’t typically break through an important resistance point without testing it and re-testing it so some volatility around a record high is normal. We are also slightly concerned that small and mid cap stocks have drastically underperformed the S&P 500 over the past two days.

2013-04-02 ProVise Bullets by Ray Ferrara of ProVise Management Group

As we began 2013 America was looking ahead to President Obama’s second term, the passage of a tax bill that raised government revenue significantly, discovering that fourth quarter growth was virtually flat, corporate earnings that had only a few mild surprises to the upside and several to the downside, and finally, an increase in Social Security taxes of 2%. Then the sequester kicked in in early March, a band aid was used to patch the government together until the end of September, and we saw the nervousness the European markets, highlighted by Cyprus.

2013-04-01 Currency and Emerging Markets: What Can We Expect? by Giordano Lombardo of Pioneer Investments

Currency markets are making headlines again after taking a low profile amid the crises and the turmoil in financial markets of the last five years or so. I asked Greg Saichin, Head of High Yield and Emerging Markets Fixed Income Portfolio Management here at Pioneer, to provide his views about what is going on, and what he sees as the drivers of investment flows into emerging markets.

2013-03-29 Market Resilience by Liz Ann Sonders, Brad Sorensen and Michelle Gibley of Charles Schwab

After a stellar first quarter performance from US stock markets, which showed impressive resilience to continued headwinds, a pullback is certainly possible but we don’t suggest investors who need to add to allocations wait. In a relative world, the US stock market continues to look like an attractive place to invest, although there may also be opportunities in Japan and Europe as well. The upcoming earnings season could tell the story for the market over the next couple of months, but we continue to advocate a long-term point of view and maintaining a diversified portfolio.

2013-03-28 What Will Drive the Market? by Charlie Dreifus of The Royce Funds

The sequester adds to the economic headwinds caused by ending the payroll tax holiday and the boost in tax rates. However, even with the sequester, total federal government outlays will rise this fiscal year. Finally, after more than a month of daily increases for a gallon of unleaded gasoline, prices are now declining. This has been of concern as rising oil and gasoline prices were yet another headwind facing the U.S. economy. (Oil prices have also declined.)

2013-03-27 Call Him Ishmael by Jeffrey Bronchick of Cove Street Capital

One of the hardest things to conquer as a value investor is the concept of "price." The industry remains mired in fascination with abstract prices like 100, 1,000, 14,000, previous highs, new lows, etc. The stock is up x% from x dollar price; it is down x% from x price. There is also much in print and general fretting in regard to "price action," with lots of attention paid to where the stock has "been" and how this move relates to other "moves," as in "the largest move since last December 12th."

2013-03-27 Weekly Market Review Notes by Team of Tuttle Tactical Management

The continuing mess in Cyprus and the S&P 500 nearing a record close dominated the news this week. As I said last week, Cyprus is insignificant, the only important aspects of what is going on is timing. If the crisis hit the news during a time when the market was oversold and due for a rally then it would have little, if any, impact. The fact that that market has rallied this year without much of a selloff gives traders an excuse to use something like this to take profits.

2013-03-27 What Happened to That Export-Led Recovery? by Mike Amey of PIMCO

With nearly 50% of the UK’s total exports going to Europe, an economic area constantly flirting with its own recession, it is no surprise to see that UK trade performance has been challenged.As the US continues to re-heal, and trade becomes more geographically diversified, we should see exports start to grow once more, albeit off a modest base. The easing in sterling is undoubtedly welcome and will improve prospects for exports, but it is unlikely to be a “game changer”.

2013-03-26 A Cry for Help from Income Investors by Legg Mason Global Income Survey (Article)

Confronted with the stark realities of income investing now, affluent investors all over the world are rethinking their approach, notes Legg Mason’s just-released Global Income Survey. Yet the Survey also found income investors hungry for more knowledge and ideas -- creating opportunities for savvy financial advisors.

2013-03-25 Voyager by Jeffrey Saut of Raymond James

According to Wikipedia, the Voyager 1 spacecraft is a 1,590 pound space probe launched by NASA on September 5, 1977 to study our solar system and interstellar space. Operating for more than 35 years, the spacecraft receives commands and transmits data back to the Deep Space Network. At a distance of more than 11 billion miles it is the farthest human-made object from Earth and is traveling in a previously unknown region of space. Similarly, the D-J Industrial Average is traveling in a previously unknown region of space as it boldly goes where no man has been before.

2013-03-25 Cyprus Reminds Us of Threats and Improving Global Economy by Bob Doll of Nuveen Asset Management

Equity averages sagged slightly last week. Strength later in the week made up for earlier weakness as the equity rally paused for the Cyprus crisis. We (and the consensus) perceive Cyprus as mainly a local problem and believe it supports our view to remain cautious with Eurozone weightings.

2013-03-22 ING Fixed Income Perspectives March 2013 by Christine Hurtsellers, Matt Toms, Mike Mata of ING Investment Management

Developed sovereigns are still broadly unattractive, but global central banks appear poised to ease. We prefer EM currencies that will continue to benefit from positive global growth and tolerate further upward pressure on the U.S.

2013-03-20 Weekly Market Review Notes by Team of Tuttle Tactical Management

The banking crisis in Cyprus dominated the news this week as the market sold off 3 days in a row after being up 10 days in a row. The selloff was blamed on what was going on in Cyprus but that was not the real story. Globally Cyprus is pretty insignificant, most people probably don’t even know where it is. The real story is that markets just don’t go up for 10 straight days without needing a breather from time to time, Cyprus was just an excuse to take some profits.

2013-03-20 Investors Need to Pivot by William Benz of PIMCO

Fixed income investors need to think differently in the current environment. Investors may want to consider pivoting to strategies that are less focused on traditional benchmarks and more oriented to generating income and providing greater flexibility to hedge against rising rates, widening credit spreads or higher inflation.

2013-03-19 Paul Matlack from Delaware Investments on the Direction of the Bond Market by Robert Huebscher (Article)

Paul Matlack is senior vice president, senior portfolio manager and fixed income strategist for Delaware Investments. His firm oversees $145 billion in fixed-income strategies, and in this interview Matlack discusses his outlook for the economy and the bond market, and how advisors should be positioning client portfolios.

2013-03-19 The Outlook for Equities by Howard Marks of Oaktree Capital Management

It doesn’t take much to get me started on a memo. In this case one sentence was enough, in an article from the February 4 online edition of Pensions & Investments, as described by FierceFinance on February 28: “The long-term equity risk premium is typically between 4.5% and 5%.”

2013-03-19 A Tired Equity Market Crawls Higher by Bob Doll of Nuveen Asset Management

U.S. equities rose again last week as the S&P 500 increased 0.66%, with an overall gain for the year of 9.96%.1 The remarkable resilience of the U.S. economy against fiscal cliff headwinds has boosted equity investor sentiment. The U.S. macroeconomic outperformance has also helped U.S. equities outperform global counterparts. Investor preference toward the U.S. has largely been confirmed by rising flows into U.S. equities.

2013-03-19 Keeping Up With Changes In Emerging Market ETFs by Jun Zhu of Leuthold Weeden Capital Management

In this report, we highlight benchmark changes in a major player, a potential substitute (with cheaper fees) for another major player, a new player with an innovative weighting scheme and provide an overview of the Emerging Market ETF space available to investors.

2013-03-18 M&A and Dividends Likely Drivers of the Market by Charlie Dreifus of The Royce Funds

The sequester adds to the economic headwinds caused by ending the payroll tax holiday and the boost in tax rates. However, even with the sequester, total federal government outlays will rise this fiscal year. Finally, after more than a month of daily increases for a gallon of unleaded gasoline, prices are now declining. This has been of concern as rising oil and gasoline prices were yet another headwind facing the U.S. economy. (Oil prices have also declined.)

2013-03-14 Weekly Market Review Notes by Team of Tuttle Tactical Management

The Dow continues to make new highs but the rate of climb has slowed considerably this week. This is normal as markets have to take a breather after large moves.

2013-03-14 3 Reasons It's Not Too Late to Consider Emerging Market Bonds by Russ Koesterich of iShares Blog

After the recent rally in emerging market bonds, is it too late to allocate to this asset class? Not for long-term investors, says Russ and he offers 3 reasons why.

2013-03-13 Yield Opportunity in a Low Yield Environment by Troy Johnson of Westcore Funds Denver Investments

The Fed’s aggressive monetary policy teamed with its inability to jump-start the anemic economic growth pattern has challenged investors’ quest for yield entering 2013. We offer investors the following for consideration as they seek yield in this environment.

2013-03-11 Spring is in the Air, Who's Buying Fixed Income and Exports by Gregg Bienstock of Lumesis

This week we start with a look at some bizarre coincidences that have us wondering if it is Spring that is the cause. We next look at who is buying so much debt and to contemplate the implications for the muni market. We conclude with a look at Exports and a reminder that the world really is a small place.

2013-03-11 Forecasting Bond Returns in the New Normal by Saumil Parikh of PIMCO

PIMCO has a detailed framework for deriving a forecast for secular bond returns based on our most current expectations of policy rates and the inflation-adjusted (or real) bond risk premium. We start by defining the expected secular real policy rate as the expected average rate of the fed funds rate after adjusting for inflation over the next 10 years.

2013-03-08 Three Trends Will Shake American Businesses Out Of Paralysis by Mike Temple of Pioneer Investments

On-shoring, energy infrastructure reinvestment and plant replacement are three trends in the making that will shake American business out of paralysis. In the last "Bond Deer in the Headlights," I outlined the "Monetary Abolitionists" assertion that out-of-control government spending, made acceptable by historically low interest rates, was responsible for corporate paralysis in investing and hiring.

2013-03-07 Weekly Market Review Notes by Team of Tuttle Tactical Management

Yesterday saw a new record close on the Dow Jones Industrial Average and a renewal of the panic buying we saw earlier in the year. While it is great to see that the Dow has retraced all of the losses from the 2008 decline I am concerned about what message will be directed towards individual investors. The asset allocation/buy and hold crowd will use this milestone to "prove" that markets always come back so that their approach is still valid. This is true, but it ignores the fact that it took the market almost 6 years to come back and the lost opportunity cost associated with that.

2013-03-07 Guanxi, Mianzi, and Business: The Impact of Culture on Corporate Governance in China by David Smith of Aberdeen Asset Management

There are two key cultural and sociological issues of particular importance when evaluating Chinese companies: guanxi (relationships and networks) and mianzi (face). When analyzing the potential of a Chinese company, it's important to understand how guanzi and mianzi affect transactions, board composition and deliberations, and shareholder engagement, among other issues.

2013-03-07 Animal Spirits: F.I.R.S.T. by Christine Hurtsellers, Matt Toms, Mike Mata of ING Investment Management

Call it what you will a dog-eat-dog world in which you're wearing Milk-Bone underwear or an example of capitalism at its finest an M&A cycle is heating up. This activity may be signaling the rebirth of what British economist John Maynard Keynes originally referred to as "animal spirits", much to the delight of fictional corporate barbarian Gordon Gekko and his real-life analogues, who require little prompting to act on Keynes "spontaneous urge to action".

2013-03-06 Liquidity Tiering for Higher Yields in the Tax-Free Market by Duane McAllister, John Bortizke of BMO Global Asset Management

In today's low-yield environment, investors need a fresh approach to managing their portfolios for higher income. Liquidity tiering provides a framework that can help you achieve both principal stability and yields sufficient to meet your goals.

2013-03-05 Is Now the Time to Diversify? by Chris Maxey, Ryan Davis of Fortigent

The use of global diversification in constructing client portfolios has come under fire in recent years due to the underperformance of many risk assets. Traditionalists who stuck to their familiar S&P 500 and BarCap Aggregate Bond index blends generally outperformed their diversified peers in 2011 and 2012, as historic risk premiums failed to materialize and various alternative investment strategies faced headwinds.

2013-03-05 Reflections on Sequester by Bill O'Grady of Confluence Investment Management

Over the past several weeks, the notion of sequester, a plan of across the board spending cuts, has been dominating the news. The sequester was a program designed to never go into effect. In the dark days of 2011, when the debt ceiling debate threatened to cause the U.S. to default on its debt, the administration and the House GOP made a deal. In return for a higher debt ceiling, one high enough to ensure that it would not be hit before the 2012 presidential elections, a commission was tasked to make significant cuts to fiscal spending.

2013-03-05 The Magic of Compound Interest by Jeffrey Saut of Raymond James

When compound interest works in your favor, it is a blessing. When it works against you, it's a curse! That is a "Jeffreism" I learned the hard way back in the bear market of the early 1970s when I was working for a $100 per week in this business and consequently had my credit cards levered to the "max." The interest rate at the time was 18%.

2013-03-04 Health Care Reform: A Q&A With Our Municipal Bond Experts by Shari Sikes, Art Schloss of Invesco

Health care reform took center stage in the last year as the Supreme Court upheld the Patient Protection and Affordable Care Act of 2010 (ACA), affirming the constitutionality of portions of the law. The decision made it possible for major health care reform to proceed. This January, health care spending again was at the forefront during the fiscal cliff debate as a means to reduce government spending. Health care is poised to remain at the center of this discussion until a federal budget deal is reached.

2013-03-04 Forecasting Bond Returns in the New Normal by Saumil Parikh of PIMCO

PIMCO has a detailed framework for deriving a forecast for secular bond returns based on our most current expectations of policy rates and the inflation-adjusted (or real) bond risk premium. We start by defining the expected secular real policy rate as the expected average rate of the fed funds rate after adjusting for inflation over the next 10 years.

2013-03-01 The Walk of Life: Stepping Away From Dire Straits and Toward Active Short-Term Mgmt Strategies by Jerome Schneider, Andrew Spottiswoode of PIMCO

Money market investors may find the benefits of recent regulatory and industry reforms bittersweet at best, as they are still tolerating borderline zero percent yields in a persistent low rate environment. Without creative strategies for liquidity management, many investors are finding themselves in the "dire straits" of actual negative real returns on their cash allocations even with modest current levels of inflation.

2013-03-01 Critical Juncture? by Liz Ann Sonders, Brad Sorensen and Michelle Gibley of Charles Schwab

Headwinds have reemerged and investor concern is heightened yet again. We still believe stocks can run further, but a pullback is more likely in the near-term. The sequestration is now in affect but that doesn't necessarily mean it's here to stay and more budget fights loom, particularly in advance of the potential government shutdown on March 27. Meanwhile, some members of the Fed are in favor of scaling back its quantitative easing (QE) program, rattling markets a bit.

2013-02-27 ING Fixed Income Perspectives February 2013 by Christine Hurtsellers, Matt Toms, Mike Mata of ING Investment Management

Despite its diminutive size, February has been a whirlwind. Eat and drink too much on Fat Tuesday, be reminded of our corporeal nature on Ash Wednesday, receive a sappy Hallmark card on Thursday, and cap it all off with a memorial for a bunch of ex-presidents on Monday. Unfortunately, the next several weeks don't appear to offer any relief from this calendar whiplash.

2013-02-27 Love, Money or Disappointment: What Will Asian Credit Investors Find in Their Red Envelopes? by Robert Mead, Raja Mukherji of PIMCO

Our cyclical economic outlook for Asia in 2013 is unusually dependent on breakthroughs in structural policies. Although we continue to favor select opportunities in key sectors, in general Asian credit spreads are trading historically tight. Bottom-up research is critical, along with careful top-down views on shifting economic conditions, and investors need adequate compensation for taking credit risk. Some sectors and companies can grow significantly faster than their respective economies.

2013-02-27 Weekly Market Review Notes by Team of Tuttle Tactical Management

For a while it was obvious that the market had become overbought and was due for a selloff, all traders needed was an excuse, this past week they got two of them. First, the Fed hinted that QE might end and then Italian elections sparked uncertainty in Europe. Add those things in with the looming sequester and you have all the ingredients for a profit taking selloff. At this point this is all part of normal market machinations. The market doesn't go up in a straight line and it doesn't go down in a straight line.

2013-02-27 Ignore the Noise. Equities Offer Income Potential. by Joe Kringdon of Pioneer Investments

Common prospectus disclosure reads, "past performance is no guarantee of future results." Yet, this crowd of naysayers seems to be projecting the paranoia associated with the "lost decade(s)" onto the current environment and beyond. They are preparing for the future by fighting the last few wars all over again. Their sentiments and actions (or inactions) are emblematic of an American looking the wrong way for traffic on a London street. Given wrongfully configured context, these people are looking in the wrong direction for the wrong things. I continue to be positive on the equity markets.

2013-02-26 Can Advisors Add Value Through Fund Selection? by Joe Tomlinson (Article)

Low-cost index funds will beat the average actively managed fund after expenses. But can advisors identify superior active funds to overcome this disadvantage? Advisors who believe they can choose those funds will be challenged by the results of two studies from the defined-contribution industry.

2013-02-25 We Expect High-Yield Defaults to Remain Low by Jeff Skoglund of AllianceBernstein

High-yield bond defaults are historically low today, even for troubled companies. Despite the worries we hear in some corners about looming high-yield defaults, we think default rates will stay low for at least the next few years. In the wake of the 2008 financial meltdown, US companies did the responsible thing and got leaner, reducing head count and overhead costs aggressively. When the recovery gained traction, they held the line on expensesand profit margins are at historic highs today.

2013-02-25 Market Gains Will be Tougher to Come By by Russ Koesterich of BlackRock Investment Management

Markets saw a return to more volatile conditions last weeka trend that is likely to continue. The sequester is likely to contribute to an increased fiscal drag in the first half of the year. Nevertheless, stocks have the potential for increased gains, although the road ahead will be bumpier.

2013-02-22 Uncovering 'Diamonds in the Rough' in Today's Credit Markets by Mark Kiesel of PIMCO

There are still good opportunities for yield and total return in the credit markets, but there has been a shift in where and how investors can find them. A "diamond in the rough" is a credit that is under-covered, or not actively followed or researched by many investors. At PIMCO, we identify these opportunities through our top-down and bottom-up investment process. We've identified a number of sectors that appear poised for above-average growth.

2013-02-22 Finding What's Real in Real Estate by Team of Franklin Templeton Investments

The U.S. financial crisis in 2008-2009 left many investors with a reluctance to take investment risks, particularly those related to any of the world's wilted housing markets. However, as your local real estate agent would likely tell you, the market in one location can be vastly different than it is in another. Wilson Magee, co-manager of Franklin Global Real Estate Fund would agree that the adage "location, location, location" applies not only to individual home buyers and sellers, but to investors seeking opportunities in the commercial real estate sector, too.

2013-02-22 January 2013 Market Commentary by Andrew Clinton of Clinton Investment Management

The municipal bond market continues to perform well in the face of significant political, financial and economic uncertainty, once again, demonstrating the importance of consistent, competitive tax-free cash flow. Municipal bonds proved to be one of the best performing asset classes during 2012.

2013-02-22 The 4 New Defensive Strategies by Russ Koesterich of iShares Blog

Waiting for a market correction? Wondering how to potentially protect your gains? Forget merely opting for traditional defensive sectors. Instead, consider Russ' four suggestions.

2013-02-20 Trying And Failing To Make The Math Work For Long-Term Bonds by Doug Ramsey, Eric Weigel of Leuthold Weeden Capital Management

For the past 31 1/2 years, owners of 10-year U.S. Treasury bonds have earned "real" total returns of 6.7%on par with the long-term real return to equities. Long before government bonds matched real stock returns, they suffered a 55-year period that offered investors a real return of zero. The short-term implications of higher U.S. Treasury rates on asset allocation decisions.

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.

2013-02-20 The 2030 Most Likely Best Case Scenario by Bill O'Grady Kaisa Stucke of Confluence Investment Management

Two weeks ago we started looking at the 2030 alternative world development scenarios as laid out by the National Intelligence Council (NIC). The NIC forecasts the likely paths that are either currently underway or are forecast to occur in the future. In its most recent report, the NIC projects four possible global political and economic states based on these expected trends. Last time, we presented the most likely worst case scenario. This week, we will explore the most likely best case scenario.

2013-02-20 Weekly Market Review Notes by Team of Tuttle Tactical Management

Markets continued to move up this week in spite of looming Fiscal Cliff budget cuts. Everyone still expects a selloff but money continues to flow into the market as it has nowhere else to go.

2013-02-16 Seeing the Forest by Liz Ann Sonders, Brad Sorensen and Michelle Gibley of Charles Schwab

Equity markets continue to be resilient and investor confidence is elevated in various sentiment indices, suggesting a near-term pullback is possible. But there are longer-term trends developing that give us hope that the US economy's expansion and market's rally are sustainable. Federal spending cuts via the "sequestration" appear sure to happen, but there will continue to be debates about the nature and size of the cuts. Similarly, questions are increasing as to the potential unwinding of current Fed policy with regard to timing and rapidity.

2013-02-14 Understanding Derivative Overlays, in All Their Forms by Markus Aakko, Rene Martel of PIMCO

Passively managed overlays are typically based on a simple formula, while active approaches involve more complex algorithms or decision-making. Overlay examples include portable alpha, LDI, currency, completion, rebalancing, and tactical asset allocation overlays -- as well as tail-risk hedging and hedge fund replication. Potential benefits include the ability to effectively manage cash, reduce costs and risk exposure, simplify manager transitions and express tactical views.

2013-02-13 Weekly Market Review Notes by Team of Tuttle Tactical Management

After a decent selloff earlier in the month the market has continued to move up, but in very small increments. Most people seem convinced that we are due for another selloff, which seems to be tempering upside enthusiasm. On the other hand, there also doesn't seem to be any enthusiasm to sell.

2013-02-12 High Yield Opportunity in a Crowded Space? by Mike Temple of Pioneer Investments

We have seen something interesting unfold over the last month in the markets signs of what we believe are the beginning of a Treasury breakout. Yields are starting to push through levels that have been fairly stable and steady over the last year. Our observation would be that we are starting to see a more secular move out of U.S. Treasuries and other high quality fixed income assets.

2013-02-11 Distracting Dividends by John Petrides (Article)

With interest rates at historic lows, bonds have become a difficult place to find income (although paradoxically, in 2012, asset flows into bond mutual funds have outpaced that of stock mutual funds yet again), so investors have looked to other assets for yield, most notably high dividend paying stocks. Stocks continue to be attractively valued relative to fixed income and cash. In addition, high dividend paying stocks offer investors the ability to grow the income to help offset inflation, whereas in bonds, the income is fixed.

2013-02-07 Echoes of 2004 by Scott Minerd of Guggenheim Partners

Rising equities and tightening credit spreads define the near-term investment outlook, but this is not the first time we have seen this cycle play out in recent memory.

2013-02-07 Investing in a Low-Growth World by Jeremy Grantham of GMO

This quarter I will review any new data that has come out on the topic of likely lower GDP growth. Then I will consider any investment implications that might come with lower GDP growth: counter intuitively, we find that investment returns are likely to be more or less unchanged a little lower only if lower growth brings with it less instability, hence less risk. Finally I will take a look at the reaction to last quarter's letter, specifically about my outlook for lower GDP growth.

2013-02-07 We Have Met the Enemy, and He Is Us by Ben Inker of GMO

If modern portfolio management has a single defining urge, it is almost certainly diversification. We look for diversifying assets, strategies, and managers. A thoughtful investor can argue against almost any asset class stocks, bonds, hedge funds, private equity, commodities, you name it but arguing against diversification is like arguing against indoor plumbing. I dont want to sound like I'm calling for a return to chamber pots and outhouses, so I'm not actually going to argue against diversification.

2013-02-06 Focus on Fixed Income by Steve Van Order of Calvert Investment Management

Last week Administration officials, including the President, clearly ruled out using extraordinary legal measures to avoid defaulting on Treasurys financial obligations in the absence of a debt ceiling hike by Congress. The two legal measures most discussed, going back to the summer 2011, were invoking the 14th Amendment and minting a trillion dollar platinum coin. The coin idea was dismissed as Fed officials commented that the central bank would not honor the coin as a deposit, and the amendment idea has been shelved a number of times.

2013-02-06 Market Commentary by Matthew Tuttle of Tuttle Tactical Management

The long awaited sell off finally came this week as the market suffered its worst day since November. The decline seems to have somewhat solved the overbought situation as the market rallied back the next day.

2013-02-05 Letters to the Editor by Various (Article)

A reader responds to Joe Tomlinson's article, Predicting Asset Class Returns: Recommendations for Financial Planners, which appeared last week, and another reader responds to Dan Richards' articles.

2013-02-05 The 2030 Outlook by Bill O'Grady, Kaisa Stucke of Confluence Investment Management

Over the next several weeks we will look into the more distant future, to the year 2030. We will explore the long-term strategic alternative world development scenarios as laid out by the National Intelligence Council (NIC) and present our views regarding the developments. The NIC forecasts the likely paths that are either currently underway or are forecast to occur in the future. The NIC projects four possible global political and economic states based on these expected trends.

2013-02-05 Ditto by Howard Marks of Oaktree Capital Management

Anyone who reads my memos of the last 23 years will see I return often to a few topics. This is due to the frequency with which themes tend to recur in the investment world. Humans often fail to learn. They forget the lessons of history, repeat patterns of behavior and make the same mistakes. As a result, certain themes arise over and over. Mark Twain had it right: "History doesn't repeat itself, but it does rhyme." The details of the events may vary greatly from occurrence to occurrence, but the themes giving rise to the events tend not to change.

2013-02-04 A Gross Underestimate by Jonathan Coleman, Soonyong Park of Janus Capital Group

As we enter 2013, we felt it would be an appropriate time to revisit one of last years most controversial predictions of future equity performance. We acknowledge that equities in general may not continue to deliver the same real rate of return they have over the last century; however, we believe the glum outlook for the asset class forecasted by Bill Gross last year misses the mark. Our estimates of future equity returnsbased on three different approachesall point to a meaningfully higher forecast than Gross' pessimistic prediction.

2013-02-04 2013 Annual Forecast by Clyde Kendzierski of Financial Solutions Group

It's that time again. January will be over by the time you read this which means we are out of holiday excuses or "just ramping up for the new year" reasons for not getting back to work. Having said that, I'd like to offer my excuse for the Annual Forecast getting to you in February instead of the first week of the year. Hand over my heart, we started early this go-round.

2013-02-04 Shifting Sentiment? by Liz Ann Sonders, Brad Sorensen, Michelle Gibley of Charles Schwab

Is investor sentiment shifting in favor of equities, which could help to continue the recent rally?

2013-02-04 What's the Best Asset Allocation When the Business Cycle Moves to Stage IV? by Martin Pring of Pring Turner Capital Group

History shows that the business cycle, which has been with us since recorded economic history began, experiences a set series of chronological sequences. The calendar year progresses through seasons, one of which is literally ideally suited for making hay. The business cycle also has seasons or phases, where certain sectors of the economy fall in and out of favor. For investors, the key lies in the fact that the cyclical turning points of bonds, stocks and commodities are all part of the business cycle progression.

2013-02-01 Q412 Portfolio Commentary by Jay Compson of Absolute Investment Advisers

While much of the fundamental picture has played out as we expected over the past 18-24 months, the financial markets appear to be concerned solely with the existence or non-existence of macro headlines and events. There seems to be a disconnect between market movements and fundamentals which means doing real work based on intellectual honesty and logic puts you at a disadvantage. Chasing momentum and profiting from central bank market manipulation appear to be the current winning strategies.

2013-02-01 The Lost Decade...Found? by Jeffrey Bronchick of Cove Street Capital

While much of the fundamental picture has played out as we expected over the past 18-24 months, the financial markets appear to be concerned solely with the existence or non-existence of macro headlines and events. There seems to be a disconnect between market movements and fundamentals which means doing real work based on intellectual honesty and logic puts you at a disadvantage. Chasing momentum and profiting from central bank market manipulation appear to be the current winning strategies.

2013-02-01 For All the Sad Words of Tongue and Pen... by Jeffrey Saut of Raymond James

"For all the sad words of tongue and pen, the saddest are these: It might have been." ... John Whittier; an influential American Quaker poet. Certainly, American poet John Greenleaf Whittier's apothegm has stood the test of time, serving as a universal lament for what "might have been." I was reminded of this maxim last week as Wall Street heard increasing laments from investors on the Street of Dreams.

2013-02-01 A Gross Underestimate by Jonathan Coleman and Soonyong Park of Janus Capital Group

The glum outlook for the asset class forecasted by Bill Gross last year misses the mark. Our estimates of future equity returnsbased on three different approachesall point to a meaningfully higher forecast than Gross pessimistic prediction.

2013-02-01 Look at the Bears! Look at the Bears! by Christine Hurtsellers, Matt Toms and Mike Mata of ING Investment Management

Yes, the grumbling of bond bears is reverberating in Treasury yields, but that sound isnt the death knell of a grizzly; at this point, the closest ursine analogue is Boo-Boo Bear.

2013-01-31 Closed-End Fund Review: Fourth Quarter 2012 by Jeff Margolin of First Trust Advisors

Following a year (2011) when the average closed-end fund was up a respectable 5.37% on a share price total return basis, closed-end funds posted even better performance in 2012, with the average fund up 14.00% (according to Morningstar) on a share price total return basis. The strong performance was broad and deep with many categories posting double-digit total returns. There were many factors which contributed to the strong results posted in 2012 and while I have written and spoken about them before, I want to reiterate them here.

2013-01-31 Credit Supernova! by Bill Gross of PIMCO

They say that time is money. What they don't say is that money may be running out of time. There may be a natural evolution to our fractionally reserved credit system which characterizes modern global finance. Much like the universe, which began with a big bang nearly 14 billion years ago, but is expanding so rapidly that scientists predict it will all end in a "big freeze" trillions of years from now, our current monetary system seems to require perpetual expansion to maintain its existence.

2013-01-31 Making Sense of Low Volatility Investing by Feifei Li of Research Affiliates

Why do low volatility stocks outperform riskier ones over time? Dr. Feifei Li, our Head of Research and my long-time collaborator, has focused on understanding the theoretical foundation underpinning the low volatility anomaly and documenting the strategy's risk-return characteristics in developed and emerging markets. In this issue of Simply Stated, our newsletter focusing on investor education, she summarizes the literature on the low volatility effect as well as provides additional insights from her own research based on an expanded global data set.

2013-01-31 A Look Back at My 2012 Calls by Russ Koesterich of iShares Blog

It's time again for Russ K's annual look back at the investment calls he made in 2012. Find out what he got right and the couple of things he got wrong.

2013-01-30 An Apple's First Worm by Doug MacKay, Bill Hoover, Mike Czekaj of Broadleaf Partners

Writing about Apple is painful. Not because I have lost money in recent months or have no insight to provide, but because the media will likely report on it ad nausea for the next few days. It is perhaps human nature that the news which is most readily produced is also the news that is most easily consumed. If you want to be read, it's best to write words that people will read. While this makes for great entertainment and advertising, it hasn't typically been the best way to get new investment ideas.

2013-01-30 Weekly Market Commentary by Matthew Tuttle of Tuttle Tactical Management

The market continued to "melt up" this week. Everybody is expecting some sort of correction, but just like every time there is a consensus on something it never tends to happen. It is hard to envision the market having a massive continuation of this rally without some pullback, but we could easily continue to inch up for a while.

2013-01-30 Expanding Horizons: The Most Difficult Environment for Generating Income in 140 Years by Ehren Stanhope, Travis Fairchild of O'Shaughnessy Asset Management

In the most difficult environment for generating income in 140 years, we survey the landscape of income-generating options, review lessons from the previous bond Bear Market, and demonstrate why we believe global, dividend-paying equities deserve a prominent role in investor portfolios.

2013-01-29 Strategies for Speculating on the Crisis in Japan by Simit Patel (Article)

Bears on Japan are finally, after nearly two decades of being on the wrong side of the market, getting some vindication. The end of 2012 was marked by a significant decline in the Japanese yen and a rise in the yield on 30-year Japanese Government Bonds (JGBs). Should those trends continue, the conventional wisdom is that investors will do best by shorting JGBs. But a superior strategy is to short the yen itself.

2013-01-29 Q4 2012 Market Commentary by Team of Altegris Advisors

With the end of a historically challenging year for alternative investment strategies, signs emerge of a potentially more favorable environment.

2013-01-23 High Yield Market Overview December 2012 by Team of Nomura Asset Management

The high yield market, as measured by the Bank of America Merrill Lynch U.S. High Yield Master II Constrained Index, posted a positive total return of 1.59% in December, as the high yield market rallied on the perceived benefits of a fiscal compromise in the U.S.

2013-01-23 Economic Backdrop Supports Stocks, Credit Sectors and Munis by Russ Koesterich of BlackRock Investment Management

Thanks to solid earnings, some decent (if mixed) economic news and indications that the debt ceiling debate may be delayed slightly, stocks posted additional gains last week, continuing their strong start to 2013. For the week, the Dow Jones industrial average climbed 1.2% to 13,649, the S&P 500 index advanced 1.0% to 1,485 and the NASDAQ composite rose 0.3% to 3,134. Bonds have remained relatively steady, with the 10-year Us treasury closing the week at a yield of 1.84%, two one-hundredths lower than the previous Friday close.

2013-01-23 The Year of the American Consumer by Philip Tasho of TAMRO Capital

It was an above-average year for stock returns across the domestic market cap spectrum. Ultimately, unconventional and accommodative monetary policy trumped investor concerns over fiscal policy, the Presidential election and weakness overseas. The Federal Reserve (the Fed) entered uncharted waters when it announced open-ended quantitative easing through the ongoing purchasing of government securities. Importantly, other central banks globally waded in by mimicking the Fed in word if not deed and the global liquidity cycle continued apace.

2013-01-23 The Washington Hurdles by Scott Brown of Raymond James

While President Obama is now beginning his second term, the new Congress isn't expected to "get down to business" until next month. There are three hurdles for Washington, which are likely to have significant implications for the financial markets.

2013-01-22 Ten for '13 by Investment Strategy Group of Neuberger Berman

Last year, despite the noise surrounding the U.S. elections and the ongoing European debt crisis, the main drivers of asset prices arguably were the large-scale bond-buying programs put in place by global central banks to alleviate systemic pressures. In 2013, we anticipate fewer aggressive central bank actions as the pace of global growth gradually picks up. We believe the largest influential factors to our outlook are premature fiscal tightening in the U.S. and a potential resurgence of eurozone problems.

2013-01-18 Equity Investment Outlook January 2013 by Team of Osterweis Capital Management

Despite many headwinds and amid great uncertainty, both the U.S. economy and stock market enjoyed a rather good year in 2012. Real Gross Domestic Product ("GDP") grew around 2%, and the stock market, as measured by the S&P 500 Index, returned 16%. At the risk of sounding complacent, we believe that the fundamental trends that produced such favorable results in 2012 are still in place and should support another good year in 2013.

2013-01-18 Fixed Income Investment Outlook by Team of Osterweis Capital Management

We continue to feel that the mismatch between yield and interest rate exposure means that investment grade bonds are less attractive compared with the non-investment grade universe, especially in shorter maturities. Treasury, investment grade corporate and high yield bonds have yields and effective durations that are virtually unchanged compared to levels three months ago. Yields on short-dated high yield paper have actually risen a bit and are still, in our opinion, the most attractive sector we look at in terms of interest rate risk.

2013-01-17 Signs of a Rotation by Scott Minerd of Guggenheim Partners

As yields continue to dwindle and risks in the fixed income market come into clearer focus, investors have begun to regard equities as a compelling alternative to bonds.

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.

2013-01-15 New Year's Vantage Point: Christopher Molumphy by Christopher Molumphy of Franklin Templeton Investments

For a view on the U.S. and global fixed income market and potential opportunities therein, we turn to Christopher Molumphy, CFA, chief investment officer of Franklin Templeton Fixed Income Group.

2013-01-15 A Conversation With Warren Buffett by Jeffrey Saut of Raymond James

Clearly, the stock market "thinks" something good can happen given the action so far this year. To wit, we ushered in the New Year with a 90% Upside Volume Day on December 31st followed by another 90% Upside Volume Day on January 2nd (90% of total volume traded came in on the upside). Such back-to-back Upside Days are pretty rare, especially at the beginning of the year.

2013-01-14 And That's the Week That Was by Ron Brounes of Brounes & Associates

Finally, a week not totally dominated by "fiscal cliff" discussions (though politicos now have their hands full with a gun control debate...what are the chances of compromise there?). Alcoa kicked off earnings season as usual and the early results lend credence to the thought that China will again be relied upon to lead any global recovery. Major banks announced major settlements as they continued to try to close the (negative) books on the financial crisis. Oil rose on Saudi production cuts.

2013-01-14 Bond Market Review & Outlook by Thomas Fahey of Loomis Sayles

The final quarter of 2012 was the icing on the cake of an exceptional year for the credit sectors. Fourth quarter credit gains stemmed in part from uncommonly aggressive monetary policy responses in the third quarter. As economic growth continued to undershoot expectations, major central banks made clear that they were dissatisfied with the status quo of tepid economic growth and high unemployment. The Federal Reserve went so far as to tie its monetary policy to the level of the unemployment rate.

2013-01-11 Thanks, Everybody...We'll be Right Back! by Colin Moore of Columbia Management

The Washington Comedy Club has taken a brief intermission and will be back in session shortly to resume the show. Please enjoy the facilities of this great country, free of charge, while you wait. Ignore the "Nero" character in the far corner playing the fiddle. Apparently, he isn't part of the show. Economic uncertainty emanating from fears of the U.S. fiscal cliff has been deferred but not avoided.

2013-01-11 2013 Leveraged Credit Report: High Yield and Bank Loans by Scott Minerd of Guggenheim Partners

Record high prices, historically low yields and gradually deteriorating fundamentals have tempered expectations for the leveraged credit market. Generating above-market returns in 2013 will require an even greater emphasis on fundamental credit analysis to unearth opportunities in attractively valued segments of the market, such as upper middle-market bank loans.

2013-01-11 Winter Quarterly Commentary by John Prichard of Knightsbridge Asset Management

While a last minute compromise may have been reached on taxes, it represents only a brief rest stop on a required road of repair. On the positive side, we should see less annual wrangling with tax rates having been made permanent, meaning they will not automatically change at some future date (but rather only when Congress feels like changing them), with many areas also sensibly indexed for inflation.

2013-01-10 Defense as a Good Offense by Brian Frank of Frank Capital Partners

Oddly, defensive names that ordinarily trade at premiums to the market are trading at big value discounts. These companies that have the ability to grow in any economic environment are a part of the portfolio, as well as companies riding pockets of growth around the globe. There is a lot to be excited about in 2013 for value stocks.

2013-01-10 A New Years Vantage Point: Michael Hasenstab by Michael Hasenstab of Franklin Templeton Investments

As we ring in a new year, it's a good time to gain some perspective on where we've been, and where we might be headed. In the first few weeks of January, Beyond Bulls & Bears will be featuring a series of investment commentaries from select Franklin Templeton investment management teams. These professionals provide their insights on the market ups and downs of 2012, and the potential challenges and opportunities that may lie ahead from their respective vantage points. Today we hear from Michael Hasenstab, portfolio manager and co-director of the International Bond Department.

2013-01-08 From Cliff to Ceiling: No Clear Signal for Investors by Libby Cantrill, Josh Thimons of PIMCO

We expect the last minute deal in the lame duck session to result in about 1.3% of GDP contraction, slightly less than our earlier prediction of about 1.5%. The compromise eliminated (or at least delayed) the possibility of the most damaging equity market outcomes. The deal failed to set up a framework for structural deficit reform in 2013. Almost immediately, Congress must address the debt ceiling, the sequester and the continuing resolution to keep the government funded.

2013-01-08 Early 2013 Looks to Feature Slow Growth and Ongoing Fiscal Drama by Russ Koesterich of BlackRock Investment Management

Stock markets started 2013 off with a bang, as investors expressed relief over the down-to-the-wire agreement on the fiscal cliff that came on January 1. For the week, the Dow Jones industrial average jumped 3.8% to 13,435, the S&P 500 index rose 4.6% to 1,466 and the Nasdaq composite advanced 4.8% to 3,101. Although the deal reached last week was good news for the markets, Washington's fiscal soap opera is far from over. Although the deal reached last week was good news for the markets, Washingtons fiscal soap opera is far from over.

2013-01-07 Fixed Income Asset Allocation Post-Apocalypse by Christine Hurtsellers, Matt Toms, Mike Mata of ING Investment Management

December 21, 2012 the day the Earth was prophesized to collide with a black hole of kaputness has come and gone in defiance of the Mayan calendar. The more upbeat interpretation of the 5,125-year Mayan cycle, however, is that the end date doesn't signify Armageddon but rather the beginning of a new time for positive change here on earth. So allow us to suggest an investment playbook to cash in on this silver lining. In short, the sweetness of the metaphorical fortune cookie in your hand will depend on how you allocate your fixed income assets in 2013.

2013-01-07 An Unconstrained Approach to Bond Market Investing by Sabrina Callin, Lisa Kim of PIMCO

Investors are increasingly focused on alternatives to traditional investment strategies. Unconstrained bond portfolio construction should be driven by an outcome-oriented goal, with strategies assessed on an individual risk/reward and correlation basis, and each investment in the portfolio evaluated rigorously for the expected risk and return as well as the potential impact of the correlation to other investments in the portfolio.

2013-01-06 Partial Deal: Perspectives on the U.S. Fiscal Policy Agreement by Team of Janus Capital Group

The U.S. Congress and President Barack Obama have patched together a deal that avoided the January 1 fiscal cliff. However, Washington has postponed a full resolution of fiscal and tax issues, creating continued uncertainty that can be expected to weigh on business and consumer spending and potentially keep U.S. gross domestic product growth below 2% in 2013.

2013-01-03 Outlook 2013: Fiscal Cliff Remains Unresolved, but Opportunities Still Exist by Russ Koesterich of BlackRock Investment Management

As we look ahead to 2013, it is impossible to make any sort of forecast without first turning our attention to the still-unresolved fiscal cliff debate. We have long said that unless we were to see significant movement on the issues of tax rates and entitlement spending, the most likely outcome would be some sort of bare-bones deal. At the time of this writing, congress and the President were still negotiating, but our analysis suggests that such a bare-bones resolution remains the most probable result, even if it does not come before the January 1 deadline.

2013-01-03 Grin and Bear It. by Scotty George of du Pasquier Asset Management

Without question, the financial markets yielded better in 2012 than what most had believed possible at the beginning of the calendar year. At that time, embroiled in a U.S. Presidential election and ongoing turmoil in the Middle East, many analysts would have been happy if we simply avoided catastrophe.

2013-01-03 5 Investment Ideas for a Post-Fiscal Cliff Deal World by Russ Koesterich of iShares Blog

As discussed in previous posts, Congress kicked off the New Year with a bare bones deal to avert (or at least delay) the fiscal cliff. Though markets responded positively to the news Wednesday morning, the euphoria isn't likely to last.

2013-01-02 Getting the Most from Your Investment Committee by Bob Veres (Article)

Investment committees are a little bit like fingerprints: they come in all shapes and sizes, and no two are exactly alike in form or function. So advisory firms that have investment committees ? or are considering creating one ? can learn a lot from one another. My research has identified some best practices for this flexible management tool, by comparing notes among advisors on how they are managing their IC teams.

2013-01-02 Is Fracking a ?Happy Solution? to our Energy Needs? by Richard Vodra, JD, CFP (Article)

A few weeks ago, John Mauldin called fracking a 'happy solution' that will produce jobs, potentially solve our trade deficit and generate new tax revenue, though energy prices may rise in the process. But how excited should we be about the 'shale revolution'?

2013-01-02 Brian McMahon on Thornburg?s Investment Income Builder Fund by Robert Huebscher (Article)

Brian McMahon is the chief executive officer and chief investment officer for Thornburg Investment Management, where he the co-portfolio manager for the $11.4 billion Thornburg Investment Income Builder Fund (TIBAX). The fund's goal is income production, and it has outperformed its benchmark, the Morningstar Moderate Target Risk, over the last ten years (10.87% versus 2.88%). In this interview, he offers his views on the economy and the markets, and how he has positioned his fund.

2013-01-02 Deal or No Deal? Assessing a Bare Bones Fiscal Plan by Russ Koesterich of iShares Blog

A grand bargain in fiscal cliff negotiations remains elusive, but a bare bones deal seems likely. Russ K explains what that means for the economy and investors.

2012-12-28 Don\'t Wait for the Robins: Investment Strategy for 2013 by Pamela Rosenau of HighTower Advisors

Warren Buffet once remarked, "If you wait for the robins, spring will be over." "Uncertainty" has been an overarching issue since the financial crisis of 2008 and one of the principal reasons that investors have remained on the sidelines away from the equity markets. As it has been a part of the investment lexicon, "uncertainty" will always exist in some capacity. In 2012, investors began by focusing on European issues, then the U.S. election, and now the fiscal cliff. In fact, when there is little uncertainty and investors appear unafraid, one should be more concerned.

2012-12-27 The Ten Best Articles You Probably Missed by Robert Huebscher (Article)

Great articles don't always get the readership they deserve. We've posted the 10 most-widely read articles for the past year. Below are another 10 that you might have missed, but I believe merit reading.

2012-12-27 Saving for Retirement Stage 3: Making Retirement Funds Last as Long as You Do by Team of Franklin Templeton Investments

So you're finally ready to retire. You've worked hard. You've planned. You've saved. You're ready to toss the business section and flip to the travel pages. You hope the investment decisions you've made have positioned you to meet your future needs. You may be retired, but your money has to keep working, and luck, as they say, tends to favor the prepared. In this third installment of our "Saving for Retirement" series, we take a look at some considerations and strategies for those fortunate folks beginning or living in retirement.

2012-12-26 The Ten Key Benefits of Investment Committees by Bob Veres (Article)

In this first part of a two-part report, I'll identify ten core purposes that investment committees serve in different types of firms, ranking them in order of the number of responses I received. If your investment committee is serving all ten purposes, based on the survey, you're among a select minority - which means that many advisors may find new ways to use this versatile new tool in their RIA practices.

2012-12-26 Assessing ISG's "Ten for '12" by Investment Strategy Group of Neuberger Berman

Earlier this year, we offered a forward-looking view of 10 macro themes that we anticipated for 2012. These ideas were meant not to be "surprises" but rather guideposts within the context of a longer-term strategic allocation. At year-end, we are pleased to note that seven of our 10 themes fully materialized. We provide a brief look below.

2012-12-21 Lights, Camera and Action in China by Winnie Phua of Matthews Asia

More than a decade ago, China reached a turning point in its film industry with the co-production of its first internationally acclaimed movie hit, "Crouching Tiger, Hidden Dragon." The film, directed by Academy Award winning Taiwanese American director Ang Lee, raked in more than US$213 million globally, and became the highest grossing foreign language film in U.S. history. Pretty good for a movie made in China on a US$17 million budget.

2012-12-20 2012 in Review by Investment Strategy Group of Neuberger Berman

As we approach the New Year and contemplate the opportunities the investment landscape may offer in 2013, it helps to look back at the performance trends of 2012. Overall, the year-to-date period has seen impressive results from various risk assets, which is in line with the projections of our Asset Allocation Committee. However, ongoing concerns about volatility and Europe hampered the markets at times. Here, we provide a performance scorecard and consider potential developments in the year ahead.

2012-12-19 ING Fixed Income Perspectives December 2012 by Christine Hurtsellers, Matt Toms, Mike Mata of ING Investment Management

While all the good little boys and Cindy Lou Whos dream of sugar plums and new iPhone 5s in blue, the adults in our modern-day Christmas story can't sleep but a wink, as visions of getting Scrooge'd by the fiscal cliff are making hearts sink. No matter if this political humbug cease or persist, down the chimneys of a recuperating housing market Ol' Saint Bernanke-olas will continue to gift $85 billion of Treasury and MBS purchases per month or more until the labor market can finally get over the hump and deliver 6.5% unemployment and inflation of 2.5% and no more.

2012-12-19 TAG Could Be Tagged in Fiscal-Cliff Negotiations by Doug Peebles, Jon Denfeld, Ed Dombrowski of AllianceBernstein

Caught up in the wrangling over the US fiscal cliff is a little-publicized program that could have big implications for short-term investors and bond yields if it expires on December 31. If the Transaction Account Guarantee (TAG) program ends, huge sums of money may start looking for a new home.

2012-12-18 Comparing Long-Term Care Alternatives by Joe Tomlinson (Article)

Should clients buy expensive long-term care insurance they might never need, or go without insurance and risk a big hit to their life savings? For advisors whose clients face this critical dilemma, there's now a third option: life insurance and annuity products that also incorporate long-term care insurance.

2012-12-18 Three Takeaways from the Fed by David Rosenberg (Article)

The equity market likes the prospect of more money printing and the Fed's more forceful efforts to reflate the economy, and stocks are a far better inflation hedge than bonds.

2012-12-17 Fiscal Cliff Deadlines Draw Near by Russ Koesterich of BlackRock Investment Management

In addition to the seemingly never-ending focus on the fiscal cliff, markets turned their attention to last week's Federal reserve meeting and the corresponding announcement of the central bank's continuation of its bond-purchase program. Following a very brief rally after the announcement, however, stock prices fell and ended the week marginally lower. For the week, the Dow Jones industrial average declined 0.2% to 13,135, the S&P 500 index fell 0.3% to 1,413 and the NASDAQ composite dropped 0.2% to 2,971.

2012-12-17 2013: A Year in Global Emerging Markets by Allan Conway of Schroders Investment Management

We expect emerging market equities to deliver solid performance during 2013 and perform even better over the longer term. Emerging markets look extremely attractive in terms of valuations. We believe the Chinese economy has stabilised and will see a modest recovery next year and that tail risks in the developed world have been reduced for now by central bank policy.

2012-12-13 Rescuing the Bond Deer from the Bond Bear by Mike Temple of Pioneer Investments

It's the season to talk about the man who delivers presents. No, not Santa Claus, but Fed Chairman Bernanke who has been delivering the green stuff for the past four years in a helicopter, not a sleigh... My last installment introduced the Fixed Income Bond Deer the investor caught in the headlights confused about what to do. This week we contemplate the following: should "Bond Deer" be grateful for the green stuff or frightened by the possibility that it is fueling the next bond "bear" market? The answer: it depends on how long this experiment continues.

2012-12-13 2012 in Review by Investment Strategy Group of Neuberger Berman

As we approach the New Year and contemplate the opportunities the investment landscape may offer in 2013, it helps to look back at the performance trends of 2012. Overall, the year-to-date period has seen impressive results from various risk assets, which is in line with the projections of our Asset Allocation Committee. However, ongoing concerns about volatility and Europe hampered the markets at times. Here, we provide a performance scorecard and consider potential developments in the year ahead.

2012-12-11 Loomis Sayles' Matt Eagan on the Macro and Fixed Income Outlook by David Schawel, CFA (Article)

In this interview, Loomis Sayles' Matt Eagan discusses the fixed income universe, Fed policy and issues facing the global macro economy. Eagan is the co-manager, along with Dan Fuss, of the Loomis Sayles Bond Fund and he manages the Loomis Sayles Strategic Alpha Bond Fund.

2012-12-11 Fine Wine - Why it's for More than Just Drinking by Mark E. Ricardo, JD, LLM, AAMS (Article)

For many investors, an ideal asset class would combine superior long-term absolute and risk-adjusted returns with a hedge against inflation and stock market volatility. There's a way to get all of that, in an asset class you might never have thought of until now: fine wine. Investment-grade wine deserves careful consideration, particularly now that - unlike other collectibles, such as art and rare books - it can be traded on a regulated exchange.

2012-12-10 13 for '13 by Richard Bernstein of Richard Bernstein Advisors

Each December we publish a list of investment themes that we feel are critical to the coming year. We continue to believe that US equities are in the midst of a major bull market that could ultimately rival 1982's bull market. It is hard to be bearish when one considers the following.

2012-12-06 Weekly Market Commentary by Scotty George of du Pasquier Asset Management

Now that the election is over, and the markets are oversold, the Mideast is again volatile, and the fiscal cliff is fast approaching, most market concern rests with whos going to be the first one in the pool? Interestingly, although the stars are aligned once again to make money in the equities markets, it is still a psychological, not financial, component that governs peoples capital deployment considerations.

2012-12-04 Surprising Choices in the Search for Safety Near-Certain Loss of Purchasing Power versus Short-Term by Jason Petitte, CFA (Article)

Risk, in its many guises, is unavoidable, and investors today are taking on significant amounts of credit risk, duration, and leverage to obtain high yields from many presumably safe bonds. But certain types of risk are often mispriced. By overweighting one's portfolio to those sectors that currently offer attractive risk-adjusted returns, investors will be better positioned to meet their long-term goals.

2012-12-03 Watching for Cliff to Fade, Jobs to Appear by Bob Doll of BlackRock Investment Management

Investors are likely to remain volatile as the focus on the fiscal cliff will remain intense. Progress on the cliff needs to happen quickly if a compromise is to be reached. Given the sluggish nature of jobs growth, we are unlikely to see the Fed change its stance anytime soon.

2012-12-01 Are Corporate Bonds Expensive? by Team of Neuberger Berman

As in the case of Treasury bonds, yields for U.S. corporate credits have fallen to historic lows as prices have risen. The yield on the Barclays Aggregate U.S. Investment Grade Bond Index was recently at 2.8%far below levels achieved during the heady days of 2007. Obviously, this reflects overall interest rates, but is it also a sign that corporate issues may be overvalued? We explore the issues and consider how investors should position their portfolios for the current environment.

2012-11-29 "Bond Deer" in the Headlights by Mike Temple of Pioneer Investments

An insightful client exclaimed to me last week, after I had enumerated the many risks facing bond market investors that he felt like a deer in the headlights. "Bear" with me for a paragraph or two while I elaborate. . .

2012-11-28 Idiosyncratic Risk...and the Other Kind by Jeffrey Bronchick of Cove Street Capital

If the recent election demonstrated anything of relevance to an investor, it should have been the beginning of the end of the tyranny of the "catalyst." The day before the election, an investor could have legitimately been worried about any number of micro, macro, domestic or global issues. And yet the sun rose, work was attended to by those who have jobs, markets opened, fell, and closed and the collective attention moved to the next "perceived" catalyst-the so-called fiscal cliff. Calling Roseanne Roseannadanna.

2012-11-27 Fixed Income Perspectives by Christine Hurtsellers, Matt Toms, Mike Mata of ING Investment Management

A wise American once said "Life is hard; it's harder if you're stupid." A good example is when your pals in Washington are so busy pushing their partisan agendas that they lose sight of what could happen to the American economic Thunderbird if it goes all Thelma and Louise over the fiscal cliff. With the latest elections in the books, it remains to be seen if a Democratic president and acrimonious Republican House can put on their thinking caps to devise a way to delicately pump the brakes of fiscal restraint.

2012-11-26 Buying Treasuries and Avoiding Stocks Not the Way to Go by John Buckingham of AFAM

While we know better than to make too much out of a low-volume rally, especially during a holiday-shortened trading week, it was interesting to hear what The Wall Street Journal had to say one week ago at this time. As the publication helped ready investors for the week ahead, one story advised folks to head toward the safety of U.S. Treasury securities: "Expect safe-haven Treasurys to draw demand at the expense of stocks in the coming weeks, bucking a seasonal trend that has often favored riskier assets."

2012-11-20 Fix the Debt! by Team of Franklin Templeton Investments

In the "normal" course of a U.S. election, investors typically breathe a sigh of relief when the results come in, with at least one layer of market uncertainty removed. This time around, the political squabbling hasn't ended with the close of the polls on November 6. The debate about the "fiscal cliff," a combination of spending cuts and tax hikes set to go into effect on January 1, 2013, has heightened. Market volatility since the election seems to have heightened, too.

2012-11-19 Q3 2012 Market Commentary by Jon Sundt of Altegris

Decisive actions by central bankers altered the course of global markets in the third quarter of 2012 at least temporarily.

2012-11-15 Too Low for Too Long by Scott Minerd of Guggenheim Partners

The Federal Reserve faces the risk of inducing a sell-off in bonds similar to that which occurred in 1994 when Dr. Greenspan tightened credit conditions after maintaining an artificially low interest rate environment for an extended period.

2012-11-13 Europe: Opportunity of a Generation by David Marcus of Evermore Global Advisors

A difficult political and economic backdrop is masking exceptional opportunities in European markets for discerning, long-term oriented investors. Evermore believes that there is a generational opportunity to build significant wealth by selectively investing in catalyst-driven, deep value European securities, trading at depressed valuations.

2012-11-12 Surveying the Post-Election Landscape by Team of Lord Abbett

Of all the uncertainties facing investors over the past few years, the U.S. presidential election was among the most significant. And now that the election is over, asset managers are assessing the opportunities and riskssuch as the looming fiscal cliffwithin their respective markets. Indeed, the direction of fiscal policy remains investors' foremost concern, according to a recent survey of nearly 600 financial advisors conducted on Lord Abbett's postelection Web conference.

2012-11-12 President Obama Wins Reelection; Equity Markets Trade Lower by Matthew Rubin of Neuberger Berman

Congress remains split following Tuesday's vote (Democrat Senate, Republican House. DJIA and S&P 500 decline 2.0% and 2.3%, respectively, last week. European Central Bank and Bank of England maintain current monetary policy stances.

2012-11-09 Roots of Economic Karma by Vivek Tanneeru of Matthews Asia

I'm a strong believer that bad governance (yes, bad) is a natural part of the process of socio-political empowerment, and one that is actually necessary at times in order for some democracies, such as India, to achieve faster economic growth. Typically, during times of great socio-political transformation economic governance takes a backseat as newly empowered segments of society view redistribution of power and patronage as the first order of business. Their attention turns to good economic governance only after they feel fully assimilated. Allow me to explain.

2012-11-08 Obama Wins: What's Next? by Team of Janus Capital Group

U.S. President Barack Obama has been re-elected for another four years, while Democrats will continue to control the Senate and Republicans the House of Representatives. We believe this outcome was largely anticipated by the markets before Election Day. However, U.S. Treasury markets likely will gain and risk assets could decline as investors remain concerned about sluggish economic growth, the impact of the impending "fiscal cliff" and the effects of continued Federal Reserve (Fed) intervention.

2012-11-06 Letters to the Editor by Various (Article)

A reader responds to Gary Halbert's commentary, What Really Happened in Benghazi on Sept. 11, which appeared on October 31, and a reader responds to David Schawel's article, Will Bonds Be 'Burnt to a Crisp?', which appeared on October 16.

2012-11-02 High Yield is Looking Expensive by Russ Koesterich of iShares Blog

High yield has enjoyed a rally over the last several months. Russ explains why it may be a good time to reexamine your exposure to the asset class.

2012-10-30 Bond Market Primer by Kendall Anderson of Anderson Griggs

For years, our tag line "Common Sense Portfolio Management for Intelligent Investors" has served us well. There are times, though, that "Common Sense" can steer us in the wrong direction. Take driving. When a teenager sits behind the wheel of a car for their very first attempt at driving they know, from years of watching Mom and Dad drive, that when they want the car to go to the right, they turn the steering wheel to the right. Even someone who has never driven an automobile knows this. It is common sense.

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.

2012-10-26 The China Debate by Robert Horrocks of Matthews Asia

It seems to me that pretty much the only thing you can get Democrats and Republicans to agree on these days is that China is bada job-destroying exporter of cheap goods. And indeed, at the most recent two presidential debates, both candidates spoke of the trade deficit with China and described China as a rule-breaker, including the way it has managed its currency. They phrased their views as if trade were a competition between nations and that exports are obviously superior to imports. U.S. manufacturers might agree but consumers may demur.

2012-10-26 October 2012: Fixed Income Investment Outlook by Team of Osterweis Capital Management

Like last year, this summer's quarter was eventful. Investors entered the quarter with high expectations that the European Central Bank (ECB) and Federal Open Market Committee (FOMC) would provide the markets with more monetary largesse. On July 26th, Mario Draghi, President of the ECB, vowed to "do whatever it takes" to preserve the euro. Risk assets then began an anticipatory rally heading into some key events in mid-September.

2012-10-26 October 2012: Equity Investment Outlook by Team of Osterweis Capital Management

Equity and other "risk" assets rallied in the third quarter in anticipation of further monetary easing by central banks around the world. The prospect of increased liquidity from the central banks appears to have focused investor attention, at least temporarily, away from the generally softer economic data that continue to emerge from Europe and Asia.

2012-10-26 Of Irish and Fiscal Cliffs by Team of Franklin Templeton Investments

Dr. Michael Hasenstab, Templeton Global Bond Fund portfolio manager and co-director of Franklin Templeton Fixed Income Group's International Bond Department, doesn't prescribe legislative answers, but he can relate the fiscal challenges the U.S. faces to the experiences of a country with its own dramatic cliffs: Ireland.

2012-10-25 In or Out? The Case for - and Against - the Stock Market by Team of Knowledge @ Wharton

Given ongoing volatility in the stock market, it's no surprise that investors are increasingly bearish on the market's prospects, beset by a lack of confidence in its institutional underpinnings and a general pessimism about the direction of the economy. But is that distrust misplaced? Wharton experts are mixed about the future fortunes of the stock market, with some saying that investors are withdrawing at the worst possible time and others noting that many people had entrusted too much of their retirement savings to the fate of equity markets.

2012-10-24 Emerging Markets Local Currency Bonds: Reducing Risk and Improving Returns in a Global Fixed Income by Marcela Meirelles, Blaise Antin of TCW Asset Management

Emerging market (EM) local currency bonds broaden the scope for income generation and risk diversification in a global fixed income portfolio. The asset class offers a unique opportunity to access higher income and potential for capital appreciation through a basket comprised of mostly investment grade credits with an average yield spread of 475 basis points over US Treasuries.

2012-10-22 Politics, Cliff Watching Take Priority in the Short-Term by Bob Doll of BlackRock Investment Management

The US elections are only two weeks away, and the recent polls show a very tight race. There are significant differences, both perceived and real, in the policies of the two candidates and the impact they might have on financial markets.

2012-10-22 3 Investment Strategies for the New World by Russ Koesterich of iShares Blog

No doubt about it the investment climate has changed, and it's unlikely to change back anytime soon. Russ K gives 3 possible solutions for investors seeking to adjust to the new investment world.

2012-10-19 Quarterly Letter by Ron Muhlenkamp of Muhlenkamp & Company

In his latest quarterly letter, Ron Muhlenkamp, president and portfolio manager of the Muhlenkamp Fund, re-examines Europe, China, and U.S. Politics as the major drivers of the markets. On September 7, 2012, Muhlenkamp published a Market Commentary, headlined "Threat of European Banking Crisis Recedes." In it, he discusses the Outright Monetary Transactions program, introduced by the European Central Bank. Mr. Muhlenkamp thinks this program makes credible the ECB's promise to do all it can to keep the Eurozone together.

2012-10-19 Monthly Investment Bulletin by Team of Bedlam Asset Management

In their efforts to support growth, governments and central bankers have steadily chipped away at the free market. Through increased regulation, financial suppression and monetary intervention they have accentuated the lack of supply in quality fixed income paper, driving bond yields down to previously unthinkable levels. Policy makers are almost pathological in their belief that the end justifies the means as they try to inflate away their debt by keeping interest rates below nominal growth.

2012-10-19 Blurring Lines: Positioning for Developed and Emerging Market Realignments by David Fisher, Julie Salsbery of PIMCO

The demographic, financial and political lines separating developed and emerging countries are increasingly blurred, and we believe bond investors will need to adapt. Not only do investors need to take a more holistic approach to analyzing and investing in sovereign debt, they also need to reconsider their strategic thinking regarding benchmarks and their tactical approach to seeking returns. PIMCO Global Advantage Strategy utilizes a GDP-weighted benchmark and capitalizes on PIMCO's global resources to create a portfolio designed to reflect the evolving international opportunity set.

2012-10-19 Educating India by Siddharth Bhargava of Matthews Asia

India has long been a country where entrepreneurs have stepped in to fill gaps in the market, and their role in primary education has been no different. Over the last decade, an estimated 300,000 low-cost private schools have sprung up across India. And as counterintuitive as it seems, many poor parents are willing to pay for their children's schooling to avoid the country's free education system.

2012-10-19 Stealth Mode by Stephen J. Taddie of Stellar Capital Management

After more than 30 years of declining rates, a reversal that started a longer term trend of higher interest rates, like that experienced from the late 50s to early 80s could be devastating to bond investors. In addition, interest rate increases have not treated many other income investments like fixed rate preferred stocks very well as many of these issues have extremely long maturities, and/or are perpetual. This makes stretching for yield in this type of environment both challenging and hazardous.

2012-10-18 Investment Outlook 2013: "ABCD" Investing: Anything Bernanke Cannot Destroy by Cliff Draughn of Excelsia Investment Advisors

The Ben Bernanke and Mario Draghi concert gave the markets a double shot of their love in the month of September by promising to print as much money as needed to finance the debts of their respective countries. Ever since the financial fraternity party ended in 2008 and the world began deleveraging its massive credit hangover, the global markets have been hooked on the next shot of love from the central bankers.

2012-10-17 Fuzzy Math from the Continent of Peace by Christian Thwaites of Sentinel Investments

Whoops! The IMF made two announcements last week that caught our attention. But to set up the joke in all this, it's worth remembering that for decades the IMF preached austerity economics to any country that needed balance of payments assistance.

2012-10-15 Equity Market Review & Outlook by Richard Skaggs of Loomis Sayles

Global equity markets performed well in the third quarter after posting modest losses in the second quarter. The soft second quarter, which followed back-to-back double-digit quarterly gains, proved to be a pause rather than a signal that the equity bull market was ending. Though defensive sectors garnered favor in the second quarter, economically sensitive sectors have generally led performance this year, with technology, financials and consumer discretionary topping the list year to date.

2012-10-15 Bond Market Review & Outlook by Thomas Fahey of Loomis Sayles

Aggressive policy responses from major central banks were dominant forces in the third quarter. The European Central Bank (ECB), Federal Reserve (Fed), Bank of Japan (BoJ) and other central banks took decisive action, prompted by the escalating European sovereign debt crisis, slowing global growth, financial market volatility, and the impending US "fiscal cliff."

2012-10-15 High Yield and Bank Loan Outlook by Scott Minerd of Guggenheim Partners

The leveraged credit market turned in an impressive Q3 with high yield bonds and bank loans returning 4.3 and 3.1 percent, respectively. Unprecedented accommodation from central bankers across the globe has alleviated much of the macroeconomic tail risk that we highlighted in last quarters publication. Presented with a seemingly insatiable demand for new issue bonds, issuers returned to the torrid pace of issuance that characterized the start of 2012 by raising a record $99 billion during the third quarter.

2012-10-12 Teetering on the Edge? by Liz Ann Sonders, Brad Sorensen, Michelle Gibley of Charles Schwab

Concerns about a possible US recession remain elevated in light of the pending "fiscal cliff," resulting in some lackluster stock market action. The fiscal cliff and uncertainty around tax and regulatory policy appear to be influencing business decisions to the detriment of economic growth. While worst-case scenarios for Europe may have been taken off the table by the ECB, Spain's reluctance to ask for aid is causing consternation. And although we see continued weak growth in China, signs indicate the global slowdown may be turning around.

2012-10-12 The Golub Group Commentary by Team of The Golub Group

High-quality businesses that have the ability to pay and increase their dividends are even more attractive in this low yield environment and the valuations of these businesses are cheap on an historic basis and relative basis to the alternatives.

2012-10-11 The New TIPping Point by Jeremie Banet, Rahul Seksaria, Mihir Worah of PIMCO

The Federal Reserve's QE3 program combined with more aggressive communication are likely to have implications for Treasury Inflation Protected Securities (TIPS).

2012-10-11 When Averting Loss Can Lead to Averting Gains by Team of Franklin Templeton Investments

Think about something you'd really hate to lose, something of value to you such as a treasured possession. Now imagine you're told that if you lay that object on the line in a bet, you have a good shot at doubling its value, but there's also a possibility you'll lose it. How low would the chance of loss have to be before you'd be willing to take the risk? Maybe 10 percent? Less than that? The answer may lie in a behavioral economic theory called "loss aversion."

2012-10-10 Munis and Tax Reform: Tempest in a Teapot or Taxmageddon? by Team of Neuberger Berman

We've heard increased dialogue recently about the future of the tax exemption for municipal bond income. While it has long been commonly thought that taxing municipal bond income would result in higher borrowing costs to governments potentially impairing their ability to operate the current political landscape, upcoming election and looming "fiscal cliff" have opened for debate the prospect of changes to longstanding provisions of the U.S. tax code.

2012-10-10 Third Quarter Surge Caps 12-Month Relentless Risk Rally by Douglas Cote of ING Investment Management

Despite the rally of the past year, equity markets still look cheap. Weakening manufacturing data suggest the 12-quarter streak of positive earnings growth may come to an end in the third quarter. Housing has turned the corner, providing consumers with cause for confidence. Though fundamentals have wavered a bit, we are constructively bullish on risky assets, as "successful investing demands a choice between prudent risk control and outright risk avoidance".

2012-10-10 Potential Picks for a Yield-Starved Portfolio by Russ Koesterich of iShares Blog

Yield-hungry investors today are faced with a stark choice: accept lower yield or more risk. Russ K explains why given those options, investment grade bonds may be one of the better bargains.

2012-10-09 Is Gluskin's David Rosenberg Right about Utilities? by Geoff Considine (Article)

They're not the sexiest property on the Monopoly board, but in today's market, there's plenty of evidence mounting that utilities are a great source of income. Indeed, Gluskin Sheff's David Rosenberg made the case for utilities in a recent commentary.

2012-10-09 Expect Economic Sluggishness to Persist by Bob Doll of BlackRock Investment Management

Although the economy does seem to have improved a bit in recent months compared to where it was in the second quarter, growth levels in both the United States and around the world will likely remain subpar at least through the middle of next year. The base case for the United States appears to be the economy continuing to grow at around 2% (perhaps a notch higher) over the course of 2013. This growth level would be contingent on avoiding the full force of the fiscal cliff and would be underpinned by a recovery in housing and a pickup in capital spending levels.

2012-10-09 High Yield and Equities Mind the (Equity) Gap by Hozef Arif of PIMCO

High yield bonds returned 12% through September, even as corporate defaults continued to rise, albeit gradually. While the default rate is an important market metric, it has been a lagging indicator of high yield bond total return performance. Investors should closely monitor equity markets for signals on where high yield spreads may go.

2012-10-05 Market Performance and the Party in Power: Is There Really a Connection? by Team of Janus Capital Group

The relationship between domestic securities market returns and U.S. Presidential elections is a favored topic of Wall Street commentators. As the 2012 Presidential election heads toward the tape, the pundits are in full swing once again, and claims about the impact of a Democratic or Republican victory on U.S. stock and bond markets pop up almost as frequently as political ads. In this paper, we address the question, Should investors take these prognostications to heart and, more importantly, apply them to their asset allocations?

2012-10-05 Economic Recovery and Debt Reduction: Faster, Please! by Chris Molumphy of Franklin Templeton Investments

It's tough to be patient in an age of instantaneous communications and instant gratification. We all want immediate answers to our questions and quick fixes to our problems. When it comes to real world tangles like the global economy, though, Chris Molumphy, CIO of Franklin Templeton Fixed Income Group, reminds us that patience, not a magic pill, is the order of the day when it comes to European and U.S. struggles to cure their economic ailments. He's realistic about these problemsbut isn't waiting to act where he does spot investment opportunities.

2012-10-05 Harmony and Turmoil by Sherwood Zhang of Matthews Asia

Since Japan's recent purchase of the disputed Diaoyu/Senkaku Islands a few weeks ago, anti-Japan protests erupted in various Chinese cities, with some turning violent and targeting Japanese shops, cars and factories.

2012-10-05 Market Respite by Richard Michaud of New Frontier Advisors

In a period of looming macroeconomic risks and great investor uncertainty the quarter resulted in solid gains in most global equity markets. The Dow was up 4.3%, the S&P 500 5.8% and the NASDAQ 6.2% for the quarter. Year-to-date the Dow was up 10%, the S&P 14.5% and the NASDAQ 19.6%. The news internationally was encouraging though mixed with European indices up 8% for the quarter and 11.8% for the year while Pacific indices were up 2% for the quarter and 7.4% for the year.

2012-10-03 Stocks Are Taking a Breather from the Rally by Bob Doll of BlackRock Investment Management

To at least some extent, the pause in the rally we have seen over the past couple of weeks can be attributed to some profit-taking on the heels of a significant multi-month uptrend (US stocks rose close to 6% in the third quarter). It is also likely, however, that investors are coming to grips with the fact that the world continues to face some serious risks and are recognizing that not all of the world's problems can be solved by central bank action.

2012-10-02 The Risk in Safety by Greg Nejmeh of HS Management Partners

The "risk on/risk off" sound bite is routinely applied by financial commentators when attempting to explain inexplicable market fluctuations. As the pendulum oscillates between greed (risk on) and fear (risk off), the fulcrum the pivot point where the scale rests in perfect balance can best be characterized as safety. It is from that state of equilibrium that the market begins each trading day...

2012-10-01 Moral Hazard. by Scotty George of du Pasquier Asset Management

Overall, equity market risk is dissipating. There appears to be a stronger momentum ameliorating a global tapestry of "ills." What may have been a domino effect when the credit crisis began has stopped short of a cataclysm and turned closer to equilibrium. As a result, equities might be poised to perform. The question is when?

2012-09-28 Alternative Thoughts: Macro Investing - What is macro investing and investing in a macro strategy? by Lawrence Epstein, Josh Rowe of Orinda Asset Management

Macro investing has long been the focus of investors in search of non-correlated investment strategies. Orinda Asset Management believes that macro strategies have the potential to produce positive absolute returns across market cycles. In addition, the strategy has historically exhibited low correlation to traditional equity and fixed income indices, and has provided effective diversification benefits when incorporated as part of a long-term investment plan.

2012-09-28 ProVise Bullets by Ray Ferrara of ProVise Management Group

The median household income adjusted for inflation is now around $50,000 for a "typical" American family. This is 8% below the all-time high, which was set in 2007. Driving these results, as reported by the Census Bureau, was the fact that 80% of Americans saw their household incomes decline, or at a minimum, remain the same, while the top 20% saw their incomes increase by 1.6%. Depending upon which side of the political spectrum you are on, an argument could be made for the policies of either President Obama or Governor Romney.

2012-09-28 Schwab Market Perspective: Disrespected RallyCan It Continue? by Liz Ann Sonders, Brad Sorensen, Michelle Gibley of Charles Schwab

US equities are trading near five-year highs but numerous measures show investors remain skeptical. The enthusiasm following the Fed's announcement of more quantitative easing was short-lived, although the summer rally in stocks could be at least partially attributed to anticipation of more stimulus. The enthusiasm following the Fed's announcement of more quantitative easing was short-lived, although the summer rally in stocks could be at least partially attributed to anticipation of more stimulus.

2012-09-28 Look Out Below! The Fiscal Cliff Steepens by Russ Koesterich of iShares Blog

Despite the recent happy headlines, most measures of US economic activity point to slower growth, which makes the threat of the fiscal cliff pushing the US economy into a recession even greater. Russ K explains how investors can prepare.

2012-09-27 Dividend Yield vs. Dividend Growth by Ashvin Viswanathan of O'Shaughnessy Asset Management

Investor demand for high-yielding companies has grown even stronger because of the perception that these companies are more defensive and recent news that the Federal Open Market Committee (FOMC) has extended its forecast of low rates until 2015. We believe buying a portfolio of high-quality, global, market-leading companies with superior valuations and high dividend yields provides investors with an excellent opportunity to consistently beat the market, while providing high income relative to fixed income securities in the current environment.

2012-09-25 Bill Gross: Hedging Your Bet on Deflation versus Inflation by Ben Huebscher (Article)

Will deflation or inflation prevail? The answer to that one question determines portfolio construction, according to Bill Gross, founder, managing director, and co-CIO of PIMCO.

2012-09-25 Stocks Should Overcome Hurdles to Continue the Bull Market by Bob Doll of BlackRock Investment Management

Although global economic data has been relatively weak in recent years, risk asset prices have nonetheless advanced. We would attribute this trend to the fact that weak economic growth does not, by itself, limit the potential for risk assets. In our view, the liquidity-driven reflationary policies of the world's central banks have been a more important factor for asset prices than economic growth levels have been.

2012-09-24 Do TIPS Pose a Hidden Risk to Seekers of Inflation Protection? by Douglas Peebles of AllianceBernstein

Treasury-inflation protected securities, or TIPS, have been a popular choice for investors concerned about future inflation. And TIPS' returns have been impressive in recent years. But the main contributor to TIPS' performance isn't inflation. It's an ingredient that could become as hurtful down the road as it's been helpful in the past.

2012-09-21 Growth for the Long Run by Jonathan Coleman, Brian Demain, Nick Thompson of Janus Capital Group

"I skate to where the puck is going, not where its been." Wayne Gretzky. Many investors would love to be as successful as The Great One when it comes to their portfolios. Yet investors are often heavily influenced by the past, losing sight of where they need to be going. This seems to be especially true today: mistrust of equities is running high after a decade of disappointing returns and excessive volatility.

2012-09-20 QE n+1 What The Fed Is Really Up To by JJ Abodeely of Sitka Pacific Capital Management

As I survey the news stories and other analysis on the Feds recent announcement, most fall short of describing what the Fed is really up to. Here is a hint: it's not really about employment. It's not really about "price stability" or really about growth either.

2012-09-19 Bank Loans: Looking Beyond Interest Rate Expectations by John Bell, Kevin Perry of Loomis Sayles

Fixed income investors may be stymied by the current mix of interest rate projections and global macroeconomic news. Interest rates remain near historical lows, and investors continue to move between risky assets and relative safe havens like Treasurys based on the latest market headlines. We believe that bank loans can be a compelling addition to fixed income portfolios in this environment and, more importantly, over the long term.

2012-09-18 Federal Reserve Actions Help the Rally to Continue by Bob Doll of BlackRock Investment Management

The headline news last week was the US Federal Reserve's announcement of a new round of quantitative easing in which the central bank plans to purchase $40 billion of mortgage-backed securities on a monthly basis (without a predetermined end date). The Fed also pushed back the timeframe on how long it will maintain its current zerointerest-rate policy, indicating that the current level of rates should be in effect through the middle of 2015.

2012-09-17 Main Street Policy...Seriously? by Jason Doiron of Sentinel Investments

In case you did not catch the press conference last week, Ben Bernanke believes that his latest round of quantitative easing will benefit Main Street. Seriously? The notion that Main Street will benefit from the Fed purchasing an additional $40 billion per month of agency-backed MBS is preposterous to us.

2012-09-14 All In by Bob Rodriguez of First Pacific Advisors

2013 is a critical moment in time. If a material and timely fiscal restructuring does not take place by next September, I fear and believe that it will not occur before 2017. Unfortunately, if this were to occur, my 2009 warning of a crisis of equal or greater magnitude than the Great Recession by 2017 would be a more likely outcome. My worst fear is that fiscal gridlock continues, coupled with the policies of this activist Fed Chairman. Todays Fed actions add to my anxieties. ALL IN may be a good strategy for poker but not for this economy.

2012-09-14 Operation Screw by Peter Schiff of Euro Pacific Capital

The Fed will try to conjure a recovery on the backs of currency debasement. It will not stop or alter from this course. If the economy fails to respond to the drugs, Bernanke will simply up the dosage. In fact, he is so convinced we will remain dependent on quantitative easing that he explicitly said he won't turn off the spigots even if things noticeably improve. In other words, the dollar is screwed.

2012-09-13 How Would Municipals Fare Under Romney? by Douglas Peebles of AllianceBernstein

Last month, we wrote that changes to the tax code being discussed in Washington would affect the value of municipal bonds. While that analysis still holds true, that was before the election campaign engines really revved up. Now there's more chatter, if not more clarity. My colleague Michael Brooks weighs in.

2012-09-13 Finding Seeds of Growth by Serena Perin Vinton of Franklin Templeton Investments

Like the seed waiting to emerge beneath an icy winter blanket, there are equity growth opportunities sprouting that perhaps aren't obvious on the surface. When the global economic landscape seems rocky and unfertile, you might think opportunities in growth-oriented stocks would be stunted. Serena Perin Vinton, co-manager for Franklin Growth Fund, knows where to dig for those growth opportunities though, and sometimes it's in unusual places. One area she points to is U.S. manufacturing, which she believes could be set to stage a comeback.

2012-09-12 On Uncertain Ground by Howard Marks of Oaktree Capital

I'm going to devote this memo to the uncertainty in the world and the investment environment and then offer my take on the appropriate strategy response. This will require me to touch on a large number of topics, but I will try to dwell less than usual on each of them.

2012-09-12 Investing is Like Duck Hunting by Pamela Rosenau of HighTower Advisors

The discussion of additional monetary easing by the Federal Reserve has been the topic du jour in recent weeks. As a result of potential additional monetary stimulus, the US dollar has experienced a decline. Also, after a weaker than expected jobs report last week, US treasuries initially rallied given an increased expectation of Fed action. However, as pointed out by the market commentators at Sober Look, the Treasury curve has begun to steepen with the "30-year bond and other longer dated treasuries steadily selling off."

2012-09-11 The Winds of Market Change by Mark Mobius, Michael Hasenstab of Franklin Templeton Investments

As we cross the mid-way point of the year, you might say the equity and fixed income markets have been a lot like the recent weather in much of the world: uncertain, and tending toward extremes. The perception of a stormy economic climate has driven some equity valuations to extremely low levels, particularly in Europe, and investors have been pouring into fixed income despite extremely low yields.

2012-09-11 Rally Should Continue, but Look for More Volatility by Bob Doll of BlackRock Investment Management

Despite a relatively disappointing jobs market report for August, stocks rose last week as investors focused on the European Central Banks (ECB) announcement of its longawaited plan to buy bonds in the secondary market. The ECB program represents an important step in terms of lowering volatility and providing a cushion for Europes debttroubled countries to make some longer-term improvements in their fundamentals.

2012-09-07 The Federal Reserves Next Move: QE3? Perspectives on U.S. monetary policy by Team of Janus Capital Group

We believe the Fed will take additional action by mid-September to stimulate the economy, probably through a third round of quantitative easing. U.S. economic growth remains well below potential and is slowing, and the Fed is not meeting its dual mandate to ensure price stability and full employment. We recently reduced our 2012 GDP growth estimate to between 1.5% and 1.7%.

2012-09-06 August 2012 Market Commentary by Andrew Clinton of Clinton Investment Management

On a year-to-date basis the municipal bond market has, once again, delivered meaningful returns both on an absolute and risk adjusted basis. While the market yield and or cash flow of a bond is typically very important to investors, it is equally important to remember that the income a bond produces is only one component of a bonds return. Investors must consider several other essential elements of a security to properly quantify a bonds relative value.

2012-09-04 The Ultimate Income Strategy - Higher Yield and Lower Volatility by Geoff Considine (Article)

Investors, especially those in the de-accumulation phase of their retirement, count on high income and low volatility. Achieving the best possible tradeoff between yield and risk is a major challenge for advisors. Over the last two years, I've shown how to construct a low-risk portfolio - the ultimate income portfolio (UIP) - that yields over 9.0%. Let's look back at how those portfolios performed and the components of this year's UIP.

2012-09-04 Letters to the Editor by Various (Article)

A reader responds to Dan Richard's article, The Wrong Way to Ask for Referrals, which appeared last week, and two readers respond to Bob Veres' article, The Profession's Faulty Assumptions: A Top Ten List, which appeared on August 21.

2012-09-04 Challenges in Todays Municipal Market by Douglas Peebles of AllianceBernstein

Most fixed-income investments carry two key risks: interest-rate risk and credit risk. Both affect a bond's value in the market. But before the 2008 financial crisis, interest-rate risk was the primary concern of many investors and investment managerscredit risk was much less of a consideration. My colleague Michael Brooks explains why.

2012-08-31 Rethinking How We Invest by Matt Scales of Columbia Management

Building portfolios to meet individual objectives is or should be a customized exercise, so this article should not be considered advice for any individual. Instead, it is an alternative philosophy to how investors have traditionally approached building portfolios. For the vast majority of us, we allocate our capital to asset classes with the highest expected returns.

2012-08-30 Dividends: The Next Bubble? by Ed Perks, Don Taylor of Franklin Templeton

Dividend-paying stocks have received a good deal of attention this yearand for good reason. Ed Perks, senior vice president and director of the Core Hybrid Portfolio Management Group at Franklin Templeton, and Don Taylor, senior vice president and portfolio manager for Franklin Equity Group, suspect it's these fearful prognostications that are overinflated, not the asset class. As they see it, the dividend-paying stock universe is expanding, and deserves investor attention.

2012-08-30 Fixed Income Investing - the Dangers of Complacency by Bill Woodruff of Bandon Capital Management

The paper points out the US has been in a declining interest rate environment for 30 years, producing a tailwind for fixed income investors but one with little room left for further decline. At these interest rate levels - the yield on the 10 year US Treasury recently hit an all-time month end low of 1.49% - fixed income investors face unique risks which are predominantly unfamiliar.

2012-08-29 Closed-End Funds by Douglas Bond of Cohen & Steers

We would like to share with you our review and outlook for the closed-end fund market as of July 31, 2012. For the month, the total return of the Morningstar U.S. All Taxable ex-Foreign Equity Closed-End Fund Index was 3.0% based on market price and 2.3% based on net asset value (NAV). Year to date, the index had a market-price return of 11.8% and a NAV return of 8.1%. By comparison, the S&P 500 Index and the Barclays Capital U.S.

2012-08-29 A Two-Pronged Case for Holding Gold by Russ Koesterich of iShares Blog

Gold continues to benefit from today's low interest rate monetary climate, and Russ says its diversifying effects mean the metal can be a valuable risk management tool for investors.

2012-08-28 Real Estate Resiliency: the REIT Model Proves its Mettle by Josh Olazabal, Amit Arora of PIMCO

REIT unsecured debt has been one of the best-performing sub-sectors in the entire investment-grade credit area. When insurance companies began to look at REIT unsecured debt, they asked for the same type of covenants associated with property-level mortgages. These requirements have coalesced into a standard REIT covenant package. We believe low default rates and relatively high recovery rates make the sector attractive over the long term particularly for buy-and-hold investors.

2012-08-28 Policymakers Hold the Key to Confidence by Bob Doll of BlackRock Investment Management

The Dow Jones Industrial Average fell 0.9% to 13,158, the S&P 500 Index slid 0.5% to 1,411 and the Nasdaq Composite lost 0.2% to close the week at 3,070. As August draws toward a close, US equities have hit four-year highs, corporate bond yields touched multi-year lows and many risk assets can look back on a pretty good summer. But despite plenty of investment and central bank activity, we continue to see a shortage of economic and financial market confidence.

2012-08-22 What Will it Take for the Rally to Continue? by Bob Doll of BlackRock Investment Management

One of the factors underlying the upturn in stock prices over the past couple of months has been a modestly improving trend in US economic data. Last week, retail sales advanced 0.8%, well ahead of expectations. This was the first increase in four months, which suggests that while households remain generally cautious, spending levels are beginning to tick higher.

2012-08-22 The Faustian Bargain by Scott Minerd of Guggenheim Partners

In Goethe's 1831 drama Faust, the devil persuades a bankrupt emperor to print and spend vast quantities of paper money as a short-term fix for his country's fiscal problems. As a consequence, the empire ultimately unravels and descends into chaos. Today, governments that have relied upon quantitative easing (QE) instead of undertaking necessary structural reforms have arguably entered into the grandest Faustian bargain in financial history.

2012-08-21 Hype and Reality in the Muni Bond Market by Hildy Richelson (Article)

Meredith Whitney's prediction last year of billions of dollars in municipal bond defaults stirred investors' fears. Earlier this summer, bankruptcies in three California cities reignited them, and last week a Federal Reserve study revealed that muni bonds have defaulted at a higher rate than previously reported. But no crisis has befallen the municipal bond market, and it is highly unlikely that one ever will.

2012-08-17 Disconnected Markets Confound Investors by John Browne of Euro Pacific Capital

The current environment for investors is perhaps one of the most confusing that many have ever encountered. Unpredictable markets now appear to take no clue whatsoever from underlying economic data, and maxims long cherished by traditional money managers are being abandoned in favor of seemingly illogical choices. While such an environment is enough to encourage many to cash out completely, we believe that investors should remain focused on the fundamentals.

2012-08-14 An Imperfect Storm by Janus (Article)

Changing regulations have drained liquidity from the corporate bond markets, as growth in bond ETFs is distorting a shrinking market. These converging forces are likely to result in a more volatile environment, but we see opportunity for managers able to understand the fundamental risk and reward.

2012-08-13 Thinking about Treasuries? 2 Reasons to Think Again by Russ Koesterich of iShares Blog

The Fed will soon own more long-term Treasuries than the entire private sector. Russ explains the implications of this milestone for US long-dated debt and shows investors where to look for more attractive alternatives.

2012-08-13 To Find Liquidity in Corporate Bonds, It Pays to "Think Odd" by Howard Edelstein of BondDesk Group

Electronic corporate bond markets are suddenly all the rage. Apparently, much of Wall Street now believes that a new, centralized electronic market will be required in coming years to prevent a contraction in liquidity in the $8.1 trillion market for corporate bonds. That's because there's a perfect storm of looming regulatory changes that will increase the capital banks need to support their trading operations, while limiting their ability to trade for their own account.

2012-08-13 Stocks Look Poised for Continued Gains by Bob Doll of BlackRock Investment Management

Although investor attention seems focused on a number of well-known downside risks (including the European debt crisis, hesitant US economic growth and the pending US fiscal cliff), stocks have continued to climb higher and last week notched their fifth consecutive week of gains.

2012-08-10 2012 2Q Economic - Capital Market Summary by Greg Hahn of Winthrop Capital Management

The single biggest driver for the economy and investment returns is the deleveraging process which we are currently struggling through. Arguably, we have successfully transferred debt from the financial sector to the U.S. government through the Fed's QE programs. As we move through the long process of reducing debt, economic growth inevitably moderates as resources are applied to debt reduction rather than fixed investment and consumption within the economy. As a result, expected returns on financial assets are lower.

2012-08-07 A Plane on the Tarmac by David Kelly of JP Morgan Funds

A few weeks ago, I was sitting in a plane on the tarmac at La Guardia. We had pulled away from the gate, but the pilot had just come over in the intercom to let us know that we were number 35 in line for takeoff. Since we were going nowhere fast, I took out my laptop and tried to think of an analogy to describe the current state of the American economy. Then I realized that I was sitting in one.

2012-08-03 Hedging Against (and Profiting From) A Prospective Decline In The U.S. Dollar by Team of Emerald Asset Advisors

The U.S. dollar has remained the world's reserve currency due to several factors: 1. Its large circulation (roughly $1.1 trillion); 2. The denomination of many transactions (especially commodities such as oil and other natural resources) being in USD; 3. The stability of its political system; and 4. The lack of any other viable options. However, that may not always be the case.

2012-08-02 Two Inflection Points by Andrew Redleaf of Whitebox Advisors

I'm generally happiest, professionally, when I have at least one strong investment conviction. Currently I have two. I want to be long large-cap equities and short small-cap equities. And I want to be long cheap options on natural gas, mostly by owning E&P (exploration and production) firms that have become attractively cheap with the collapse of gas prices.

2012-08-02 Mythbusting: How Elections Affect Markets by Russ Koesterich of iShares Blog

Elections do matter for the markets, but not necessarily for the reasons that investors tend to believe. Ahead of the next presidential election, Russ debunks some common myths surrounding markets and elections.

2012-08-01 Real Estate Portfolio Construction for Individual Investors by Casey Frazier of Versus Capital Management

Commercial real estate is an asset class that includes many different strategies and approaches. Investors segment real estate investments into a few categories. This segmentation is done by several key factors including income profile, leverage, operational risk and potential returns. The most important segmentation is core versus non-core, or properties with stable income versus properties that have unstable or no income.

2012-08-01 The Vanishing Treasury Yield by Team of Neuberger Berman

Although Treasury bonds have performed well in recent years, investors should be aware of increasing risks as yields decline. Yields for 10-year Treasury Inflation-Protected Securities have been persistently negative since the fourth quarter of 2011 and continue to trend lower, implying that investors are paying increasingly higher prices for the relative safety these investments are supposed to provide.

2012-08-01 China's Growing Pains by Mark Mobius of Franklin Templeton Investments

Many feel that China is the engine for the world economy and that if it slows down, we may be doomed to a recession or even a depression. Yes, China's growth is decelerating from the double-digits of recent years; various forecasters are predicting a possible GDP growth range of 7-8% this year. However, I think it's important to emphasize that would still represent an impressive pace, and remember that China isn't the world economy's only locomotive.

2012-07-31 The False Promise of Gold as an Inflation Hedge by Michael Edesess (Article)

If you were a time traveler, hopping from one point in history 2,000 years forward or back, you'd best carry with you - if your time machine will allow it - a small stash of gold. Gold has been an effective hedge against inflation over the very, very long term. But that's about all it's good for. The other common reasons for owning gold - in particular, to use as a short-term or even a long-term hedge against inflation - are baseless.

2012-07-30 Sharp Decline in Earnings and Revenue Estimates by Mike "Mish" Shedlock of Sitka Pacific

For the first time in three years, US Quarterly Earnings are Poised to Drop. "Third-quarter earnings of Standard & Poor's 500 companies are now expected to fall 0.1 percent from a year ago, a sharp revision from the July 1 forecast of 3.1 percent growth, Thomson Reuters data showed on Thursday. That would be the first decline in earnings since the third quarter of 2009, the data showed."

2012-07-30 The Central Bank by John Petrides (Article)

Global markets responded favorably last week to comments from Mario Draghi, President of the European Central Bank, saying that he would do whatever it takes to save the euro (this reminded me of Fed Chairman Bernanke's comments in February 2009, when the Fed started its asset purchase program, and markets responded favorably soon after). Although the world awaits more details as to what Mr. Draghi's comments entail, equity markets rallied, and the yields on Spanish and Italian bonds came in.

2012-07-30 Looking Past Weak Data; Awaiting Policy Responses by Bob Doll of BlackRock Investment Management

Although last week featured some lackluster economic and earnings news, investors continued to focus their attention on the growing possibility of additional monetary policy action, particularly from Europe. For the week, the Dow Jones Industrial Average climbed 2.0% to 13,075, the S&P 500 Index advanced 1.7% to 1,385 and the Nasdaq Composite rose 1.1% to 2,958.

2012-07-27 Secular Outlook: Implications for Investors by William Benz of PIMCO

For investors, the biggest challenge now is moving from a world of normal distributions, with expected occurrences around the mean, to one of bi-modal distributions where more extreme scenarios prevail. Key institutions, including governments and central banks, were previously stabilizing forces but are now helping to accelerate underlying, destabilizing trends in the global economy and financial markets.

2012-07-26 Global Bonds: Protection in Down Markets by Douglas Peebles of AllianceBernstein

As US Treasury yields continue to plumb record lows, some have quipped that government bonds have gone from offering risk-free returns to return-free risk. Indeed, when interest rates inevitably rise from their current levels, bondholders face the prospect of poor or even negative returns. One way for investors to mitigate such a risk is by globally diversifying their bond holdings.

2012-07-25 Global Bonds - Where To Now? by Nic Pifer of Columbia Management

Economic data over the past four months show a clear softening trend in global economic activity. From our perspective, the muddle-along, sluggish global growth scenario remains very much intact. Highly accommodative monetary policies by the major central banks are helping support activity and contain downside risk.

2012-07-25 If You Own Utility Stocks, Consider Selling The Overvalued Ones - Part 1 by Team of F.A.S.T. Graphs

Recently, I've come across several discussions by dividend growth investors as to whether the utility sector is overvalued or not today. Therefore, I decided to look into the sectors relative valuation as a whole to see what I could find. The only way to efficiently conduct this kind of research is to rely on a broad statistical array utilizing traditional valuation metrics. However, before I report my findings there are some caveats and clarifications that I feel are very appropriate.

2012-07-24 Markets Likely to Continue Moving Unevenly by Bob Doll of BlackRock Investment Management

Notwithstanding a pullback on Friday, stocks managed to post gains last week despite a generally negative tone to the economic data. In some ways, the recent trend of relatively weak data has actually been beneficial for stocks in that it has been boosting hopes for additional policy stimulus around the world. For the week, the Dow Jones Industrial Average climbed 0.4% to 12,822, the S&P 500 Index advanced 0.4% to 1,362 and the Nasdaq Composite climbed 0.6% to 2,925.

2012-07-24 Litman Gregory Mid-Year Commentary by Team of Litman Gregory

High debt levels in developed countries create headwinds that are likely to hamper global economic growth in the years ahead. Europe's debt woes raise the risk of a damaging financial crisis, and global stock markets reflected these concerns in the second quarter. Why are we discussing this now? It is partly a reflection on having reached a quarter of a century in business and thinking about how we have conducted our business.

2012-07-20 Long Journey, Map Provided by John Gilbert of GR-NEAM

It is almost four years since the Lehman bankruptcy. In the periods of economic contraction that were typical of the postwar period, the clouds would be parting by now. Income growth would have resumed and necessary balance sheet repair would be more or less complete. By any standard, the current episode is a balance sheet recession of historic proportion. Previous downturns were initiated by central bank rate increases, which occurred this time as well.

2012-07-20 No Armageddon, but Consequences by Michael Hasenstab of Franklin Templeton

In a time of severe stress and crisis, its easy to come to the conclusion that Armageddon is upon us. Those who believe the European Union is going to split up and Chinas growth will come to a screeching halt are probably building bunkers and sharpening their survival skills right about now. Hasenstab isnt in panic mode. In fact, hes optimistic the eurozone will survive, and that no, China wont move back into the feudal age.

2012-07-20 The Fiscal Cliff: 4 Reasons To Be Concerned by Russ Koesterich of iShares Blog

The bottom line: If were still stuck at an impasse come fall, investors should consider positioning their portfolios for a higher probability of a recession in 2013 by implementing five strategies that I outline below.

2012-07-19 Fixed Income Investment Outlook by Team of Osterweis Capital Management

Recent escalations in the euro crisis and weaker-than-expected global economic data have led to widespread calls for further stimulus. Global leaders believe they are addressing the issue, with China and the ECB lowering interest rates and the Bank of England announcing an additional 50 billion sterling of quantitative easing. We are skeptical about the benefits of such policy action and believe that the U.S. and Europe each require different solutions to solve their fiscal issues.

2012-07-18 Taking Short Cuts to Higher Returns with AQRs Capital Antti Ilmanen by Kendall Anderson of Anderson Griggs

On November 2-3 of 2011 the CFA Institute and CFA France sponsored the Fourth Annual European Investment Conference in Paris, France. Antti Ilmanen, Ph.D. was one of the presenters. The title of his Presentation was Understanding Expected Returns. This months letter is based on this presentation as it appeared in the June 2012 publication CFA Institute Conference Proceedings Quarterly.

2012-07-17 Gundlach ? Avoid Riskier Assets by Robert Huebscher (Article)

Since early this year, Jeffrey Gundlach has warned investors to avoid exposure to riskier assets ? among them, equities, non-dollar-denominated securities and sovereign debt. Still reluctant to move to a more aggressive position, Gundlach said on Thursday that 'substantial opportunities await,' but they may be as much as a year away.

2012-07-17 Global Slowdown: Preparing for a Recession by Russ Koesterich of iShares Blog

While Russ believes that the most likely scenario for the global economy in 2012 is continued slow growth, he explains what's behind the recent global slowdown and what investors may want to consider doing if it grows worse.

2012-07-17 Bull Market Has Been Buffeted, but Remains Intact by Bob Doll of BlackRock Investment Management

During a relatively modest week in terms of trading activity, stocks managed to stage a rally on Friday that helped erase the declines of the previous four days. The stock market gains over the past month can be largely attributed to the perception that policymakers in Europe have been making some progress combatting the ongoing debt crisis. There is a sense of uncertainty over the state of the US economy, and that uncertainty is making investors, companies and consumers wary about the future.

2012-07-16 Rethinking Asset Allocation by Curtis Mewbourne of PIMCO

As risk and return characteristics evolve, we believe investors need to adapt the way they think about using asset classes. Asset classes are likely to be affected by the situation in Europe and, more broadly, by high debt levels in developed countries. The related political debate about austerity vs. growth is also critical. Fixed income investors should note whether countries control their own currencies and can monetize their debts. Those that can may be greater inflation risks.

2012-07-13 End Game: What Happens to Residential Mortgage-Backed Securities if There's a Eurozone Exit by Rod Dubitsky of PIMCO

An exit would substantially affect euro-denominated RMBS mortgage collateral. Currency redenomination and devaluation would likely wipe out the entire available credit enhancement for most deals. Losses of redenominated loans could overwhelm credit support, even for well-performing deals.

2012-07-12 Equity Market Review & Outlook by Richard Skaggs of Loomis Sayles

Following back-to-back double-digit quarterly gains, US stocks took a breather in the second quarter, with the S&P 500 Index declining 2.8%. It could have been worse. At the quarters low point in early June, the Index had declined 10.0% from the first-quarter close. June was a strong month for stock performance, leading to a welcome recovery from the early quarter decline. However, positive returns from the first quarter prevented the Index from becoming negative on a year-to-date basis.

2012-07-12 The Intersection of Monetary Policy and Volatility Markets by Josh Thimons of PIMCO

When the Fed exhausted the power of its traditional monetary policy tools, it turned to increasingly creative and innovative policy measures. During periods of Fed balance sheet expansion, both interest rate and equity implied volatility experienced significant declines. The opportunities presented by the intersection of monetary policy and volatility markets are often compelling, because most options market participants are not looking at the world through a policy lens.

2012-07-10 Is Higher Inflation on the Horizon? by Orhan Imer of Columbia Management

For nearly two decades inflation in the U.S. has been fairly contained except for a few periods of moderate acceleration around peak levels of economic activity. More recently, headline inflation as measured by the year-over-year change in the CPI-U (Consumer Price Index for Urban Consumers) declined from 3.9% in September 2011 to 1.7% in May 2012 driven primarily by the slowdown in the U.S. economy and the sharp drop in energy and commodity prices.

2012-07-10 Investing and the Euro Crisis by David Kelly of J.P. Morgan Funds

In the summer of 2012, the Euro Zone crisis continues to dominate financial markets as it has done over each of the past two summers. While the solution to the problem remains relatively straightforward, it requires a level of economic understanding, political courage and communication among policymakers that has been absent thus far. Without this, the crisis is likely to lurch forward with only a very slow and painful resolution.

2012-07-09 Equity Investing in a Lower-Return, Volatile World by Charles Lahr, Brad Kinkelaar, Maria (Masha) Gordon of PIMCO

Company balance sheets in developed markets are generally in good health and many are well positioned to generate growth even in difficult times. We expect growth to moderate in emerging markets, although still outpace the trajectory in the developed world. Certain companies may temporarily face lower capacity utilization. A focus on quality is invaluable. We define quality by clean balance sheets, high operating margins and access to high-growth markets with barriers to entry.

2012-07-03 Bond Funds: You Get What You Don't Pay For by Michael Edesess (Article)

Innumerable studies have shown that it's well-nigh impossible to beat the averages consistently investing in equity funds. But what about bonds? Bonds, after all, have more structure - perhaps there are ways an expert fund manager could exploit that structure and gain an edge over other investors. Is it possible to predict how well a bond fund will perform relative to other funds?

2012-07-03 10 Predictions for 2012: Mid-Year Update by Bob Doll of BlackRock Investment Management

At the midway point of 2012, it seems an opportune time to review the predictions we made at the beginning of the year. Although much could change, at this point it appears that the majority of our predictions are on track.

2012-07-03 The 2012 Mid-Year Geopolitical Update by Bill OGrady of Confluence Investment Management

As is our custom, we use this early July report to offer our outlook for the next six months. In this issue, we will discuss what we see as the key geopolitical issues that will affect the markets for the rest of 2012. This list is not exhaustive but highlights our greatest concerns.

2012-07-03 2Q 2012: Why I Still Believe in the Long-Term Viability of Stocks by Chuck Royce of The Royce Funds

Royce's President and Co-CIO talks about recent volatility, correlation, and why he still has confidence in stocks...How long do you think the market will be caught in this volatile, range-bound pattern? I think it's impossible to say with any certainty, though obviously we'd all like it to be over soon. There's vast turmoil going on in Europe, which is having an effect on the equity markets, and that is a large part of this range-bound phenomenon that has characterized the markets.

2012-06-28 Focusing on Capital Preservation: Stable Value and Possible Alternatives by Brett Gorman, Henry Kao, Stacy Schaus of PIMCO

Stable value, which combines an actively managed fixed income portfolio with a contract to help assure principal and income, offers capital preservation potential and historically higher risk-adjusted returns than money market and low duration strategies.

2012-06-27 Q3 2012 Outlook by Asset Allocation Committee of Neuberger Berman

The second quarter experienced a return to volatility as heightened concerns over the European sovereign debt crisis and an aura of pessimism around the pace of global economic growth have reverberated through financial markets. The year began on a positive note, with all major equity indices posting strong double-digit gains.

2012-06-25 12 Reasons US Recession Has Arrived (Or Will Shortly) by Mike "Mish" Shedlock of Sitka Pacific Capital Management

I am amused by the Shadow Weekly Leading Index Project, which claims the probability of recession is 31%. I think it is much higher. When the NBER, the official arbiter of recessions, finally backdates the recession, May or June of 2012

2012-06-25 Markets Vacillate Between Weaker Data and Hopes for Policy by Bob Doll of BlackRock Investment Management

Last week was a modestly negative one for stocks as investors continued to focus on a trend of weakening economic data. Additionally, many were disappointed by what was perceived to be a less-than-robust response from the Federal Reserve following its policy meeting last week.

2012-06-21 Cohen & Steers Closed-End Fund Strategy by Team of Cohen & Steers

We would like to share with you our review and outlook for the closed-end fund market as of May 31, 2012. For the month, the total return of the Morningstar U.S. All Taxable ex-Foreign Equity Closed-End Fund Index was 4.4 percent based on market-price and 4.6 percent on a net-asset-value (NAV) basis. Year to date, the index had a market-price total return of 5.1 percent and a NAV return of 2.6 percent.

2012-06-19 Retirement Floors and Implications for Evensky's Cash-Reserve Strategy by Wade Pfau (Article)

Does sensible retirement planning call for funding basic needs with less volatile assets and investing more aggressively for aspirational goals? Or, with client goals clearly defined and prioritized, does sensible planning call for a total returns approach? Multiple schools of thought have emerged, but there is not yet any consensus about what constitutes a proper retirement income floor. These lingering unresolved disagreements reinforce the benefits of Harold Evensky?s and Deena Katz? popular strategy.

2012-06-19 Will Policy Response Follow Policy Rumor? by Bob Doll of BlackRock Investment Management

The past two weeks have been better for stocks, with the major indices up in consecutive weeks for the first time in more than a month. Europe remains stuck in a cruel cycle of recession, a banking system in need of life support, frozen policymakers, too much debt and a downward confidence spiral. In the United States, economic growth slowed this spring (likely due to poor weather and the earlier spike in gasoline prices), but remains intact.

2012-06-19 Achilles Last Stand: Greeks Vote in Favor of Euro by Liz Ann Sonders of Charles Schwab

The June 17 Greek elections favored the pro-bailout party and allow for a likely coalition to be formed probably the least-tumultuous outcome. However, kicking the can further down the road doesn't solve the eurozone's structural problems, nor does it stem contagion. Next on investors' radar is this week's Federal Reserve meeting, where additional easing is expected.

2012-06-19 U.S. High Yield: A Closer Look at Junk Spreads by Hozef Arif of PIMCO

Investors are cautious about high yield bonds which have become more volatile following strong performance and inflows earlier this year. We believe the cyclical bottom in default rates is behind us, and based on a tightening in lending standards compared to last year, we expect a gradual increase toward the mean in default rates and credit losses in 2012.

2012-06-18 Weekly Market Commentary by Scotty George of du Pasquier Asset Management

The big problem last week was in trying to distinguish between macroeconomic factors and underlying stock performance. The resulting decoupling made some equities more vulnerable than aggressive weekly gains might otherwise have one believe. As we muddle through the disappointment of global austerity packages and downwards earning revisions, too many stocks have spurted up simply on traders dreams for a new bull cycle.

2012-06-18 Cohen & Steers Preferred Securities Strategy by Team of Cohen & Steers

We would like to share with you our review and outlook for the preferred securities market as of May 31, 2012. For the month, the BofA Merrill Lynch Fixed Rate Preferred Index had a total return of 0.3% and the BofA Merrill Lynch Capital Securities Index returned 0.7%. Year to date, the indexes had total returns of +6.9% and +7.7%, respectively.

2012-06-18 Choosing the Right Asset Class in Emerging Markets: Why it Matters by Ignacio Sosa, Christopher Getter of PIMCO

Depending on individual risk tolerances during the past five years, it may have made more sense to overweight one or two EM asset classes and at times to avoid one or two EM asset classes altogether. In general, asset classes are better viewed as carriers of risks rather than each being considered a risk in its own right. This phenomenon is readily apparent in the emerging market space. We have advocated that asset allocation in EM should be dynamic with respect to both segment and country.

2012-06-15 Schwab Market Perspective: Time for Action by Liz Ann Sonders, Brad Sorensen, and Michelle Gibley of Charles Schwab

With escalated uncertainty, sitting back can be an easy choice, but we believe investors and policymakers alike need to take action. Equities bounced off of what appeared to be oversold conditions but although the US economy appears to be holding its own, a renewed sustainable uptrend may be hard to come by until some substantive policy actions are taken around the globe. The time for decisive action in the eurozone appears to be quickly approaching as short-term solutions are no longer satiating the market.

2012-06-14 Chart of the Week: Growth Dichotomys Diminished Influence by Team of American Century Investments

Despite weaker-than-expected U.S. employment data for May (released June 1) and other signs of slow economic growth, the Fixed Income Macro Strategy Team at American Century Investments does not believe the U.S. economy is headed toward another recession (though the marginal possibility of recession has increased). Rather, the team believes the economy remains on a sub-par recovery/slow (1-3%) growth path, with headwinds.

2012-06-13 Three Years and Counting by Neel Kashkari of PIMCO

In addition to muted economic growth, record low interest rates, and sustained high unemployment, extraordinary equity market volatility has been a repeated feature of the past three years. As heightened volatility persists, many equity investors remain on the sidelines. We think a better investment approach is to invest globally, across asset classes, reflecting the likelihood of the various outcomes. We believe managing against downside shocks is enormously beneficial to compounding attractive returns over the long term.

2012-06-13 U.S. Commercial Real Estate: A Technical Affair by John Murray of PIMCO

We believe attractive investment opportunities will arise in sectors of CRE that haven't yet caught the eye of technicals-driven capital. Demand for CMBS arguably comes from a lack of alternatives as opposed to any sort of inherent belief in rental fundamentals. Fickle technical factors are not the only headwinds: Deleveraging, regulatory uncertainty and weak fundamentals add further pressure.

2012-06-12 Asia's Role in Global Economic and Portfolio Rebalancing by Tomoya Masanao, Robert Mead, Ramin Toloui of PIMCO

We expect that the reallocation of global investor portfolios toward more balanced allocations to emerging market bonds the Great Migration to support Asia in the coming years. To pivot to a growth model that emphasizes domestic demand, China must alter government policy on taxes, profits of state-owned enterprises as well as make other structural changes. Japans growth will continue to be challenged by secular dynamics, and by the countrys inability to respond to them.

2012-06-11 Investors Look Forward to More Policy Help by Bob Doll of BlackRock Investment Management

Following a significant slide the week before, stocks bounced back last week, primarily due to a growing sense that policymakers in Europe and the United States may be ready to engage in further easing measures. The increasing stress in Europe has put additional pressure on the European Central Bank (ECB) and on other policymakers to take stronger action, and, indeed, over the weekend European finance ministers announced a new plan to recapitalize the Spanish banking sector.

2012-06-08 The Purveyors of Notgeld by Tony Crescenzi of PIMCO

It is through this emergency money and repressively low interest rates that the worlds central banks create conditions that compel investors to seek out value in real assets and move outward along the risk spectrum. Investors should focus on assets that are likely to benefit from central bank policies designed to reflate deflated economies: commodities, land, equipment and software, for example. In equities, this means favoring entities in the developing world over those of the developed world in particular those reliably expected to pay a dividend.

2012-06-07 The Specter of Default: How Safe Are U.S. Treasuries? by Team of Knowledge @ Wharton

Just how solid are U.S. Treasury bonds, long considered a "riskless" investment? Is a default possible? Desirable? Unthinkable? And what are the options for reducing the annual government deficits that cause the country's debt to grow? Those and other questions were the subject of a recent Wharton conference titled, "Is U.S. Government Debt Different?" The conference was set up in the wake of last summer's debt-ceiling showdown in Washington, which highlighted the risk of a default on government bonds.

2012-06-06 Liquidity Lessons: The Critical Importance of Budgeting for Overlay Strategies by Markus Aakko, Jared Gross of PIMCO

One approach is to tier liquidity into current and contingent tiers, where some assets are kept in more liquid form and others are kept in higher-yielding investments. Quantifying how much of the immediate category is needed is a relatively straightforward risk-management exercise involving estimating the potential mark-to-market change in value of the overlay. Our view is that locating the liquidity pool internally has a number of potential advantages over an external model.

2012-06-04 It's All Relative by Liz Ann Sonders, Brad Sorensen, and Michelle Gibley of Charles Schwab

Equities have pulled back and are flirting with correction (-10%) territory. We believed this was a needed process, and remain modestly optimistic that economic data will rebound and the market will eventually resume its move higher over the next several months. The Federal Reserve has made clear that it stands ready to act should the US economy deteriorate, or the European debt crisis escalate, but we remain skeptical. The more important issue in our view is how the coming "fiscal cliff" is addressed.

2012-06-04 My Best Investment Advice - Watch Your Fellow Investors And Do The Opposite by Chuck Carnevale of F.A.S.T. Graphs

In my opinion, the recent selloff in stocks defies commonsense and logic, but in truth and fact it usually does. In other words, its not uncommon to see investors selling at precisely the time they should be buying and vice versa. Moreover, when investor pessimism is at a high, like it is today, stocks become cheap causing people to panic and sell. Now when I review the data, I get optimistic and immediately began to suspect that all this pessimism is creating a great long-term opportunity for investors with a more optimistic view of the future.

2012-06-04 Negatives Intensify, but Panic Isn't Warranted by Bob Doll of BlackRock Investment Management

For some time, we have been suggesting that the US economy had been holding up relatively well compared to the rest of the world. While we are not changing that view, last weeks data (particularly Mays employment report) provided a negative jolt and pushed stock prices down sharply. Our summary view of the US economy is that while the United States appears to have entered another slowdown phase with the data growing more disappointing in recent weeks, the case for a renewed recession still looks flimsy.

2012-06-01 Asset Allocation: Does Macro Matter? Part II by Sebastien Page of PIMCO

We see the conventional, valuation-based approach to asset allocation as akin to looking in the rearview mirror, which may lead to suboptimal investment outcomes when important macroeconomic shifts take place. We believe an econometric framework to assess the impact of shocks to GDP growth and inflation provides the missing link between macroeconomic forecasts and portfolio performance. Investors should constantly complement, review and revise qualitative and quantitative macroeconomic analyses with judgment, experience and a view on current events.

2012-06-01 Hasenstab on a Possible Grexit by Michael Hasenstab of Franklin Templeton

The Greek debt drama looks to be entering its final act. On June 17, Greek citizens will cast their votes to either elect a pro-austerity government that would keep the economically eviscerated country in the eurozone, or leave the union and go it alone. Dr. Michael Hasenstab expects either option is going to be painful for Greece, so the big question in his mind is whether the world is prepared for either outcome. A summary of some of Dr. Hasenstabs thoughts on what Greeces next move may mean for investors.

2012-06-01 Civil Disobedience Hong Kong Style by Robert Horrocks of Matthews Asia

Walking around Hong Kong a couple of weeks ago, I was struck by the citys own version of the Occupy Wall Street movement. Directly underneath the HSBC tower, in the center of Hong Kongs vibrant financial district, is a small paved area, a portion of which is home to Hong Kongs anti-capitalist, anti-Wall Street movement. In the skyscraper above, thousands of banking and financial employees toil away daily, not overly disturbed by the protesters directly beneath their feet. Why? Because the civil disobedience below is just sowell, civil.

2012-05-31 The Sense and Sensibility of Global Investors by Mark Mobius of Franklin Templeton

The worlds financial markets are like a spiders web; inter-linked and highly connected, strong and flexible, but sometimes fragile, too. The global financial markets have gone through rapid change in the last ten years. Large, emerging economies such as China and India have increased their contribution to global GDP and become true global powers1, causing individuals perceptions of the global economy to shift, as well. Perception has the tendency to impact market reality, which is why I was intrigued to see the results of our 2012 Global Investor Sentiment Survey.

2012-05-31 The Case for Short Duration High Yield by Greg Hahn of Winthrop Capital Management

Valuations in the domestic high yield market appear stretched and we are concerned that opportunities for incremental return are fewer over a near term horizon. In this article we provide an analysis of the structure of the high yield market and a rationale for investing in specific short duration and callable high yield bonds which offer investors a better risk/reward trade-off in the current environment.

2012-05-25 Loss Capacity Drives 401(k) Investment Default Evaluation by Stacy Schaus and Ying Gao of PIMCO

Based on our research, we believe retirement plan participants capacity for loss may be much lower than many investment default options accept as tolerable. Regardless of asset allocation structure, an investment default option should maximize the likelihood that each plan participant will meet his or her retirement income needs. One of the keys to meeting a set income replacement goal is to understand how much plan participants can afford to lose at every age as they approach retirement.

2012-05-25 India's Demographic Dividends by Sunil Asnani of Matthews Asia

Fortunately, Indias vast population of 1.21 billion, considered a time bomb not long ago, is increasingly being viewed as a positive. While its population has grown by roughly 18% over the past decade, the percentage of its children has actually fallen during this same period.looking to base manufacturing operations in other countries.India would do well to realize that this period of demographic shift is not merely a stroke of luck, but a window of opportunity. For growth to be sustainable requires some reforms in the way people live and work.

2012-05-24 Why Invest in Asian Credit? by Showbhik Kalra of PIMCO

Asian sovereign and corporate credit offer more attractive yields than a number of other global fixed income sectors as investors take on additional risk. Given Asian markets diversity and the global macroeconomic environment, investors may wish to consider investment managers with a strong global macro process coupled with strong relationships with local stakeholders and experience in local portfolio management and markets.

2012-05-22 Investing Through a Bumpy Ride by David Kelly of J.P. Morgan Funds

Its been a tough quarter so far. The U.S. economy is still growing, but not at a sufficient pace to excite anyone. Meanwhile, investors have had plenty to worry about including a fiscal cliff in the United States, a slowdown in China and, right now most ominously, further turmoil in Europe. Despite plenty to worry about, the realities of a U.S. economic recovery, very conservative allocations and relatively attractive valuations suggest that investors should still consider adding stocks and other risky assets to their portfolios.

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.

2012-05-22 Goodbye Planet Rates, Hello Planet Quantity: Credit Markets in a Zero Rate World by Luke Spajic of PIMCO

There is a sense that developed market economies are somehow undergoing a reversed metamorphosis reverting from butterfly back to caterpillar where growth is crawling as opposed to flying. The fear of credit destruction, perhaps triggered by deflationary scares, becomes a bigger obsession for central banks. The culture of credit risk-taking changes as rates go lower and approach zero with a perennial risk of the economy tipping into deflation.

2012-05-21 Are We Near the End of the Correction? by Bob Doll of BlackRock Investment Management

Although US economic data was generally good last week, stocks sank sharply as investor fears over Europe's debt problems intensified. Despite the mounting crisis in the eurozone, the US economic recovery continues to look stable. While it is true that US stocks have taken a turn for the worse over the last month, other markets (particularly European stocks) have been hurt even more. In our view, markets are awaiting some sort of positive jolt (perhaps in the form of a policy response in Europe or some stronger US economic data) to break out toward the upside.

2012-05-18 Real Assets by Team of Cohen & Steers

Chinas economic growth is a key theme that drives our outlook for real asset categories. As the worlds dominant consumer of most commodities, China is the largest importer of iron ore, producer of steel and consumer of copper. About 65% of the worlds soybean production is imported to the region. Thus, we were encouraged by central bank easing in response to the first-quarter slowdown, as it seems to have orchestrated a soft landing. Should there be further policy actions, it could spur opportunities in a number of natural resource categories.

2012-05-18 U.S. Large Cap Value Investment Commentary As of April 30, 2012 by Team of Cohen & Steers

The economic expansion is likely to continue, but at a pace that is modest both in absolute terms and relative to previous recoveries. Many stocks are still attractively valued, in our view, and they have the potential to advance in the coming months. At the same time we are watchful of global economic developments, particularly in Europe and the Middle East. A winding down of monetary stimulus (such as the Federal Reserves Operation Twist program) could create headwinds.

2012-05-18 Preferred Securities Review & Outlook for April 2012 by Team of Cohen & Steers

Barring meaningful erosion in the economic backdrop, preferreds can continue to deliver attractive total returns due to generally improving credit fundamentals and historically wide credit spreads. In addition, favorable technicals should continue to support the asset class, as investor appetite for income is likely to remain strong and the overall size of the market could shrink as banks retire issues that may lose Tier 1 capital status. Preferreds offer an average yield close to 7%, which is significantly higher than other investment-grade alternatives such as corporate bonds and Treasurys.

2012-05-18 Closed-End Funds April 2012 Review and Outlook by Team of Cohen & Steers

Given various risks to the domestic and global economies and generally modest inflation, monetary policy in the US will remain accommodative. With borrowing rates likely to remain low for an extended period, the yield advantage of leveraged closed-end funds will continue to draw investor interest. As a result, we see potential for the broad closed-end fund market to maintain historically narrow discounts, or even at times trade at premiums to NAV.

2012-05-17 Our Fixed Income Insights on Yield Traps by Team of American Century Investments

From a fixed income perspective, we explain why aggressive yield-enhancing strategiesresulting from this extended period of historically low U.S. interest rates and yieldscan threaten the potentially valuable long-term portfolio benefits from holding fixed income positions. In particular, chasing yieldand stumbling into yield trapscan derail the important volatility reduction and diversification benefits offered by carefully selected and well-managed fixed income holdings.

2012-05-16 Quarterly Review: 1st Quarter 2012 by Robert L. Worthington of Hatteras Funds

Overall economic conditions are slowly improving in certain developed markets like the U.S. This could result in decent and probably better than expected earnings results for Q1 2012, which of course are announced throughout the early-mid part of the coming quarter. Risks are still prevalent and meaningful in regards to the European debt crisis and may continue to mute economic activity for this part of the world. Finally, while evidence suggests that the major developing economies of China, India and Brazil are slowing, risk of hard landings in these countries is small.

2012-05-15 Lacy Hunt on Debt, Austerity and Recovery by Robert Huebscher (Article)

Global economies are experiencing unsustainable debt disequilibrium, according to Lacy Hunt. Economic textbooks preach that equilibrium, rather than transition, should be the predominant condition. But our attempts to reduce our indebtedness by taking on more ? and less productive ? debt are weakening our economy and creating unstable conditions.

2012-05-15 A Growing Attraction to Municipal Bonds by Team of Hennion & Walsh Asset Management

For income oriented investors, bonds can provide for a dependable and consistent stream of income, and principal protection when held to maturity. Bonds, whether they are Municipal, Government or Corporate bonds, can also provide for compounded growth opportunities when the income received from the bonds is reinvested. Additionally, for growth-oriented investors, fixed income securities can provide investors with downside protection and diversification within a growth portfolio especially in a highly volatile market where additional, measured, short-term flights to quality are likely.

2012-05-15 Policy Confusions & Inflection Points by Mohamed A. El-Erian of PIMCO

During this important annual event, PIMCO colleagues from around the world debate the major trends that will play out over the next three to five years, focusing not on what should happen, but what is likely to happen. Based on the 2012 Secular Forum discussions, we expect three themes to play out: continued policy and political confusion, overly incremental public and private sector responses and, therefore, greater potential for inflection points. In terms of regions, the status quo is no longer an option for Europe.

2012-05-10 A Mixed Fixed Landscape by Team of Franklin Templeton

The lingering low-rate environment in the U.S, Eurozone, Japan and some other nations has many yield-seeking investors feeling stuck in the mud. At its April policy meeting, the Federal Reserve pledged to keep its key short-term interest rate exceptionally low at least through late 2014. Some other global central banks, even in emerging nations, have pushed their rates lower too this year to spur growth. On top of that, many countries are also still trying to dig out of debt, but seem to be spinning their wheels.

2012-05-10 Benchmarking Tail Risk Management by Vineer Bhansali of PIMCO

While tail risk hedging is a critically important area of modern portfolio management practice, the relative newness of the area means standard frameworks for benchmarking such portfolios have not developed. In fact, weve found that once the framework for proper tail hedge construction is defined based on key guidelines (including exposures, attachment, cost, and basis risk), the task of creating a proper index becomes relatively straightforward. To compensate for insufficient real-time performance measurement, tail hedges need to be evaluated on the basis of scenario analysis.

2012-05-10 Staying Bullish by Herbert Abramson and Randall Abramson of Trapeze Asset Management

We believe we are in a new bull market, and bull markets thrive on climbing that proverbial wall of worry. Bullish sentiment is low and bearish sentiment high. Anxious retail investors, having suffered two ugly bear markets since 2000, continue to shun stocks, with money flowing out of mutual equity funds now for more than 5 consecutive years. The public is hugely underinvested. Cash on the sidelines is enormous. The fuel to ultimately power stocks higher as confidence returns.

2012-05-09 The Bond Market\'s Changing Face by Tom Seay of Heartland & Co.

Many investors think of the bond market as a sleepy backwater of the investable universe. But since interest rates peaked in the early 80s, financial innovation in the bond market has spawned countless new investment vehicles (junk bonds, zero-coupon bonds, collateralized debt obligations and other derivative products), democratized lending (think subprime borrowers and emerging countries) and brought Central Bankers our of dark paneled, smoke-filled rooms into the media spotlight (think Fed Chairman Ben Bernanke on 60 Minutes). All this has occurred during a 30-year bull market in bonds.

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.

2012-05-07 Q1 2012 Letter by Team of Grey Owl Capital Management

The overall equity markets strong first quarter rally was narrowly focused and, from our perspective, fragile. Cutting to the chase, we think both stocks and bonds are expensive. During the quarter, we used opportunities presented by Mr. Market to trim some of our lower quality positions and to add starter positions in a few high quality businesses. We also added to our short-term, high-yield fixed income holdings, sources of return that we expect to show less volatility but results equal to or better than the broad equity market indices.

2012-05-07 Mixed Data and Patience is a Virtue by John Buckingham of AFAM

The labor report issued by the U.S. Bureau of Labor Statistics found that nonfarm payroll employment rose by 115,000 in April, and that the unemployment rate dropped to 8.1%. The improvement in the jobless rate came about only because 342,000 folks left the workforce, so there was little cause for cheer, even though the rate stood at 9.0% in April 2011 and 9.9% in April 2010. Employment increased in professional and business services, retail trade and health care, but declined in transportation and warehousing, while the private sector added 130,000 jobs and government payrolls fell by 15,000.

2012-05-04 Stocks Cheap? Not so Fast! by Mike Paciotti of Integrated Capital management

Markets seem to have forgotten that which ailed us just 4 months ago. Talk of another Lehman style meltdown by a major financial institution has given way to positive earnings results, record profit margins and a much publicized recovery in the US. Equities, have now taken center stage once again with many major asset management firms proclaiming their attractive nature. Over the course of the next few paragraphs, we will examine this argument in greater detail by deconstructing equity market returns into component pieces.

2012-05-03 Weekly Market Commentary by Scotty George of du Pasquier Asset Management

As markets regroup from their phenomenal start to the year, certain groups have transformed the conversational dynamic. Focusing as I do upon longer term demographics, I have noticed a shift from traditional consumer cyclical brands toward epic population issue sectors, such as agriculture, healthcare, energy and infrastructure. Beyond the obvious significance of these topics, trading machinations within those secular themes have transformed during the last year. One notices a steadier stochastic pulse to equities within these sectors, emblematic of a longer attention span.

2012-05-03 A Troika of Problems by Team of BondWave Advisors

The troika of the International Monetary Fund (IMF), European Union (EU), and European Central Bank (ECB) has continued to prescribe austerity. But at the end of what is now a lengthy cycle of agreements and ever-increasing austerity measures, the debt still remains significant and much of the region has either been plunged into recession or is heading that way. We discuss these ongoing problems and provide additional insight on the US Treasury, Corporate and Municipal Bond Markets.

2012-05-02 Digbys Umbrella and a Dinner to Remember by Christian Thwaites of Sentinel Investments

The US economy is on a painfully slow road. It is recovering. Jobs numbers are better, even though some hiring in the first quarter may have been brought forward by mild weather. Production, manufacturing and exports, all signs of regained competitiveness in the US, are showing steady improvements. And the government sector is contracting. Not on purpose mind you, but jumping off a cliff and letting inertia do the work result in the same end. Above all of this, we have a Fed using every monetary policy at their disposal to try and promote growth and employment.

2012-05-01 Why MLPs Belong in Your Portfolio by Geoff Considine (Article)

One would think that an asset class yielding 7% and carrying less volatility than do equities would be popular with investors. Yet, despite those attributes, master limited partnerships (MLPs) remain unknown or ignored by large numbers of investors. The case for MLPs is compelling, so it's time for a deep examination of the special properties of this asset class.

2012-05-01 The Income Hunt: Opportunities Abroad by Russ Koesterich of iShares Blog

When it comes to fixed income portfolios, investors are often too reliant on domestic debt issues. However, as Russ explains, today there are a number of reasons why US investors should consider looking outside their own country particularly toward emerging markets for their fixed income needs.

2012-05-01 Bernanke: Be Humble! by Axel Merk of Merk Funds

To Bernanke, being humble means to keep strong monetary policy support to avoid deflation. This humbleness creates a lot of debt whether that be out of thin air on the Feds balance sheet, or across the economy as consumers, businesses and the government alike are enticed to borrow evermore money. What we consider monetary largess, as well as fiscal unsustainability, may ultimately lead to deterioration of the US purchasing power. We have encouraged investors to take a diversified approach to cash. A basket of hard currencies or gold might serve to mitigate the risks of a declining dollar.

2012-04-27 TIPS for Value Investors: Whos Afraid of Negative Yields? by Jeremie Banet and Mihir Worah of PIMCO

Why wasnt the recent TIPS auction a blockbuster among Main Street investors? We believe they were frightened away by the -1.08% real yield. We would argue that the negative real yields that are explicit in TIPS also represent the implicit discount rate for ALL financial assets in the U.S. Moving away from TIPS into nominal yield is a bet on inflation being less than 2% for the next five years and less than 2.25% for the next 10 years a pretty bold bet!

2012-04-27 Happy (Third) Anniversary: Now What? by Jon Quigley of Advanced Investment Partners

During the trading day on March 6th, 2009, the S&P 500 Index hit its intraday bottom of 666.79. In the ensuing three years the Index has advanced over 100%. Along the way, weve witnessed the collapse of some of the older and more hallowed names in the financial industry buh-bye Lehman Brothers, so long Merrill), endured the most severe recession in at least 25 years, suffered through incredible spates of market volatility, and gathered a few gray hairs (or lost some hair) along the way.

2012-04-27 Bond Market Reflections Spring 2012 by Bruce A. Weininger of Kovitz Investment Group

Faced with the prospect of loaning money out for eight years knowing that our best case return over that time was 2%, we decided that, for a while anyway, wed rather hold onto to cash in hopes that pricing will become more rational over the coming weeks or months.

2012-04-26 Shareholder Letter and Commentaries by Robert Horrocks of Matthews Asia

How the markets behave in the near future, including the size and duration of any pullback, is unknowable. However, we remain confident in the long-term growth and prosperity of Asia. Therefore, our approach, in the midst of what are admittedly absorbing macro discussions, has been to focus on finding good businesses, rather than try to speculate on events. As much as we all like to discuss the big issues of the day, the real excitement and challenge comes in discovering businesses whose future prospects are underappreciated by the average view of the investment community.

2012-04-26 One Step Closer: Fed Keeps Rates Low But Gets More Hawkish by Liz Ann Sonders of Charles Schwab

The Federal Reserve's Open Market Committee (FOMC) made no change to short-term interest rates, but provided no hints that a third round of quantitative easing (QE3) was in the offing. As usual, the committee repeated its comment about keeping the Fed's balance sheet under review and being willing to act "as appropriate," while also confirming its pledge to keep rates "exceptionally low" through 2014. For the third consecutive meeting, there was one dissenterRichmond Federal Reserve Bank President Jeffrey Lackerwho believes the first increase in rates will be necessary in 2013.

2012-04-25 Avoiding Equity Market Exposure by Team of American Century Investments

The year 2012 finds the search still on for income and capital appreciation with acceptably low volatility. Many investors remain leery of stocks and are also interested in opportunities that possess low correlation to equity markets. In addition, the low interest rate environment presents difficulties for those trying to achieve total return goals by relying on fixed income investments. Given these issues, some may wish to learn more about the techniques utilized by many equity market-neutral (EMN) strategies.

2012-04-24 Fixed Income Commentary First Quarter 2012 by John E. Villela, David W. Seeley and Barbara J. McKenna of Longfellow Investment Management

The ever‐changing regulatory environment must be watched closely. The new, onerous capital requirements directed at the broker‐dealer community will make it more costly for broker‐dealers to hold inventory on their balance sheets. This will affect the cost of liquidity by making transactions more expensive in the marketplace. In addition, potential changes to money market regulations, which could include allowing the net asset value to float, could force a number of market participants to seek alternative fixed income solutions such as cash or short duration strategies.

2012-04-24 Rising Rates? Why Municipal Bonds May Weather the Storm by Tom Dalpiaz of Advisors Asset Management

A rising interest rate environment over the next few years is an investment scenario to which many investors now subscribe. The prospect of rising rates often prompts investors to think along the following lines: Interest rates are going rise and thats bad for bonds, so Ive got to cut back or stay away completely. But what if we suggested that investment grade, intermediate muni's might weather a rising rate storm comparatively well? We believe there are a number of factors worth considering that could help municipal bonds lessen the negative impact of generally rising interest rates.

2012-04-24 A Risky Business by Russ Koesterich of iShares Blog

In todays low yield environment, fixed income investors face a stark choice: accept lower income or take on additional risk to generate incremental yield. In assessing these two options, investors must start with their own tolerance for risk and investment objectives. For those willing to take on additional risk, I continue to advocate reducing duration risk, for which investors are not being adequately compensated, and modestly increasing exposure to spread products. I currently see opportunities in Investment Grade US Corporate Debt and Emerging Market Bonds.

2012-04-24 Weekly Market Commentary by Scotty George of du Pasquier Asset Management

As markets regroup from their phenomenal start to the year, certain groups have transformed the conversational dynamic. Focusing as I do upon longer term demographics, I have noticed a shift from traditional consumer cyclical brands toward epic population issue sectors, such as agriculture, healthcare, energy and infrastructure. Beyond the obvious significance of these topics, trading machinations within those secular themes have transformed during the last year. One notices a steadier stochastic pulse to equities within these sectors, emblematic of a longer attention span.

2012-04-23 Decoding Duration to Better Understand Your Portfolio by William G. De Leon and Ravi K. Mattu of PIMCO

Duration is often used as a shorthand way to communicate the interest rate risk of a fixed income portfolio. We frequently encounter duration quotations presented as though no subtleties exist. These quotations average duration exposures across maturities and across currencies, implicitly assuming that yields across maturities and currencies are equally volatile and perfectly correlated. We approach the task of understanding interest rate risk with a more complete view of the risk dynamics driving interest rate sensitivity.

2012-04-20 Maybe Diversification Is Not All It's Cracked Up To Be by Chuck Carnevale of F.A.S.T. Graphs

As I began digging into the many faces of diversification, I quickly learned that it is a much more complex concept than at first meets the eye. I feel I learned that there is no one-size-fits-all or even a set of universally applicable rules or principles. To a great extent, diversification turns out to be a very personal issue. How much or how little depends more on your goals and objectives, the knowledge and experience you possess, the time you can allocate to your investment portfolio, and of course, your tolerance for risk. Some of us need a great deal of diversification.

2012-04-20 Whats Ahead for the Fed? by Team of Neuberger Berman

Although growth could slow from here, we do not believe economic conditions will deteriorate enough to provoke further accommodative measures from the Fed. The Fed may be on hold for the time being, but we also believe that Bernanke is acutely aware of the potential consequences of reversing monetary policy too quickly. As a result, interest rates may stay lower for longer. In this type of yield-constrained environment, we continue to favor segments like high yield fixed income and emerging market debt, which both offer attractive sources of income and upside potential.

2012-04-20 Preferred Securities First Quarter 2012 Review and Outlook by Team of Cohen & Steers

Preferred securities continue to offer a compelling total return proposition. Treasury yields are at or near historic lows, and the Federal Reserve appears committed to holding interest rates steady for the foreseeable future. At the same time, with preferred yields near 7%, the yield spread between preferred securities and Treasuries remains far wider than its long-term average, and few other investments offer as much income.

2012-04-20 Closed End Funds First Quarter 2012 Review and Outlook by Team of Cohen & Steers

. With borrowing rates likely to remain low for an extended period, we believe the yield advantage of leveraged closed-end funds will continue to draw investor interest. As a result, we see potential for the broad closed-end fund market to trade at even narrower discounts or even premiums to NAV. In addition, the recent success of new issues should allow the closed-end fund IPO window to remain open in 2012. At the present pace, we do not believe new supply will pressure pricing in the secondary market or impede discount narrowing.

2012-04-19 Current Conditions Cater to Our Rigorous Muni Investment Process by Team of American Century Investments

The last four years have been a remarkable period in municipal bond (muni) market history. The 2008 Financial Crisis and the Great Recession transformed the high-grade U.S. muni market and how people invest in it. What was once a relatively homogenous bond sector in terms of its credit quality and ratings became much more heterogeneous. Under these conditions, we believe experienced professional credit research and portfolio management are now crucial to investment success. This article outlines our muni investment processes.

2012-04-19 New Breed of Managed Futures Funds May Offer Downside Protection...and Upside Opportunity by Team of Emerald Asset Advisors

The search is on for strategies and portfolio managers that can generate return streams uncorrelated to traditional equities and fixed income. Whether it's due to the low return and high volatility equity markets of 2011 or the historically low government bond yields that persist even today, investors are scratching their heads wondering where to turn. A variety of alternative investment styles are available, many of which take an absolute return approach and aim to generate low market correlation, or at least, relatively low correlation to the broad equity markets.

2012-04-19 Price and Waistline Stability Prove Elusive as Inflation Creeps Up by Scott Colyer of Advisors Asset Management

The long-time trends are firmly in support of consistent price inflation during the history of the US. Inflation is a natural inclination for people, businesses, politicians and central banks. Given the Feds ultra-easy monetary policy aimed at creating inflation, we will eventually see it. Higher inflation requires investors to rethink where they invest. Cash and fixed income do little to cope with inflation and actually can be losers if held at times of higher than normal inflation rates. We think investors should take advantage of current bargains in real estate and equity asset prices.

2012-04-18 Balancing Perception, Reality, Equities and Fixed Income by Team of Franklin Templeton

Never underestimate the power of perception to influence peoples fiscal behavior. Perception is such a significant influence, in fact, that economic tea-leaf readers have developed a myriad of surveys and indicators to monitor individuals perceptions of the investing environment because perceptions canand domove markets. When sentiment is negative, investors tend to shift out of assets they perceive as risky and into assets they perceive as safe. Ed Perks, portfolio manager of Franklin Balanced Fund and Franklin Income Fund, is well aware of the role perception plays in the markets.

2012-04-17 10 More Years of Low Returns by Lance Roberts of Streettalk Live

Ten more years of low returns in the stock market. If you are one of the millions of baby boomers headed into retirement-start saving more and spending less because the stock market won't bail you out. I will explain why this is the likely future ahead for investors. In this weekends newsletter I wrote that "If you put all of your money into cash today and dont look at the market for another decade you will be better off..."I realize that this statement is equivalent to heresy where Wall Street is concerned but there is one reason behind my apparent madness - the power of reversion.

2012-04-17 The Elusive Equilibrium: How Financial Markets Shape Global Rebalancing by Ramin Toloui of PIMCO

The mental and organizational infrastructure in the asset management industry has been built for a world with a sharp dichotomy between developed countries and emerging markets. Effective portfolio management requires an integrated approach that eschews the traditional dichotomy between developed and emerging markets. Emerging markets account for about 36% of global output and 68% of global GDP growth, but only represent about 4% of the equity portfolios of U.S. investors. We believe the representation in bond portfolios is even lower.

2012-04-12 Equity Market Review & Outlook by Richard Skaggs of Loomis Sayles

Looking out to year-end, Congress and the White House will be required to act on a long list of expiring tax measures and a debt ceiling increase is necessary as well. As we saw in 2011, compromise is very difficult to achieve and the elections introduce another level of uncertainty. However, the markets current attractive valuation builds in some of these risks. Beyond our shores, there is always the possibility of disappointment in Chinas growth trajectory, and further serious challenges with weaker members of the euro zone should be anticipated.

2012-04-11 Emerging Market Rates: A Different Cycle by Francesc Balcells of PIMCO

The business cycle in EM has been conducive to easing policy rates. Global growth decelerated noticeably in the second half of 2011, and this included most EM economies. While we expect EM local rates will move higher again as the business cycle progresses, the cyclical highs will likely be lower than the previous highs, reinforcing the secular trend towards lower rates. We like EM local rates with a strong credit quality, steep local curves and high real rates that may offer compensation for taking inflation risks. The local markets of Brazil, Mexico and South Africa all stand out.

2012-04-11 A Balancing Act by Mark Mobius of Franklin Templeton

The balancing act between inflation and growth that economies often face is perhaps even more pronounced in the emerging markets world: stimulate growth too much, and inflation could flare, but stamp out inflation too hard, and growth could freeze. The fire of inflation seems to have moderated and some central banks have taken actions to stimulate growth. I believe the fundamentals in many emerging markets look supportive of these actionsas long as it doesnt tip out of balance. Inflation is a big challenge, and I believe it will probably be a very important consideration going forward.

2012-04-09 And That's The "QUARTER" That Was... by Ron Brounes of Brounes & Associates

Europe hopes the latest (bailout and reg) moves will help it get its act together. (Good luck with that.) China applies the brakes. Labor looks strong, but can it continue? The Fed debates the need for more stimulus (without any consensus). Facebook moves closer to IPO (and investors beg to participate). The world lectures Iran and finally takes harsh measures (stand by to help Saudi). Investors hope to keep the mo going for another quarter, while being tempted to take profits along the way. Can we finally start focusing on Obama vs. Romney?

2012-04-06 If You Think All Utility Stocks Are The Same - Think Again by Chuck Carnevale of F.A.S.T. Graphs

Utility stocks, especially regulated utility stocks share certain characteristics that differentiate them from the typical dividend growth stock. On the plus side, utilities are thought of as predictable stocks with low volatility characteristics. Utility stocks also tend to provide a higher current yield than many dividend growth stocks. On the other hand, all of this consistency comes at a sacrifice of growth. Since the typical utility has a significant portion of their businesses regulated, their ability to grow earnings and dividends is restricted.

2012-04-04 Time Heals All Wounds by Robert Stimpson of Oak Associates

The US stock market enjoyed a strong first quarter of 2012. Fueled by better economic data and a calming of fears over Europe, the stock market surged higher. For the first quarter, the S&P 500 rose 12.6%. Oak Associates accounts did much better, gaining on average more than 17%. The strongest performing sectors of the market were financials, technology, and consumer discretionary. These three groups are the most cyclical and their strong performance bodes well for a broader economic recovery through 2012.

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 Senior Loans Attractively Priced Relative to High Yield by OppenheimerFunds, Inc. (Article)

By restoring confidence in the global financial system, the European Central Bank's Long Term Refinancing Operation has allowed global bond investors to participate in attractive opportunities around the world.

2012-03-30 Stocks, Bonds, and the Efficacy of Global Dividends by Ehren Stanhope, CFA of O'Shaughnessey Asset management

First, we look at the prospects for the two assets classes that comprise a majority of investors portfolios: stocks and bonds. Second, we review one of the most tried-and-true investment strategies that has been a part of the investment lexicon since the beginning of the modern investment era: dividends. But we do so with a caveat global dividends. Finally, we review the results of two strategies back to 1977 to demonstrate the applicability of our approach. We think you will find the results both eye opening and compelling.

2012-03-29 Asset Allocation Committee Outlook by Team of Neuberger Berman

The resurgence of risk appetite witnessed in late 2011 has continued, with most major equity indices up in double digits for the year-to-date. In contrast, fixed income indices have posted very modest and, in some cases, negative returns in the first quarter. Much has been accomplished in the U.S. and globally that has contributed to the now six-month-old equity rally. However, concerns remain. Given this picture, the Asset Allocation Committee's core view remains steadyunderweight bonds, overweight equities.

2012-03-28 Challenges and Change in Brazil by Team of Franklin Templeton

Brazils economy is grappling with some interesting challenges right now, such as shifts in monetary policy to cope with a possible economic slowdown and preparing to host two major events on the international stagethe 2014 FIFA World Cup Brazil and the Olympics in 2016. Marco Freire, Franklin Templetons CIO, Brazil Fixed Income for the Local Asset Management team based in Sao Paulo, isnt sharing any locals-only secrets about either event, but hes happy to share his insights on how Brazil is approaching these challenges, and to clear up some common misconceptions about Brazils markets.

2012-03-27 The demise of risk-on / risk-off and the emergence of heteroscedasticity by Jason Doiron of Sentinel Investments

I estimate that I inadvertently watch 12 hours of financial news programming per day. Too much television? perhaps, but for a portfolio manager it has become an occupational necessity. One of the greatest benefits to watching this much television is that I can recite verbatim every commercial that plays on CNBC with no clue which company is sponsoring the ad - pig on a skateboard anyone? The other benefit is that I am provided with a front row seat to a rogues gallery of pundits who describe the complexities of the financial markets through sound bites.

2012-03-27 Uncovering Equity Yield Traps by Team of American Century Investments

As the low interest rate environment persists, uncertainties continue even as new marketplace concerns begin to emerge. This observation is especially applicable to investors that are desperate for current income opportunities. In their search for equity investments, many will opt to screen for opportunities using current yield as the main filtering criterion. In situations such as this, those in hot pursuit of rich rates find themselves at risk of falling prey to nasty yield traps. Although yield traps exist in the fixed-income space, this piece focuses on yield traps involving equities.

2012-03-26 And Thats The Week That Was by Ron Brounes of Brounes & Associates

Europe takes a well-deserved back seat to the global headlines as all eyes shift to China to see how the country deals with its recent economic slowdown. Consumer activity is on the hot seat domestically as a key confidence gauge is released and analysts closely dissect personal income and spending data in light of the sudden pickup in the labor market. The markets continue to test key levels as investors weigh the low yields in fixed income against the current risk in equities. Hows that speaking tour treating you, Dr. B.? Any Ron Paul sightings?

2012-03-23 Closed End Funds - February 2012 Review and Outlook by Team of Cohen & Steers

The U.S. economic picture has brightened since the fall of 2011, and we expect the trend to continue. We are also encouraged by progress in Europe, as economic austerity measures will likely weigh meaningfully on the regions growth. In this period of extended easy monetary policy by the Fed, we believe the yield advantage of leveraged closed-end funds will continue to draw investor interest. The success of recent IPOs should bode well for closed-end fund issuance in 2012, although we do not believe new supply will pressure pricing in the secondary market or impede discount narrowing.

2012-03-23 Is There Still Income in Fixed Income Today? by Joni Clark of Loring Ward

The extraordinary performance of fixed income investments in the past few years resulted from a combination of slow economic growth, low inflation and aggressive intervention by the Federal Reserve. These unusual factors are unlikely to be repeated over the next 30 years, and these unexpected returns simply cannot reoccur.

2012-03-22 Regulated Energy: Rise and Shine by Josh Olazabal, John Devir and Jennifer Seo of PIMCO

Regulated energy companies natural gas pipes, gas utilities and electric utilities have generally been seen as the sleepy cousins of more exciting energy subsectors like exploration and production, or coal extraction and production. But we have witnessed a number of events and regulatory developments in recent years that we believe are re-energizing the regulated energy subsector, more clearly distinguishing it from other members of the energy sector family and providing the potential for an abundance of opportunity for astute investors.

2012-03-22 Explaining the Stir over Recent Fed-Speak by Team of American Century Investments

The official statement from the Federal Reserves March 13 interest rate policy committee meeting was relatively ho-hum (no significant changes from Januarys statement), but other recent Fed communications have raised more of a stir. In particular, we explain what fiscal cliff and sterilized QE mean, and help put them into context. Its all part of a mixed, uncertain economic outlook in which slower mid-year growth, like last year, cant be ruled out, but higher inflation by next year is also a possibility.

2012-03-21 The Scarcity of Income: A Hobsons Choice by Alan Dorsey, Juliana Hadas and Leah Modigliani of Neuberger Berman

The post-global financial crisis environment has resulted in rock-bottom yields for U.S. Treasuries and other sovereign debt deemed to be either liquid or low risk. This situation leaves income seekers in some markets with a negative real yield (inflation adjusted), which could become more manifest during periods of rising interest rates in eventually recovering global economies. Alternatively, these investors may want to consider migrating a portion of their asset allocation to less senior income-producing securities.

2012-03-21 Falling Treasuries: A Currency Perspective by Axel Merk of Merk Funds

What are the implications for the U.S. dollar and investors portfolios if bond prices continue to fall, as they have of late? Within that context, should investors care whether the U.S. retains its status as a reserve currency? Should it effect the way investors think about their own cash reserves?

2012-03-21 Reflections: Expect the Unexpected by John Gilbert of GR-NEAM

The tides of financial returns ebb and flow, and for the moment, they are flowing. Since the financial crisis of 2008-2009, the deflationary forces of excessive indebtedness prevail for a while, and then are beaten back by the determination of popularly elected governments to reflate. The financial markets no longer reward skill, so much as they react to the relative strength of governments will to offset contraction.

2012-03-21 Why Convertible Bonds Should Be Part of Your Asset Allocation by Gary D. Halbert of Halbert Wealth Management

Im going to let you hear from Greg Miller about convertible bonds. Not only will Greg tell you how they work, but also why they can be an important diversification technique in your portfolio even now when other types of bonds are falling out of favor. I believe that many of you will want to have convertible bonds in your portfolio before long. The interest rate increases weve seen over the last couple of weeks may be a sign that the long bull market in traditional bonds is rolling over to the downside. Convertible bonds offer opportunity even during periods of rising interest rates!

2012-03-20 New Normal Still Part of the Vernacular by John Buckingham of AFAM

Have to say that I chuckled a bit when I read in Saturdays New York Times that most professional investors think that a black swan event is possible, even as a black swan was described as an unlikely event that too few people plan for! The comments accompanied a piece entitled, A Forecast for Low Returns, in which several investment pros put forth the argument that people should plan for single-digit investment returns for the next five to as many as 20 years.

2012-03-19 Did You See The 10-Year? by John Petrides (Article)

This week the US 10 year Treasury note spiked from 2% yield on Monday to 2.4% by the end of Wednesday. Around the office we were marveling at this move. Given the recent volatility in the equity market, that might not seem like much to stock investors, but to those in the fixed income world thats quite a change. The sudden spike in Treasuries has several implications: 1. Those investors who rushed into U.S. Treasuries over the past four months out of fear and panic (presumably not in hopes of achieving income) in search of safety, actually have an unrealized loss in their position!

2012-03-16 ProVise Bullets by Team of ProVise Management Group

Lets take a few moments to talk about GDP, the economy in general, and investor psychology. the GDP figures for the fourth quarter were revised from 2.8% to 3%. This marks the tenth consecutive quarter of growth, and given everything we know at this point its likely that the first quarter of 2012 will also reflect growth. In other words, we will have 11 consecutive quarters of growth. Fortunately the concept of a double dip recession has faded. Make no mistakethere will be another recession at some time in the future, but it will clearly not be a double dip recession.

2012-03-15 Where to Look for Dividends? Try Outside the US by Russ Koesterich of iShares Blog

With the dividend corner of the US equity market now crowded and expensive, Russ gives three reasons why investors might want to consider looking abroad for dividend income. More Reasonable Valuations: Outside of the US, dividend paying stocks still appear cheap and are trading at a significant discount to the broader equity market. More Attractive Yields: Non-US dividend companies are offering more enticing yields. Outperformance in a Slow Growth Environment: high dividend paying stocks tend to outperform during periods of slow growth like the one were experiencing this year.

2012-03-15 Everyone Hates Stocks ...and That's Why You Shouldn't by Bill Mann of Motley Fool

I dont tend to put currency into market moves, particularly short-term ones. But it has to be said that the tenor of the news regarding economies worldwide has been unambiguously bad. Why in the world would stocks go up in the face of such misery? Havent people heard about whats going on in Greece? Of course they have -- its why so many rushed out of risk assets last October and November. But while the caterwauling has done its job in spooking people, the underlying facts belie the news cycle: the American economy is booming.

2012-03-14 Why U.S. Investors Should Look Beyond Dividend Yield by Patrick O'Shaughnessey of O'Shaughnessey Asset management

Many investors are fed up with yields on fixed income securities and are in search of higher yield. As a result, U.S. stocks with high yields have become very popular with individual and professional investorsbut we believe that investors are looking at the wrong kind of yield. Though dividend yield works very well internationally, investors in U.S. stocks should instead focus on shareholder yield, a factor we have long advocated that has provided considerably stronger returns for U.S. stocks for more than 80 years.

2012-03-13 Checking In With the Municipal Market by Team of Neuberger Berman

In 2011, many investors appeared concerned about the potential for widespread defaults in the U.S. municipal bond marketsomething that failed to materialize. Now, we check in with the municipal markets and find that the outlook is greatly improved; however, in the wake of recent robust performance, it may also be a good time to exert some caution.

2012-03-13 Home Prices and Inflation, Part 1 by Mike "Mish" Shedlock of Sitka Pacific Capital Management

Various charts show home prices are now back to levels last seen in September-October 2002. I posted such a chart constructed from the LPS Home Price Index (HPI) in LPS Home Price Index Shows U.S. Home Prices Accelerated Decline.

2012-03-13 The Strategic Times: What is the Yield Curve Saying and Should We be Listening? by Matt Lloyd of Advisors Asset Management

Many prognosticators continue to discount the shape of the yield curve and what bits of wisdom one might see in its steepness or flatness. Though not a perfect indicator from the past, it does represent some interesting expectations from institutional investors that should not go unaddressed. Though these numbers may not appear meaningful to the average investor, the institutional investor sees this as highly significant as it pertains to investor appetite, economic impacts and hedging of interest rate swaps and currency expectations.

2012-03-09 The Road to Hades Is Paved with Partisan Politics by Gregory Yencharis of Neuberger Berman

Over the last year, we have become more guarded on GARVEE bonds based on changing dynamics in the municipal market that have been driven largely by fiscal pressure and dysfunctional Washington politics. In this piece, we discuss why our views have changed and the assumptions we use in our proprietary stress test model that help the Neuberger Berman Municipal Research Team avoid potentially problematic bonds.

2012-03-08 And Thats The Week That Was by Ron Brounes of Brounes & Associates

New week; same old story. EU ministers continue debating the Greek bailout package which should (hopefully) come to resolution next week. Unemployment highlights a busy economic calendar as investors look to see how the solid weekly jobless claims releases translate into the key labor rate and nonfarm payroll data. Bring on Super Tuesday, right Mitt?

2012-03-07 Winning the War in Europe by Scott Minerd of Guggenheim

Given my view on the global liquidity glut, it probably will come as no surprise that I remain bullish on U.S. investments, including equities, high yield bonds, bank loans and other risk assets, as well as art and collectibles. I believe the United States has entered a period of self-sustaining economic expansion, driven primarily by the aggressive monetary policy of the Fed, which is now being reinforced by the ECB. U.S. growth is necessary to reduce domestic unemployment and to provide support to the struggling economies in Europe and Asia.

2012-03-02 Will the Bond Bubble Burst This Year? by Gary D. Halbert of Halbert Wealth Management

I dont know who first uttered this classic line The trend is your friend (until its not) but it is timeless. It seems especially appropriate today in light of the massive shift weve seen from stocks to bonds since the financial crisis and bear market of 2008-early 2009. Millions of investors have moved from stocks to bonds and consider themselves safe. Today, there are more people invested in US bonds (of all types) than ever before.

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.

2012-02-29 Dirt Economics: Demographics Matter! by Shane Shepherd of Research Affiliates

Generations ago, people had large families, ensuring an adequate supply of labor to work the farm and provide a comfortable retirement. Now, families are small and we face a mountain of debt and soaring deficits. This months Fundamentals examines the implications for the economy and investors portfolios.

2012-02-28 Credit Counts: The New Municipal Bond Market by Joe Deane, Julie Callahan & David McMahon of PIMCO

Today, the primary emphasis in security selection must be placed upon creditworthiness and the relative value of credit spreads. When the spread on a bond more than compensates an investor for its underlying risks, the bond becomes an attractive candidate, PIMCO believes. Investors with the resources and process in place to conduct proprietary credit research may have a strong competitive advantage.

2012-02-27 And Thats The Week That Was by Ron Brounes of Brounes & Associates

A few retailers (Abercrombie & Fitch, Nordstrom) take center stage in earnings season as investors get another glimpse into the recent holiday activity. Likewise retail sales highlights the economic calendar and offers some follow-through from the season. Fed minutes depict the mindset of the policymakers. And, of course, there will be news from Greece.

2012-02-23 Muni Outlook Q&A with Portfolio Manager Alan Kruss by Team of American Century Investments

Municipal bonds (munis) are back in the bond market spotlight, but for different reasons than a year ago (when widespread defaults were projected, and muni funds experienced heavy outflows). Muni performance has rebounded strongly since then, which has triggered follow-up questions about the muni market outlook. We posed them to Alan Kruss, Vice President and Municipal Portfolio Manager at American Century Investments.

2012-02-23 PIMCO by Ed Devlin of PIMCO

Given the bimodal nature of the expected distribution of outcomes, it is important for investors to remain nimble so they can respond to high frequency data and global public policy developments. We expect the Bank of Canada to remain in wait-and-see mode until it is clear which way the economy is tipping. In our base case scenario, we estimate Canadian bond market returns in the range of 2%-4%, and if we tip into a virtuous cycle of economic recovery, we anticipate the possibility of negative absolute returns.

2012-02-22 Closed End Funds - January 2012 Review and Outlook by Team of Cohen & Steers

The U.S. economic picture has brightened meaningfully since December, and we expect the trend to continue, albeit at a modest pace. We are also encouraged by progress in Europe, but continue to monitor developments closely, as the issues there are complex and will take considerable time to resolve, while economic austerity measures are likely to weigh on growth. In this period of extended easy monetary policy by the Federal Reserve, we believe the yield advantage of leveraged closed-end funds will continue to draw investor interest, as demonstrated by the IPO in January.

2012-02-22 Rethinking Risk: Pension Plans Should Adjust to Global Realities by Jeff Helsing of PIMCO

Many governments are carrying higher levels of debt, which can increase both economic and asset volatility as well as default risk. The resulting incremental increase in default risk suggests pension portfolios may have less duration than implied by traditional measures. Pension plans with high levels of equity exposure should consider increasing durations and credit exposure. Investment guidelines may need to be adjusted so they dont measure credit risk simply by the World Banks definition of emerging markets.

2012-02-21 Good News Cant Keep a Lid on Investor Fear by Kristina Hooper of Allianz Global Investors

The outlook for the stock market keeps getting brighter, but investors are still letting fear cloud their judgment. In the United States, the jobs picture a rather bleak scenario less than a year ago has improved substantially. The euro-zone debt crisis has also improved. We havent seen any real contagion from Greece, as evidenced by sovereign debt yields. And despite prominent investors such as Warren Buffett and Jeremy Grantham favoring stocks over bonds, a lot more money flowed into bond funds in January. This disconnect reveals a continued tug-of-war between fear and fundamentals.

2012-02-16 Hasenstab Sticks to His Guns by Team of Franklin Templeton

Michael Hasenstab, Portfolio Manager of the Templeton Global Bond Fund, doesnt scare so easily. As he reiterated recently, he actually sees times of market panic as opportunities to make investments where he sees long-term value. The key thoughts he shared: The challenge during periods of volatility is that, although investors can take a short-term hit, this volatility can create opportunity. Fears Europe will sink Asia appear overblown. China not likely to see a hard landing. The Eurozone drama continues to unfold.

2012-02-16 Currency Funds - Special Case International Bond Funds by Axel Merk and Kieran Osborne of Merk Funds

Investors may want to reduce their exposure to interest and credit risk in their international fixed income investments. One way to accomplish this may be to invest in international fixed income funds that have a commitment to the short end of the yield curve and to high credit quality securities. Currency funds may be considered special cases of international bond funds, as many typically invest in international fixed income securities of short duration to gain currency exposure. As such, currency funds tend to focus on currency risk while seeking to mitigate interest and credit risk.

2012-02-14 The Safety-first, Goals-based Approach to Financial Planning by Wade Pfau (Article)

Little of what is taught in traditional investment textbooks is of value in personal financial planning. Risk is not standard deviation; it is the probability and consequences of not meeting one's goals. That real-world perspective animates a new book by Zvi Bodie and Rachelle Taqqu that implores advisors and their clients to lock in the funding of their essential expenses before worrying about their discretionary goals.

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 Current Market Volatility? Too Quiet by Russ Koesterich of iShares Blog

In horror movies, the time to worry is when things become eerily quiet. Last Friday, the Chicago Board Options Exchange Volatility Index (VIX), hit its lowest level since last July. This is the financial equivalent of eerily quiet. Assuming that volatility is set to rise, how should investors adjust their portfolios? First, remember that its the change in volatility that tends to impact asset prices. Investors would want to modestly lower their weight to market segments that are very sensitive to changes in volatility and raise their weight to less sensitive or lower beta instruments.

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.

2012-02-10 Missed Opportunities? by Liz Ann Sonders, Brad Sorensen and Michelle Gibley of Charles Schwab

Investors eased back into stocks to start the year. This is the start of a sustainable trend, but equities rarely go up in a straight line and near-term caution may be warranted. Another deadline is approaching for Congress and the President to make a deal. Something will get done, but any hopes for substantial action remain dim. Markets appear to be more comfortable with the European debt crisis and the risks associated with it. Central banks around the world are easing, which could help support international stocks in the coming months.

2012-02-08 What the Bond Market Knows That You Dont by Matt Tucker of iShares Blog

On the back of improving US economic data, equities have rallied off of autumn lows, and yet US Treasury yields have continued to surf bottom with the 10-year note trading below 2% for the first time on record. Why havent interest rates recovered in support of improving data? Do US Treasury investors know something that equity investors dont? The answer may lie across the pond in Europe. The European crisis intensified significantly in the fall, causing equity markets (and most risky assets for that matter) to sell off and US Treasury rates to fall, despite the August downgrade.

2012-02-07 Jeremy Siegel, Rob Arnott and Other Experts Forecast Equity Returns by Laurence B. Siegel (Article)

A forecast of the equity risk premium (ERP) tells you how much to save, how to allocate assets between equities and fixed income, and how much you can consume. Given its great importance, the CFA Institute recently convened a group of top-level academics and practitioners to forecast future ERPs - and to reflect on similar predictions they had made a decade ago.

2012-02-07 Neel Kashkari on PIMCO's Equity Strategy by John Heins (Article)

Bond titan PIMCO has been methodically building its equity-investing expertise. Here the architect of that effort, Neel Kashkari, and his first major hires describe their strategy and how they're uncovering value in today's market.

2012-02-01 A Slippery Year for Excess Returns by John West of Research Affiliates

Last year, securities prices moved like a school of sardines. That environment made life difficult for both active managers and the Fundamental Index approach. This month's Fundamentals examines what happened in 2011 and the opportunities for breaking loose this year.

2012-02-01 Year-End Commentary by Steven Romick of First Pacific Advisors

We find investing especially challenging todaynot that its ever been easy. We feel like we are forced to bet on policy, and how does one do that? Particularly when we believe we are betting that too many of the wrong people will make the right decisions. We feel a little like explorers, blazing new trails, learning about the new world weve come upon, charting a different path with new information, all while trying to avoid being scalped. We continue to seek the best path, even if its new, to both protect your capital (first) and to provide a return on it (second).

2012-02-01 The Trouble with Seeking Core Fixed Income Alpha by Daniel Morillo of iShares Blog

A typical core fixed income bond fund managers alpha is often positively correlated with the returns of broad equity benchmarks like the S&P 500. That means an investors actively managed fixed income holdings may perform more like equities than bonds. How problematic is this? Daniel Morillo is here to explain.

2012-01-31 Bob Doll Believes the Recent Equities Rally Could Continue by BlackRock (Article)

Conditions have improved compared to last quarter, with the US economy showing signs of acceleration and European policymakers moving further along the path of progress. With the bearish tone receding, investors should consider moving into "risk" assets and out of "safe" assets, especially on pullbacks.

2012-01-30 And Thats The Week That Was by Ron Brounes of Brounes & Associates

All eyes will be on the Fed as investors hope to take the newfound insight from its meeting and translate that into profitable trading opportunities (is that the intent of the new strategy?). The ever-changing mindset of the consumer is again on display as McDonalds (1/24), Starbucks (1/26), and Procter & Gamble (1/27) headline the earnings season. Looking at the economic data, analysts get their first look at 4th quarter GDP and gain greater insight on the impact of those Thai floods and the success of the holiday season. And then theres Europeis Greece really back in the headlines?

2012-01-30 Tide Turns for Structured Credit by Joshua Anderson and Carrie Peterson of PIMCO

Many investors remain skeptical, but the market environment for structured products has changed markedly since the financial crisis of 2008. Current pricing now reflects a more realistic view of the underlying fundamentals, including weakness in the global economy and U.S. housing market. We believe now is the time to consider entering the structured credit market.

2012-01-30 TIPS for Financial Repression by Mihir Worah of PIMCO

Treasury Inflation-Protected Securities got a boost last week after the Fed extended the period of time it is likely to maintain unusually easy monetary policy and moved toward adopting a formal inflation target of 2% for the Personal Consumption Expenditure Index. Bernanke said that the central bank was likely to allow deviations from this target if employment was not where the Fed thinks it should be. We think financial repression is likely to persist and real interest rates are likely to be lower than recent history would suggest for the foreseeable future.

2012-01-30 Fourth Quarter Investor Letter by Mark Bennett, David Templeton and Nick Reilly of HORAN Capital Advisors

We have our reservations about world economic output, but stand by our past comments about slow U.S. growth without a recession. We do believe equities offer attractive return opportunities for the foreseeable future in the context of historical valuation and relative valuation. We acknowledge the structural issues prevalent in developed economies and the risk that comes with debt hurdles, demographic challenges and potential deflation, but there are many data points that make us optimistic about equity returns in 2012 and for long-term strategic investment allocations of capital.

2012-01-27 Adding to Our Pro-Muni Arguments by Team of American Century Investments

Last month, we outlined multiple reasons why investors and investment advisors should consider high-quality muni investments as core fixed income portfolio holdings. In support of owning funds vs. individual securities, we focused primarily on credit-quality issueshow we believe most of the muni market remains fundamentally sound and resilient, but pressured by the economic and fiscal environment. We think this has created a heterogeneous muni market with generally strong credit quality but dotted with potential credit risks and pitfalls in select areas that require professional vigilance.

2012-01-27 Preferred Securities Investment Commentary - December 2011 by Team of Cohen & Steers

In terms of preferreds broad performance potential, we note that bond yields are at or near historic lows, and that the Federal Reserve is likely to hold interest rates steady until 2013. In such an environment, the income offered by preferreds (78% or more) will be hard to come by, likely resulting in good investor demand in the year ahead. At the same time, the high income these securities produce is also likely to continue to factor meaningfully into their total return and dampen returns volatility.

2012-01-27 12 Trades for 2012 by Komal Sri-Kumar of TCW Asset Management

Earlier this month, I suggested that investors closely watch 12 macroeconomic and financial indicators in deciding whether the world economy is improving or worsening (12 Indicators for 2012, January 3, 2012). Some readers wrote to ask if I would discuss what those indicators would mean for investment strategies. That was the genesis of the present piece which is intended to be consistent with expectations on the economic and financial fronts.

2012-01-25 2011 Review and Outlook by Ronald W. Roge and Steven M. Roge of R. W. Roge

While there is plenty to worry about globally, particularly the European financial crisis, Iran, and domestic policy decisions, we can take some comfort that corporate earnings continued to grow and our economy is muddling through with positive GDP numbers. Traditionally, election years are positive for equities. Since 1928 there have been 21 Presidential elections with only three of those years producing negative returns for the S&P 500. Until we have more clarity on the U.S. election, domestic policy decisions and the European financial crisis we will remain cautious and flexible.

2012-01-25 Closed End Funds Investment Commentary December 2011 by Team of Cohen & Steers

The U.S. economic picture has brightened in recent weeks, a positive for equities and credit markets, and we expect slow sustained growth. However, Europe remains a risk. While recent fiscal, political and central bank initiatives to address the credit crisis in Europe are encouraging, the political landscape remains uncertain, and economic austerity measures will weigh on growth. With interest rates likely to remain near historical lows for an extended period, we believe that attractive spreads should continue to benefit the income-generating potential of leveraged closed-end funds.

2012-01-24 Must Bond Investors Fear Rising Interest Rates? by Andrew D. Martin (Article)

Thirty-one years ago, in 1981, the one-year Treasury reached its all time high of 14%. Today it hovers around 0.10%. Never before have interest rates fallen so far. Many economists and investment advisors, seeing nowhere to go but up, expect interest rates to climb from these historic lows. But that would not be the catastrophe that many bond investors fear.

2012-01-20 Equity Investment Outlook by John Osterweis and Matt Berler of Osterweis Capital Management

We believe that 2011 was an aberration in terms of stock market correlations and that gradually stocks will once again perform based more on their individual results and outlooks and less on the markets en masse risk on, risk off vacillations. Despite our near-term caution, which reflects a very uncertain economic and political climate, we are increasingly convinced that equities are poised for solid longer-term returns. Over the past ten years, stocks generally underperformed bonds. This is highly unusual. Stocks are now reasonably priced and profits are expected to expand.

2012-01-20 European Sovereign Downgrades by Azad Zangana and Bob Jolly of Schroder Investment Management

Last Friday ratings agency Standard & Poors announced the credit rating downgrade of nine of the eurozones seventeen sovereigns. Though the downgrades could have a marginal negative impact on the cost of borrowing for these countries, the key issue is the implication for the EFSF. There is now a high risk that the EFSF will also lose its AAA rating, as the only way to avoid a downgrade would be either to increase the amount of collateral member states are offering, or to reduce the amount the fund is borrowing - both of which are detrimental for the eurozones stability.

2012-01-20 And That's The Week That Was by Ron Brounes of Brounes & Associates

So will Frances borrowing costs start tumbling now that the S&P has cut its rating below AAA? Illogically, thats what happened in the US. Now that the news is finally out in the open, investors can go back to monitoring Greece as it hopes to finally make a debt restructuring deal with private creditors. What say you, Germany? Earnings season moves forward and the banks look to reverse the pessimism initiated from JP Morgans disappointing report. Intel pushes some of the earnings attention over to the tech world and GE provides profit news from one of the nations key economic bellwethers.

2012-01-20 And That's The Week That Was by Ron Brounes of Brounes & Associates

So will Frances borrowing costs start tumbling now that the S&P has cut its rating below AAA? Illogically, thats what happened in the US. Now that the news is finally out in the open, investors can go back to monitoring Greece as it hopes to finally make a debt restructuring deal with private creditors. What say you, Germany? Earnings season moves forward and the banks look to reverse the pessimism initiated from JP Morgans disappointing report. Intel pushes some of the earnings attention over to the tech world and GE provides profit news from one of the nations key economic bellwethers.

2012-01-18 A Little Cold Water Thrown on the Recovery by John Buckingham of AFAM

The economic data out last week was hardly terrible, but the positive momentum seen in the past couple of months was slowed as the Commerce Department reported that higher prices for imported oil and a 7% drop in exports to Europe caused the U.S. trade deficit to expand sharply in November.

2012-01-18 The Bigger the Base, the Higher the Space by Pamela Rosenau of Hightower Advisors

Overall, people around the globe are underinvested or invested in the wrong asset classes. As data point continue to strengthen, coupled with the fact that income (and sustainability of income) are becoming a scarce commodity, a significant rally in the equity markets could ensue. As some technical analysts may suggest, the bigger the base, the higher the space. As U.S. blue chip stocks have lagged for more than ten years, they have built a base that has prepared these stocks for liftoff.

2012-01-17 The Mess That Is the Eurozone Inflation-Linked Bond Market by Michael Althof and Jeremie Banet of PIMCO

Italian ILBs now mostly reflect credit risk and tend to trade at a discount to compensate for the higher volatility. Unless the eurozone collectively decides to inflate their way out of their sovereign debt problems through a large increase in the ECB balance sheet, Italian inflation-linked bonds are likely to keep trading like a more volatile and less liquid version of nominal Italian bonds. A European investor looking to secure consumption of real assets in the future may wish to think about alternative measures to help protect their real purchasing power when hedging real liabilities.

2012-01-17 Fixed Income Investment Outlook by Carl Kaufman and Simon Lee of Osterweis Capital Management

An incongruity developed during the 2nd half of 2011. As Treasuries continued their rally that began after the S&s, US equity markets also rose from their August lows. Normally, a rally in Treasuries implies that investors are in a risk off mode, fear of economic weakness causes investors to seek safe havens, like US Treasuries. Conversely, a rally in equities is perceived as a risk on mode, meaning that the sky is clearing and it is safe to invest again. With the Q4 rally in both the risk on and the risk off markets, the question arises: What is causing this anomaly?

2012-01-12 42 Dividend Contenders for Above-Average Total Return by Chuck Carnevale of F.A.S.T. Graphs

With interest rates hovering near all-time lows, investors needing income are faced with very limited choices. The traditional high yield available from bonds and other fixed income vehicles are no longer available to meet the needs of retirees needing income to live off. Moreover, it is almost a certainty that todays low yields are not adequate enough to fight inflation. Consequently, there is a growing investor interest in dividend paying common stocks, especially those that have a long record of increasing their dividend every year.

2012-01-12 It's Too Late by David Baccile of Sextant Investment Advisors

As we set expectations for 2012, the global financial markets are no less complicated but expected returns for most asset classes are even lower now than when we started 2011 making our jobs that much more difficult. The margin for error has narrowed. For fixed income investors, returns of 2 or 3% will probably look pretty good this year and next. Equity managers will need to be focused on stock selection with an emphasis on companies that possess very strong balance sheets, stable cash flows and price valuations with low expectations built in.

2012-01-09 Retail Trades of Municipal Bonds by Chris Shayne and Farshad Mashayekhi of BondDesk Group

ecember was a quiet month in the muni markets with no bankruptcies or defaults. Retail demand for individual municipal bonds was relatively strong in December, particularly considering it was the holiday season. Mutual funds had a very strong December, receiving $4.4B in net inflows (according to Investment Company Institute), which was easily the high-water mark for 2011. Median municipal yields fell consistently during December (and prices rose), largely due to the increased demand in the mutual fund market.

2012-01-09 Corporate Market Transparency Report: December 2011 by Chris Shayne and Farshad Mashayekhi of BondDesk Group

December was a relatively calm month on Wall Street, particularly compared to the extreme volatility of 2011. Concerns about Europe surfaced briefly, but by the end of the month all three major U.S. stock indices had recovered their losses. Corporate yields and spreads were essentially flat last month while transaction volumes were down slightly due to the holiday season. Demand for taxable (i.e., corporate) bond funds was moderate during December. According to the Investment Company Institute, mutual funds received $9.3B in net inflows vs. $15.5B during November.

2012-01-06 Dividend Champions a Rare Undervalued Opportunity by Chuck Carnevale of F.A.S.T. Graphs

We believe that based on earnings, 2012 is starting out with the stock market undervalued. We believe in the long-term ownership of great businesses purchased at sound and attractive valuations. Consequently, we view the stock market as merely the store that we shop at in order to buy the businesses we want to own.

2012-01-04 On Tap for 2012: More Bond Market Transparency by Matt Tucker of iShares Blog

In 2011, 102 new fixed income funds launched across exchanges in Europe, Canada, Asia and the United States. How will the landscape continue to evolve in 2012? Matt Tucker is here to provide a few insights, including his expectation that new fund launches will help to make the bond market more transparent.

2011-12-29 Following Fixed Incomes 2011 Fund Flows by Matt Tucker of iShares Blog

When it comes to fixed income market conditions, 2011 can be described as the year of unmet expectations. In this blog, Matt Tucker explains how that environment influenced fund flows and how investors used fixed income ETFs to respond to ever-changing market conditions.

2011-12-28 Delayed LDI Implementation: Making it Worth Your While by Rene Martel of PIMCO

With interest rates so low, many defined benefit plan sponsors have delayed implementing or expanding LDI programs, often using intermediate duration bond portfolios instead. Traditional intermediate duration portfolios may not offer the most attractive yields or the best credit match for pension liabilities, and may make the transition to long-term bonds difficult later. We believe plan sponsors in a waiting mode should consider switching to long duration portfolios with a synthetic overlay in an effort to reduce duration exposure.

2011-12-27 The Ten Best Articles You Probably Missed by Robert Huebscher (Article)

Great articles don't always get the readership they deserve. Here are 10 articles that you might have missed, but I believe merit reading.

2011-12-27 The Ten Most-Read Articles in 2011 by Robert Huebscher (Article)

As is our custom, we conclude the year by reflecting on the 10 most-read articles over the past 12 months.

2011-12-23 Twenty Years of Investing in Asia by Paul Matthews and Mark Headley of Matthews Asia

This month Asia Insight speaks with Paul Matthews and Mark Headley to get their thoughts on 20 years of investing in Asia. Why were you so convinced of Asias growth prospects at a time when few others were? Paul: As a young businessman trying to build an asset management firm focused on Asia ex Japan, the challenge for me was that Japan was 95% of the investment universe and also a majority of the market for asset gathering. While based in Hong Kong, I was given the task of looking for ways to build the business and so I was attracted to the markets that were open and growing.

2011-12-23 Closed End Funds Investment Commentary by Team of Cohen & Steers

With interest rates likely to remain near historical lows for an extended period, we believe that attractive spreads should continue to benefit the income-generating potential of leveraged closed-end funds. As for new closed-end fund issuances, we believe the IPO window will remain open, but not to the degree that could pressure pricing in the secondary market or impede discount narrowing as investors bid for above-average income.

2011-12-22 Value Traps and Investor Psychology by Team of American Century Investments

Many financial market participants are familiar with what is generally known as the two basic emotions felt by investors, greed and fear. Very often, over-enthusiasm is observed accompanying greed during bull markets and over-despondency is seen on the heels of fear during bear markets. Besides the cyclical aspects of investor psychology, there are other aspects of behavioral finance (another name for this branch of psychology) to explore that relate to value trap avoidance.

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 Concussed, The Year in Review by Doug MacKay and Bill Hoover of Broadleaf Partners

We remain biased to a slow growth environment for as far as the eyes can see, an environment which continues to favor innovators. At the same time, with concerns about a slowdown in China emerging and Europe likely already in recession, the Economic Cycle may deserve some increased attention as a driver of alpha in the portfolio, particularly with a global monetary policy bias towards easing and leading economic indicators in the United State now improving.

2011-12-20 Fixed Income in 2011: The Year of Opposites by Matt Tucker of iShares Blog

Fears of municipal bond defaults. Expectations of rising interest rates. Those were the conditions fixed income investors were positioned for heading into 2011. Instead, it turned out to be the year of opposites. Matt Tucker looks back at 2011 and studies how market expectations matched up with reality.

2011-12-19 Emerging Markets: Yesterday, Today and Tomorrow by Mark Mobius of Franklin Templeton

Almost every market move these days seems to be tied to the latest headline coming from Europe. And the U.S. political deadlock on deficit reduction, high unemployment and fear of a recession hiding under the bed are certainly not helping investor morale. But dont throw in the towel just yet. While the ongoing turbulence in the markets has investors feeling more than a little edgy, the story of robust and resilient growth in emerging markets seems cause for optimism.

2011-12-19 Changing of the Guard: Do European and U.S. Debt Woes Signal a Shift in the Economic World Order? by Team of Emerald Asset Advisors

Industrialized nations in the West have enjoyed decades of economic prosperity and generous social safety nets. However, recent events have made it clear that shifting demographics and huge debt burdens will make it increasingly difficult, if not impossible, for many industrialized nations to maintain the same standard of living for their citizens. It seems that many formerly emerged economies are now on the verge of submerging. As citizens and political leaders in Europe and the U.S. slowly awaken to this reality, economies in many emerging markets are moving ahead at full steam.

2011-12-16 De-stressing Balanced Fund Investing by John West of Research Affiliates

Balanced fund management has largely become a benchmark-hugging exercise, with asset allocations confined within a tight band. This month's Fundamentals examines what can be done to improve the added value investors can obtain from balanced fund investments.

2011-12-14 Idaho Municipal Bonds: The Gem State Shines by Phelps McIlvaine and Shannon Skinner of Saturna Capital

Here we examine the health of Idaho and its municipal bonds in the context of the U.S. market as a whole, in order to separate the facts from the hype. What we find is that Idahos staunch fiscal conservatism is serving its economy well in trying times, and that for Idaho resident investors, the tax-exempt returns from high-quality Idaho bond issues offer a relatively low-volatility way to take advantage of a bright spot in the muni market.

2011-12-14 The Credit Research Case for Using Muni Funds by Team of American Century Investments

We believe muni market credit quality remains generally high despite continuing changes and challenges, including the demise of the bond insurance industry (which has created a more heterogeneous muni market) and the slow economic recovery, which has put continued pressures on municipal budgets. However, we believe these challenges have made experienced, professional credit analysis more important than ever. One way for investors and advisors to access expert, experienced credit analysis is through the use of established muni mutual funds that have been through multiple market cycles.

2011-12-12 Rethinking Asset Allocation: PIMCOs Strategy for a Changing World by Mohamed A. El-Erian, Vineer Bhansali and Curtis Mewbourne of PIMCO

Alpha generation is a distinct component of the strategy because it is critical to actively seek opportunities in all global markets in this challenging environment. Explicit tail risk hedging is essential to prepare for more frequent significant downturns, both to mitigate their effects and to potentially benefit from them. The strategy is positioned to navigate a world of muted growth in the Western economies, significant market volatility, recurring balance sheet issues and continued income and wealth convergence of the emerging world with the developed world.

2011-12-12 Europe Crisis: Not Over Yet! by Komal Sri-Kumar of TCW Asset Management

On Friday European leaders completed their 14th or 15th crisis-related summit meeting since the beginning of 2010. Fitting a pattern, the results were termed a success by the leaders. Wolfgang Schuble told Focus magazine that he was certain that the leaders will be able to handle the debt crisis in Europe with the agreed, far-reaching measures on institutional reform of the European currency union. A close examination of factors behind the agreement suggests, however, that the decisions may end up being another band-aid solution to the still festering crisis.

2011-12-09 Corporate Market Transparency Report: November 2011 by Chris Shayne of BondDesk Group

November was an extremely volatile month on Wall Street. Concerns about Europe caused a temporary free fall in the equity market, and later in the month American Airlines filed for bankruptcy. Not surprisingly all the turmoil drove up yields for corporate bonds as concerns about credit risk resurfaced. "A" rated corporates experienced the biggest increase, and we continue to believe that investors looking for yield should consider purchasing those bonds opportunistically. Demand for corporate bonds also increased in November, marking the fifth consecutive month buying activity has gone up.

2011-12-09 Municipal Market Transparency Report: November 2011 by Chris Shayne of BondDesk Group

Once again, the big muni news last month was another high-profile bankruptcy. Jefferson County, Alabama filed for Chapter 9 protection on November 9. Although this was the second consecutive month with a large municipal bankruptcy announcement, the retail markets were unfazed. In fact, November demand increased substantially over October levels, even with the light trading during Thanksgiving week. And municipal mutual funds also had a strong month, pulling in $2.9B in net inflows.

2011-12-09 Emerging Markets Bonds and Currencies in an Uncertain World by Ignacio Sosa of PIMCO

Even if global risk deteriorates significantly, emerging markets may continue to offer compelling risk-adjusted return characteristics. Emerging markets external sovereign debt, along with receiving interest rates in higher-quality EM countries, could be the best relative performers. EM currencies would likely sell off sharply in risk-off periods but would also tend to rebound robustly when risk appetite returns. Several Asian currencies are likely to be the best relative performers. Emerging markets assets remain a risk asset class and will not be immune to waves of global jitters.

2011-12-08 Myth vs Reality in the Hunt for Fixed Income Alpha by Matt Tucker of iShares Blog

Many investors rely on active managers to oversee their fixed income holdings. The belief is that in opaque markets, information asymmetry exists among investors and a skilled manager can use this asymmetry to outperform the market. Thats the theory. Now, what's the reality? Matt Tucker is here to explain.

2011-12-07 4 Portfolio Moves for a Long-Term European Debt Crisis by Russ Koesterich of iShares Blog

In recent weeks, governments around the world have stepped up efforts to solve the European debt crisis. While Russ believes European leaders will address the outstanding issues in time to avoid a sovereign debt collapse, here are four investing ideas to consider if you expect the crisis to drag on. 1. Within your international equity exposure, overweight CASSH countries. 2. Within your international equity exposure, overweight emerging markets outside of Europe. 3.) Overweight safe-haven assets. And 4.) Within fixed income, overweight investment grade and munis.

2011-12-07 After the Flood: Surviving in a Sea of Debt by David Fisher and Olivia Albrecht of PIMCO

Since 2009, developed country governments have run fiscal deficits unprecedented outside of wartime, and their debt levels have reached epic heights. Investors accustomed to considering only the interest rate risk associated with their developed government bond holdings have been shocked to find that credit risk has become dominant in many cases. For investors in government bonds, inflation and currency debasement have the potential to be just as costly as outright default. Investors should consider focusing on GDP, or national income, as a measure of a countrys ability to service its debt.

2011-12-06 Sauta Clause by Jeffrey Saut of Raymond James Equity Research

December has been the best performing month of the year over the past 100 years with positive returns 73% of the time. And while last weeks 7.39% romp will likely not be duplicated quickly, the path of least resistance remains up according to our work. That said, while the DJIA bettered its 200-day moving average last week, the SPX and D-J Transportation Index did not. Consequently, a divergence currently exists that could lead to some sort of pause and/or pullback. Therefore, look for opening strength this morning followed by attempts to sell stocks back down.

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.

2011-12-05 The Facts They Dont Want You to Know by Niels C. Jensen of Absolute Return Partners

Our industry needs a good old fashioned kick up its backside. Far too much mediocrity is rewarded for nothing other than destroying value.

2011-12-02 The Paradox of Active Fixed Income Management by Matt Tucker of iShares Blog

Amid this years volatile markets, many investors expected their fixed income holdings to be a source of stability in their portfolios. But some are finding the opposite has been true. In this blog, Matt Tucker explains how the Paradox of Active Management could be partly to blame.

2011-11-28 The Upshot: In Thanksgiving by Kristina Hooper of Allianz Global Investors

Despite a turkey performance from the stock market last week, U.S. investors still have a lot to be thankful for, namely a doubling of corporate profits in the last three years, improved labor market conditions and surprisingly strong consumer spending.

2011-11-26 Beyond the Supercommittee by Team of Charles Schwab

After months of negotiations, the Joint Select Committee on Deficit Reduction announced that it could not reach agreement, stating: "we have come to the conclusion today that it will not be possible to make any bipartisan agreement available to the public before the committee's deadline" The supercommittee had a deadline of November 23 to make recommendations to trim at least $1.2 trillion from the budget deficit. What's beyond the supercommittee? Schwab answers the key questions. Such as, why did the supercommittee fail? and are US Treasuries still a safe-haven investment? among others.

2011-11-21 The Upshot: Anxiety, Not Hard Evidence, Occupy Wall Street by Kristina Hooper of Allianz Global Investors

Stocks retreated despite positive economic news, suggesting even tangible proof of recovery may prove too little to overcome investor fear. With higher volatility over political handwringing expected, investors can exploit likely buying opportunities. Indeed, anxiety occupied Wall Street last week and trading was decidedly risk off: The S&P 500 gave up almost 4% and the Dow Jones Europe Index lost 5%, while the 10-year Treasury was driven down to 2.01%. But stock market performance belies an improving economic picture, a condition best illustrated by the latest government data.

2011-11-17 Supercommittee Update by Team of Charles Schwab

New this week: the real deadline for the supercommittee; why we think there's still hope for an agreement; President Obama's vow to veto legislation to "undo" automatic cuts if an agreement isn't reached. What are the different deadlines for the supercommittee, and what do they mean? November 23 is the deadline by which the supercommittee must put forward recommendations to cut at least $1.2 trillion from the deficit. However, the supercommittee must post its recommendations publicly 48 hours prior to November 23, meaning the true deadline for finishing its work is Monday, November 21.

2011-11-15 Capital Flows: Asias Quiet Revolution by Gerald Hwang of Matthews Asia

As markets evolve, so do regulations. The reflexive rebuke of capital controls once voiced by Western regulators has given way to a more flexible approach in times of extreme volatility. Asias regulators have observed the efficacy of volatility-dampening measures, and thus far, appear to have avoided the worst excesses. As fears continue over diminishing U.S. dollar power, Asias bonds remain attractive diversifiers for their yields and good credit ratings. However, one should never forget the volatile history of currencies in Asia.

2011-11-15 QE2 and Its Impact on Sterling Credit Markets by Ketish Pothalingam and Luke Spajic of PIMCO

The removal of government bond supply combined with the likely suppression of yields may encourage investors to seek out greater yield via investment grade bonds in the credit markets. The BoEs new round of QE could exacerbate the imbalance between supply and demand and leave a hole in supply that is highly unlikely to be filled by sterling credit issuance. The lack of issuance in the case of non-financials is generally due to strong corporate balance sheets, undrawn credit lines at banks and the rebirth of the loan market.

2011-11-15 Every Picture Tells a Story: Market Charts Looking Good by Liz Ann Sonders of Charles Schwab

With so much focus on the macro, I thought an update on the micro would be welcome. Several measures of sentiment, valuation and technical conditions show the market to be in pretty good shape. Macro headwinds persist, but the expectations bar has arguably been set low enough to be easily hurdled.

2011-11-14 Hokey Pokey by John P. Hussman of Hussman Funds

Sound monetary policy requires sound fiscal policy, coupled with a habit of the private sector to allocate resources productively so that the government isn't forced to compensate for bad decisions. That's where the global economy has failed.

2011-11-14 The Upshot: Fear vs. Fundamentals by Kristina Hooper of Allianz Global Investors

There is continued disparity between investor moods and a healthy corporate America. A vicious tug-of-war between positive economic data and negative news formed the backdrop for another tumultuous week in the financial markets. The tiebreaker was a more optimistic take on Europes ability to solve its debt problems, which enabled stocks to finish the week on a positive note with the S&P 500 gaining less than 1%. Looking at the stock market's progress so far in 2011, it has been a similar tale: volatility with little to show for it. The S&P 500 is up a modest 0.5% year to date.

2011-11-11 The Many Factors Fueling a Return to $100 Oil by Frank Holmes of U.S. Global Investors

The IEA says trends on both the oil demand and supply sides maintain pressure on prices. We assume the average IEA crude oil import price remains high, approaching $120 per barrel (in 2010 dollars) in 2035 (over $210 per barrel in nominal terms). Thats a distant projection but it certainly illustrates why you should consider investing a portion of your wealth in oil.

2011-11-08 Corporate Market Transparency Report: October 2011 by Team of BondDesk Group

October was the stock market's best month in nearly a decade. As expected, the strong equity rally caused retail corporate bond yields to fall as concerns about credit risk receded. Bonds rated single A experienced the biggest decrease in yields, though yields for triple B bonds remained largely unchanged, providing continued opportunity for investors willing to own lower rated investment grade bonds. The buy/sell ratio increased to 1.9 in October, a modest increase over the 1.8 ratio in September but a material increase over the historical norm of 1.4.

2011-11-08 Municipal Market Transparency Report: October 2011 by Team of BondDesk Group

The big muni news last month was that Harrisburg, the capital of Pennsylvania, filed for Chapter 9 bankruptcy protection. But the incident didnt have much impact on the retail markets. In fact, trading activity in October recovered from the ultra low levels of August and September, though it was still a relatively quiet month. Mutual funds had a solid October, receiving $1.8B in net inflows according to the Investment Company Institute.

2011-11-05 Two High-Yield Choices by Chuck Carnevale of F.A.S.T. Graphs

This article is the second in a series of articles designed to elaborate on the proper utilization and understanding of the PE ratio as an important investing metric. Our first article in this series looked at how the PE ratio could be used to determine overvaluation. With this article we are going to review two companies where each is fairly valued and each has similar current PE ratios. Moreover, both companies offer yields above 3 % which is greater than is available on the 30-year Treasury bond (current yield 30-year Treasury bond 3.02%).

2011-11-01 The Danger in European Stocks by Geoff Considine, Ph.D. (Article)

European equity prices, depressed by fears of a sovereign debt crisis, are cheap to such a degree that William Bernstein, author of The Intelligent Asset Allocator, called them a true bargain. Income-oriented investors, in particular, may be tempted by 4.2% dividend yields and a market-wide P/E ratio of approximately 11. My analysis, however, contradicts Bernstein's and shows the underlying risk those investments carry.

2011-11-01 Crescendo? by Jeffrey Saut of Raymond James Equity Research

Websters defines the word crescendo as, The peak of a gradual increase; or a climax. And, thats the climatic feeling I got last Thursday when the D-J Industrials sprinted some 340 points on the European euphoria to close above 12000 for the first time since August 2, 2011. Such action caused one old Wall Street wag to exclaim, Buy on the cannons and sell on the trumpets! Clearly we bought on the cannons back on October 4th when the indexes broke below their respective August 8th and 9th selling-climax lows.

2011-11-01 ProVise Bullets by Team of ProVise Management Group

October is a month that has provided much drama in the stock market through the years and this year is no exception. The S&P 500 was up over 11%, which is the second best October in history, and ended a five month losing streak. The S&P 500 was up 17.1% from October 3rdthrough October 28th. Those 19 days were better than 9 of the last 11 calendaryears. Do you see why market timing is virtually impossible?

2011-10-31 Pennies from Heaven by Bill Gross of PIMCO

Growth is the commodity that the world is short of at the moment. Once interest rates inch close to zero and discounted future cash flows are elevated in price, it's difficult to generate much more return if economic growth doesn't follow. Equity markets should be dominated by dividend yields and the return of capital via share buybacks, as opposed to growth. In fixed income assets, we suggest that portfolios should avoid longer dated issues where inflation premiums dominate performance.

2011-10-31 Tiedemann Wealth Management 3 Qtr Market Commentary by Team of Tiedemann Wealth Management

Despite the ongoing debt crisis in Europe the news is not as grim for investors as it may seem. We believe that markets have more than discounted the risk of European recession as fallout from this crisis, which an inept political system has exacerbated. It marks the first time in many years that markets are questioning political leadership in developed world nations something they normally only consider when investing in emerging markets. We do not believe that the G-20 leaders will allow a major counterparty bank to fail, despite their apparent lack of coordination over the past few months.

2011-10-27 Outlining the U.S. Economys Growth Dichotomy by Team of American Century Investments

David MacEwen describes the growth dichotomy that has developed during the recovery from the Great Recession, and how its restricted the recovery, softened consumer sentiment, influenced the fixed income teams macroeconomic outlook, and shaped some of the teams sector outlooks. One of the key characteristics of the subpar, slow-growth recovery we have experienced since the Great Recession has been the clear divide between the recovery rates of the business and consumer sectors. Businesses have bounced back faster and stronger than the U.S. consumer who buys their goods and services.

2011-10-25 The Questions You Should Ask about PIMCO?s Total Return Fund by Martin Weil (Article)

When a manager's performance slips, the inevitable question is why. Was this a simple misjudgment on the direction of the markets or an incorrect selection of securities in the portfolio? On the other hand, is the slip indicative of a more serious process failure? When the manager in question is Bill Gross, the answers to these questions become crucial to money managers and investors across the country.

2011-10-25 Residential Housing: The Problem and the Solution by Robert Huebscher (Article)

If arresting the decline in residential housing prices is a precondition to a broader economic recovery, then the prospects of a double-dip recessions are more likely. Over the next year home prices will decline 5% to 7%, according to Laurie Goodman. She identified two key policy initiatives that would break what she termed an ongoing 'death spiral' in the housing market.

2011-10-24 And Thats The Week That Was by Ron Brounes of Brounes & Associates

Earnings season rolls along as Citigroup, Wells Fargo, and Bank of America hope to send some positive messages from banking (that JP Morgan was unable to dodont hold your breath). IBM and Intel give investors a glimpse into the world of tech. A hectic week on the economic calendar leaves investor hoping to see a continuation of the rebound in manufacturing (from the post-Japan earthquake doldrums) and good news on the inflation front. The Fed Beige book grants another look into the data debated by the policymakers as investors speculate about future stimuli.

2011-10-24 Weekly Market Commentary by Scotty George of du Pasquier Asset Management

The Fed, and a majority of global state treasuries, have made the decision that keeping money inexpensive is at least one of the tools they can use both to sustain economic growth. This policy has been a boon to those with money, and a severe hindrance to those without. A vexing conundrum exists when monetary policy is designed to promote the flow of money into dynamic expansion but the spigot gets blocked because psychology and momentum are running in the opposite direction. In the meantime savings rates have nearly disappeared, along with whatever savings the losers in this game had.

2011-10-21 Closed-End Funds by Doug Bond of Cohen & Steers

In a volatile quarter for global capital markets, U.S. closed-end funds tumbled as investors factored in meaningfully lower expectations for global economic growth. We are expectating a challenging economic environment over the near term, including an increased likelihood that Europeand possibly even the U.S.may slip into recession. As such, we have moderated our allocation to equity funds, while increasing our investments in fixed income and gold. We believe we are well-positioned, with the flexibility to take advantage of price breaks that emerge across asset classes.

2011-10-21 Global Equity OutlookFourth Quarter 2011 by Team of American Century Investments

In this edition of Weekly Market Update, presents the teams outlook for global equity markets, based on the latest research and discussions with companies from industries and countries across the economy and the globe. The team focuses on individual security selection, building portfolios from the bottom up, rather than making top-down judgments about the economy. In their view, economic trends matter to the extent that they relate to corporate earnings power. As a result, the outlook focuses on corporate earnings and other areas they deem important to successful global equity investing.

2011-10-20 Preferred Securities by Bill Scapell of Cohen & Steers

This is our review and outlook for the preferred securities market as of September 30, 2011. For the quarter, the BofA Merrill Lynch Fixed Rate Preferred Index had a total return of 3.1% and the BofA Merrill Lynch Capital Securities Index returned 6.2%. Year to date, the indexes had total returns of +2.1% and 2.4%. In general, we prefer nonfinancial sectors, such as utilities, pipelines, real estate, telecommunications and media. That said, we are also seeing new opportunities in U.S. bank trust preferred securities, many of which reached attractive levels following the recent selloff.

2011-10-20 Making the (Credit) Grade in Emerging Markets by Russ Koesterich of iShares Blog

While emerging markets are not without their share of macroeconomic problems, they are not experiencing the same sovereign debt problems as their developed market neighbors. In fact, the worlds sovereign debt problems are centered in developed markets such as Europe, the United States and Japan. Ive already mentioned this as a fact supporting emerging market equities. Its even more supportive of emerging market fixed income.

2011-10-19 Fixed Income Investment Outlook by Team of Osterweis Capital Management

We continue to favor short-term high yield securities.While the high yield market has generally been under pressure due to fears of lower economic growth, lower gross domestic product growth does not necessarily translate into weaker credit fundamentals. In light of all the uncertainty in the market, we have generally reduced our exposure to convertible bonds and have continued to favor bonds with high coupons that we think are likely to be refinanced before maturity.In addition we are keeping some cash on the sidelines so that we are in a good position to buy as future opportunities arise.

2011-10-18 Dan Fuss on the Liquidity Problem in the Bond Market by Robert Huebscher (Article)

Each morning, the traders at Loomis Sayles' bond desk rate the degree of liquidity in the bond market, with a rating of one being the worst and 10 the best. Ratings of one or two ? as corporate bonds have been receiving of late ? are an ominous sign, according to Dan Fuss. 'Liquidity is the God of the markets,' Fuss said, adding that he expects to deal with illiquidity for a while.

2011-10-18 Three Strategists Speak Out & Rare Apology From PIMCO by Scott Colyer of Advisors Asset Management

Quality in bond land is expensive and promises little return for a fair amount of risk. The Fed is punishing Treasury investors with historically-low yields. We believe the only way to generate a return in these markets is by price appreciation because these notes have very little in the way of coupon income. This lack means that they will trade more like zero coupon bonds when, and if, the Fed ever removes the buying pressure on that market. History has shown us that the market will move before the Fed does. Our discipline has thus far beaten our benchmark.

2011-10-17 Connecting the Dots by Pamela Rosenau of HighTower Advisors

The efficient frontier provides the optimal expected return for a portfolio for a given level of risk, or the lowest level of risk needed to achieve the optimal expected return. Over the years, investors have come to perceive that certain asset classes with higher risk premiums are more risky than others. We believe what many view as traditional asset allocation may be vulnerable going forward. In short, it is dynamic, not static. In todays negative real interest rate environment, investors will be well served by investing in certain asset classes perceived to be more risky.

2011-10-14 ProVise Bullets by Team of ProVise Management Group

Low interest rates have certainly hurt savers, even more so those who live on a fixed income. The current bubble in bonds will eventually pop, and many people will be surprised. But this ProVise Bullet is not about the risk in bonds today. Its more about the fact there is some good news as it relates to interest rates. First, mortgage rates are near an all-time low. A 30 year mortgage loan is available at an interest rate slightly above 4% and 15 year mortgage loans have been quoted at just a little under 3.57%. Even the IRS is getting into the act.

2011-10-13 Our Fixed Income Macro OutlookFourth Quarter 2011 by Team of American Century Investments

Our economic outlook has become a bit more defensive and cautious, compared with earlier this year. After improvement last year, economic conditions have slowed. In particular, the financial sector has come under renewed pressure from the European sovereign debt crisis and continued housing market stagnation. It remains to be seen if this slowing is transitory or more significant. Both the consumer and business sectors have experienced slowing. But a subpar recovery with headwinds remains our projected most-likely scenario, not a recession.

2011-10-12 Gold During Times of Market Turmoil by Frank Holmes of U.S. Global Investors

Jason Toussaint from the WGC provided an interesting perspective during our recent webcast. The WGC looked back at six incidences of market turmoil over the past few decades. In five out of the six periods during market turmoil, an allocation to gold preserved wealth by reducing the hit taken by the portfolio. On average, the portfolios with an allocation to gold were about 7 percent more buoyant. Only during the Dot-com Bubble did gold in a portfolio hurt its performance. These dramatic events happen infrequently. However, Its best to prepare for the worst and hope for the best.

2011-10-12 Investing in an Environment of Extremes by David Kelly of J.P. Morgan Funds

The volatility of the last few months along with very negative headlines have caused a stream of assets to leave equity funds and move into cash and high-quality fixed income assets. However, this has left assets at extreme valuations. Indeed, by the end of the Q3, U.S. stocks were selling at lower prices than at the end of any quarter in 21 years. 10-year Treasury yields were running below the core year-over-year inflation rate for the first time in 31 years. Long-term investors may want to be somewhat over-weight in equities and under-weight in fixed income relative to a normal portfolio.

2011-10-10 And That's The "QUARTER" That Was... by Ron Brounes of Brounes & Associates

Yes, the quarter was bad for the markets, but earnings season will go a long way toward revealing if companies are truly hurting. Many are thought to be sitting on plenty of cash, just waiting for calmer times to invest in operations (and hopefully human capital). Meanwhile, Dr. B. still claims to be ready to jump in with more stimuli if deemed necessary. As for Europecan they ever get their house in order? Their politicos may be just as bad as ours?

2011-10-07 The Hunt for (Sustainable) Yield by Team of Emerald Asset Advisors

In any low-rate environment, it is easy to be seduced by any investment that can deliver high yields. But to achieve a consistent total return, you need to carefully weigh the risks and focus on investments that can deliver attractive yields that are sustainable, while also providing the potential for higher income in the future. Our answer thus far has been a combination of sources. Given the current miniscule yield environment, we expect these higher-quality asset classes to move the income-generation meter at least a little for client portfolios without exposing them to inordinate risk.

2011-10-07 Bearish Sentiment Abounds by Lance Roberts of Streettalk Live

The bears have control of Wall Street and have mauled stocks for the past five months. Now with bearish sentiment running amok, is it time to begin investing back into the market for "longer term" investors? Lately there have been numerous analysts and media outlets touting the cheapness of the markets based on forward earnings expectations. The problem with that premise is that it is highly likely that those expectations are too lofty considering the economic slowdown currently in progress. Furthermore, valuation models are horrible "timing" indicators for both traders and investors.

2011-10-07 On Teflon and Emerging Market Currencies by Andrew Foster of Seafarer Capital

Investors can distinguish between the fundamental health of EM credit which is, as some have suggested, strong and the still fragile currencies of those markets. Rapid unwinding of capital flows may do quick damage to local currency EM bonds, wiping out fixed income investors expectations for current income. EM credit denominated in U.S. dollars may be a viable alternative. EM currencies may offer desirable diversification, and they may even be a good investment but they remain speculative, and should not be considered a safe haven.

2011-10-07 Bond Market Review and Outlook by Thomas Fahey of Loomis Sayles

Amid the ongoing debate, the financial markets are signaling a need for liquidity. Until Europe and the US are able to demonstrate economic growth, the financial markets are likely to remain skittish, leaving risk premiums high. In the interim, policy-makers will be in the spotlight. In our opinion, central banks should supply more liquidity on a global basis in this turbulent environment. We believe such intervention can help assuage the markets.

2011-10-07 Corporate Bond Transparency Report by Chris Shayne of BondDesk Group

The equity market turmoil impacted yields for retail corporate bonds as expected, but the effect was not consistent across rating grades. Yields for 2nd tier investment grade (A, BBB) bonds increased substantially, while upper tier (AAA, AA) were largely unchanged. This was a continuation of the trend established in August.

2011-10-07 Municipal Market Transparency Report by Chris Shayne of BondDesk Group

September was another extremely quiet month in the retail market for individual municipal bonds. Median municipal spreads increased in September, continuing a trend that began last month. because Treasury yields fell faster than muni spreads widened. Comparably rated revenue bonds were generally yielding more than their general obligation counterparts, continuing a trend that began in August.

2011-10-05 Million Dollar Question: Dollar and Recession Risk Up Together by Liz Ann Sonders of Charles Schwab

Recession fears have mounted, but the picture is still mixed and it's not yet conclusive. The US dollar is winning the "least ugly" currency contest, but isn't helping stocks or commodities. Short-term, a stronger dollar is a negative for riskier assets but not necessarily longer-term, if history's a guide.

2011-10-04 Fixed Income ETFs and Yield: A Game of Catch Up by Matt Tucker of iShares Blog

Whats amazing to me is how many different types of yield existfor a bond or bond fund you could quote the yield a half dozen ways and each would be different. Understanding which yield to use can be confusing. Its easy to be enticed by what looks like the highest, especially in this low rate environment where investors are searching for ways to extract extra income from their bond holdings. I want to highlight three of the most common yields investors see for fixed income ETFs, explain how they are connected and show how they have a tendency to catch up with one another over time.

2011-09-30 Schwab Market Perspective: Perception vs. Reality by Liz Ann Sonders, Brad Sorensen, and Michelle Gibley of Charles Schwab

Economic data continues to reveal sluggish activity, and markets have been increasingly trading in a risk-on, risk-off mode. The Fed continues to try to stimulate greater economic growth, most recently with the announcement of operation twist. We have serious doubts this will engender any broad upturn. We continue to look toward Washington to move beyond short-term rhetoric and provide some serious long-term plans that allow businesses to have more confidence in the future. European policymakers continue to delay any real action, increasing the risks of an escalation of the debt crisis.

2011-09-29 European Banks Under Pressure by Team of American Century Investments

On the surface, the European banking sectors status in the fixed-income markets should be on the upswing. The Basel III Accord strengthened capital requirements for banks and also set stricter guidelines for liquidity and debt. Helping reduce the risk profile of the banking sector, and this would normally be attractive to fixed-income investors. However, bond investors have had the opposite reaction, shunning the bonds of European banks in recent months. The gap between bank bonds and government bonds recently rose to levels not seen since the height of the 2008 Financial Crisis.

2011-09-28 Fed Extends Maturities by Kathy A. Jones and Rob Williams of Charles Schwab

Fed Notes-The TwistObservations and takeaways on the Fed's two day meeting this week. Bank Bondsplus Extraordinary Calls on Trust Preferred SecuritiesWe elaborate on factors affecting the banking sector. Obama Bill Questions Exemption on Muni bondsOur view on one piece of the job proposal presented by the Obama administration. Liquidity- Ignore at Your PerilWe highlight some reasons why liquidity, especially in volatile markets, is an important investment factor.

2011-09-27 Reexamining Bill Gross' Decision to Sell Treasury Bonds by Geoff Considine (Article)

Bill Gross made headlines in February by asserting that Treasury bonds were not providing enough yield to make them worth the risk and reducing his allocation to zero in the PIMCO Total Return Fund. The subsequent rally forced him to admit his mistake in August, but by then his fund was trailing 90% of its peers and having its worst year since 1995. I will examine Gross' decision in retrospect, to illustrate its tactical and strategic costs and benefits for his shareholders.

2011-09-27 A Buying Opportunity in Investment-Grade Corporate Bonds by Chris Shayne, CFA (Article)

Given that yields on Treasury and high-quality corporate bonds are near 50-year lows, investors looking for relative value in fixed income should consider purchasing lower-rated investment-grade corporate bonds. As Gluskin Sheff's David Rosenberg said last Wednesday, 'if you have money to put to work, and are looking for a reward that more than compensates for the incremental risk involved at this juncture, credit is a good place to be looking.'

2011-09-27 Do Low Correlations Favor Active Managers? by FundQuest Investment Management & Research Group (Article)

There has been much debate regarding the challenges for active managers in market environments with persistently high correlations. Some argue that high correlations hinder active managers seeking to generate alpha through security selection. Indeed, in a recent study, we found that active managers were more likely to succeed in low-correlation environments.

2011-09-26 Reflections and Outrage by Bob Rodriguez of First Pacific Advisors

Here is address given at the 2009 Morningstar conference which has just as much relevance now as it did then. Last years performance was a terrible one for the market averages as well as for mutual fund active portfolio managers. It did not matter the style, asset class or geographic region. We managers did not deliver the goods and we must explain why. In letters to shareholder will this failure be chalked up to bad luck, an inability to identify a changing governmental environment or to some other excuse? We owe them more than simple platitudes, if we expect to regain their confidence.

2011-09-26 Its 11:01? by Jeffrey Saut of Raymond James Equity Research

Its 11:01 p.m., do you know where your children are? is a phrase that haunted me reminding my parents that I was out past my curfew. Similarly, investors asked themselves last week, Its 1101, do you know where your stocks are? as on Wednesday the Dow dove through last Mondays intraday low of 1188.36 and headed below the August 9th selling climax low of 1101.54. For 7 weeks I have discussed the importance of holding above the 1100 level, if our analogue to the October 1978 and October 1979 bottoming sequence is going to hold. So far, the correlation between then and now is remarkable.

2011-09-24 Catastrophic Success by John Mauldin of Millennium Wave Advisors

Rick Perry touched the third rail of Social Security and called it a Ponzi scheme, which of course immediately made him the leading candidate in the shoot the messenger category. Behind the rhetoric, I look at some actual numbers. Not the unfunded liabilities, thats too easy. Lets look at what a heartless, uncompassionate man President Roosevelt was when he started Social Security. And of course, we must start off with the results of the FOMC meeting, which has me feeling not at all amused. What are they thinking? Apparently, they are seeing the results from another, alternative universe.

2011-09-23 A Dual View of Operation Twist by Team of iShares Blog

On Wednesday, the Federal Reserve outlined its new Operation Twist program. The central bank will buy $400 billion of long-term Treasuries in an effort to lower long-term interest rates and spur lending and economic growth. The announcement came as no surprise: It had been clearly telegraphed by the Fed. Nonetheless, stock markets fell after the announcement and 10-year Treasury yields dropped to levels not seen since the 1940s. Two of our contributors weigh in to explain the markets reaction and the plans implications for equity and fixed income investors.

2011-09-22 More Focus on Fixed Income by Team of American Century Investments

G. David MacEwen, discusses how volatile market conditions, a population boom in the 65+ years category, and increasingly conservative investment behavior by those in that category as they approach retirement (including growing demand for more predictable outcomes) are shifting the focus of investment strategies toward fixed income. We strongly believe that the scheduled, mostly predictable payments of interest and principal from bonds are becoming progressively more attractive to a growing pool of investors and their advisors.

2011-09-22 Twist and Shout: The Fed, as Expected, Announced "Operation Twist" by Liz Ann Sonders of Charles Schwab

The Federal Reserve announced "Operation Twist," which was largely expected. The goal is to further reduce borrowing costs and push money via lending out into the real economy. Whether it will work is the big question because high interest rates are not the economy's problem. Ultimately, confidence has to improve before we're likely to enjoy any reasonable pace of economic growth. Whether this move by the Fed starts the confidence-healing process remains to be seen. But we suggest you keep your expectations relatively low.

2011-09-20 Counterparty Risk in Large Total-Return Funds by Robert Huebscher (Article)

We can add another to the list of concerns facing advisors: counterparty risk ? a potential loss from the failure of a bank or broker-dealer. Underscoring this threat, DoubleLine's founder and chief investment officer, Jeffrey Gundlach, recently warned advisors to avoid all funds with counterparty risk. Heeding his warning, however, is not easy; it is virtually impossible to gauge the extent of counterparty risk in most funds.

2011-09-15 More of the Same by Bob Rodriguez of First Pacific Advisors

What would it take for me to shift to a more optimistic longer term outlook? First, there should be a discussion and then implementation of real and substantive congressional budgetary reforms that have a standing in law. Without this change, a future congress can overturn any of the expenditure cuts that are voted on today but are not implemented until much later. With a congressional approval rating of 13%, the American public should demand nothing less because the Congress cannot be trusted. Both parties are equally responsible for the fiscal mess the nation faces.

2011-09-10 Market Comment by Keith Goddard of Capital Advisors

Whether measured objectively through indicators for valuation, trend and risk; or subjectively by pondering all that might go wrong in the euro zone, we come to the same conclusion about the current market climate proceed with caution.

2011-09-08 Teaching to the Test by Neel Kashkari of PIMCO

Many managers are focused on beating benchmarks, rather than helping clients achieve their investment objectives. Clients save and invest their money for specific reasons, such as for retirement or childrens education and managers should focus on helping them meet those goals. Many managers are really closet indexers masquerading as active managers while charging premium fees for benchmark returns. Many equity managers deviate very little from their benchmark because they are terrified of potentially underperforming it.

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.

2011-09-08 The Changing Landscape of Global Investing by Mohamed A. El-Erian of PIMCO

National and global realignments are fundamentally and durably changing the global investment landscape. Investors face the challenge of recalibrating some of the traditional parameters that are key to managing risk and delivering returns. There are also implications for investment management firms which are yet to be sufficiently reflected in the thinking and actions of the industry as a whole.

2011-09-08 Middle East/Africa: Economic Review August 2011 by Team of Thomas White International

According to the IMF, global economic prospects have taken a downturn in the wake of a weaker U.S. economic recovery, uncertainty surrounding the Euro-zones fiscal stability and relentless turmoil in the Middle East and North Africa (MENA) region. In recent weeks, the MENA region has been in the spotlight yet again, with the Libyan revolt against Muammar Gaddafis 42-year long dictatorship gaining momentum. The IMF has been keeping a close watch on developments in the strife-ridden country and is yet to determine the uprisings impact on the Libyan economy.

2011-09-07 Keep Calm, Carry On by Scott Minerd of Guggenheim

The markets overreaction has created an incredible opportunity in U.S. equities. In particular, I see value in high-dividend stocks. Many companies with strong cash flows and stellar credit ratings pay more in dividends than the yield on their bondsa situation that hasnt existed for such a large number of stocks since the 1950s. Without doubt, Europes problems indicate that further turbulence, even a retest of recent lows on the S&P 500, cannot be ruled out. Nevertheless, for investors with 2- to 5-year horizons, price dips represent buying opportunities.

2011-09-02 8 Strong Growth Stocks Significantly Under-valued by Mr. Market by Chuck Carnevale of F.A.S.T. Graphs

We don't believe in investing in the stock market, we believe in investing in great businesses. Therefore, we tend to focus more on how the business is performing on an operating basis than we do on stock price volatility. True Worth valuation is what we monitor and measure most closely. Our rationale is based on the reality that any business, public or private, ultimately derives its value from the amount of cash flows and earnings it can generate for stakeholders. The bigger the income stream they can buy, the bigger the value they will eventually receive.

2011-09-02 Dividend Growth: Volatile markets revive an old investing strategy by Kevin Feldman of iShares Blog

Lately I've been hearing a lot about the new dividend growth strategy: Simply buy the right blue chip stocks featuring rising dividends and youll be on the path to a more secure retirement. With regular headlines like Top 20 High Yielding Dividend Aristocrats and 10 Dividend-Paying Blue Chips for Your Parents, its no wonder Im hearing people at dinner parties buzzing about Coke (KO), J&J (JNJ) and P&G (PG) in a way that reminds me of my grandparents stacking up their stock certificates to keep up with dividend checks from these venerable value giants.

2011-08-30 The Case for Active Management in a Volatile Market by Brandon Thomas (Article)

It's been an eventful few weeks, to say the least. The market volatility reminds us that active investment management is more crucial than ever.

2011-08-30 Why High-Yield Bonds Make Sense Today by Geoff Considine, Ph.D. (Article)

None other than Gluskin Sheff's Dave Rosenberg, the widely followed analyst who was been consistently bearish in the current market cycle, said last week that high-yield bonds are 'a good place to be right now.' Recent price declines have made them attractive in the short term, and their risk-adjusted returns make them attractive to longer-term strategic investors.

2011-08-30 No More Cowbell by David Baccile of Sextant Investment Advisors

Since 2008, fiscal and monetary authorities around the globe have been clamoring for more and more cowbell, government generated stimulus and financial support. But there are increasingly clear signs now that the effectiveness of more cowbell is on the wane while opposition to more cowbell is on the rise. In a world with no more cowbell, cash and high quality assets are good places to hide out in anticipation of greater opportunities to profit from market uncertainty. While it may be true that we should not fear the Reaper, a healthy dose of skepticism is essential.

2011-08-29 Instant Pudding by Tim Gramatovich, Ron Heller and Heather Rupp of AdvisorShares/Peritus Asset Management

We are in the midst of a prolonged stagnant economy and Europe is facing mounting issueshowever we believe the end result is a resetting of expectations and re-pricing of global equity markets rather than anything economically devastating. Credit bubbles, and the resulting deleveraging, take a great deal of time to heal and this time is no different. There is no instant fix. But with the transfer of debt to public balance sheets from private ones (thanks to QEs 1 and 2), we see corporate credit as more desirable than Government paper.

2011-08-26 A Private Matter: Income ETFs by Kevin Feldman of iShares Blog

As with all things in investing, theres no free lunch in higher yields; seeking higher returns means taking on higher levels of risk. Depending on your goals, time horizon and view of the macro economy, you may choose to take those risks but its important even given the understandable desire to generate income during a challenging market not to forget that theyre there.

2011-08-24 The Greatest Risk We Face: To Again Fall Into a Recession by Chuck Carnevale of F.A.S.T. Graphs

A spate of frightening headlines has led to two troubling declines in financial instruments. The first, of course, is the decline in equity prices that has everyone worried about their financial futures. The second troubling decline in financial instruments is the unprecedented drop in Treasury bond yields. This is troubling because frightened investors are fleeing to the safety of Treasury bonds at the precise time when the risk of owning them has perhaps been the highest in recorded history. This is especially true for the long bond, but also applies to shorter-term bonds.

2011-08-18 Where the Debt Crisis Could Spread by Russ Koesterich of iShares Blog

Investors are facing an unprecedented situation. Virtually all the major advanced economies the US, Japan and Europe have simultaneously undergone a significant fiscal deterioration, thanks to the after-effects of the financial crisis and worsening demographics. In addition, investors are wrestling with the implications of the recent US downgrade by S&P, as well as a slowing economy. Markets are rattled and many are wondering: what is the new riskless asset? A new index called the BlackRock Sovereign Risk Index provides just such a framework.

2011-08-17 I Love the Smell of Napalm in the Morning by Liam Molloy and Bethany Carlson of Galway Investment Strategy

The analysis performed by S&P was flawed. They made a $2 trillion mistake. S&P stated the mistake was not material and had no impact on the rating. Simultaneously they inserted a change in their assumption on the Bush tax cuts. For two years the assumption was the impact of the cuts was $900 billion over 10 years. Now reversing the cuts is worth $4 trillion over 10 years. This very significant change being revealed only after their mistake was pointed out is interesting. Guess $900 billion is not big enough to allow you to so clearly dismiss a $2 trillion mistake but perhaps $4 trillion is.

2011-08-17 Terminator 3: Rise of the Machines by Jeffrey Saut of Raymond James Equity Research

While people who live in glass houses should not throw rocks, I have to observe how the media has trotted out super-bear Robert Prechter at every major stock market low for the past decade. They featured him again last week. Combine such anecdotal gleanings with the aforementioned market valuation metrics and it suggests a downside inflection point may have been reached. And while the bottoming process should take weeks, many individual stocks have likely already bottomed.

2011-08-15 Return to Recession.or Recovery? by Liz Ann Sonders of Charles Schwab

Soft economic data has caused talk of a return to recession to grow, leading to a return to the risk-off trade and a spike in volatility. We believe these fears and the market reaction are overdone and indicators still point to growth, but risks are high. The chorus calling for a new quantitative easing (QE3) program from the Fed has grown. We believe it's unlikely at this point. The European debt crisis continues to damage investor confidence as policymakers appear to be consistently behind the curve. Meanwhile, the economic slowdown could ultimately help emerging markets.

2011-08-12 Making Sense of the Markets by Team of Neuberger Berman

It is one thing to theorize about markets. It is quite another to invest. With that sentiment in mind, we offer a sampling of views from some of our portfolio managers across our firm who each independently form their own conclusions as to what to make of the market and how to position portfolios according to their respective investment disciplines.

2011-08-10 The Economic Recovery Has No Clothes by Kevin D. Mahn of Hennion & Walsh

What likely transpired yesterday was that investors finally siad, The economic recovery has no clothes, despite repeated claims by the Federal Government and certain economists to the contrary over the past 6-12 months. While historical research has shown that typical stock market recoveries generally precede economic recoveries by 6-9 months; perhaps it was too soon. While many encouraging signs pointing to a sustainable economic recovery have emerged over this timeframe in terms of corporate earnings GDP growth and M&A activity, many headwinds for the U.S. economy still exist.

2011-08-05 Advisor Alert - Placing This Week's Selloff Into Context by Frank Holmes of U.S. Global Investors

The major market indices were lower this week. The Dow Jones Industrial Average lost 5.75 percent. The S&P 500 Stock Index decreased 7.19 percent, while the Nasdaq Composite fell 8.13 percent. Barra Growth outperformed Barra Value as Barra Value finished 7.53 percent lower while Barra Growth decreased 6.88 percent. The Russell 2000 closed the week with a loss of 10.34 percent. The Hang Seng Composite Index finished lower by 6.80 percent, Taiwan fell 9.15 percent, and the KOSPI declined 8.88 percent. The 10-year Treasury bond yield closed 24 basis points lower at 2.56 percent.

2011-08-04 The Five Horsemen of the Economic Malaise by Craig Hester of Hester Capital Management

The unwinding of the economic malaise will take years, and it will be a painful - but necessary-process. There is much fear and anxiety reflected in the financial markets. Many of the world economies are in a state of disequilibrium, with too much debt, facing high unemployment and sluggish growth. Policy options are limited, and politicians lack the courage to act. But out of such times come opportunities. We live in a world of instant news and an acute short-term focus. One of the keys to investment prosperity is to manage money with a long-term perspective while balancing risk and return.

2011-08-03 Default? by Jeffrey Saut of Raymond James Equity Research

We have many great campaigners inside the D.C. Beltway, but far too few have the ability to govern given that their main concern is to get reelected. Maybe Warren Buffet had the right idea when he said, I could end the deficit in five minutes. You just pass a law that says that anytime there is a deficit of more than three percent of GDP all sitting members of congress are ineligible for reelection. As for the Nations AAA rating status, I think we are in for a downgrade no matter what happens inside the Beltway as the pendulum always swings too far in each direction.

2011-08-02 A Winning Endgame by Robert Huebscher (Article)

Reducing our nation's debt burden is no longer only the rallying cry of Tea Partiers and fiscal conservatives. As the debate over the debt ceiling proved, it is now the goal of the president and many fellow Democrats. John Mauldin and Jonathan Tepper's book, Endgame, published earlier this year, makes a compelling argument as to why reducing the deficit is so critical and why we face a long, slow and ultimately painful period of deleveraging. I will explain their thesis and then provide the counterargument.

2011-08-02 Kings of the Wild Frontier by Bill Gross of PIMCO

The U.S. has averted a debt crisis, but there remains a stain on our reputation. Nothing in the Congressional compromise reached over the weekend makes a significant dent in our $1.5 trillion deficit. In addition to an existing nearly $10 trillion of outstanding Treasury debt, the U.S. has a near unfathomable $66 trillion of future liabilities at net present cost. Aside from outright default, there are numerous ways a government can reduce its future liabilities. They include balancing the budget, unexpected inflation, currency depreciation and financial repression.

2011-07-28 Investor Question: Greek Bonds in ETFs by Matt Tucker of iShares Blog

As the Greece situation continues to develop, Ive been hearing a lot of client questions about the exposure to Greek debt in some of our iShares fixed income ETFs. With good reason, too investors are wondering whether downgraded Greek bonds will be removed from the funds in which they currently reside. Its a fair question, and it really highlights some of the points I made in my last post on index construction. Of course, last time I focused on US indexes (which are fairly straightforward). The Greece example gives me a good excuse to cover index rules for non-US bond indexes.

2011-07-28 The Debt Ceiling by Geremy van Arkel of Frontier Asset Management

No one knows for certain what Congress will decide to do. Its actions could shock capital markets. However, the general theme of what Congress is trying to accomplish is fiscal responsibility. Long-term, this will be good for the financial markets and the creditworthiness of our government. The process of getting there, however, may cause short-term disruptions throughout the global financial markets. As portfolio managers, our concern is how developments in the capital markets affect our clients portfolios. We have significant experience navigating uncertain and difficult times.

2011-07-27 What a (Cash) Drag: Institutional Investors and ETF Cash Equitization by Kevin Feldman of iShares Blog

At first glance, cash equitization using an ETF is pretty straightforward. As opposed to carrying a significant cash position, an investor simply selects an ETF that closely approximates their target risk and asset class exposure to remain invested in the market. Typically institutional investors will implement a cash equitization strategy when cash is on the sidelines and waiting to be put to work. For example, at times large institutional clients are transitioning between managers. Rather than risking underperformance through cash drag they will invest in an ETF as an interim solution.

2011-07-26 On Your Mind: The Debt Ceiling, US Credit Rating and Potential Default by Team of Charles Schwab

We are disappointed in the continued inability of Washington to resolve the current short- and long-term debt issues. However, we do not believe now is the time to make major portfolio adjustments given US companies' continued strong earnings reports, few signs of a double-dip recession, and few signs that the bond market currently questions the fundamental ability of the US to pay its bills. Be prepared for more volatility as the political negotiations continue. Watch the VIX index for upward spikes indicating that investors are losing patience.

2011-07-25 Quarterly Letter by Team of Grey Owl Capital Management

We remain concerned about the global economy and suspect of broad asset class valuations.However, in a world of tens of thousands of securities there are always opportunities.Absent a significant market correction, we are likely to continue to hold cash or dry powder.We also continue to look to hold assets that can perform well in an inflationary environment, as dollar debasement seems to be the political path of least resistance out of our current problems.The politicians appear happy to solve the problems maana. We on the other hand are happy to make hay when the sun shines.

2011-07-23 Worried About the Future? by Kendall J. Anderson of Anderson Griggs

If you are worried about the current economic state of affairs you may be relieved by what research analysts are telling portfolio managers. First, they seem to be in agreement that businesses are doing fine, especially those that have a global market. Second, interest rates will be higher at some point in the future, and the majority of government debt is safe as far as the ability to pay interest on their borrowing. And most importantly, the earnings you should expect from your investments will be driven over time by the ability of companies to pay you with a little left over to reinvest.

2011-07-22 Why We Think the U.S. Wont Default on Its Debt by Team of American Century Investments

We believe its highly unlikely that the U.S. government will miss any of its scheduled debt payments in coming months, or that related market uncertainty and volatility will cause our money market funds to break the buck (be forced to transact share purchases and redemptions at prices less than the usual $1 per share). To help explain market behavior under unstable conditions, we often repeat the following adage: investment markets hate uncertainty. We tend to be leery of uncertainty because it can trigger investor skittishness, irrational behavior, and volatility.

2011-07-21 More on the Case for Mega Caps by Russ Koesterich of iShares Blog

While the recent June non-farm payroll report offered yet another reminder of the fragile and sluggish nature of the current recovery, we continue to believe that equities offer better prospects than fixed income. A combination of high margins, low inflation and some top-line growth will continue to support stocks. For the most part, the largest companies are cheaper, more profitable and more diversified than their smaller counterparts. In fact, US and global mega-cap companies remain one of the few unambiguously cheap asset classes, trading at roughly a 15% discount to the broader market.

2011-07-20 Cash Can Be Risky, Too by Kevin Feldman of iShares Blog

Young investors who keep their money in cash may think theyre playing it safe, but the strategy could cost them in the long run. A recent Bank of America-Merrill Lynch survey found that almost half (47%) of 1 ,000 affluent Americansdefined by Merrill as Americans with investable assets in excess of $250, 000describe themselves as conservative investors, meaning that they favored low to moderate risk investments intended to deliver modest but steady gains. Among young investors aged 18 to 34, that number soared to 59 percent. (As compared to 41% among investors aged 35-64.)

2011-07-19 The Debt Ceiling Debate & China by Russ Koesterich of iShares Blog

This week, our first call focuses on the ongoing drama over the US debt ceiling and its implications for the US Treasury Market. While the clock continues to tick towards an August 2nd deadline for raising the debt ceiling, Congress and the White House are still nowhere near a compromise. Next, heres a quick update regarding our view of China. While we remain, for now, neutral on China, and hold a negative view of emerging markets in general, our stance on China is starting to shift to a more constructive, or positive, view.

2011-07-18 Fixed Income Investment Outlook by Team of Osterweis Capital Management

The equity and high yield markets seem to be reacting to renewed fears of sovereign debt defaults in Europe and slower economic activity in the U.S. The duration and ultimate severity of our economic slowdown is still in question, as inflation fears seem to have temporarily abated and the yield curve in the U.S. is steep, which has historically preceded economic growth. We are avoiding highly leveraged companies and longer-dated bonds, which may be vulnerable if a double-dip recession were to occur. There seem to be many sellers of shorter-dated bonds from which to choose.

2011-07-15 We See This Slowdown as Temporary Too by Team of American Century Investments

We?re experiencing another mid-year economic slowdown, with renewed fears of a double-dip recession. Will the recovery regain momentum, like last year? The fixed income team, thinks so. Two years after the Great Recession ended, we?re still struggling to escape its lingering grip. Major facets of that struggle include the market and financial extremes the recession generated. U.S. economic growth and financial market benchmarks are striving to shift back to more normal/average levels. These cyclical shifts from historic extremes interest us as sources of potentially value-adding positioning.

2011-07-14 The Brightening Air by Christian Thwaites of Sentinel Investments

A casual empiricist would conclude that the US economy is troubled: weak GNP, employment, housing and slowdowns in the important ISM and Fed surveys. But a longer perspective shows this is entirely in keeping with a recovery from a deep-seated financial and borrowing crisis. There are many signs that the US is picking itself up: manufacturing productivity, private sector job creation, corporate profitability and household deleveraging. Monetary policy has saved the economy from the insidious threat of deflation. Fiscal policy is meandering. Some of the answers are right in front of us.

2011-07-13 What Investors Should Know About Bond Index Construction by Matt Tucker of iShares Blog

Most people are familiar with the popular indexes in the market like the S&P 500 and the Dow. The majority of indexes people are familiar with are of the equity variety-their bond market cousins don?t have the same visibility with most investors. Today I want to talk about what bond indexes are and how they are put together, focusing on the US and then covering international in a future post. There are a large number of different US bond indexes out there, and they are all built a little bit differently, but the vast majority of them are rules-driven.

2011-07-13 The Inflation Revival: Is it Time to Recalibrate Your Portfolio? by Richard Levine, Matthew Rubin and Tom Marthaler of Neuberger Berman

After a decades-long hiatus, inflation appears to be making a comeback. Clearly few anticipate a return to the days of the late 1970s and early 1980s when double-digit annual inflation gains were the norm. Still, the cumulative impact of inflation can be costly even during periods of modest price increases. According to Bloomberg $100 saved by the end of 1988 was ?worth? only $56 by the end of 2009. Investors may wish to take into account such changes as they estimate the potential returns of their portfolios, and consider incorporating inflation hedges into their investment strategy.

2011-07-13 Treading Water by Richard Michaud of New Frontier Advisors

While unemployment remains high, corporate balance sheets are healthier, Wall Street de-leveraging is proceeding, savings rates are up, and many strategists currently consider equities cheap.The lackluster performance of domestic equities in the quarter was associated with negative returns in financials, a symptom of the continuing de-leveraging process and new regulations worldwide. However, the underlying conditions for a long sustained business expansion do not seem in-place. A cyclical expansion, typically lasting roughly four years, seems a reasonable, though far from certain, scenario.

2011-07-12 Harold Evensky on the New Rules for Wealth Management by Robert Huebscher (Article)

If you don't have a copy of The New Wealth Management on your bookshelf, you should. From gauging the risk tolerance of your clients to measuring the performance of their portfolios, this book provides comprehensive guidance for virtually every aspect of a financial advisory practice. Harold Evensky, the lead author, spoke with me last week and highlighted some key themes in the newly released second edition.

2011-07-12 An End-of-Quarter Letter to Clients by Dan Richards (Article)

Given recent unrest in Europe and uncertainty about economic growth, many clients are looking to their advisors for direction. This template for an end-of-quarter letter is a starting point for your own letter to clients, one that can be a catalyst for a conversation about how to position portfolios.

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.?

2011-07-07 Lessons from Investor Behavior Studies: Better to Have Patience and a Plan by Team of American Century Investments

Recent studies raise important questions about investor behavior and the likelihood that investors will successfully reach their financial targets. It seems that the best way to increase the odds of investing success is to take a balanced approach, providing exposure to the broad asset classes without leaving investors overexposed to any single area. Risk and financial reward exist in relation to one another. But diversification works on the principle that the relationship is not linear?you have the potential to get more return for each unit of risk you take by spreading out your investments.

2011-07-06 The S&P 500 ends Q2, 2011 Fairly Valued, Year-end Target 1467 by Chuck Carnevale of EDMP

Individual companies derive their value from the amount of earnings and cash flows they are capable of generating for their stakeholders. The market will inevitably capitalize a publicly traded company?s shares based on the velocity and volume of earnings generated. A PE ratio of plus or minus 15 generally applies to the average company growing earnings between zero and 12% a year. The essence behind this valuation is the idea that any company that generates a profitable income stream is worth more than one times earnings.

2011-07-05 Fox in the Henhouse by Joseph Calhoun and Douglas Terry (Article)

In 1971, President Nixon ended the Bretton Woods gold standard currency system. That move set us on a path of debauching our currency through inflation. Ever since, we have counted on the Federal Reserve to preserve the purchasing power of our money. We have depended on the fox to protect our hens.

2011-07-02 China Opens World\'s Longest Cross-Sea Bridge by Frank Holmes of U.S. Global Investors

When the new Qingdao Jiaozhou Bay Bridge opened to traffic this week in China, it made the Guinness World Records for the longest cross-sea bridge in the world. The 26.4-mile long and 110-foot wide bridge stretches across the bay, linking the Huangdao district to the city of Qingdao and Hongdao Island. China spent 17 years planning and designing the engineering marvel to be able to withstand the bay?s high salt content and icy winters. Yet, it only took four years to build, with at least 10,000 workers on the construction team.

2011-07-02 And That\'s the Week That Was... by Ron Brounes of Brounes & Associates

The second quarter ended on a very positive note as equities enjoyed a late surge to bring the Dow into positive territory for the period (and the other indexes close to flat). Such performances didn?t seem likely just a few weeks ago, but positive news this week from Greece, signs of a rebound in manufacturing, and declining gas prices that helped ease a more fearful inflation picture put a damper on the recent negativity. Equities enjoyed their best week in two years. Let?s hope the mood lasts.

2011-07-01 Expert Roundtable on Interest Rates by Mark W. Riepe, Liz Ann Sonders, Kathy A. Jones, Rande Spiegelman & Brad Sorensen of Charles Schwab

US short-term interest rates have hovered near zero percent for a record period of time. The Fed has kept the funds rate extremely low, not only to boost economic growth, but also to ward off the threat of a deflationary spiral. Given the economy's recent soft patch, we don't expect the Fed to raise rates too soon. But, at some point rates will rise, it makes sense for clients to start planning now. With this in mind, Mark Riepe, led a roundtable discussion of investment and debt strategies for both the current low-interest rate environment and a future point when rates begin to tick up.

2011-06-28 An Important Challenge to ?Stocks for the Long Run? by Geoff Considine (Article)

Jeremy Siegel's dictum - to invest in stocks for the long run - faces a new challenge. A recent paper by Robert Stambaugh, a Wharton colleague, and Lubos Pastor of the University of Chicago says that once you take into account the uncertainty of estimating future returns, stocks are not nearly as attractive to retirement-oriented investors as Siegel has claimed.

2011-06-28 The End of QE2: What Does It Mean for Investors? by BlackRock (Article)

The financial crisis sparked widespread flight from risk. Although the crisis is over and equity prices have rebounded, many investors have not yet returned to the capital markets. For them, the safe-haven appeal of money market funds remains strong. In this paper, American Century Investments® proposes a strategy of "smart risk taking," an active asset management approach that seeks to identify, understand, manage, and be consistently rewarded for risk.

2011-06-25 Playing Cat and Mouse with Global Oil by Frank Holmes of U.S. Global Investors

Oil markets took another dose of global geopolitics this week when the International Energy Agency (IEA) unexpectedly announced that it would be releasing 60 million barrels of oil from strategic petroleum reserves (SPR) around the globe. Thursday?s surprise announcement gave oil prices a 4.5 percent hair cut and oil prices closed Friday at $91.25, down 20 percent from their April 29 peak.

2011-06-23 Fixed Income Commentary: High Yield Takes a Pause by Gino Nucci of TCW Asset Management

Given that the current credit cycle is but 30 months old (as compared to the more typical 60+ month cycle lifespan), TCW views current conditions as reflective of a mid-cycle correction and not a harbinger of a return to recessionary conditions. As such, current high yield bond spreads are attractive.

2011-06-23 Fixed Income Commentary: Recent High Yield Selloff: Caution or Opportunity? by Jamie Farnham of TCW Asset Management

The spring season has tested the mettle of the high yield market. A common inquiry on investor minds of late is whether this is a short-term bump on a longer journey or alternatively that risk is rising for high yield investors. This note touches on (i) relative value, (ii) fundamentals and (iii) the potential interest rate effect on high yield.

2011-06-22 We?re Still Patiently Positioned for a Flatter Yield Curve by Team of American Century Investments

In this Weekly Market Update, we discuss the steep Treasury yield curve and our yield curve flattener trade. This economic cycle-based, duration-neutral, mean-reversion strategy?and how it fits with our other active positions?helps illustrate the investment process and outlook of the fixed income team. The gap between short- and long-maturity U.S. Treasury yields has been at or near historically wide levels since 2009. It?s an interesting facet of the latest economic cycle. One of our active positions is tied to an eventual narrowing of this spread to a more historically average level.

2011-06-21 Understanding the Risk in Discounted Municipal Bonds by Evan Lamp (Article)

The market discount rule is one of those arcane regulations in municipal taxation that many investors and financial advisors ignore, either because they are unaware of its adverse consequences or because they don't know what to do about them. As the market discount rule grows in impact with the recent rise in interest rates, understanding this important topic is vital.

2011-06-21 Quick Update by James G. Tillar and Steve Wenstrup of Tillar-Wenstrup Advisors

Currently the stock market is rightly focused on the many risks emanating from the macro environment. The European debt crisis, inflation and social unrest in emerging markets, especially China, and our economy has slowed while unemployment remains elevated.Most of these conditions were peculating well before the stock market started its decline in early May. We took advantage of that period to reduce risk in our portfolios by selling some stocks, especially the more cyclically oriented companies. As aresult our portfolios are holding up better than their benchmarks in the current correction.

2011-06-20 Game Change for Bond Investors? by Scott A. Mather of PIMCO

Over the next three to five years, we argue that market behavior may be vastly different than what typical cyclical models would predict. Sovereign debt, which is at the core of our global financial system, is undergoing a seismic shift. Governments practicing financial repression may be transferring wealth from creditors (citizens) to debtors (governments) to the detriment of creditors, fixed income investors and savers.

2011-06-17 Time to Float? The Investment Case for Floating Rate Notes by Matt Tucker of BlackRock Investment Management

With QE2 winding down at the end of June, many analysts and investors are speculating that the end of the purchases may signal the beginning of a tightening cycle, creating concerns about rising interest rates. Since fixed rate bond prices decline when interest rates rise, this has prompted many investors to buy shorter duration securities to help protect their fixed income portfolios from rate increases. Another solution that investors may consider are floating rate notes (FRNs), which can help investors reduce their exposure to interest rate increases.

2011-06-17 Will Gold Equity Investors Strike Gold? by Frank Holmes of U.S. Global Investors

While the party continues for gold bullion prices, stocks of gold companies have been a no-show. The NYSE Arca Gold Bugs Index (HUI) has fallen more than 13 percent year-to-date and the Philadelphia Gold & Silver Index (XAU) has toppled more than 16 percent. Companies such as High River Gold Mines, Jaguar Mining and NovaGold Resources are off 45 percent from 2007-2008 highs. This has been exacerbated in recent weeks making it a hot topic of discussion among investors. This chart shows gold equities of all market capitalization sizes were holding up quite well until late April.

2011-06-16 U.S. Investors Overexposed to U.S. Dollar Risk? by Axel Merk of Merk Funds

The U.S. dollar has experienced significant weakness over recent years. And there is a risk the U.S. dollar will experience ongoing deterioration for an extended period of time. U.S. investors may want to take this possibility into consideration when assessing the U.S. dollar risk inherent in their investment portfolios. Our analysis into the aggregate financial asset holdings of the U.S. personal sector finds that the vast majority of investor?s financial assets are denominated in U.S. dollars and as a result, significant U.S. dollar risk exposure is evident.

2011-06-13 Ouch by Jeffrey Saut of Raymond James Equity Research

While equity markets can certainly do anything, if the SPX declines to the lows registered in March of 2009, which is what Walter Zimmerman thinks, and if the current earnings estimates are anywhere near the mark, it would leave the S&P 500 trading at less than 6x earnings with a dividend yield (excluding any dividend increases) approaching 5%. I just dont believe this is in the cards, given my assumption the economy is NOT going to double dip. Amid such market machination I think investors should keep their heads screwed-on straight and begin compiling their buying lists.

2011-06-10 And That's the Week That Was... by Ron Brounes of Brounes & Associates

Last summer, the markets encountered a (temporary) setback as debt problems in Europe threatened the global recovery and weaker data prompted thoughts of a double-dip. Well, after six consecutive down weeks, the pessimism has returned to the equity markets; of similar note, Greece still has yet to find its footing and the once promising labor rebound still has a long way to go. The Fed is about to end a controversial stimulus, but stands prepared to help again if situations warrant.

2011-06-10 Searching for the Market's 'Sweet Spot' by John Derrick of U.S. Global Investors

One of U.S. Global Investors? ?sweet spots? is investing in global small-and mid-cap companies. We generally define these companies as having a market capitalization between $1 and $10 billion. Ten billion sounds like a lot but is relatively small compared to market caps of companies such as Apple ($301 billion), Johnson & Johnson ($181 billion) and Coca-Cola ($149 billion). We like small and mid-cap companies because they tend to be less volatile than micro-caps, but still nimble enough to grow at faster rates than large companies.

2011-06-10 Pause or Panic? by Liz Ann Sonders, Brad Sorensen, and Michelle Gibley of Charles Schwab

Economic data has deteriorated to the point that talk of a double dip recession has returned. The risk of another recession is low as most indicators remain well in expansion territory. Several factors are contributing to a soft patch, but a rebound is likely in the latter part of 2011. Along with talk of recession risk, chatter about the need for QE3 by the Fed has increased. The bar is quite high for QE3, but it is very likely the Fed will not let its balance sheet shrink in the near-term. Global growth is decelerating as well, with China tightening and Japan dealing with reconstruction.

2011-06-07 Low Volatility Equity Solutions ? Is Now The Time? by K.Sean Clark of Clark Capital Management Group

Correlations converging amid the market declines of 2008 called attention to the limits of relying on diversification between assets for portfolio protection. The desire for non-correlated returns among assets had led to a significant reduction in U.S. equity exposures and accelerated flows into non-U.S. equities and alternative strategies. But the correlations of these uncorrelated assets spiked under the extreme market stress of 2007 and 2008. This shows that for downside protection, buying assets with many different risk profiles is not a substitute for buying volatility to manage risk.

2011-06-07 Modern Portfolio Theory IS Harming Your Portfolio by JJ Abodeely of Sitka Pacific Capital Management

In a recent paper, Scott Vincent argues that the flawed foundation of MPT has allowed its advocates to control the language of the debate and set the stage for the obvious conclusion that passive index-based investing is inherently superior. And don?t think for a second that this debate is simply theoretical, academic, or unimportant? the basic tenets of MPT shape the decisions of nearly all investors in profound and often disturbing ways. YOUR money is almost certainly being managed with these ideas at the core. The traditional approach to asset allocation is built on false axioms.

2011-06-03 Five Misconceptions Squashed by Niels C. Jensen of Absolute Return Partners

DSK is not the only one in need of a bailout! As the sovereign crisis intensifies - and it will - bond yields in some countries will go higher. But they won?t go higher everywhere. Demographic as well as technical factors (e.g. Solvency II) will drive ever more money towards bonds, and that money will have to go somewhere. Germany, Switzerland and Scandinavia are probably the safest bets in terms of where sovereign bond yields could fall further. You should also expect high quality corporate bond yields to trade through sovereign yields in many countries. The trend has already begun.

2011-06-03 Natural Resources Q&A with the Global Resources Fund Team by Frank Holmes of U.S. Global Investors

This week Frank Holmes and the co-managers of the U.S. Global Investors Global Resources Fund (PSPFX), Evan Smith and Brian Hicks, participated in a special webcast for the Peak Advisor Alliance. Here are some candid portions of the Q&A: Q. How are interest rates currently affecting commodity prices? A. The magic number for real interest rates is 2 percent. That?s when you can earn more than 2 percent on a U.S. Treasury bill after discounting for inflation. Our research has shown that commodities tend to perform well when rates fall below 2 percent.

2011-06-02 Still Chugging Along: The Market that Could by Team of Eagle Asset Management

The global economic recovery is moving along but there remain some areas of concern. Our managers? discussion included such things as rising commodity prices, real estate problems and perhaps most interesting to readers, how they have investment portfolios positioned. Included in the roundtable were Bert L. Boksen (Small/Mid Cap Growth); James Camp (Fixed Income); Ed Cowart (Equity Income/Value); Todd McCallister (Small/Mid Cap Core); Jack McPherson (Small Cap Core Value); Eric Mintz (Small/Mid Cap Growth); Richard Skeppstrom (Large Cap Core); and Stacey Serafini Thomas (Small/Mid Cap Core)

2011-06-02 Expert Roundtable on Risk by Mark W. Riepe, Liz Ann Sonders, Randy Frederick, Rob Williams, & Brad Sorensen of Charles Schwab

The word "risk" has a negative connotation-something to steer clear of whenever possible. However, in the investing world, risk and performance are intertwined. Market sentiment can shift quickly depending on economic or political news, geopolitical events and even natural disasters and these shifts can sometimes send investors fleeing for safety or taking on more risk as they seek higher returns. Mark Riepe, led a roundtable discussing the concept of risk in investing, strategies for reducing portfolio risk, and investment suggestions tailored to both risk-seeking and risk-averse investors.

2011-06-01 An Investment in Infrastructure by Team of Columbia Management

Neglecting infrastructure can have tragic consequences. Think about the I-35 bridge collapse in Minneapolis, levees breaking in Missouri or the San Bruno gas pipeline explosion. These and many other examples illustrate the type of destruction that can occur if the country?s aging infrastructure is not addressed. At the same time, demand for new infrastructure is growing exponentially in emerging markets. Data highlighting the scale of construction, transport, logistics and communications development are so large they render relevant context difficult to comprehend.

2011-06-01 Next Big Thing: "Rent to Own?" Recreating the Ear of the Markets by Team of Institutional Risk Analyst

We feature a comment by Damien IslamFrenoy and David Cox, of Microsoft Banking and Capital Markets, about the need to restore context to information to better identify and manage risk. But first we make a few observations about the trends in the political economy. The first quarter of 2011 is now the best quarter since 2007 but does this mean that the future is assured? With an ROA<1% and ROE measured in single digits, the results are less than stellar. But the retrenchment of Americans away from housing assets and toward cash savings raises questions about the future of the banking industry.

2011-05-31 Weekly Commentary & Outlook by Scotty George of du Pasquier Asset Management

So what is the state of the economy and the financial markets? Poor. Whether it?s drought, weather disasters, human disasters, or economic uncertainty, the markets seem to be going nowhere. The most potent markets are driven by cash, confidence, and confluence. But with two bear markets in the last decade, behavior and attitudes have changed. There has been a drastic decline in consumer confidence brought on by the dot.com bubble and by the horrific events of 9/11 and their reverberations. No matter how accessible cash became, it only seemed to lead to some kind of disaster.

2011-05-28 And That?s The Week That Was ? by Ron Brounes of Brounes & Associates

While Memorial Day starts summer, many traders got a jumpstart on the season by skipping town early as volume was quite thin on the exchanges. Earnings announcements continued (though folks stopped paying attention long ago) and Tiffany and Guess both bested expectations, a nice sign for luxury retail. As the season comes to a close, the results spoke well for the state of Corporate America. For the quarter, profits increased by almost 6% to $1.45 trillion. The IPO world did not fare as well after investors thought the LinkedIn success of last week had ushered in a new ?exuberance.?

2011-05-28 Schwab Market Perspective: Shifting Sentiment by Liz Ann Sonders, Brad Sorensen, and Michelle Gibley of Charles Schwab

Economic headwinds are causing growth expectations to be reevaluated, resulting in choppier action in a majority of asset classes. The Fed is moving steadily closer to ending its purchases of Treasuries but we dont believe its a major event. Normalization of monetary policy still seems slow in coming, although we believe QE2 ending on schedule is nearly certain. Europe's debt crisis continues to plague the eurozone. Solutions appear to be limited and agreement is still anything but assured. Meanwhile, China's slowdown is also weighing on investors.

2011-05-26 The Case for More Monetary Elixir by Scott Minerd of Guggenheim

Ive noticed a critical mass of groupthink growing around the expiration of the Feds asset purchase program dubbed QE2. After tripling its balance sheet in 2.5 years, the conventional wisdom is that the era of quantitative easing should now give way to the era of inflation. As a result, the foregone conclusion is that U.S. interest rates will rise and bonds will underperform significantly. While I acknowledge the potential for rising rates, I dont think the expiration of QE2 is the catalyst that most believe it to be. In fact, I believe U.S. rates should remain at historically low levels.

2011-05-26 Protecting Bond Portfolios From Rising Rates by Team of Neuberger Berman

As the U.S. economy continues to strengthen and the prospect of inflation rises, investors are concerned the U.S. may potentially face a sustained period of rising interest rates. This matters to bond owners because changes in interest rates directly impact the market value of bonds and bond portfolios. With today?s fixed income markets now implying an increase in interest rates and higher volatility in credit spreads, a traditional buy-and-hold bond portfolio or a more traditional fixed income mutual fund strategy may not be as attractive to investors.

2011-05-24 Debt Ceiling Jeopardizes Dollar?s Reserve Status by Axel Merk of Merk Funds

While borrowing costs for the U.S. government have not yet risen, irreparable harm may have already been done to the U.S. dollar and its status as a reserve currency. Ironically, it?s not a plunging, but a rallying bond market that is a symptom of the problem. Most observers believe that a) the Treasury has a big bag of tricks to continue servicing the debt; and b) politicians will play a game of chicken, but eventually do what they always do: agree to spend more money. We don?t know how the bond market will react; but we do know that policy makers are playing with fire.

2011-05-24 What is conservative about Absolute Return, Market Neutral or Long/Short Mutual Funds? by Kendall J. Anderson of Anderson Griggs

The machine of Wall Street has convinced many individuals who believe they are prudent, conservative, investors that a mutual fund whose name or objective includes the terms Absolute Return, Market Neutral, Long/Short or hedged, will never lose your money. An individual whose fear of losing again from common stocks just can?t bear sitting on cash and earning a nickel of interest every three months 1k. The desire to increase returns is just too great. Before you fall for the hype there are a few things you should know. The most important item you should remember is that there is no guarantee.

2011-05-23 Spreads Edge out as Large Supply Continues by Stephen Smart of CCM

Secondary investment-grade and high-yield corporate bonds are still in favorable (albeit attenuated) trends, but are now past the seasonally ?right? time of year for outperformance; most new nonfinancial issues are still being priced rich to secondaries. Investment-grade corporate bonds still look like they will probably outperform Treasuries over the next two-to-three year period, but I expect most of that outperformance will recommence later in the year ? not in the May-October period.

2011-05-21 And That?s The Week That Was ? by Ron Brounes of Brounes & Associates

It?s beginning to look a lot like?summer. From college commencements to high school proms to nursery school graduations?soon kids will be home with nothing to do (but spend their parents? hard-earned money); vacations start in earnest; and market volume usually takes a tumble (tee times during trading hours). As for this year?rising commodities have elevated food prices which makes dining out more expensive. Likewise, with gasoline prices pushing $4/gal, analysts worry about any ill-effects on travel plans and overall consumer activity. In fact, several retailers are already feeling the pinch.

2011-05-20 Weekly Market Commentary by Scotty George of du Pasquier Asset Management

The funny thing about perpetual motion devices is that they give the impression of constant, and sometimes complicated, activity, but in reality they don?t actually go anywhere. Such is the state of global bourses, traversing an active up, then down, then up again pattern, yielding a great big net-nothing. The problem, though, with such market-driven perpetual motion is that unless the ?axis of ascent? is rising it must either be neutral or falling. And in today?s climate since the run-up in markets dating back to 2008, many securities are doing just that, declining or going nowhere.

2011-05-18 Floating rate: Hedging the interest rate risk in your fixed-income portfolio by Team of Columbia Management

Following the Great Recession of 2008, many investors aggressively moved to cash and fixed-income securities in a classic flight to safety. In early 2009, we could point to a historic opportunity to capture significant total return. Much of that correction has already occurred and valuations across the fixed-income market have largely recovered. At this juncture in the business cycle, credit risk has declined dramatically, as evidenced by defaults that are running below long-term averages, robust new issuance and demand for bonds, and healthy corporate balance sheets and earnings.

2011-05-13 And That's the Week That Was... by Ron Brounes of Brounes & Associates

Let the volatility begin. Commodities prices go up?equities follow. Commodities prices stumble?equities follow. These days, the supply/demand vs. speculation debate seems to be consuming investors? mindsets as the major moves in metals, grains, and energy (both up and down) are leading the direction of stocks (both up and down). Earnings still remain solid, though more firms are warning about future results.

2011-05-13 Market Turbulence Increasing by Liz Ann Sonders, Brad Sorensen, and Michelle Gibley of Charles Schwab

We are entering a traditionally tough period for the market and economic data has been raising questions about the sustainability of the recovery. While still optimistic on the longer-term outlook, there could be more choppiness in the near term as markets adjust to a changing environment. The Fed continues to buck the global trend by maintaining loose monetary policy, which contributed to a weaker dollar. But lately the dollar has gotten a lift as QE2 comes to an end, contributing to a rout in commodity prices.

2011-05-10 Howard Marks on the Human Side of Investing-Q & A by Robert Huebscher (Article)

Howard Marks is widely regarded for his thought-provoking essays on the discipline and process of value investing. He is the chairman and co-founder of California-based Oaktree Capital, and he delivered the keynote address at the Value Investing Congress in Pasadena last week. Here are excerpts from the Q&A.

2011-05-10 What is the greatest investment risk? The risk that money won?t be there when you need it! by David Edwards of Heron Financial Group

Stocks rallied in April, closing at the high for the year and the highest level in three years. With stocks up 9.1% through April 30th versus our 2011 forecast of 8%, we see stocks as fully to slightly overvalued. In fact, given the lack of substantial ?new? news to push stocks one way or the other, we expect a 10% trading range that could last through the summer and into the fall. On February 28th, David Edwards commented on Bloomberg Radio that ?the S&P 500 could fall 10% in the next six months,? but that he wouldn?t change his strategy because he expected a 20% rally on the other side.

2011-04-25 Near-Term Turbulence Wont Upset Positive Equity Backdrop by Bob Doll of BlackRock Investment Management

Equities remain in the broad trading ranges they have been tracing for months, but made a strong move to the top of those ranges this past week. The big news event in the US was the S&P downgrade of the US outlook, causing investors to focus on the possibility of the US government losing its AAA rating, and making it likely the budget problems will become the preeminent issue in the 2012 campaign. The looming debt ceiling vote is the proverbial bargaining chip in the middle of the chasm between the two parties on deficit reduction.

2011-04-22 Could the U.S. Return to 1970s Style Inflation? by Scott Colyer of Advisors Asset Management

The U.S. appears to be at the crossroads of fiscal and monetary policy. Many are painting a very bleak picture of the future of the dollar, U.S. credit and the validity of the U.S. economy as the model for the world. Could the U.S. return to 1970s style of inflation? The answer is that, although the possibility is there, the probability that such a high level of inflation returning any time soon is actually very low. Is the Fed conducting monetary policy that is inflationary in nature? Yes they are, but let?s not forget why they are doing this. The Fed is engaged in the avoidance of deflation

2011-04-18 Approaching the Eraser by John P. Hussman of Hussman Funds

Market conditions in stocks continue to be characterized by a hostile syndrome of overvaluation, overbought conditions, overbullish sentiment, and rising interest rates, which has historically been associated with a poor return/risk profile, on average, across a wide variety of subsets of historical data. Though I question the ability of the economy to "pass the baton" to the private sector as government stimulus effects run off in the coming 8-10 weeks, I should emphasize up front that our present defensive position is not driven by those economic concerns.

2011-04-15 Not all Bonds are Created Equal by Dan Fuss, Kathleen Gaffney, Matthew Eagan & Elaine Stokes of Loomis Sayles

It has become the question of the day: If interest rates are heading higher, shouldn?t I bail out of bonds altogether? While we anticipate rates will rise, we don?t believe abandoning bonds would be prudent for most investors. Bonds can play an important role in investor portfolios by providing income potential plus diversification. In this piece, we describe why we think rates may be biased higher in coming years and how our portfolio strategies may adjust to the new environment.

2011-04-13 Fixed Income Investment Outlook by Team of Osterweis Capital Management

Investors sometimes walk a fine line between either over-reacting to temporal changes, which ultimately don?t have a lasting impact on either the economy or the markets, or underestimating the impact of real risks that can bring about lasting and meaningful changes. Currently, the main areas of concern are the Japanese triple disaster, the Middle Eastern/North African ?Arab Spring,? and inflation. While we do not believe the Japanese and Middle Eastern situations pose a real threat to financial markets long term, we do believe inflation may.

2011-04-12 Ten Trends that will Reshape the Fund Industry by Robert Huebscher (Article)

For advisors scouring among thousands of mutual funds, bargains and inefficiencies will be harder to find in coming years. Intense competition among funds for shelf space will not translate to lower fees, and the new class of broad asset allocation funds is unlikely to live up to its marketing promises. Those were among the surprising forecasts from Geoff Bobroff, with whom I met last week.

2011-04-11 Despite Near-Term Risks, Stocks Remain Resilient by Bob Doll of BlackRock Investment Management

The preponderance of the economic and market-related news skewed to the negative last week, with an additional earthquake in Japan, rising oil prices, an interest rate hike by the European Central Bank (ECB), escalating debt problems in Europe and increasing noise about the since-averted potential federal government shutdown. Despite this backdrop, however, US equities remained resilient and were roughly flat for the week, with the Dow Jones Industrial Average up marginally to 12,380, the S&P 500 Index down 0.3% to 1,328 and the Nasdaq Composite down 0.3% to 2,780.

2011-04-08 Financial markets don?t worry about government shutdowns ? It?s when they come back we worry! by Colin Moore of Columbia Management

We examine the implications for the broad economy, financial markets and state and local budgets of a federal government shutdown. The probability of a ?shutdown? this weekend is growing. There appears to have been little real progress in negotiations over the last few days. If anything, the debate about the current crisis has ballooned into an even greater battle about the size of and role of government. It is relatively easy to agree on a target $33 billion or $40 billion of expenditure cuts, it is MUCH more difficult to identify exactly which programs should be cut to meet that target.

2011-04-05 Is Alpha Dead? by Andreas Steiner (Article)

While beta has been declared dead several times in the past, alpha is a survivor. My diagnosis is that alpha, however, is in very critical condition itself, even under the most optimistic interpretation. A more realistic assessment is that alpha is dead.

2011-04-05 Letters to the Editor: GMWBs and the Permanent Portfolio by Various (Article)

A reader responds to our article, Understanding Variable Annuities with GMWBs, which appeared on March 1 and another reader responds to Geoff Considine's article, What Investors Should Fear in the Permanent Portfolio, which appeared on March 22.

2011-03-30 ?Agri?-vation by Scotty George of du Pasquier Asset Management

Recent events in the Middle East, combined with weather, have put tremendous pressure upon raw materials prices. The fear is that cyclical pricing pressure might become secular (generational) trends, accelerating inflation in energy prices, foodstuffs, and industrial components, thus undermining a tenuous uptick in consumer spending, global trade, and consumer confidence. While Wall Street rejoices that something, anything, has stimulated trading activity and profit margins, the world watches as surpluses contract and statistics become human convoys of disaster.

2011-03-29 GMO's Market Outlook: 'Disappointingly Overvalued' by Robert Huebscher (Article)

Opportunities across US and foreign assets classes are unattractive, according to Ben Inker, the head of asset allocation at the Boston-based global money manager Grantham, Mayo, van Otterloo & Co. (GMO). Neither the equity nor fixed income markets hold the potential for investors to earn acceptable inflation-adjusted returns, Inker said.

2011-03-25 Unrest and Turmoil = Rising Oil Prices by Monty Guild and Tony Danaher of Guild Investment Management

Nine of the eleven nations sharing land or water borders with Saudi Arabia (SA0 have had demonstrations. Trouble is likely to surface in SA because much of the country?s wealth is located under lands where Shia Muslims are in the majority. The ruling House of Saud is Sunni Muslim. The distrust and bad blood between the two sects predates oil discovery and is not likely to be solved with oil money. The political events are about freedom from repression but also represent a basic struggle between these two Muslim groups for control of revenues from the huge oil fields in that part of the world.

2011-03-24 Mixed Fed Messages Reflect Murky Outlook by Team of American Century Investments

Mixed. Unsettled. Not altogether reassuring. Sounding a lot like the current state of the U.S. economy, that was the tone of the policy statement issued March 15 by the open-market operations committee of the U.S. Federal Reserve. It certainly didn?t provide comfort to those fearing that the Fed is in the process of fueling future inflation flames, nor did it offer any encouragement to savers hoping for higher short-term interest rates in the near future. What the statement did accomplish was help support the economic, inflation, and Fed policy outlooks of the fixed income team at ACI.

2011-03-23 As The World Turns by Scott Brown of Raymond James Equity Research

Japan?s earthquake/tsunami/nuclear tragedy and heightened tensions in the Middle East and North Africa have led to some concerns about the global economy, and in turn, the strength of the U.S. recovery. A weaker Japanese economy and supply-chain disruptions are detrimental to U.S. growth, but moderately and only short-term in nature. Developments in the Middle East and North Africa are more uncertain, but are likely to keep oil prices relatively elevated. None of this is expected to jeopardize the U.S. recovery, but it could keep growth from being as strong as was hoped for just a month ago.

2011-03-23 PIMCO Cyclical Outlook: U.S. Economy, Global by Saumil H. Parikh of PIMCO

PIMCO continues to foresee a multi-speed global recovery over the next few years. The U.S. is experiencing a cyclical economic rebound, but its strong durability is uncertain. Several countries in Europe face headwinds to growth over our cyclical horizon. Japan?s growth rate will likely fall in the near term, but reconstruction activities should stimulate growth over time. We expect real economic growth in key emerging economies to remain at a solid rate during 2011, but lower than 2010.

2011-03-21 Risks to the Global Economy Should Remain Contained by Bob Doll of BlackRock Investment Management

Escalating anxiety over the damage from the earthquake in Japan and resulting nuclear reactor problems as well as rising tensions in Libya and the Middle East resulted in an aggressive selloff in equity prices early last week. Despite an end-of-week rally, stocks were down for the week as a whole, with the Dow Jones Industrial Average falling 1.5% to 11,859, the S&P 500 Index declining 1.9% to 1,279 and the Nasdaq Composite losing 2.7% to 2,644. The events of the last several weeks serve as a reminder about how quickly potential risks can turn into downside reality.

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.

2011-03-18 What Inflation Means to You: Inside the Consumer Price Index by Doug Short of Doug Short

The Fed justified the current round of quantitative easing "to promote a stronger pace of economic recovery" The Fed is trying to increase inflation, operating at the macro level. But what does an increase in inflation mean at the micro level, specifically to your household? Let's do some analysis of the Consumer Price Index, the best known measure of inflation. The Bureau of Labor Statistics divides all expenditures into eight categories and assigns a relative size to each. The pie chart below illustrates the components of the Consumer Price Index for Urban Consumers.

2011-03-17 5 Dividend Champions to Work Your Money as hard as You Worked for It! by Chuck Carnevale of EDMP

You worked hard over your lifetime to build a nest egg in order to fund your retirement. Doesnt it make sense that now that youre retired your money should work as hard for you as you worked for it? When you were working, you were accustomed to receiving a raise in pay each year. Why should that end now, just because you are retired? It doesnt have to, because investors today have the good fortune and opportunity to invest in blue-chip 'Dividend Champions' (companies that have increased their dividend every year for at least 25 years) which are trading at historically low valuations

2011-03-15 U.S. Government: Evermore Reliant on Foreign Investors by Kieran Osborne of Merk Funds

Despite the Fed recently surpassing China as the largest owner of U.S. government debt, the U.S. remains heavily reliant on foreigners to fund the government?s ongoing fiscal largess. Geithner?s Treasury Department has firmly focused new issues at the mid to longer end of the yield curve. Despite the Treasury taking advantage of the ultra-low interest rate and funding environment, there are substantial refinancing issues over the near term; moreover, many of these maturing issues are foreign owned.

2011-03-14 Weekly Investment Commentary by Bob Doll of BlackRock Investment Management

Risk assets experienced a setback last week in the face of rising tensions in Libya and the Middle East. Additionally, the massive earthquake that hit Japan on Friday resulted in a sharp downturn in Japanese equities on Monday and increased investor unease. For the week, the Dow Jones Industrial Average lost 1.0% to 12,044, the S&P 500 Index declined 1.3% to 1,304 and the Nasdaq Composite fell 2.5% to 2,716. The human costs of the earthquake in Japan are obviously foremost in everyone?s mind at this time, but the potential economic and market implications are also being weighed by investors.

2011-03-11 The Seven Immutable Laws of Investing by James Montier of GMO

This dearth of assets offering a margin of safety raises a conundrum for the asset allocation professional: what does one do when nothing is cheap? Personally, I?d seek to raise cash. This is obvious not for its uninspiring near-zero yield, but because it acts as dry powder ? a store of value to deploy when the opportunity set offered by Mr. Market becomes more appealing. And this is likely, as long as the emotional pendulum of investors oscillates between the depths of despair and irrational exuberance as it always has done. Of course, the timing of these swings remains as nebulous as ever.

2011-03-10 Stock picking is dead? Long live stock picking by Robert McConnaughey of Columbia Management

A recent front­page story in The Wall Street Journal was titled ?Macro Forces in Market Confound Stock Pickers.? The article quoted a prominent Wall Street strategist as saying, ?Stock picking is a dead art form.? The article is now prominently displayed on my office bulletin board as I believe it (and similar articles and research notes) marks a high in skepticism regarding active investing. I also believe these sentiments will be proven dramatically wrong in the months and years to come, as certain active investors take advantage of the inefficiencies that this very skepticism is causing.

2011-03-08 Letters to the Editor and a Final Thought on VAs with GMWBs by Various (Article)

We received a record number of letters in response to Robert Huebscher?s article, Understanding Variable Annuities with GMWBs, and to Peng Chen?s response, The Real Flaws ? A response to 'Understanding Variable Annuities with GMWBs,' which were published last week. We also provide a final thought on this subject.

2011-03-07 Investment Commentary by Bob Doll of BlackRock Investment Management

A tug of war is taking place in the markets, with crosscurrents of good economic reports on the positive side and a continued rise in oil prices from the conflicts in the Middle East on the negative side. Last week, US equities were up modestly, with the Dow Jones Industrial Average rising 0.33% to 12,169, the Nasdaq Composite advancing 0.13% to 2,784 and the S&P 500 adding 0.10% to close at 1,321.

2011-03-04 And That's The Week That Was? by Ron Brounes of Brounes & Associates

Unlike Egypt?s Mubarak, Libya?s Gadhafi is not going down without a strong fight. With tensions escalating throughout the region, the world?s oil supply and crude prices soared above $104/barrel over the past few days to levels not seen in 29 months. While optimists point out that Saudi Arabia has been quick to pick up the slack for any shortfall out of Libya, others worry that a prolonged crisis limits its ability to do so indefinitely. The bigger pessimists fear that the uprising could spread to Saudi (Anyone think it may be time to reduce our dependency on foreign oil?)

2011-03-03 Multi-Asset Real Return: Assessing & Exploiting Price Pressures in their Many Forms by Kevin Kearns, Laura Sarlo and James Balfour of Loomis Sayles

An asset manager?s challenge is to preserve and grow the purchasing power of investors? portfolios under a variety of economic conditions. Understanding the breadth of global inflationary or deflationary trends that can occur, and the ways different assets might perform in these environments, is critical to this objective. Based on our research, we have determined that no single asset class can protect investors from inflation. On the contrary, we believe the flexibility and diversification offered by a multi-asset-class strategy is necessary to help weather changing inflation regimes.

2011-03-01 Understanding Variable Annuities with GMWBs by Robert Huebscher (Article)

It's very tempting: a variable annuity with minimum lifetime payout that can increase - but never decrease - based on market performance. That temptation comes in the form of an increasingly popular variable annuity rider known as a guaranteed minimum withdrawal benefit. We explain the flaws in a widely publicized study by Morningstar/Ibbotson, and provide our own analysis of the product.

2011-02-25 And That's The Week That Was? by Ron Brounes of Brounes & Associates

First Tunisia was stricken with political unrest and investors barely noticed. Then Egypt suffered through a revolution which initiated a change in leadership, and the markets offered a collective yawn. Now Libya faces mass protests and traders are on edge. So what?s different in this case? One word?OIL. Libya is the first major oil producing state to encounter the violent turmoil that threatens a major shift in power. It produces 1.6 million barrels of oil a day and crude prices surged in the immediate aftermath of the revolution on fears of a production slowdown.

2011-02-22 Toward an Understanding of Risk - Part 2 by Robert Huebscher (Article)

How should clients think about risk in their portfolios? Advisor Perspectives put that question to a cross-section of prominent advisors and academics. Their answers encompassed diverse opinions and underscored how crucial that question is to the investment process. In part one of this series, which appeared last week, we heard from seven practitioners in the financial planning community. This week, we hear from seven well-known academics, including two Nobel Prize winners.

2011-02-20 December 2010 Semi-Annual Report by John P. Hussman of Hussman Funds

For the third time in a decade, the Federal Reserve has embarked on a policy that addresses structural economic problems by provoking speculation in asset prices. The first two attempts were ultimately followed by stock market declines greater than 50% each. As we enter 2011, the stock market remains in what we view as an already strenuously overvalued advance, which has driven our estimates for S&P 500 Index total returns to less than 3.2% annually over the coming decade. My expectation is that this attempt to create ?illusory prosperity? will end no better than it has in the past.

2011-02-17 Responding to the Stubbornly Steep U.S. Treasury Yield Curve by Team of American Century Investments

Disciplined, active investment managers are constantly on the lookout for capital market extremes, which can provide value-adding opportunities for investors. One such market extreme has been developing in the U.S. Treasury market for the past three years, reaching historic levels in 2010 and earlier this year. We?re talking about the very wide, stubbornly persistent gap between short- and longer-maturity U.S. Treasury yields.

2011-02-15 Toward an Understanding of Risk by Robert Huebscher (Article)

How should clients think about risk in their portfolios? Advisor Perspectives put that question to a cross-section of prominent advisors and academics. Their answers encompassed diverse opinions and underscored how crucial that question is to the investment process.

2011-02-15 The Stuxnet Paradigm by Michael Lewitt (Article)

Michael Lewitt discusses the situation in Egypt, the economy, rising risk appetites in the market, sovereign debt and municipal bonds. 'It might be very easy,' he writes, 'to be impressed by the 'two years and thousands of man hours' that Ms. Whitney spent researching the fiscal condition of the 15 largest states. What in the world required so much time and effort? It shouldn't have taken nearly so long to determine that these states are in severe financial trouble and that their options for dealing with it are limited.

2011-02-13 Rich Valuations and Poor Market Returns by John P. Hussman of Hussman Funds

At present, my view on monetary policy is that the inflation outlook following the completion of QE2 will be quite unstable, because small changes in interest rates are likely to induce very large changes in the willingness of individuals to hold base money. Any external upward pressure on interest rates beyond a fraction of a percent will have to be rapidly offset by a large reduction in the outstanding monetary base in order to avoid a deterioration in the value of money relative to goods and services (i.e. inflation).

2011-02-11 Yelling Fire in a Crowded ?Muni? Theatre by Andrew Clinton of Clinton Investment Management

Municipalities have the unique power to raise taxes and service fees, while cutting non-essential services, in order to create revenues sufficient to pay debt holders. There are over 50,000 individual municipalities across the country. Over the course of decades, there have been very few instances of default. The economy's improvement should bolster state and local finances now and in the future. I firmly believe investors seeking safety of principle and attractive tax-free cash flow should look to capitalize on the current market uncertainty as they are being well compensated to do so.

2011-02-09 Testing the Wisdom of Ben Graham?s Formula (part one) by Chuck Carnevale of EDMP

Ben Graham?s formula for valuing a company V* = EPS x (8.5 + 2g) established a solid foundation for future value investors to build upon. The small ?g? in the formula represents your reasonably expected 7 to 10 year growth rate. Consequently, Ben Graham?s formula was forward-looking. In this article we looked at modern historical performance in order to test the validity of this famous value formula. Remarkably, the formula proves itself to being very precise when applied in the real world to businesses that grow earnings between zero and 5% per annum.

2011-02-09 How to Play in 2011 by David A. Rosenberg of Gluskin Sheff

At the start of every year I remind myself that each individual year has its own story. For example, 2007 taught us that it never hurts to take profits after the market doubles and that if something is too good to be true (housing and credit bubble) it probably is. The 2008 lesson focused on capital preservation strategies and the urgency of managing downside risks. 2009 it was vital not to overstay a bearish stance in the face of massive fiscal and monetary stimulus. Last year?s lesson was how to handle the many post-stimulus market swings that are inherent in a post-bubble credit collapse.

2011-02-08 Optimizing Your Fixed Income Allocation by Geoff Considine, Ph.D. (Article)

Here's a little-known fact: The traditional 60/40 portfolio, when using the aggregate-bond index for its fixed-income allocation, has a 99% correlation to the returns of the S&P 500. One way to overcome the limited diversification value offered by the aggregate index is to use a risk-parity approach. In this article, I explore the concept of risk parity in asset allocation and how it provides value for portfolio management.

2011-02-08 Conundrum Investing by James G. Tillar and Steve Wenstrup of Tillar-Wenstrup Advisors

The range of possible outcomes for the economy and market is still wide. We believe QE2 is simply a continuation of a boom-and-bust regime. Fundamentals are good now but are unlikely to be sustainable. Printing money to support asset prices cannot go on forever and usually ends in disaster like it did after both the technology and housing busts. Therefore, we dont believe this is a time to be aggressive. We are maintaining our strategy of emphasizing steady-growth businesses, with strong balance sheets, healthy dividends, attractive valuations and exposure to emerging economies.

2011-02-02 Devil?s Bargain by Bill Gross of PIMCO

Money has become the economic and political wedge for profound changes in American society. Perhaps the most deceptive policy tool to lessen debt loads is the ?negative? or exceedingly low real interest rate that central banks impose on savers and debt holders. Old-fashioned gilts and Treasury bonds may need to be ?exorcised? from model portfolios and replaced with more attractive alternatives both from a risk and a reward standpoint.

2011-01-31 The Investment Outlook: An Overview by Milton Ezrati of Lord Abbett

This is the first of a four-article series on the macro considerations behind Lord Abbett?s fixed-income and equity outlooks. This first installment offers an overview. The three pieces that follow will, in turn, take up the reasons behind 1) the general preference for credit-sensitive fixed-income issues; 2) the positive overall stance on equities; and 3) the call for a thorough capitalization mix within equities.

2011-01-31 Duration: Not the Whole Story by David L. Waldman of Loomis Sayles

Our analysis has shown that drawing on a broad set of quantitative tools to assess a portfolio?s perceived interest rate sensitivity can enhance the decision making process. At Loomis Sayles, iRate Beta is one of many resources?including other analytics, fundamental research and trading insights?for portfolio managers to consider when making investment decisions. By arming portfolio managers with a comprehensive perspective on their portfolios? Treasury sensitivity and risk, we believe managers will be better positioned to consider various investment and hedging strategies.

2011-01-31 Investment Commentary by Bob Doll of BlackRock Investment Management

At present, most investors appear to have increased their expectations for global growth and for growth levels in the United States. The words ?double dip? have virtually vanished from investors? vocabularies and while we agree with the generally optimistic tenor of the conversation, we are also somewhat uneasy about the positive shift in sentiment and growing sense of complacency. As last week?s events remind us, there are a number of risks to be wary of, including one we have not yet mentioned ? monetary tightening in emerging markets.

2011-01-29 Q410 Market and Economic Commentary by Mike Timm of Granite Investment Advisors

We remain positive on equities. Valuations on large capitalization stocks remain attractive. Though smaller cap companies outperformed large cap stocks in 2010, we believe the valuation gap will close in 2011 in large part because many of the large cap names have significant sales exposure to emerging economies around the world. In fixed income, we continue to favor corporate securities with maturities shorter than five to six years, cushion bonds, step-up bonds, and selected non-investment grade bonds. We expect rates to continue to rise over the next eighteen months.

2011-01-28 Pie in the Sky by John Browne of Euro Pacific Capital

Investors would be well-advised to retain a jaundiced view of all political statements, especially those of central bankers and politicians positioning themselves for the next election. In 2011, investors should focus their eyes not on the sky, but at the brick wall our Union is fast approaching.

2011-01-25 Fourth Quarter 2010 Market Review & Outlook by Steven Roge of R.W. Roge

Our outlook for 2011 remains cautious, as we were last year. We will continue with most of our 2010 strategies for 2011, with the exception of bonds and municipal bonds which may present some difficulty going forward. We have already lowered our allocation to bonds in the third quarter, lowered our bond duration, and are currently lowering these variables even further, especially in the municipal bond area.

2011-01-24 Weapons of Mass Poverty by Mark Elliott of Elliott Asset Management

Modern financial management dogmas may be fundamentally, terminally, and irreparably flawed ? and may be key ingredients in modern asset bubbles. I believe what could be the most serious catastrophe to face retirees and other investors since The Great Depression may be currently underway and, as in past recent financial catastrophes, most investors and financial ?professionals? will fail to act ? despite what appears to be clear writing on the wall.

2011-01-24 Investment Commentary by Bob Doll of BlackRock Investment Management

A number of factors bear close watching for investors, including the potential for additional Chinese policy tightening, ongoing weakness in the housing market and ongoing European sovereign debt issues. The overall strength of the economy, however, suggests to us that a repeat of the environment of fear that surfaced last year when the Greek sovereign debt problem developed is unlikely. We believe the strength in profit margins coupled with a less-hostile regulatory posture from D.C., should spur increased confidence, which should lead to a pickup in employment.

2011-01-20 James Tobin?s Advice; Look 'Anywhere insight may be found' by Kendall J. Anderson of Anderson Griggs

For 99% of all investors in the United States, risk control can be simplified by separating your funds into buckets of ?risk-free? and ?risky? assets. Just remember that ?risk-free? cannot be substituted with investments that are almost risk free. With FDIC Insurance coverage of $250,000.00 per person, and unlimited amounts available from the U.S. Treasury, the ability for most investors to incorporate risk free investments into their portfolios is easily accomplished.

2011-01-18 Weekly Market Commentary by Scotty George of du Pasquier Asset Management

Today, bond and stock inventors sit at the edge of a new paradigm, indeed, where inexpensive money has yielded about as much as possible from corporate balance sheet expansion, while lower interest rates no longer offer high yield or capital gains probabilities to fixed income investors. The difficulty today, however, is that stocks are at a significant inflection point where the likelihood of perpetual sustainable upside gains is limited.

2011-01-18 How High is High? (To Whom?) by Jeffrey Saut of Raymond James Equity Research

The current buying stampede is legend with the DJIA experiencing no more than three consecutive days on the downside over the past 93 sessions. This, combined with numerous other negative indicators, continues to leave me cautious in the short-term on both stocks and commodities, but not bearish. As for buy ideas, as stated I do like Tech.

2011-01-18 Fixed Income Investment Outlook by Team of Osterweis Capital Management

As for our strategy, we continue on a steady course of balancing major risk aversion while opportunistically seeking returns. Although there are no longer any soft pitches like there were in late 2008 and early 2009, we feel that there are still enough bond issues from well-run companies that offer reasonable returns without going too far out on the risk or duration curves. We do not believe it is prudent to lower quality standards or to take excessive duration exposure at this time in order to increase returns. We believe there will be better opportunities for that in the future.

2011-01-15 Trading Secrets by Tad Rivelle of TCW Asset Management

Treasury yields are lower today than they were in the early 1930s. This is despite a paucity of evidence that prices are deflating, or that the U.S. is the beneficiary of a flight-to-quality. Furthermore, the low rates have continued notwithstanding QE2, a program of thinly disguised ?money printing.? Our belief is that low rates are the product of a zero rate policy that is distorting Treasury pricing. This ?artificial? propping up of Treasury pricing will last until such time that bank balance sheets are substantially repaired. As such, our outlook for Treasuries is decidedly negative.

2011-01-13 Post Time by Michael Dana of Dana Investment Advisors

The financial markets by themselves do not recognize time. It doesn?t matter if it is August 9 or January 2. Time does, however, matter to investors. There are always tax considerations, window dressing, estate planning and numerous other factors that coincide with the end of the year and the beginning of a new year. For many (particularly mutual funds or investment advisors) it is a horse race. Anyone in the investment business is judged on performance. In order to retain and attract new clients one must consistently outperform the popular market indexes. So here we are again: it?s post time.

2011-01-13 TW3?! by Jeffrey Saut of Raymond James Equity Research

?That Was The Week That Was,? also known as TW3, was a satirical TV comedy first broadcast on the BBC in November of 1962 and subsequently moved to America. The program was radical in that it chronicled events of the previous week and broke new ground in lampooning the establishment. It was also the first show to demonstrate it was truly television by allowing the cameras and boom microphones to be seen, giving the program an exciting and modern feel. I revisit TW3 this morning because despite last week?s holiday-like environment there were some pretty amazing headlines.

2011-01-12 Equity Market Review and Outlook by Richard Skaggs and Thomas Davis of Loomis Sayles

Global equity markets continued the uptrend that began in the third quarter and finished the year with solid gains across all major equity categories. Such a powerful second half of 2010 seemed improbable just last summer, when concerns over a potential double-dip recession dominated investor thinking. Other macro issues, such as the ongoing financial challenges within the European Union, remain unresolved. However, these macro concerns have remained manageable in the eyes of equity investors.

2011-01-10 Q4 Bond Market Review and Outlook by Teri L. Mason of Loomis Sayles

The US economic picture brightened as policymakers announced additional steps to stimulate the economy. Bond yields rose, causing many sectors of the bond market to lose ground in the final quarter of 2010, though high yield bonds, selected currencies and equity markets roared ahead.

2011-01-10 The Key Asset Classes For 2011 Will Be: Oil, Gold, And Stocks by Monty Guild and Tony Danaher of Guild Investment Management

Investors are moving from bonds to stocks and the huge cash balances at money market funds will likely find their way into stock and commodity markets in 2011. This means inflation and commodities prices are likely to rise faster than wages, and those living on fixed incomes or bond interest will be affected the most, due to the fact that their money buys them less of everything; both luxuries and necessities. However, the ramifications of this inflationary trend are also serious for wage-earners. In every inflationary period in recorded history, wages have risen more slowly than inflation.

2011-01-05 Market Review & Outlook by Doug MacKay of Broadleaf Partners

In 2011, we remain optimistic, believing the economy will progress from its recovery phase into expansion territory sometime during 2012. A more favorable regulatory and political environment should be a positive for corporate America, which may finally begin to spend its huge accumulated cash hoards, not solely by returning it to shareholders in the form of stock buybacks and dividends, but by also hiring new employees and upgrading their capital equipment as demand trends improve. A continued trend of bond market outflows and equity inflows should also prove constructive for the stocks.

2011-01-04 The White Hurricane by Jeffrey Saut of Raymond James Equity Research

I believe that in the short-term, the odds are not tipped decidedly in investors? favor. The Volatility Index is down to ?complacency levels? last seen in April. Ditto, Investors Intelligence data shows advisory sentiment approaching the bullish extremes of October 07. Meanwhile, stock market leadership is narrowing, internal momentum is waning, and every macro sector except Utilities is overbought. Correlations between various asset classes are decreasing, implying that investors are becoming increasingly selective. All of this suggests more caution is warranted as we enter the new year.

2011-01-04 Getting a Grip by David A. Rosenberg of Gluskin Sheff

We can expect a showdown between the House Republicans and the Administration over the debt ceiling in Q2. At stake could be a good dose of spending restraint as ?pay-go? rules make a sudden reappearance after being neglected by the lame-duckers last year. There is always the reality of the payroll tax cut coming to an end in December and how that will crimp personal income in 2011. Of course, there is always the prospect of a Q4 corporate spending binge as the bonus depreciation allowance expires. The last 3 quarters of 2011 are going to be very interesting

2011-01-04 The 2011 Economic Outlook ? Credit Given Where Credit Is Due by Paul Kasriel of Northern Trust

With regard to 2011 real GDP growth, we now expect Q4/Q4 growth of 3.3% vs. 3.0%. An upward revision of 2011 Q4/Q4 real consumption growth to 2.9% from 2.5% in November is the primary factor accounting for the upward revision to the real GDP growth forecast. We are more optimistic about 2011 real GDP growth primarily because QE2 implies that the Fed will be purchasing all of the additional Treasury debt issued in conjunction with the Obama-McConnell tax and unemployment insurance compromise. We currently see more upside risk to our 2011 real GDP growth forecast than downside risk.

2011-01-04 Understanding Recent Municipal Bond Market Volatility by Steven Permut of American Century Investments

Municipal bonds have fallen in price recently. The price drop is not due to a new significant credit event or default, but rather, the decline is being driven by a host of other factors such as rising interest rates and a lack of liquidity stemming from increasing municipal supply, uncertainty surrounding the extension of Build America Bonds and the Bush tax cuts, and reduced investor demand. While municipal bond price volatility may continue into the beginning of 2011, we believe that municipal bonds still offer value over a long-term time horizon.

2010-12-31 2011: A Look Ahead by Bob Doll of BlackRock

As a way of discussing our economic and market views for the coming year, we present our 10 predictions for 2011: 1. US growth accelerates as US real GDP reaches a new all-time high. 2. The US economy creates two to three million jobs in 2011 as the unemployment rate falls to 9%. 3. US stocks experience a third year of double-digit percentage returns for the first time in more than a decade as earnings reach a new all-time high. 4. Stocks outperform bonds and cash. 5. The US stock market outperforms the MSCI World Index.

2010-12-31 Heads you lose, tails you lose. by Scotty George of du Pasquier Asset Management

Despite 2 year gains in financial valuations, most major global bourses remain in a downtrend as we enter 2011. Year-end improvements in market performance have not erased the erosive cycle trend decline begun in late 2006. Some argue that the past two years represented the regeneration of a new bull cycle in financial markets. However, empirical macro data, as well as a longer term perspective about the duration of bull markets, indicates that last year?s bull was simply a second intermediate upleg within a much longer bear market. No turnaround in the secular trend just yet.

2010-12-25 The Skinny On Thursday?s Data Flow by David A. Rosenberg of Gluskin Sheff

We got a flurry of U.S. data releases on 12/24 that, at the margin, added some comfort for the growth bulls. Initial jobless claims came in roughly as expected at 420k on a seasonally adjusted basis for the week of December 18, down 3k from the prior week. The 4-week moving average is at 426k and this time last year it was sitting at 479k, so the pace of firings has clearly receded sharply. The issue at this time is really one of hiring and going beyond part-time help.

2010-12-22 Understanding Risk Parity by Brian Hurst, Bryan W. Johnson, and Yao Hua Ooi of AQR Capital Management

The outperformance of Risk Parity strategies during the recent credit crisis has confirmed the benefits of a truly diversified portfolio. Traditional diversification focuses on dollar allocation; but because equities have disproportionate risk, a traditional portfolio?s overall risk is often dominated by its equity portion. Risk Parity diversification focuses on risk allocation. We find that by making significant investments in non-equity asset classes, investors can achieve true diversification ? and expect more consistent performance across the spectrum of potential economic environments.

2010-12-22 The Year in Review by Doug MacKay of Broadleaf Partners

For 2011, we believe this trend of bond outflows and equity inflows will likely continue, overwhelming any concerns about valuations or fundamentals. In the short run, I've come to realize that fund flows, or investor desires for specific favored asset classes over others - tends to exacerbate price movements in both directions, often for much longer than most expect. I see great things for the stock market in 2011. While an improving economy will help, a shakeout in bonds may be just what the doctor ordered to get investors truly interested in stocks again.

2010-12-17 Capital Markets Brace for Exciting 2011 by Andreas Utermann of RCM

Andreas Utermann, global chief investment officer at RCM, a company of Allianz Global Investors, highlights key themes likely to shape the direction of capital markets in the coming year and provides a brief outlook on how he expects major asset classes to perform.

2010-12-13 Weekly Investment Commentary by Bob Doll of BlackRock

Recent economic data has continued to be generally positive, with highlights including some decent consumer spending figures. In addition to accelerating growth trends in the US, most areas of the world have also shown signs of economic improvement in recent weeks. The concern about the European debt situation has been relatively muted as of late, and while these issues will likely continue to surface into the New Year, the difference between the Greek debt crisis of a few months ago and what is happening today is that now the global economy as a whole appears to be on firmer footing.

2010-12-13 Bullish Sentiment Nears Extreme Levels As Investors Pile Into Equities by Chris Maxey of Fortigent

According to EPFR Global, a research provider that aggregates mutual fund flows, the week ending December 8th saw investors allocate $13.7bln of new capital to stocks funds while only investing $146mln in fixed income funds. Domestic bond funds experienced withdrawals of more than $1bln. Interestingly, money market funds picked up more than $32bln in new funds, the highest total in 22 weeks. Whether this is a wise time to jump back into equity securities remains a hotly debated issue but based on several metrics, this may not be the most opportune time to increase equity exposure.

2010-12-07 Markets Rebound Despite Poor Jobs Report by Chris Maxey of Fortigent

Earlier in the fall, pessimists were pointing towards a slowing ISM index as a surefire harbinger that a ?double-dip? recession was on the way. That did not happen, fortunately, and manufacturing activity has since rebounded. Several subcomponents also provided encouraging data. In particular, the employment index finished the month at 57.5, a clear-cut sign that manufacturers are continuing to hire in order to keep up with growing demand. Somewhat less positive was the prices paid index, which remained elevated at 69.5 in November.

2010-12-06 The Dangers of Rebalancing by Michael Edesess (Article)

Every portfolio should be rebalanced to its targeted asset allocation, we are taught. Indeed, there may be no other precept as routinely and studiously practiced among financial advisors. But does rebalancing either increase expected return or reduce risk? If so, why? The answers to those questions reveal that it may be prudent to rebalance, but not for the reasons you think.

2010-12-06 Research-driven Market Insights from Janus: 4Q Market Perspectives by Janus Investments (Article)

Offer clients research-driven market insights. Every quarter, Janus equity and fixed income teams share their insight and outlook on global market sectors and key macroeconomic indicators in Janus' Market Perspectives Series. We thank Janus Investments for their sponsorship.

2010-12-04 Decoupling, Further Defined by Andrew Foster of Matthews Asia

Emerging market equities? particularly those sectors most associated with decoupling themes?are now subject to elevated valuations. It appears that some investors have grown overly convinced that decoupling is a one-way, short-term bet. Don?t bet on it. Instead, take your time, and set any expectations for decoupling over the longest horizons.

2010-12-04 Reframing A Case For High Yield Bonds by Tom Fahey of Loomis Sayles

Our contention is that high yield bonds are likely to continue to be a respectable store of value. We base this on their valuation profile and fixed income characteristics, which tend to stand out in the midst of a protracted economic recovery and ongoing deleveraging process that could have significant implications for economic growth and yield potential.

2010-12-03 Fundamentals and the Stock Market by Matthew Rubin of Neuberger Berman

Is continued discomfort in the stock market justified? It can be argued that the economy is relatively weak, and with high unemployment, the weak housing market and a new focus on fiscal restraint, few expect rapid expansion anytime soon ? not exactly a bullish sign for an asset class that is supposed to benefit from expansion. However, from a number of vantage points, stocks are displaying what we consider attractive characteristics that suggest the benefits of maintaining substantial exposure to equities in the current environment.

2010-12-01 The Risk of Fixed Income Indexing vs. Active Multi-Sector Management by Ken Taubes of Pioneer Investment Management

Tepid economic growth coupled with weak equity markets over the past few years have driven U.S. investors to the perceived safe haven of fixed income. We believe that fixed income indices may be appropriate as benchmarks, but not as investment strategies.

2010-12-01 Open and Shut by Howard Marks of Oaktree Capital

Today some assets are fairly priced and others are high, but there are no bargains like those of 2008. Capital and nerve can?t hold the answers in such an environment. We?re no longer in a high-return, low-risk market, especially in light of the inability to know how today?s many macro uncertainties will be resolved. Instead of capital and nerve, then, the indispensable elements are now risk control, selectivity, discernment, discipline and patience.

2010-11-30 Investment in Life Settlements: Certainty in Uncertain Times by J. Mark Goode (Article)

Life settlements are not directly correlated with traditional bond and equity markets and have the potential to yield above-market returns in the intermediate and long terms. Unlike the equity and bond markets, the returns on life settlements are uniquely tied to mortality.

2010-11-30 Currency Focus: QE2 and the Course Ahead by Ugo Lancioni of Neuberger Berman

We believe the dollar is likely to move higher on an intermediate-term basis. QE2, in our opinion, could lead to stronger economic growth in the U.S. and eventually drivehigher yields, making the dollar more attractive to investors. In our view, the impact of QE2 was already in the price of the U.S. dollar at the time of the announcement. And the market is generally still shorting dollars.

2010-11-29 Valuation Opportunity by Milton Ezrati of Lord Abbett

Because the fears forged during the 2008?09 crisis still linger, investors continue to avoid equities. For a while, extreme caution drove almost all new flows of funds into cash and U.S. Treasury bonds. As these flows drove down Treasury and agency yields, investors sought returns in more credit-sensitive bonds, but still, they largely avoided equities. The pattern has by now distorted valuations enough to present a special opportunity in stocks, even after their impressive rise from spring 2009.

2010-11-29 Ripeness is All by Jeffrey Saut of Raymond James Equity Research

Shakespeare once wrote, ?Ripeness is all.? And timing is ?all? when it comes to Wall Street as any whipsawed investor will tell you.

2010-11-23 Why Three Top Bond Managers Like Equities by Robert Huebscher (Article)

You'll rarely - perhaps never - hear a fund manager say that market conditions do not favor investing in their chosen asset class. That's why it was so remarkable when several prominent managers recently admitted that they favored equities over their own discipline - fixed income.

2010-11-23 Seeking Beta in the Bond Market: A Math-driven Investment Strategy for Higher Returns by Georg Vrba, P.E. (Article)

Investors seeking permanent exposure to the bond market should invest in high-beta funds during up markets and low-beta funds during down markets. This simple strategy provides consistent long-term returns that are considerably higher than what a static investment in bond funds would achieve.

2010-11-15 Weekly Investment Commentary by Bob Doll of BlackRock

Last week?s market correction was, in many ways, somewhat overdue. Both stocks and commodities have experienced significant price appreciation and the US dollar had become oversold, so it should not be surprising to see some sort of reversal in these trends. The risks of a double dip recession are in the process of vanishing. As the recovery continues to move along, our outlook is that the trend of risk asset prices moving higher is likely to continue.

2010-11-12 And That\'s the Week That Was... by Ron Brounes of Brounes & Associates

Investors surveyed the landscape in the aftermath of two major market moving events (Fed stimulus and midterm election), retreated from their recent optimism, and booked profits heading into the homestretch of the year. Despite the overall success of another earnings season, investors fretted over the global progress (or lack thereof) from the G20 meeting of world finance ministers and news that China may have inflationary problems on its hands.

2010-11-10 Corporate Bonds March to Their Own Drummer by Chris Shayne of BondDesk Group

During the first week of the month traders bet big on QE2, purchasing Treasuries with abandon and dropping long term yields. On October 8th, 10-year yields hit a new low for the year, falling all the way down to 2.38%. But for reasons that arent completely clear, things changed in mid-October.

2010-11-09 RCM's Global Strategic Outlook: Fourth Quarter 2010 by Andreas Utermann of RCM

Analyzing various leading indicators, there is hardly any hint of a recession. This is not to say that there is no risk of a recession happening. A continued weak labor market is weighing on household consumption in industrialized economies. The housing market in the U.S. is showing signs of weakness. There is a risk of a policy failure in emerging markets, especially of China overdoing policy tightening. Fiscal policy tightening in the West may actually turn out to be too strong. In sum, we think that structural headwinds and tailwinds could balance each other out.

2010-11-09 The FDIC ambushes the Fed, and gains a beachhead in Basel by Christopher Whalen of Institutional Risk Analyst

This week The Institutional Risk Analyst is on the road. We were in Merriville, IN last night to give a talk entitled "A New Deal for the American Economy." The well-attended event was sponsored by the School of Business at Indiana State University and City Securities in Indianapolis.

2010-11-06 Equity Valuation, Earnings and Relative Yield: A Compelling Point in the Cycle? by Richard Skaggs of Loomis Sayles

Large-cap US stocks, as represented by the Dow Jones Average, quadrupled in the 1980s and again in the 1990s. Given this historical perspective, the market?s long pause since 2000, accented by calamitous financial events, particularly in 2008, has left investors impatient and fearful. That said, investors would be wise not to wallow in this sentiment and overlook the long history of stocks returning to good form following lengthy periods of underperformance. The S&P 500 Index could be on the cusp of a positive long-term cycle based on its valuation, earnings and relative yield.

2010-11-02 Tax Location in Today?s Uncertain Environment by Glenn Frank (Article)

The tumultuous political climate in Washington has heightened anxiety around the country, and the uncertainty left when Congress adjourned without tackling any of the looming tax changes has left taxpayers and investors wondering just what is in store for 2011. Though the crystal ball remains cloudy, and while taxes may rise for no one, everyone, or just the wealthiest Americans, steps taken today can help tax planners and their clients be better prepared - no matter what the politicians do.

2010-11-02 Letter to the Editor by Various (Article)

In a letter to the Editor, a reader highlights a few generalizations in a recent article on that, he says, unfortunately cast the entire universe of 529 plans in a uniformly unpleasant light.

2010-11-01 Quantitative Easing Measures Likely to Help Economy by Bob Doll of BlackRock

For the past couple of years, deflationary pressures and deleveraging risks have been front and center in the debate over the future direction of economic growth, and as the pending arrival of additional easing measures shows, these forces are still highly present. The worst of the deleveraging situation is now in the past, however, and the future growth impact of deleveraging will be less than it was over the past two years. The falling dollar higher commodity prices and the addition of more quantitative easing should prime the pump for inflationary pressures to begin increasing.

2010-10-29 BlackRock?s Rieder: The US Faces a Structural Dilemma by Roberth Huebscher (Article)

The U.S. economy faces a structural dilemma with high unemployment that cannot be addressed with conventional policy measures, according to Rick Rieder. Rieder is the CIO of Fixed Income for BlackRock. The 'bond bubble' will not burst, he said, and the high-yield market now offers attractive yields.

2010-10-29 Cliff Asness: Understanding Managed Futures by Robert Huebscher (Article)

In a portfolio with equities and fixed income, managed futures offer strong diversification value and high returns, according to Cliff Asness. Asness is the founder and Managing Principal of AQR Capital Management, a provider of managed futures products.

2010-10-29 And That's the Week That Was... by Ron Brounes of Brounes & Associates

October 2010 comes to a close and, despite little movement in the key indexes for the week, equities experienced another solid month. Earnings, Fed-Speak, and midterms gave investors more than enough to keep themselves busy and next week promises more of the same. Add a few major releases (manufacturing, labor) to the mix, and investors/traders can expect little sleep over the course of the week. (For that matter, neither can parents and siblings of newborns?pic attached.)

2010-10-28 What the G-20 Achieved by Komal Sri-Kumar of TCW Asset Management

A key item on the agenda last weekend during the meeting of G-20 finance ministers was the U.S. desire to have member nations' current account deficits and surpluses limited to 4 percent of GDP. A country with a bigger surplus (e.g., China) would have to let its currency appreciate. The United States, however, cannot insist on deciding on the size of QE2 based purely on domestic considerations, accuse Chinese authorities of currency manipulation, and expect other countries to provide a level playing field for American exports all at the same time.

2010-10-25 Market Rally Continues by Bob Doll of BlackRock

Over the long term, modest levels of growth should be enough to allow corporate earnings to continue to make gains and push markets higher. However, because stock markets have advanced so strongly over the past several weeks (at least in part over expectations of additional easing), we may be looking at a classic 'buy the rumor, sell the news' scenario that could cause a near-term setback at some point later this year. In any case, the economic, earnings and valuation backdrop makes for an attractive longer-term case for equities.

2010-10-25 'Janitor's Job!?' by Jeffrey Saut of Raymond James Equity Research

Eight of the S&P 500's macro sectors are currently overbought. The two that are not, Financials and Telecom, are a neutral value. Meanwhile, 88 percent of the SPX's stocks are above their respective 50-day moving averages. Equity markets are going to reach some kind of trading top over the next few weeks. Any pullback, however, will be a buying opportunity. Therefore, instead of randomly 'buying' right here, Saut prefers to wait and see which stocks resist the envisioned decline.

2010-10-22 Fed Forces Interest Rates Lower by Jim Ulland of Ulland Investment Advisors

Demand for fixed income securities is so great that companies with strong credit ratings, like IBM and Microsoft, can issue debt at record low interest rates. It is therefore remarkable that trust preferred securities issued by the largest U.S. and European banks continue to yield upwards of 7 percent. Because of these historically wide spreads, a defensive growth strategy using trust preferred securities earn vastly superior returns than any combination of CDs, cash, money markets, muni-bonds, corporate or government securities.

2010-10-18 Fixed Income Investment Outlook by Team of Osterweis Capital Management

Low yields, high corporate debt issuance, increased monetary stimulus and the rising dollar do not mean that growth will accelerate any time soon; the outlook of a slow and meandering recovery still holds. Corporations continue to rebuild balance sheets and margins at the expense of hiring and investment. While this bodes well for future debt repayment, the outlook is not rosy for job seekers. When the job outlook does change, however, and the economic pulse quickens, the era of low interest rates could end quickly.

2010-10-18 Smorgasbord by Michael Dana of Dana Investment Advisors

Now that the economy is truly now global, countries are adamant about protecting their currencies so that they can be competitive in the world market. The Bank of Japan just announced plans to limit the surging value of the yen against the dollar and the yuan. This will make their imports more attractively priced in the world market. Ben Bernanke at the Fed is considering phase two of quantitative easing for the same purpose. The exchange rate for currencies will continue to rest on the shoulders of the U.S. for some time.

2010-10-18 Market Rally Contines by Bob Doll of BlackRock

Over the long term, modest levels of growth should be enough to allow corporate earnings to continue to make gains and push markets higher. Because stock markets have advanced so strongly over the past several weeks, however, we may be looking at a classic 'buy the rumor, sell the news' scenario that could cause a near-term setback at some point later this year. In any case, the economic, earnings and valuation backdrop makes for an attractive longer-term case for equities.

2010-10-18 'Gone in 60 Seconds' by Jeffrey Saut of Raymond James Equity Research

The likelihood of the QE2 has risen dramatically since Ben Bernanke's Jackson Hole speech. This is being reflected by the 'stubborn rally' in most asset classes. If Bernanke did not think QE2 was needed, he surely would not allow such speculation because he does not want to surprise the various markets. Any ensuing pullback will be mild and contained above the 1130 - 1150 level on the S&P 500. Nevertheless, Jeffrey Saut is cautious, which he has not been since April.

2010-10-12 Misconceptions in the Great Bond Bubble Debate by Robert Huebscher (Article)

Interest rates, many claim, have bottomed, making bonds the latest asset class worthy of the dreaded "bubble" label. Others counter that deflationary forces will prevail and that bonds offer the best risk-adjusted returns in the market. Which side of this debate you take matters profoundly, but making that call is not simply a matter of predicting the direction of interest rates, as is the typical focus of analysts.

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.

2010-10-11 Quantitative Easing Prospects Lift Stocks by Bob Doll of BlackRock

Despite the fact that Treasury yields have moved lower in recent weeks, the Fed's actions will help reduce deflationary risks and will help global economic growth. Stock markets and commodity prices have been pricing in inflation; those markets have it right in that central banks will do what is necessary to fight deflationary forces. The intentions of central bankers are quite clear at present, and this appears to be a case where the old saying 'don't fight the Fed' seems prudent advice: From an investment perspective, risk assets should continue to grind higher.

2010-10-06 And That's the Week That Was... by Ron Brounes of Brounes & Associates

The economy remains unsteady as an uncertain labor picture continues to limit consumer activity. And yet, corporations have accumulated trillions of dollars in cash and money markets yielding near 0 percent have forced managers to seek other options. Looking ahead, the Fed's stimulus debate wages on although many expect a more limited bond buying program than the $1.7 trillion one offered last year. As for the markets, companies still have lots of cash looking for a home and hopefully equities have more room to run.

2010-10-05 Thinking Bond Market Bubble? Consider Short-Term Bonds by RidgeWorth Investments (Article)

The current market environment - characterized by historically low interest rates and money market reform - has created an opportune time to invest in short-term bonds. RidgeWorth believes investors with excess cash reserves earning near zero percent, as well as those invested in long-term bonds who may be most impacted by a rise in rates, will be well served to consider an allocation to short-term bonds. We thank RidgeWorth for their sponsorship.

2010-10-05 Challenges and Solutions for Income-Seeking Investors by Team of American Century Investments

The Fed's prediction that it will keep its short-term interest rate target at 0-0.25 percent for 'an extended period' continues to affect the near-term game plan for risk-averse investors and savers. A period of potentially heightened uncertainty and low absolute returns means that maximizing risk-adjusted returns is crucial to investment success over time. An optimized mix of fixed income holdings with a variety of different risk levels can add value to investor portfolios in this low-yield and low interest rate environment.

2010-10-05 Do Past 10-Year Returns Forecast Future 10-Year Returns? by Bill Hester of Hussman Funds

The argument that above-average long-term returns typically follow periods of poor past long-term returns is not wrong, it's just incomplete.

2010-10-04 Is it Feasible to Have Your Cake and Eat it Too? by Chris Maxey of Fortigent

Suggesting that the bond markets are in a bubble is dangerous at this point in the economic cycle. The intervention of the Federal Reserve into the government bond markets will inherently depress yields, while a lack of clarity around economic growth will encourage individuals and corporations to refrain from embracing excessive spending. This in turn could lead to stagnant growth and further desire to hold less risky assets. For now, bond investors can sleep well knowing that sometimes, just sometimes, you can have your cake and eat it too.

2010-10-02 Schiff Responds to Dudley, Fed by Peter Schiff of Euro Pacific Capital

NY Fed President William Dudley's outrageous statements Friday closely conform to recent pronouncements from other Fed officials and confirm that a massive round of dollar devaluation is poised to begin. Seemingly overnight, the Fed appears to have altered its mandate, ditching its former goal of "price stability" in favor of "moderate price inflation." While no one is under the illusion that the Fed has kept prices stable over the last century, it used to be that the governors would at least pretend to fight inflation. Low inflation used to be the aim, now it's the enemy.

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.

2010-09-27 Hemlines and Investment Styles by Howard Marks of Oaktree Capital

High quality, large cap stocks have good potential over a range of possible scenarios, and are more attractive than bonds, which will do well in periods of economic weakness or deflation but poorly during periods of market strength or inflation. Treasury bonds and other high grade bonds currently have all environmental factors in their favor, but are priced rich. For them to do well from here, with yields so low, everything has to work out the way the bond bulls hope. Given current yield spreads, high yield bonds should outperform high grade bonds in most foreseeable long-term environments.

2010-09-27 Weekly Investment Commentary by Bob Doll of BlackRock

The macroeconomic backdrop seems improved compared to one month ago. Economic data has moved from 'bad' to 'less bad' (if not to 'good'), and the rhetoric from Washington, D.C. has recently focused on some pro-business and tax policies. Optimism is growing that with the upcoming midterm elections, investors may be seeing some more equity-friendly policies in the works. BlackRock remains optimistic that the economy will avoid a double-dip recession, and stocks should continue to grind higher.

2010-09-24 Cash Kindling by Robert Stimpson of Oak Associates

The US stock market?s potential resurgence is tied to a renewed and sustained wave of capital spending from corporate America. While consumers delever, most corporate balance sheets are tremendously well capitalized, with high levels of cash, profitability and low debt. High uncertainty levels about the economy seen today are likely to dissipate, thereby creating a more conducive environment for making spending decisions. The stock market?s next chapter will be written by corporations spending the cash they have accumulated. This should unfold over the next 4 to 6 quarters.

2010-09-23 Was it really a Lost Decade? by Kevin D. Mahn of Hennion & Walsh

Many have claimed that the decade of the 2000s was a lost decade for stock investors. When you look at the returns of the S&P 500 index over the decade, it is hard to challenge the validity of this claim. For the period of December 31, 1999 through December 31, 2009, the S&P 500 index had an annualized simple price return of -2.72 percent. A look at returns in categories beyond U.S. large-caps, however, including emerging markets, bonds, and U.S. mid-caps and small-caps, reveals that other types of investments actually had positive returns.

2010-09-22 The Rule of 72 by Jeffrey Bronchick of Reed, Conner & Birdwell

The 'rule of 72' allows the lay investor to determine how long it will take for him to double the value of his investment. It is calculated by dividing the number 72 by the annual yield of an investment. For example, if one divides 72 by the current 10-year Treasury bond rate of 2.7 percent, the formula generates an output of 26.6 years to double one's money. Under almost any definition of an intelligent investment plan, that seems like a very long time. If you cannot earn a rate of return above the 3 percent after-tax cost of debt for 10 years, then you should quit.

2010-09-20 Stay in the Pocket by John Petrides (Article)

Those with a long-term investment time horizon should be considering stocks right now, due to the market's long-term capital appreciation potential. With regard to fixed income, investors should first consider active management versus passive (bond funds), and should consider income sources from other areas, such as REITs and MLPs, rather than just bonds for income, as well as diversifying their holdings among corporate, high yield, convertible and floating rate bonds.

2010-09-20 Weekly Investment Commentary by Bob Doll of BlackRock

Absent any significant economic disappointments, stocks are likely to continue to make gains in the weeks ahead. Although investors have begun to re-enter the markets, however, most still have lower-than-normal levels of equity exposure in their portfolios and are waiting for clearer signs that the economy has regained strength before rebuilding their stock positions. Nonetheless, equity valuations are attractive and, looking ahead, stocks appear likely to outperform Treasury bonds and cash over a two- to three-year time horizon.

2010-09-14 Identifying Opportunities in the Municipal Bond Market by RidgeWorth Investments (Article)

Ridgeworth Investments shares its perspective on the muni bond market in a recent white paper entitled "Identifying Opportunities in the Municipal Bond Market" which outlines the historical benefits of municipal bonds, the changing market dynamics in 2009 as well as RidgeWorth's outlook for municipal bonds in 2010 and potentially beyond. RidgeWorth concludes that despite a challenging market environment, munis still offer attractive investment opportunities. We thank them for their sponsorship.

2010-09-14 Latest Bond 'Bubble' Fears are Overblown by Team of American Century Investments

Despite considerable discussion in the financial media about the existence of a bond market bubble, the fixed-income team at American Century Investments finds little evidence to support this claim. Bond bubble proponents base their argument largely on record flows into fixed-income investments, bonds' extended outperformance over stocks, and record low interest rates. However, a confluence of economic headwinds argues for a prolonged period of low interest rates and inflation, while investor demographic and behavioral finance trends also appear to favor further bond inflows.

2010-09-13 Weekly Investment Commentary by Bob Doll of BlackRock

Last week saw a drop in jobless claims, a narrowing of the trade balance and an increase in wholesale inventories, all of which suggests that the economic recovery remains intact. Although market performance has improved slightly over the past couple of weeks, stocks remain in a trading range. Ultimately, stocks will break out of their current stalemate, either to the positive side or to the negative. BlackRock is in the former camp, but acknowledges that investors will need to see clearer evidence that the double-dip scenario will not emerge before that can happen.

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.

2010-09-10 Municipal Bond Market August 2010 Q&A by Andrew Clinton of Clinton Investment Management

In their quarterly commentary, Clinton Investment Management answers questions regarding municipal bond market conditions. As the U.S. economy stabilizes, they argue, higher interest rates will likely follow. That is not to say, however, that investors should avoid fixed income, let alone municipal bonds. As an asset class, fixed income, and tax-exempt bonds in particular, have proven to be a stabilizing force in asset allocations during what has arguably been one of the most challenging three-year periods in financial market history.

2010-09-10 And That's the Week That Was... by Ron Brounes of Brounes & Associates

Labor Day?Religious holiday?hardly worth coming to work at all this week. After some early fears about European financial institutions being more ?stressed? than initially reported, investors (who chose to work this week) focused on some positive signs in the economy. On light volume, stocks traded relatively flat, while fixed income investors struggled to digest all the new supply (treasury and corporate). By next week, the summer doldrums should be long forgotten and investors can once again get back to work and focus on the keys to the markets.

2010-09-07 Why Active Fixed Income in Today?s Environment: Webcast by Janus (Article)

The recent financial crisis and fear of continued under-performance has driven many investors to passive fixed income strategies. Help clients understand the interest rate sensitivity and potential for lower yields that could results from investing in passive fixed income strategies. We thank Janus for their sponsorship.

2010-09-07 Weekly Investment Commentary by Bob Doll of BlackRock

Equity markets have been shaky in recent months, but the tightening of financial conditions that occurred in the spring and summer appears to be reversing somewhat, which should act as an important stabilizing force. At present, stocks are attractively valued and are on the cheap side - the S&P 500 Index is trading at 11.5 times forward consensus earnings, and the dividend yield for stocks is close to the yield of the 10-year Treasury bond. While no dramatic breakout of the current trading range should come any time soon, the path of least resistance for stocks continues to be up.

2010-09-01 A Schizophrenic Market by David Baccile of Sextant Investment Advisors

On the surface it seems the markets are experiencing a relative period of calm with equity prices about flat year-to-date and up around 10 percent versus a year ago. The credit markets have also stabilized since the second quarter when it appeared that one or more of the European countries could be forced into defaulting on their debts. However, a look beneath the surface shows some very deep and turbulent cross-currents.

2010-09-01 Land of Confusion ? Bubbles and Omens Dissected by Liz Ann Sonders of Charles Schwab

Charles Schwab is sticking with its view that the recovery is square root shaped (a 'V' followed by a stall), and there's little question that we've entered the stall phase. In addition to the havoc the stall has wreaked on stock market volatility, it's taken yields on Treasury bonds to near all-time lows. This, of course, has generated a very strong upward price move in bonds (as bond prices and yields move inversely) and much talk about a 'bond bubble.' That could be the case if yields move higher, which could trigger a swift move out of bonds as an asset class.

2010-08-31 Why Mid-Cap? by RidgeWorth Investments (Article)

RidgeWorth Investments has published research detailing six distinct reasons why investors should consider a specific allocation to mid-caps. Specifically, it explores historical performance, evaluates current conditions that favor mid-caps as well as examines how mid-caps have performed during different points in market and economic cycles. Finally, the research looks at the incremental benefit of adding an allocation of up to 40% of mid-cap stocks to a portfolio of solely large and small cap stocks. We thank RidgeWorth Investments for their sponsorship.

2010-08-31 Risk vs. Risk by Herbert Abramson and Randall Abramson of Trapeze Asset Management

The best stock market returns occur when interest rates are relatively low and supportive of under-owned equities, with lots of cash on the sidelines to fuel a rally. Markets are currently at or inflecting up from 'floors' or buy points. Probabilities remain high that markets will rise significantly from here even if we have another temporary setback. Accordingly, Trapeze Asset Management remains fully invested (even using some leverage in margin accounts) while continuing to have no short positions, particularly with the prevailing low valuations.

2010-08-31 Boston! by Jeffrey Saut of Raymond James Equity Research

While the various markets can certainly do anything, it's typically not the snake you see that bites you; and currently the media is replete with stories about the Hindenburg Omen. When so many people are asking the same 'Hindenburg Omen' question, it is typically the wrong question. Meanwhile, the equity markets have been see-sawing, buffeted by deflationary worries from the bond market. The counterpoint to those lower bond yields is copper, which has broken out to the upside in the chart, suggesting no economic double-dip.

2010-08-30 Weekly Investment Commentary by Bob Doll of BlackRock

While the recovery has been slow, we have made significant progress. On a real basis, U.S. gross domestic product has regained 70 percent of what was lost during the recession and on a nominal basis, GDP has regained all of it, meaning that the United States is in a nominal expansion. In any case, investors in U.S. stocks can expect continued volatility ahead. The S&P 500 Index has remained in a rough trading range of between 1,020 and 1,120. While a dramatic breakout from this range is unlikely for now, as economic conditions slowly improve, the positive forces should win out.

2010-08-24 Bonds or Stocks - Who is Right? by Chris Maxey of Fortigent

Over the past several months, bond and equity markets have been on starkly divergent paths. Investors are growing increasingly concerned that perhaps the bond market knows something that the stock market is overlooking. One reason for this divergence is corporations. Emerging from one of the most severe recessions in the last century, companies are more than willing to hoard cash and favor a 'wait and see' approach before resuming expansion. Meanwhile, individual investors continue to sell equities in favor of fixed income securities.

2010-08-24 Crowded Trade by Jeffrey Saut of Raymond James Equity Research

Equity markets remain mired in a wide-swinging trading range. In such an environment, stock selection, combined with the ability to sell mistakes quickly, should be the key to portfolio performance. There are also reasonable investment alternatives to the sidelines.

2010-08-23 Weekly Investment Commentary by Bob Doll of BlackRock

The sharp pullback in bond yields throughout the past couple of weeks suggests that fixed income markets are discounting a return to recession conditions. In contrast, the relative resilience of the stock market suggests that equities are discounting a milder slowdown in the pace of recovery. BlackRock believes that fixed income markets are overly pessimistic, but acknowledges that it will take some time to work all of this out, meaning that stocks are likely to remain in a trading range.

2010-08-23 Markets Are Pricing in the 'New Normal' by Charles Gave of GaveKal

Either the upcoming U.S. elections, in a repeat of 1994, will bring about a Congress able to reduce the pace of government spending, thus triggering a massive sell-off in government bonds and a significant rally in equity markets, or the expansion of the U.S. government will continue, in which case investors in U.S. government bond markets will likely thrive in a repeat of what happened in Japan over the past two decades. You can guess which outcome the biggest fixed income investment houses are rooting for.

2010-08-20 EM Corporate Debt: Ready for Prime Time by David I. Robbins and Javier Segovia of TCW Asset Management

Emerging Market corporate debt is rapidly growing into a significant asset class backed by the world?s fastest-growing economies. These bonds benefit from strong fundamentals, improving credit quality, declining default rates and superior prospects for economic growth across most of the emerging world. One of the most compelling aspects is their consistent outperformance relative to other fixed income asset classes since 2002. Currently, they offer a yield pick-up over comparably rated corporate issues in the U.S., despite the fact that they frequently enjoy stronger credit fundamentals.

2010-08-19 An Investment Strategy for a Market in Transition by Dan Fuss, Kathleen Gaffney, Matt Eagan and Elaine Stokes of Loomis Sayles

The world is entering a period of rising interest rates on a secular basis. While inflation is not a concern in the near term, the seeds of inflation are likely being planted now, even though it could take quite some time for them to overcome powerful disinflationary forces at work today. If anything, the recent events in Europe and the deceleration of global growth suggest interest rates could remain low for longer than anticipated. The economy will likely grow at a disappointingly meager pace, but it will grow nonetheless.

2010-08-18 Pay No Attention to the Headlines by Christian Thwaites of Sentinel Investments

Market valuations are attractive, especially after the recent correction to below 1,100 on the S&P. What should work is buying companies with strong and sustainable cash flows and proven management. What will not work is chasing risk, and investing in companies that dilute shareholders and operate with high leverage. Don't look for an immediate catalyst. This is a market where stealth, opportunity buying and stock picking work. If you hear the word 'momentum,' run.

2010-08-16 Investment Commentary by Bob Doll of BlackRock

The outlook for stocks will be highly dependent on the direction of the economy. Despite last week's decline in both equity prices and Treasury yields, financial markets are signaling that the worst of the deflation scare is ending and that renewed recession is unlikely. A strong current of skepticism is likely to persist for some time, and volatility levels will likely remain elevated, but as long as the economy does not retreat back into recession, stocks should be able to continue to make gains.

2010-08-11 Real Real Returns Study by Team of Thornburg Investment Management

This commentary features Thornburg's annual look at what investors are left with after expenses, taxes and inflation take a bite out of nominal returns. Once again, common stocks and municipal bonds are the best performers. This year's study also looks at implications for retirees, a group for whom nominal returns don't mean much, since they need to be concerned about actual spending dollars to protect against outliving their retirement income.

2010-08-10 Public Pension Showdown: Actuaries vs. Economists by Charlie Curnow (Article)

Public pensions are severely underfunded, at least according to the economists. Actuaries disagree, and at stake is nearly $2 trillion. We look at why these groups arrive at such different valuations, and which one is likely to be correct.

2010-08-09 Weekly Investment Commentary by Bob Doll of BlackRock

Many risks remain to the current cautiously optimistic outlook, including the failure of the housing market to stage a meaningful recovery, the need for ongoing consumer deleveraging and the move toward fiscal austerity in many markets. As long as the economy does not fall back into recession, however, equity markets should be able to grind higher over time. Economic growth of around 2 percent should be enough to allow corporate earnings to continue to grow, and that backdrop, combined with still-attractive valuations, should make for an equity-friendly environment.

2010-08-03 Fear and Trembling Marked the Year's First Six Months by Whitney George of The Royce Funds

In roughly two years, we have moved from a market collapse to a market malaise driven by heightened fears concerning Greek debt. A slow-growth economy could lead investors to focus on two areas - high-quality companies and fast-growing companies. Any business that looks to be capable of swimming ahead of the pace of the economy as a whole is going to be in high demand, and this could benefit small-caps that boast strong balance sheets, high returns on invested capital and the ability to generate free cash flow.

2010-07-30 Inflation in 2010 and Beyond? Practical Considerations for Institutional Asset Allocation by Michael Katz and Christopher Palazzolo of AQR Capital Management

Traditional institutional portfolios with risk characteristics similar to a 60/40 stocks/bonds allocation are not well-positioned for unexpected inflation. Stocks are not effective inflation hedges, particularly in the short and medium term. Meanwhile, traditional institutional allocations resemble a 'bet' on low inflation. A risk-based approach to strategic asset allocation, however, may generate more balanced performance across both inflationary and deflationary periods.

2010-07-29 conceptual categories by tom brakke of the research puzzle

How do you organize your thinking about investments? This is not idle musing. It is helpful to know how your asset exposure ratios originated, and even more important to figure out whether they are still valid. Our tendency is to keep shoving our exposures into the same dated categories, even after the world has changed. That approach tends to lag the evolution of the markets, and given the nature of organizations and the quite infrequent reviews of allocation policy, the policies often lag badly.

2010-07-28 Grey Owl Capital Management's Q2 Letter by Team of Grey Owl Capital Management

The equity and fixed income markets are still modestly overvalued. In addition, the economic recovery may only have been a mirage that the slow dwindling of the government stimulus will reveal. The majority of Grey Owl's equity portfolio is made up of 'high quality' companies ? those with consistent earnings growth and low financial leverage. Japanese-style deflation and 1970s-style stagflation are both possible given the slow private sector growth, increasing government regulations, growing government debt loads, and expansive monetary policy.

2010-07-27 Stress Test Zombies: Reverting to the Global Mean by Christopher Whalen of Institutional Risk Analyst

Some of the big American zombie banks - Citigroup, JPMorgan Chase and Bank of America in particular - are seeing positive results from the Fed's net interest margin drip. Many, however, are reverting back to the global mean for performance due to the zero-interest rate policy maintained by the central bank. In the end, the carry trade enhancement allowed by low interest rates amounts to a subsidy for credit losses by banks that comes out of the pockets of savers.

2010-07-26 Weekly Investment Commentary by Bob Doll of BlackRock

A sustained, albeit subpar, economic recovery is in the cards. Neither critical equity sectors nor credit spreads are signaling that the recovery has been derailed, which suggests that the cyclical recovery in corporate profits is not over. Still, the US economy continues to face significant headwinds, giving us reason to believe that the move higher in equity and other risk asset prices will likely be a long, hard grind characterized by continued volatility.

2010-07-22 California Municipal Markets - Confusion, Misconceptions and Reality by Jon Davis of HighMark Capital Management

There have been dramatic changes to the California municipal bond market over the last several years, creating new challenges for today's investor. Current state budgetary stress in California and across the U.S. may lead to a greater likelihood of possible ratings downgrades or defaults. Meanwhile, pension and entitlement obligation shortfalls will add additional pressure to future budgets. These trends have made fundamental credit analysis, valuation analysis, and a diversified portfolio vital.

2010-07-21 Fixed Income Investment Outlook by Team of Osterweis Capital Management

It is unlikely that the Federal Reserve will soon reverse its easy-money policies amidst worries about the European government debt crisis, meager job growth and low inflation in the U.S. In light of all these concerning developments, Osterweis continues to take a conservative approach by focusing on securities that will experience less volatility in the current unpredictable environment. These include short duration bonds and certain 'cushion' bonds, which are longer-term, high coupon bonds that will likely be refinanced in the near term, well in advance of their maturities.

2010-07-20 Martin Leibowitz? Failed Defense of the Endowment Model by Michael Edesess (Article)

The latest book from Martin Leibowitz, one of the most respected thinkers in the investment industry, attempts to justify the endowment model of investing. As Michael Edesess writes in this review, Leibowitz's defense is highly problematic, and that should concern any advisor utilizing a Yale-like strategy.

2010-07-20 The Opportunity in Build America Bonds by Jeff Westergaard (Article)

While the unique aspects of Build America Bonds (BABs) and recent Treasury Department actions are meaningful, the risks to investors have been over-emphasized. BABs remain an attractive vehicle for investors and issuers, and the market for them is likely to grow.

2010-07-20 Don't Bet the Farm! by Jeffrey Saut of Raymond James Equity Research

Following the 90 percent downside days of June 22nd, 24th, and 29th quickly came a 90 percent upside day. On July 13th another 90 percent upside day was registered. Such sequences often mark the beginning of a rally. If so, the bulls' case would be dramatically bolstered with a decisive move above the SPX's 200-DMA at ~1112, with a subsequent confirming upside breakout above the June 21st intra-day reaction high of 1131.23. Until this occurs, Jeffrey Saut is content to remain flat in trading accounts, yet continue to position favorable stocks for investment accounts.

2010-07-19 Weekly Investment Commentary by Bob Doll of BlackRock

Stock prices have corrected sharply since mid-April and have remained in a broad trading range for the past several weeks. Equity markets appear to be caught between a number of positive and negative forces. Over time, the positive forces should win out and stocks should grind higher, but it would not be surprising to see equity markets remain in their current trading range until there is more clarity around the severity of the current economic slowdown.

2010-07-16 Global Government Spending Hits the Tipping Point... by Jason R. Graybill and Neil D. Klein of Carret Asset Management

A combination of spending cuts and tax increases could weigh on economic growth. This is important to bond investors over the short term, as global deleveraging will create slower global GDP growth and provide lower levels of inflation. In the longer term, governments will probably use their printing presses to inflate their way to lower debt levels while investors will demand greater returns relative to the interest rate and credit risks they assume. Thus, with an outlook towards higher rates in the years to come, Carret remains focused on short-duration, high quality portfolios.

2010-07-16 Value in the Agency Mortgage Market: Modern Carry by Mitchell A. Flack of TCW Asset Management

'The road to hell is paved with carry.' We investors find ourselves facing a most unusual mortgage-backed securities market. Mortgage prices are now at or near all-time high dollar prices. And with mortgage rates also near all-time lows, are we not at the precipice of the mother of all refinance waves? Will negative convexity hit us like a Mack truck and mortgage investors suffer poor returns? The simple answer is a resounding no. While we still are walking down that proverbial 'road paved with carry,' the nature of that carry has changed.

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.

2010-07-14 The Battle for Investment Survival and Our Five-Year Forecast by Kendall J. Anderson of Anderson Griggs

The S&P 500 has gained 52 percent since the March 2009 lows. Although this seems extraordinary, the current recovery is still slightly less than average compared to historical bear markets. An average recovery would have the markets appreciate more than 25 percent from this level over the next two years. Meanwhile, the potential return on equities over the next five years is just slightly above the normal returns for U.S. stock markets. All of this, combined with low interest rates, suggests that it would seem logical to remain in common stocks.

2010-07-13 Cage Match by Jeffrey Bronchick of Reed, Conner & Birdwell

Contrary to public opinion, there is enormous opportunity for an investor today to focus on the business and valuation details of a particular investment while everyone else is running around trying to tie the world together into some neatly gift-wrapped strategy that can be easily quantified and traded by a computer algorithm. Yes, it can be frustrating when everything seems to go down on a day when the market goes down, but no one said this is easy. And when it gets that easy, you should be selling into it.

2010-07-13 Our Muni Market Perspective: The Sky is Not Falling by Team of American Century Investments

The muni market sky is not falling. Municipal credit downgrades and defaults are indeed likely to increase in the months ahead, even as the U.S. economy regroups and moves forward. It may seem odd that muni credit quality faces continued challenges at a time when businesses and other sectors of the economy are going ahead, but that's just an unfortunate feature of a lagging market, one that municipalities share with the labor market. In the long run, municipal bonds as an asset class still have credit quality second only to U.S. Treasury bonds.

2010-07-12 Weekly Investment Commentary by Bob Doll of BlackRock

With 20/20 hindsight, it seems clear that investor expectations for the economy and earnings were too optimistic during the first four months of 2010, but overall sentiment also grew too pessimistic in the subsequent couple of months. The current low levels of Treasury yields are unsustainable. Either yields will move higher as investors become more risk tolerant or economic fundamentals will deteriorate. The former is more likely, however, and as long as our view about the economy holds, equity markets will be able to grind higher in the months ahead.

2010-07-12 A Man Lived by the Side of the Road ... by Jeffrey Saut of Raymond James Equity Research

Currently, the question du jour is whether the economy is going to slip back into recession; aka ...the dreaded double-dip. While there is always the chance of a double-dip, they are pretty rare. Interestingly, all three double-dips since 1880 were characterized by a mild first recession followed by a more severe secondary recession. Plainly, what we experienced in the 2007 ? 2009 recession was anything but mild. Accordingly, the odds of another recession are low. There is always the risk, however, that we will 'talk' ourselves into a recession.

2010-07-12 Keeping a Level Head by Jonathan A. Shapiro of Kovitz Investment Group

A downward bias toward stocks was evident throughout the quarter. This was a marked, but not unexpected, change from the seemingly straight up rise stock prices made from the year earlier (March 2009) lows. The potential for global fallout from Europe's fiscal crisis and its impact on the worldwide economic recovery served as the largest drag on the equities markets during the quarter. Other negatives included inconsistent readings in the U.S. on job growth, consumer-related sales and housing.

2010-07-09 And That's the Week That Was... by Ron Brounes of Brounes & Associates

Enough with the rumors and innuendoes?the optimism and concerns?the favorable forecasts and downgrades?the fundamental number crunching and the charting?Let the earnings season begin. For weeks, some analysts have spoken of stronger comps and feared disappointments. Others looked at the economic recovery and continued to believe that enhanced manufacturing activity is just now beginning to show up in the profit numbers. The waiting is over?Alcoa kicks off the season on Monday.

2010-07-08 Update: 10 Predictions for 2010 by Bob Doll of BlackRock

Over the long term, policymakers still have a difficult job to do as they work to unwind the massive amount of stimulus that had been injected into the system without causing either inflation issues or renewed deflation threats. Over the short term, the broad macro environment will continue to be buffeted by financial and economic uncertainty that will keep volatility levels elevated. That said, the odds for a double-dip recession are low. As long as a renewed economic contraction is avoided, equity prices should grind higher over time.

2010-07-07 Paper Gold vs the Dollar? Interview with James Rickards by Christopher Whalen of Institutional Risk Analyst

This commentary features an interview with James Rickards, senior managing director for market intelligence at Omnis, Inc., about the dollar and the outlook for the U.S. currency in the global economy. Mr. Rickards' career spans the period since 1976. He was a first-hand participant in the formation and growth of globalized capital markets and complex derivative trading strategies.

2010-07-06 Happy Birthday, America! by Jeffrey Saut of Raymond James Equity Research

Since the 'flash crash' low of May 6, 2010, we have had a Dow Theory 'sell signal' (5-20-10), a sell-signal from my proprietary intermediate trading indicator (the first since December 2007), the monthly stochastic-indicator has turned negative, a downside violation of the 12-month moving average has occurred and most indices have broken below spread triple-bottoms in the charts. Last week we even got a 'death cross' when the S&P 500's 50-day moving average (DMA) crossed below its 200-DMA. All of this suggests that a cautious stance on stocks is warranted.

2010-06-29 Jeff Gundlach: The US will 'Politely Default' on its Debt by Robert Huebscher (Article)

Jeff Gundlach's keynote address at last week's Morningstar conference documented the immensity of U.S. debt obligations and the lack of choices available for alleviating that burden. As he has stated in the past, he does not view inflation to be a threat in the capital markets today. He cited six options open to policy makers, but believes a seventh - some form of default - is most likely.

2010-06-29 Market Insights by Christian Thwaites of Sentinel Investments

Christian W. Thwaites takes a deeper look at some of todays big issues. He answers the question Inflation or Deflation, investigates the Eurozone collapse and explains the plight of the U.S. consumer. As the summer begins, Thwaites gives his outlook on the market and some simple rules to follow for a strong financial future.

2010-06-28 Investment Commentary by Bob Doll of BlackRock

We entered 2010 expecting a modest cyclical recovery countered by the structural problems that faced most of the developed world. For the first part of the year, the cyclical recovery did dominate, but in recent months, structural problems (especially those in Europe) began to win out and risk assets have been struggling. Now at the mid-year point, we thought it would be a good opportunity to take a look back at the predictions we made at the beginning of the year to see where we stand.

2010-06-24 No Surprises from the Fed by Liz Ann Sonders of Charles Schwab

The Federal Open Market Committee surprised no one with its decision to keep the Fed funds target rate in a range between zero and 0.25 percent, where it's been since December 2008. The new statement marked the first time since the economic recovery began last summer that the Fed had to slightly dial back its language about the pace of the recovery. Stocks rallied immediately after the announcement, but in light of rampant intraday volatility lately, it's way too soon to judge if there will be any longer-term impact.

2010-06-23 Deconstructing the Great Inflation Myth by Jason Doiron of Sentinel Investments

Inflation does not seem to be a serious risk, at least in the near term. Significant decreases in the velocity of money are offsetting the impact of any increase in the money supply as a result of fiscal and monetary stimulus. Capacity utilization remains at about 74 percent of potential output. And about 17 percent of workers are still either unemployed or underemployed.

2010-06-22 Inexpensive Protection Against Rising Rates by Geoff Considine, Ph.D. (Article)

As is too often the case, the biggest risks are those that we discount. The possibility of a surge in interest rates appears to be today's ignored risk, despite the warnings of many experts, including David Einhorn, Bill Gross, and Seth Klarman. We discuss an inexpensive strategy to protect your portfolios from the tail risk of rising rates.

2010-06-22 Market Changes Affect the Role Fixed Income May Play in Client Portfolios by Janus (Article)

Investment consistency, sector allocation and credit analysis are three of the critical ingredients of successful fixed income management. Janus shares their views on these important topics and how to use this information in your discussions with clients. We thank them for their sponsorship.

2010-06-22 Odds of a Double-Dip Recession Remain Low by Bob Doll of BlackRock

Equity markets should be able to make additional gains over the course of this year. This outlook is not so much a forecast of significantly improving economic news as it is an expectation that many of the risks facing investors will fade over the coming months. The direction of financial regulatory reform in the United States should become clearer and the slowdown in Chinese growth should result in a soft landing. The uncertainty surrounding European sovereign debt, however, remains the chief wild card.

2010-06-17 Assessing Investment-Grade Bonds by Team of Litman Gregory

Investment-grade bonds are likely to generate average returns in a 1 percent to 2 percent range in most scenarios over the next five years. That is markedly lower than any historical rolling five-year average annual return number since the mid-70s. Forward-looking scenarios project that bond yields and inflation higher than their current levels and capital losses due to rising yields will cut into income from coupon payments.

2010-06-15 'May Momentum Killers' Supported Economic, Rate Outlooks by Team of American Century Investments

Now that stocks are suffering a bona fide correction this quarter and Treasury yields are again pricing in low inflation expectations in the near term, the case for a long, slow, grinding economic recovery with continued low interest rates for months to come is a lot easier to make than it was seven weeks ago. Money market and FDIC-insured accounts should provide the most predictable path with the least price fluctuation. Investors who want more yield and return should consider high-quality short-maturity bonds and bond funds.

2010-06-14 Twelve Weeks Later, The Recovery Remains On Track by Bob Doll of BlackRock

Equities have already priced in the likelihood of somewhat slower economic growth in the coming months. Volatility measures will remain high because markets still remain subject to many risks, not the least of which is the high degree of uncertainty surrounding the European debt crisis. In any case, the bulk of the current correction should be behind us, while the positive macro backdrop and improving valuations will provide a floor for equity prices. Investors will need to remain patient, since it will still take some time before base-building can allow markets to regain ground.

2010-06-11 Schwab Sector Views: Why Sectors? by Brad Sorensen of Charles Schwab

Views on the S&P 500 sectors.

2010-06-08 Dan Fuss: What Keeps Bond Managers Up at Night by Dan Richards (Article)

Highly respected fixed-income manager Dan Fuss of Loomis Sayles recently spoke with Dan Richards about what keeps bond managers up at night. Fuss identifies the critical issues bond investors face. We provide a video and a transcript of the interview.

2010-06-07 Extraordinarily Large Band-Aids by John P. Hussman of Hussman Funds

The fundamental problem with the global economy today is that we have not accepted the word 'restructuring' into our dialogue. Instead, we have allowed our policymakers to borrow and print extraordinarily large band-aids to temporarily cover an open wound that will not heal until we close the gap. That gap is the difference between the face value of debt securities and the actual cash flows available to service them. The way to close the gap is to restructure the debt. This will require those who made the bad loans to accept the associated losses.

2010-06-07 China's Housing Bubble, To Be or Not To Be? by Chris Maxey of Fortigent

Market forecasters are worried about the state of the Chinese real estate market, with one publication after another declaring that an asset bubble is only moments away from popping. Clearly the recovery in the Chinese real estate market is impressive, perhaps curiously so, but the dynamics of the Chinese market indicate that an asset bubble is nowhere to be found?for now. From an affordability standpoint, the price-to-income index is on the rise, but well below the levels seen in the U.S., the UK and even India.

2010-06-03 Fundamental Strength Should Beat Out Heightened Uncertainty by Bob Doll of BlackRock

In previous business cycles, when credit market pressures surfaced at a time when the yield curve was steep, the economy experienced brief slowdowns, but not recessions. If that is also the case today, then what we are looking at should be a temporary slowdown in growth, but not a double-dip recession. Nervous investors and slowly receding uncertainty levels will keep market volatility high over the coming month. However, should the labor market recovery continue, the backdrop of strengthening corporate profits and a recovering economy should push equity prices higher.

2010-06-01 Three Ways to Improve Safe Withdrawal Rates by Geoff Considine, Ph.D. (Article)

Using Monte Carlo analysis, Geoff Considine examines three ways safe withdrawal rates can be increased beyond the baseline 4% guideline. He compares and quantifies the benefits of increasing diversification beyond equities and bonds, increasing allocations to fixed income, and employing tactical asset allocation.

2010-06-01 Municipal Bond Market Insights by Northern Trust Investments (Article)

Not surprisingly, the most profitable investment trends tend to be those with the most staying power. That could be particularly good news for investors in municipal bonds, since structural forces are in place that may make tax-free bonds - and the income they generate - even more valuable in the years to come. Northern Trust provides their secular outlook for municipals, and we thank them for their sponsorship.

2010-05-25 Sovereign Default Risk ? the Next Concern by Eric S. Ende of First Pacific Advisors

In this letter, first published on April 26, First Pacific argues that it was government intervention last year that stabilized the stock market and allowed credit markets to begin functioning again. Not surprisingly, however, deficit spending has led to sharp increases in the amount of outstanding government debt compared to the size of economies. Around the world we should see lower debt ratings for weaker countries, accompanied by partial defaults. Please note that events, prices and outlook may have changed since this letter was first published.

2010-05-24 Correction Should Be Nearing Completion by Bob Doll of BlackRock

The worst of the downturn should be behind us, but it will likely take some additional time before markets can repair themselves. Looking ahead, one positive factor is that market valuations have become more attractive in recent weeks, as prices have dropped while earnings have increased. Over time, additional clarity around the situation in Europe and financial market reform in the US should provide a measure of stability; and a sense that the economic recovery remains on track should help spark a turnaround in the recent aversion to higher-risk assets.

2010-05-18 Jeremy Grantham Guarantees Gold will Crash by Robert Huebscher (Article)

Jeremy Grantham, the investor celebrated for his ability to spot and exploit bubbles in asset classes, guaranteed yesterday that the current bull market in gold will end. His proof? He bought some - for his own account - at the end of last week. That comment was tongue-in-cheek, but he went on to identify two asset classes likely to go into bubble territory.

2010-05-18 Sovereign Debt Crisis Drives Volatility Higher by Bob Doll of BlackRock

Investors have grown increasingly concerned about the potential for contagion from Europe, fearing credit issues could affect other markets. While European Union rescue plans do not address the underlying fundamental issues facing Greece and other countries, however, immediate liquidity risks should be contained in the short term. On a relative basis, U.S. markets have benefited from the uncertainty, as investors have continued to view the United States as a higher-quality haven for their assets. This makes U.S. stocks more attractive than those of other developed markets.

2010-05-18 Understanding Recent Negative International Bond Returns by Team of American Century Investments

This year so far has been a challenge for U.S. investors in high-quality, unhedged international bonds, continuing a downtrend for this sector that began in December of last year. Fortunately, the long-term strategic reasons for holding international bonds remain intact, including inflation protection from a potentially weaker dollar as the U.S. budget deficit grows, and diversification benefits versus traditional domestic fixed income.

2010-05-14 Schwab Sector Views: Sea Change? by Brad Sorensen of Charles Schwab

Market volatility has heated up during the past couple of weeks as more eyes have turned toward the debt problems plaguing Europe. After a nice run in equities, it's certainly not surprising to see some sort of pullback, especially in areas of the market that may have outperformed to start the year. The United States is entering a time of more-steady growth, with flattening leading economic indicators, which typically represents a shift in sector leadership. The information technology sector, for example, should outperform the market, while materials should underperform.

2010-05-07 The Big Picture, the Investment Landscape, and Our Portfolio Strategy by Team of Litman Gregory

Debt reached binge levels during the past decade. Money to reduce the debt will have to come from somewhere, and much of it will come from reduced spending. Spending cuts could produce a sluggish economy, possibly for many years to come. There are some positives that could contribute to a better outcome, however, including continued strength from emerging economies. Domestically, we could see stimulus spending, low rates, and inventory rebuilding create a virtuous circle in which businesses with strong balance sheets add jobs, and consumer and business confidence builds and feeds on itself.

2010-05-04 Lacy Hunt: Keynes was Wrong (and Ricardo was Right) by Robert Huebscher (Article)

Underpinning the Obama administration's economic policies is the work of John Maynard Keynes, the legendary British economist who called for large fiscal and monetary interventions to counter the Great Depression. On this critical issue, Keynes was wrong, says Lacy Hunt, the internationally renowned economist with Texas-based Hoisington Investment.

2010-05-04 Timely market insights: Sector reviews and quarterly perspective on the financial markets by Janus (Article)

Janus provides sector reviews and reports on quarterly market performance in a new commentary. While economic recovery is in place, the firm says, its magnitude is uncertain. Topics covered include winners and losers in the energy sector, Chinese growth from within, the evolution of internet-related media and communications, and the financial impact of health reform. We thank Janus for their sponsorship.

2010-04-30 And That's the Week That Was... by Ron Brounes of Brounes & Associates

Goldman?s Fabulous Fab may not seem so fabulous these days, at least, not to the grandstanding Congresspersons and federal prosecutors. During the week, investors should have had plenty to cheer about: earnings remained strong, the economy continued in rebound mode, the Fed offered some positive comments and kept rates unchanged at low levels. However, equities plummeted as news from the EU raised some additional concerns about the global economy and the perpetual bailouts of other European countries (Spain and Portugal). And, as for Goldman Sachs?memories of 1990 Drexel Burnham?

2010-04-27 Writing in Plain Speak by Wendy J. Cook (Article)

Wendy Cook specializes in helping advisors write newsletters and create presentations, and in this guest contribution she shares a number of tips to improve your writing skills. Cook is passionate about writing, and her article covers topics such as the importance of brevity and how to tailor content to your audience.

2010-04-23 Reports of Our Recovery Are Greatly Exaggerated by John Browne of Euro Pacific Capital

From all outward appearances, it seems that a grim chapter in U.S. economic history has come to an end. The economic position of the United States and the member states of the European Union, excluding Germany, however, is not as healthy as our media and politicians would have us believe. The danger is even greater when measured against the relative security and economic success of China, India, Brazil, Australia, Canada and New Zealand. In these countries, economic growth and financial responsibility are real. At home, the reports of our recovery are greatly exaggerated.

2010-04-23 Fixed Income Investment Outlook by Team of Osterweis Capital Management

The consensus is that we are well past the crisis point and will gradually see more economic sunshine. While Osterweis generally agrees, there are a couple factors that are prompting the firm to keep a conservative posture. In particular, they are concerned with China?s large trade surplus and the prospect of rising interest rates in the U.S. While the market may remain buoyant for some time as the economy recovers, Osterweis does not believe there is much opportunity cost at this time in taking a more conservative posture and waiting for the next good buying opportunity.

2010-04-20 Months-Long Equity Rally Pauses by Bob Doll of BlackRock

Stocks have rallied in an almost uninterrupted fashion over the past couple of months, but the tenor of Friday's news adds an element of uncertainty. This backdrop, combined with various signs of excess in the markets, suggests that a period of profit-taking may be coming, perhaps sooner rather than later. In any case, however, the recovering economy, low inflation, strong corporate earnings and reasonable valuation levels should be enough to cause any sort of correction to be short-lived.

2010-04-20 Investment Implications for Government Policy and Intervention by BlackRock, CFA Institute Reprint w/ Curtis Arledge (Article)

Government intervention has stabilized the economy, but policymakers must be careful to draw down their interventions before inflation occurs. Although residential real estate has seen its worst days, a wave of high-yield bonds and loans will soon mature, and the banking system must rebound enough to absorb that bubble. Despite these uncertainties, the range of yields and total annual returns among fixed-income sectors provide investors with multiple opportunities. We thank BlackRock for their sponsorship.

2010-04-20 A Short-Term Buying Opportunity for Long-Term TIPS by Michael Brennan (Article)

Fixed income investors should consider a short-term buying opportunity for Treasury Inflation Protected Securities (TIPS) with maturities of ten or more years, writes Michael Brennan in this guest contribution. The 10-year TIPS should have a total return anywhere from 30 to 40 basis points greater than the comparable nominal Treasury bond.

2010-04-19 Goldman SEC Litigation: The End of OTC?; Alan Boyce on the Duration of Fed Open Market Operations by Christopher Whalen of Institutional Risk Analyst

This piece features a comment from Alan Boyce, chief executive officer of Absalon, on the impending end of the Fed Purchasing Program. Boyce says that as FPP ends, there is the real potential for unintended consequences in domestic and foreign markets. If markets were to become unglued, the Fed may purchase more mortgages and Treasury debt. Foreign central bankers will likely snap and become sellers, however, if the Fed decides to monetize more debt. Markets would likely take it as a sign that the Fed is politically unable to exit the mortgage market, or quantitative easing.

2010-04-19 playing in the street by tom brakke of the research puzzle

At one time there was a quaint notion that if your clients did well over time, you'd do well over time, especially if they thought you helped quite a bit along the way. Instead of maximizing the long-term value of their businesses, the goal of Goldman Sachs and other firms has become the production of short-term profits (and the accompanying compensation) at any cost. The firms act as if there is an inexhaustible supply of gullible clients, and for too long investors (and citizens, given that 'too big to fail' is still the way of the world) have proven them right.

2010-04-16 Our Quarterly Review by Jonathan A. Shapiro of Kovitz Investment Group

With only a few temporary setbacks, the stock market has continued its move higher since touching its most recent low in early March 2009. Much hand wringing has been done over the S&P 500's approximately 75 percent move since that time, but lost in translation is the fact that prices last March implied a pending financial and social breakdown. These panic-driven prices bore little resemblance to actual or going concern business values, and measuring from that point clearly overstates and exaggerates the return. The worries facing the U.S. and many other regions are still prevalent.

2010-04-14 Will Inflation Reemerge as a Dominant Force? by Kendall J. Anderson of Anderson Griggs

The current monetary policy of developed nations is to reinvigorate consumer demand through massive monetary stimulus. There is no doubt that this policy will have its intended effect and revitalize the private sector. Increasing demand from the private sector, along with the fiscal demands of new government obligations, however, could easily create a round of inflation where the aggregate demand of government and the private sector will exceed available supply. There is therefore a real possibility that inflation will be higher in the next 10 years relative to the past.

2010-04-14 The Global Bond Market: Opportunity or Opportunity Cost by David W. Rolley of Loomis Sayles

The U.S. bond market is unlikely to offer investors the yield or capital appreciation opportunities they need to meet their investment objectives in 2010. Instead, investors will need to expand their investment universe. Investments in non-U.S., high-quality governments and supranationals could offer capital preservation, while emerging-markets debt and corporate debt might present performance prospects. In the non-dollar securities arena, investors could take advantage of securities offering capital preservation as well as performance.

2010-04-13 Stocks Reach 18-Month Highs by Bob Doll of BlackRock Investment Management

Continued evidence of improvements in the economy and expectations for strong first-quarter earnings helped push stocks up nearly 8 percent for the year, to their highest levels in 18 months. BlackRock expects stocks to continue to grind higher over the course of the year, and for corporate earnings to become the main driver of equity prices. Over the longer term, the most significant investment issue will likely be the cyclical tailwinds of accommodative fiscal and monetary policy and the secular headwinds of massive budget deficits, high levels of debt and continued deleveraging.

2010-04-09 And That's the Week That Was... by Ron Brounes of Brounes & Associates

Heading into the first official week of reporting, several companies already raised earnings projections and shed a bit more optimism on the quarter just passed. Still the 'too far, too fast' naysayers believe the decent expected earnings results are already built into the market and Dow 11k does not justify the current level of corporate or economic activity. In short?Greece continued to struggle; treasury supply was absorbed reasonably well; oil pushed higher (then lower); Greenspan and Rubin got grilled; Bernanke hedged his bets.

2010-04-07 When the Facts Change by Niels C. Jensen of Absolute Return Partners

An echo bubble is upon us. Echo bubbles are the children of primary asset bubbles, and emerge when monetary authorities respond to the bursting of a primary asset bubble by slashing policy rates. Extraordinarily low interest rates are currently encouraging another bout of excessive risk taking. If policymakers raised rates now, however, they would almost certainly kill the fledgling recovery. The pressure is therefore on monetary authorities to keep rates low and feed the new bubble. Investors should steer toward assets that benefit from high volatility.

2010-04-06 Paul McCulley Discusses PIMCO's Cyclical Outlook by Paul McCulley of PIMCO

In an interview, PIMCO Managing Director Paul McCulley discusses his firm's cyclical economic outlook and its impact on investment strategy. PIMCO's cyclical outlook revolves around two core tensions in the global economy. The first is the huge disparity in the rate of recovery between highly leveraged developed countries and relatively balanced developing countries. The second tension is the resistance to cyclical recovery in the developed world due to deleveraging and other headwinds.

2010-04-06 Ben Bernanke: The REPO Man and Castles Made of Sand by Christopher Whalen of Institutional Risk Analyst

Without the implicit backing of the U.S. Treasury and Federal Reserve System, the remaining large dealers of over-the-counter assets and derivatives could not function in the post-crisis marketplace. This reality is most visible in the tripartite market for repurchase agreements or REPOs, the basic tools Wall Street uses to finance its working capital book. Now that it's April and the Fed's quantitative easing purchase program is ending, it seems fair to ask: What trick is Fed Chairman Ben Bernanke going to perform next to maintain the stability of market prices?

2010-04-05 Labor Market Turnaround by Bob Doll of BlackRock

The March payrolls report likely signaled the start of a long-awaited rebound in the employment picture, which should benefit the broader economy. As fiscal and monetary stimulus begins to fade over the coming months, the economy is going to require some self-sustaining mechanisms to kick in, and growing employment levels would certainly be beneficial. Over the course of the next year, we expect the economy to successfully shift from a recovery to an expansion. Investors should continue overweighting equities and credit-related fixed income assets and underweighting cash and Treasury bonds.

2010-04-01 And That's the Quarter That Was... by Ron Brounes of Brounes & Associates

Ron Brounes' recap of the prior quarter's market activity.

2010-03-30 Not a Lost Decade for Diversified, Balanced Portfolios by Joni L. Clark, CFA, CFP (Article)

Did the last ten years really demolish the foundations of Modern Portfolio Theory and classic investing principles? How did portfolios that stuck to the principles of effective diversification and buy-and-hold investing actually perform during the so-called "Lost Decade?" The answers to both questions is an unqualified "no," writes Joni Clark of Loring Ward in this guest contribution, based on her analysis of a DFA-based strategy.

2010-03-29 And That's the Week That Was... by Ron Brounes of Brounes & Associates

Last week's data revealed continued economic recovery, even though housing continues to lag, an alarming trend given that future Fed moves could negatively impact the sector. Optimists still hope that dismal housing numbers reflect poor winter conditions, however, and will reverse themselves in the coming months. As the first quarter comes to a close, expect managers to rebalance positions, take some profits and even lock in losses for tax purposes. The new month will bring a plethora of economic data, highlighted by the unemployment rate late in the week.

2010-03-24 The Economy, Interest Rates and Fixed Income Markets: What to Expect in 2010 by Curtis Arledge and Eric Pelliciaro of BlackRock

This commentary features an interview with BlackRock chief investment officer of fixed income Curtis Arledge and Eric Pellicaro, head of global rates investments for BlackRock fundamental fixed income. Arledge and Pellicaro predict that the Federal Reserve will keep the federal funds rate in the 0 to 0.25 percent range until at least the first half of 2011, particularly if economic activity slows down as the year progresses. When the central bank does start raising rates, it will do so gradually, and it will clearly telegraph its intentions in advance of formal rate announcements.

2010-03-23 Barron's' Pension Warning Doesn't Change Our Pension Outlook by Team of American Century Investments

A recent Barron's magazine piece about unfunded public pension liabilities painted an otherwise solid bond sector with a broad negative brush. While pension liabilities are a serious problem for state and local governments, they are neither a new problem nor an immediate problem, and they are not the most pressing issue that municipalities face in the post-recession environment, according to American Century Investments credit research director David Moore. Despite unfunded pension liabilities, no state runs a serious risk of default on its general debt obligation.

2010-03-23 Employment Gains Likely by Bob Doll of BlackRock

The jobs-shedding phase appears to have ended, but new jobs are still not being created. Unemployment claims have declined in March, however, and so this scenario may soon reverse. Temporary employment has increased, and many firms have discussed plans for permanent hiring. Factoring in census hiring, payrolls may increase by more than 200,000 this month. Once jobs growth commences in earnest, corporate earnings should also increase and investor uncertainty should diminish, and this should drive the next cyclical bull market in equities.

2010-03-22 Useful Frameworks For Investment Analysis by David Edwards of Heron Financial Group

The S&P 500 rallied in March to an 18 month high, but is still below pre-recession levels. The daily volatility of the stock market has declined to levels not seen since the summer of 2006. The overall stock market, however, is still slightly overvalued. Corporate earnings and Federal Reserve policy over the next year will determine whether current levels are sustainable, and whether the U.S. avoids another double-dip recession. Sound frameworks for investment analysis will be crucial.

2010-03-16 The Trifecta - Okun's Law and Unemployment - Is the Law of Supply & Demand Obsolete? by Kendall J. Anderson of Anderson Griggs

Okun's law explains the relationship between unemployment and real output, and calculates the gap between real GDP and potential GDP. Based on current GDP growth forecasts, the law predicts a one-half percentage point decline in unemployment this year and a full-point decline in 2011. Despite very positive returns, however, investors continue to allocate to bonds instead of stocks. The laws of supply and demand tell us that this is unwise.

2010-03-15 Market Rebound Continues by Bob Doll of BlackRock

Equity markets notched positive returns again last week, as the Dow Jones Industrial Average climbed 0.6% to 10,625, the S&P 500 Index advanced 1.0% to 1,150 and the Nasdaq Composite rose 1.8% to 2,368. Economic growth should continue to improve, which should provide a boost to investor confidence. Additionally, merger and acquisition activity has picked up strongly in recent weeks, as have corporate share buybacks, trends that help promote an equity-friendly environment. On balance, equity markets should endure ongoing periods of volatility, but the cyclical bull market has further to run.

2010-03-12 And That's the Week That Was... by Ron Brounes of Brounes & Associates

. Let the rally continue. As the country (world for that matter) celebrated the one year anniversary of the market turnaround (bull market sounds too encouraging), investors took time to reflect on just where we have been and where we may be going. Buyers emerged again (though on a smaller scale?

2010-03-11 Headlines Fail to Derail Munis by Team of BlackRock

Municipal bonds of all maturities enjoyed positive returns in February, outpacing their U.S. Treasury counterparts. Money market rates remain low, however, encouraging investors to move further out on the municipal curve to capture yield. While state and local governments continue to face fiscal challenges and worries over bond defaults, Moody's released an updated default rate study that continues to point to the relative safety of municipals.

2010-03-09 What's Next for the High Yield Market by Team of Pioneer Investment Management

The economy can achieve 3 to 4 percent growth in 2010. This growth rate, along with low interest rates, should provide a favorable environment for riskier fixed income asset classes such as high yield. Corporate profit margins, cash flows and productivity are all near record levels relative to prior cycles, and balance sheets are relatively healthy. This puts companies in a good position to capitalize on the recovery. A strategy that balances high yield, equity, convertible and bank loan securities is prudent, given the anticipated investment environment.

2010-03-09 Underwater in the Housing Market by Team of American Century Investments

The number of negative equity mortgages, situations where the borrower owes more on their mortgage than the current market value of the home they bought, increased substantially since the housing bubble burst in 2007. While these homeowners continue to make payments, there is a weak correlation between how badly their mortgages are underwater and foreclosure rates. This is also a problem because many middle and lower income people use their homes as their most important source of retirement savings. In addition, negative equity may diminish labor mobility at a time of high unemployment.

2010-03-09 Equities Notch Weekly Gains by Bob Doll of BlackRock

Last week was strong for risk assets, and equities in particular, as the broad U.S. averages entered positive territory for the first time since early January. All sectors were positive, with materials up the most at 6 percent. A profits-led recovery seems to be unfolding, which will lead to increases in capital expenditures, and eventually, employment. After six negative weeks, flows in equities have been positive for three weeks running. Accommodative liquidity conditions and a healing economy support a pro-growth investment stance.

2010-03-08 Turning Cautious by Scotty George of du Pasquier Asset Management

The current global rallies in stocks seem to be short-cycle upswings within the existing secular bear trend. Low interest rates are leaving no other suitable alternative for investors, and high grade fixed-income opportunities are few and far between. Interest rates may rise, however, before year end as global debt continues to mount. Investors should therefore look for an above-average exposure to cash in the short term while waiting for downward movement in stocks in the long term.

2010-03-02 Recovery Continues, But Jobs Data Critical by Bob Doll of BlackRock Investment Management

The economic recovery remains intact, but data remains mixed and outlooks are still uncertain. Employment trends remain the most critical economic data, because the labor market is the mechanism that sustains and reinforces growth. At present, corporate earnings and balance sheets are supportive of companies increasing their payrolls. Trading remains uneven, but higher-risk assets still hold long-term upside potential.

2010-03-02 A Day in the Life of a Fixed Income Analyst by Elisabeth Colleran of Loomis Sayles

This article follows a day in the life of Elizabeth Colleran, a fixed income credit analyst covering global telecommunications. News headlines, market movements or new deal offerings can quickly reshape the day of a fixed income analyst. While their day-to-day focus is on company and industry modeling, SEC filings, discussions with company management and industry developments, they must be prepared for whatever is hitting the tape. Reaction time is critical.

2010-03-02 Asset Allocation for Grantham?s Seven Lean Years by Geoff Considine, Ph.D. (Article)

Followers of Jeremy Grantham know his consistently accurate long-term forecasts well, as well as his ability to identify and avoid asset bubbles and steer clients into high-performing asset classes. Grantham's prescience is remarkable but not irreplicable. Geoff Considine shows that his Monte Carlo simulations nearly match Grantham's forecasts, and he reviews the implications for asset allocations.

2010-02-26 And That's the Week That Was... by Ron Brounes of Brounes & Associates

Ron Brounes' weekly recap of market and economic news.

2010-02-25 structured myopia by Tom Brakke of the research puzzle

Structured myopia, the institutionalized focus on a narrow range of sectors, makes no sense for the individual investor or the biggest firm, but it is everywhere. Equity investors rarely pay attention to fixed income markets. Developments in fixed income bond and credit markets often presage changes in equity markets, however, as the recent financial crisis showed.

2010-02-24 Leading Indicators Reflect Positive Trends by Ken Taubes of Pioneer Investment Management

GDP growth forecasts of 3 percent to 4 percent could mean gains in credit and equity markets. Higher growth could lead to quicker tightening by the Fed, however, which could depress bond prices, as well as increase discount rates for equity markets. Corporate credit and equity markets should provide strong opportunities in 2010. While inflation is not a threat in the near term, investors should consider incorporating inflation hedges such as bank loans or multi-sector inflation products as tensions grow between fiscal deficits and monetary policy.

2010-02-23 Fixed Income Investment: What's the Index Doing for You? by Jason Brady of Thornburg Investment Management

The Barclay's Capital Aggregate Bond Index is comprised of thousands of securities picked not due to their size or relevance, but to their presence in the market. It is reconstituted monthly and consists of reasonably large bond issues denominated in U.S. dollars, with 75 percent of its issues backed by the government. Its combination of high negative convexivity, low yield, and long duration, however, makes it an imperfect model for investors seeking fixed income exposure.

2010-02-23 Stock Market Performance and Inflation by Team of American Century Investments

The world is awash in liquidity as a result of the recent financial crisis and subsequent risk of deflation. Many investors are concerned that this \"cheap money\" will result in rising inflation. Historical S&P 500 data suggests, however, that the highest price to earnings ratios occur when inflation is between 1 percent and 6 percent.

2010-02-23 Interest Rates, Inflation and the PIMCO Total Return Fund by Robert Huebscher (Article)

The current generation of financial advisors has never experienced rising interest rates, but that will change, based on the forecasts we collected in our survey last week. We review our survey results and look at the implications for the largest bond portfolio, the PIMCO Total Return fund.

2010-02-16 Outlook Report: 2010 Searching for the Afterparty by Robert N. Stein of Astor Asset Management

Markets will grow in 2010, but foreign and domestic gains will be harder to find than they were a year ago. The market's panic and robust recovery suggest a return to growth rates closer to historical norms, with some areas outperforming others. Sectors that performed best during the recession may be the highest performers during the recovery.

2010-02-16 Boom and Bust by Michael Lewitt (Article)

The US and global economies are "trapped in a cycle of boom and bust as a result of fiscal and monetary policies from which there is no easy escape," says Michael Lewitt of Harch Capital Management. Lewitt believes the S&P will rally to 1,200-1,250, but says the long-term prognosis is "somewhere between grave and terminal." We are privileged to provide this excerpt from Lewitt's monthly newsletter and encourage our readers to subscribe to it directly.

2010-02-14 Growing Problems in the Residential Real Estate Market (Part 2) by Team of American Century Investments

The problem of growing housing delinquencies has spread to states not originally affected in the sub-prime crisis and to higher-quality prime mortgages as the nation?s unemployment rate has reached double-digit levels. This commentary looks at the failure to-date of policy initiatives intended to stem defaults, and at the range of possible future policies.

2010-02-13 Winter Quarterly Commentary by Alan T. Beimfohr and John G. Prichard of Knightsbridge Asset Management

Alan T. Beimfohr and John G. Prichard of Knightsbridge Asset Management say in their winter quarterly commentary that the federal government will need to time its balancing of the budget just right in order to avoid either a repeat downturn or accumulating inflation. The Fed, meanwhile, will also need to withdraw monetary stimulus at just the right time.

2010-02-11 Fixed Income Investment Outlook January 2010 by Team of Osterweis Capital Management

Osterweis Capital Management says in its fixed income investment outlook that increased investor appetite for risk drove up prices of high-yield bonds, equities and other financial assets in 2009. Investors may want to avoid Treasury bonds and other underweight longer-dated assets in order to avoid the impact of a possible interest rate hike.

2010-02-09 Q4 2009 Preliminary Bank Stress Ratings; OTC Derivatives: Is the DTCC Too Big To Fail? by Christopher Whalen of Institutional Risk Analyst

Christopher Whalen of Institutional Risk Analytics wonders whether The Depository Trust & Clearing Corporation, the post-trade financial services company that clears most of the free world's cash securities volume, is too big to fail. Big banks use centralized clearing provided by DTCC to lend credibility to over-the-counter derivatives.

2010-02-06 And That's the Week That Was... by Ron Brounes of Brounes & Associates

Ron Brounes' weekly market and economic recap.

2010-02-02 Bonds for the Long Run by Jeffrey Bronchick of Reed, Conner & Birdwell

RCB is a classic value-based investor. They note that the 2009 rally has left them with fewer buying alternatives. However, they state, "equities as an asset class will outperform investment grade bonds of almost any stripe over the intermediate and longer term using January 2010 as our starting point?? They believe equities are valued ?to do okay,? since 2009 and 2010 earnings do not represent a ?normalized? environment. ?Moving forward, the real fun in 2010 will be how investors react to the possibility of higher interest rates driven by a stronger than expected economy.?

2010-01-29 Quarterly Letter by Jeffrey Erber of Grey Owl Capital Management

Jeff Erber says the S&P is now 20-30% overvalued, but ?with a no-end-in-sight loose monetary policy this rally could continue for quite some time. ? He discusses his firm?s investment process and add

2010-01-26 Weekly Market Update by Team of American Century Investments

2010-01-26 Stop the Presses! by Jeremy Grantham of GMO

Grantham?s commentary begins with his reflections on the proposed financial reform, the ?Volcker Plan,? and the recent Supreme Court ruling on corporate campaign contributions. He continues with a fo

2010-01-26 The Ring of Fire by Bill Gross of PIMCO

Bill Gross reviews two recent analyses (the Reinhart/Rogoff book and the McKinsey study) of the plight of economies faced with large fiscal deficits. He says that these support PIMCO?s view of the Ne

2010-01-19 Steve Leuthold: The Market will Rally This Year by Robert Huebscher (Article)

Steve Leuthold is chairman of the $4.5 billion Leuthold Group and one of the most widely-followed market analysts. In his keynote presentation at last week's Fortigent conference, he offered an upbeat forecast for the first half of 2010.

2010-01-19 A Market for Contrarians by Robert Huebscher (Article)

Along with Steve Leuthold, Rob Arnott, Doug Kass and DoubleLine co-founder Joe Galligan were among the speakers at Fortigent's conference. These three speakers' bearish sentiment extended across a wide range of asset classes, opening lots of possibilities for those who prefer contrarian bets.

2010-01-14 Is Recovery Here to Stay? by William H. McAfee of WHM Capital Advisors

There are still high levels of uninvested cash sitting idly on the sidelines. Equity markets are likely to do well in 2010 as the perception of risk diminishes and cash flows out of low yielding mone

2010-01-09 The Same Old Bear: A Study of Bear Markets and Stock Returns Since 1926 by Patrick O'Shaughnessy of O'Shaughnessy Asset Management

2010-01-06 Psychology of why investors 'Buy High/Sell Low,' and how to avoid that trap! by David Edwards of Heron Financial Group

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

2010-01-02 And That's the Week That Was by Ron Brounes of Brounes & Associates

2009-12-21 The Bumpy Road to Recovery by Paul Merriman of Merriman

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.

2009-11-24 Dan Fuss and the Long-Term Outlook for Interest Rates by Robert Huebscher (Article)

Dan Fuss, the highly respected bond manager at Loomis Sayles in Boston, says we are in the early stages on a long-term rise in interest rates. His view was shared by two other panelists, Carl Kaufman of Osterwies and Margie Patel of Evergreen. If you accept this consensus, you must ask whether your fixed income allocation is appropriate.

2009-11-24 Interview: Brian McMahon of Thornburg Investments by Robert Huebscher (Article)

We speak with Brian McMahon, CEO and CIO of Thornburg Investment Management about the Thornburg Income Builder Fund (TIBAX) and the challenges of finding income-producing securities in today's markets.

2009-11-17 Federal Taxes & Municipal Bonds Historical & Current Perspective by Munder Capital Management (Article)

With income tax increases seemingly around the corner given the budget deficit and a potentially very expensive federal health care plan, the spotlight has returned to municipal bonds and the power of tax-free income. Municipal portfolio managers at the Munder Funds identify the attractiveness of municipal bonds based on projected budget deficits, current spreads over treasuries, and macroeconomic trends. We thank them for their sponsorship.

2009-11-17 Bruce Greenwald on Positioning First Eagle?s Funds by Robert Huebscher (Article)

Bruce Greenwald is a professor of finance at Columbia, the Director of Research at First Eagle Funds, and a leading expert on value investing. Last week we published part one of our interview, where he discussed the structural problems in the economy and his forecast for higher unemployment. This week he discusses the positioning of First Eagle's investments, and why Warren Buffett's purchase of Burlington Northern was a mistake.

2009-11-10 Bruce Greenwald on Structural Problems in the Economy and Unemployment by Robert Huebscher (Article)

Bruce Greenwald is a professor of finance at Columbia University, the Director of Research at First Eagle Funds, and perhaps the foremost expert on value investing. In part one of our two-part interview, he discusses the structural problems facing the economy, the parallels to the Great Depression, and the implications for the unemployment rate.

2009-11-10 3Q 2009 Financial Markets Review by Janus (Article)

At the end of the 3rd quarter, the S&P 500® Index posted its strongest back-to-back quarterly performance since 1975. While the economy continued to stabilize and the U.S. consumer showed signs of life, concern over the health of the consumer remained. Learn more about the key drivers of global financial markets from the perspective of the Janus investment team through this 3Q Financial Markets Review. We thank them for their sponsorship.

2009-11-03 Absolutely ? Maybe by Robert Huebscher (Article)

Since Putnam introduced its absolute return funds earlier this year, over 4,200 advisors and $650 million in assets have flocked to the new financial products. Putnam's four funds seek to beat inflation by 100, 300, 500 and 700 basis points, and their performance over their first nine months (3.1%, 6.4%, 8.4% and 12.2%, respectively) was encouraging for their investors. Impressive as those results may be, the question is whether they are sustainable.

2009-10-27 Managing Downside Risk in Retirement Planning by Geoff Considine, Ph.D. (Article)

Boston University professor Zvi Bodie advocates a retirement investment strategy that offers investors some of the upside potential in equities tempered with downside protection against bear markets and a low-risk inflation hedge via heavy allocation to TIPS. Geoff Considine examines Bodie's strategy and shows that it will work very effectively, including in a bear market like the one just experienced.

2009-10-20 Life in and after the NBA Financial Planning for Professional Athletes by Robert Huebscher (Article)

During a 13-year career that began in 1987, Chris Dudley was called on to defend some of the greatest centers in NBA history - among them Shaquille O'Neal, Robert Parish, and David Robinson. While developing a reputation as an exceptional shot-blocker and rebounder, Dudley also devoted time to preparing for his post-basketball career - as a financial advisor - and he shares with us his thoughts about financial planning for the professional athlete.

2009-10-06 A Quarter-End Letter to Send Clients by Dan Richards (Article)

Last fall, Dan Richards began posting quarter-end letters that advisors could adapt for their own use. Many advisors have told him that they have received an outstanding response to the letters they sent as a result, and Dan provides a template for a third-quarter letter.

2009-09-29 Interview: Jeff Mortimer, CIO of Charles Schwab Investment Management by Robert Huebscher (Article)

Jeff Mortimer is Senior Vice President and Chief Investment Officer-Charles Schwab Investment Management, Inc. (CSIM). Mortimer has overall responsibility for approximately $240 billion in Schwab Funds and managed accounts. We spoke with Mortimer two weeks ago about the economy and why he believes the market has already priced in the bad news trumpeted by the media.

2009-09-15 Mohammed El-Erian: We Have Not Reached Escape Velocity by Robert Huebscher (Article)

Kicking off this year's Schwab Impact conference in San Diego, Mohammed El-Erian told an audience of nearly 1,000 advisors on Sunday night that the US financial system has not fully emerged from the financial crisis. El-Erian and his co-presenter, Larry Fink of Blackrock, addressed a range of topics, including the safety of the financial system, the future of regulation, and the outlook for inflation.

2009-09-08 Why Credit Matters: Fixed Income Investing in a Changed Landscape by Janus (Article)

The recent dislocation in the fixed income market is likely to transform how investors and asset managers approach fixed income investing for years to come. The corporate credit sector may now be the single most important sector in generating risk-adjusted outperformance. In Janus' recent brief, Why Credit Matters, they discuss the structural market changes that have occurred and the importance of fundamental, bottom-up credit analysis and robust investment risk management in navigating this changed landscape. We thank them for their sponsorship.

2009-09-08 Infrastructure Investing by Michael D. Underhill (Article)

With global markets improving, liquidity returning to the credit markets, and valuations improving, the infrastructure market looks promising. In this guest contribution, Michael Underhill argues that infrastructure assets,when chosen correctly, can diversify an investor's portfolio because of their low correlation with other asset groups, their consistent returns coupled with lowered levels of risk, and their potential for inflation-linked returns.

2009-08-25 The New Normal and Asset Allocation Merriman?s Response by Larry Katz, CFA (Article)

Larry Katz, Director of Research at Merriman, Inc., responds to Geoff Considine's article two weeks ago, What the New Normal Means for Asset Allocation. He has multiple objections concerning much of Considine's logic, and would not recommend his alternative portfolio to their clients.

2009-08-18 Actively Managed TIPS? by Robert Huebscher (Article)

When PIMCO talks, the market listens. But we mustn't forget that the bulk of PIMCO's revenue comes from actively managing bond portfolios so, when they claim that alpha can be earned by actively managing TIPS, a healthy dose of scrutiny is warranted. Our article shows why that scrutiny is justified.

2009-07-21 Q2 2009 Performance among the Most Popular Mutual Funds in the Advisor Perspectives Universe by Robert Huebscher and Mary Pitek (Article)

Each quarter we analyze changes in the Advisor Perspectives database - a $50+ billion universe of high- and ultra-high net worth assets managed by Registered Investment Advisors. Our analysis has three parts. We look at changes in asset allocation, the performance of the most popular mutual funds, and the mutual funds that showed significant gains or losses in popularity during the quarter.

2009-07-07 Riding the Stock Market Wave in the First Half of 2009 by Ron Surz (Article)

Ron Surz provides his award-winning market commentary, reviewing the first half stock market performance around the world. He looks at the past decade, to set expectations accordingly. Have markets become cheap enough yet? He concludes with a realistic and sobering look at our current debt problems - a cause for concern for both young and old.

2009-06-23 Letters to the Editor ? Moving Average: Holy Grail or Fairy Tale? by Various (Article)

Ted Wong's article last week, Moving Average: Holy Grail or Fairy Tale?, drew a large number of questions and comments from readers.

2009-06-09 Changes in Asset Allocation by Robert Huebscher and Mary Pitek (Article)

Each quarter we review changes in the Advisor Perspectives (AP) Universe, which represents $50 billion in high-net worth assets managed by RIAs. Our analysis looks at changes in asset allocation, the mutual funds and ETFs that gained or lost market share, and the performance of the most popular actively managed mutual funds. This analysis focuses on changes in asset allocation.

2009-06-09 Q1 2009 Performance among the Most Popular Mutual Funds in the Advisor Perspectives Universe by Robert Huebscher and Mary Pitek (Article)

Each quarter we review changes in the Advisor Perspectives (AP) Universe, which represents $50 billion in high-net worth assets managed by RIAs. Our analysis looks at changes in asset allocation, the mutual funds and ETFs that gained or lost market share, and the performance of the most popular actively managed mutual funds. This analysis focuses on performance across the most popular mutual funds.

2009-05-26 Risk Control along the Glide Path by Craig L. Israelsen and Ron Surz (Article)

Timing matters, and it matters before and after retirement. In this guest contribution, Ron Surz and Craig Israelsen show that when money is being invested annually the sequence of returns matters,and it matters even more for portfolios in the distribution phase. The authors discuss the significance for target date fund and other retirement-focused investors.


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