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Dear Reader,
April 17, 2012 - Vol 6 No 16
Economic Blogger Mike "Mish" Shedlock's wife has ALS, better known as Lou Gehrig's disease. Mish is not asking for anything for his family, but has sponsored a raffle for ALS research. Please consider buying one or more tickets or making a small donation to the
Les Turner ALS Foundation.
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 Rethinking Safe Withdrawal Rates: The Meaning of Failure
Merely knowing the probability that an investor's wealth will be depleted at some point is not enough to build a retirement strategy. That is the traditional measure of failure in safe withdrawal studies, and it's time to move beyond it.
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The Real Reason to Worry about Oil
By Robert Huebscher
Few question the prevailing wisdom that tensions with Iran have caused the recent rise in oil prices. But another possibility exists - and it's a much greater long-term threat to economic growth.
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Harold Evensky's Fiduciary Oath
By Harold Evensky
Harold Evensky, the founder and principal of the Florida-based wealth management firm Evensky & Katz, shared with us the Fiduciary Oath he provides to his clients.
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Career Opportunities
As a service to our clients, we are posting career opportunities for firms that seek to add financial advisors and planners to their staff. Two new opportunities added since last week.
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Two Words to Get in Front of Prospects
By Dan Richards
Even advisors who are successful in every aspect of their business struggle when it comes to getting meetings with prospects. The key is to understand how prospective clients look at requests for action - and to frame anything you ask with two words in mind.
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The Rebalancing Premium
By Michael Nairne
Selling winning asset classes to buy losers runs counter to human nature. But doing so with discipline can increase the potential return of a portfolio while critically maintaining its risk profile. The rebalancing premium is an important and often overlooked addition to returns of properly managed portfolios.
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Muppet Capers
By Michael Lewitt
Investors enjoyed strong stock market and credit market gains during the first quarter of the year, but storm clouds may be forming on the horizon. Corporate profits have likely peaked. Stocks may be the best house in a bad neighborhood, but houses in that neighborhood appear to be fully priced for now. There are also some troubling signs in the bond markets, particularly the long end.
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The Unemployment Rate: A Coincident Recession Indicator
By Georg Vrba, P.E. and Dwaine van Vuuren
For what is considered to be a lagging indicator of the economy, the unemployment rate provides surprisingly good signals for the beginnings and ends of recessions. We have developed a model that uses unemployment figures to produce these signals and to determine the probability of when a recession may start.
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Facing Reality by Questioning Some Common Beliefs
By Ron Surz
I've decided to do something different in this quarterly commentary. I begin as usual with a review of first quarter market performance. Then I turn my attention to some commonly held beliefs that I regard as mistaken, as shown in the figure below.
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Letters to the Editor
We have several letters from readers, including one in response to Lisa Keung's article on myths about women and investing and one in response to a recent commentary by Dan Ariely.
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Highlights from Market Commentaries
Here are the top three commentaries from last week.
 Benjamin Graham's The Intelligent Investor: Chapter Eight
There are only five pages dedicated to bonds in Chapter Eight. But, these five pages had such major influence on my early years as an advisor. And once again, it is those pages that are sending me a reminder as to why I should not buy bonds today. Given the current interest rates, I would strongly suggest any and all bond investors read these pages. I can assure you that Mr. Buffett has.
Tags: Equities US
Benjamin Graham's The Intelligent Investor: Chapter Eight by Kendall J. Anderson of Anderson Griggs
Is the Fed Promoting Recovery or Merely Desperation?
What we've observed in the employment figures is not recovery, but desperation. Having starved savers of interest income, and having repeatedly subjected investors to Fed-induced financial bubbles that create volatility without durable returns, the Fed has successfully provoked job growth of the obligatory, low-wage variety. Over the past year, the majority of this growth has been in the 55-and-over cohort, while growth has turned down among other workers. All of this reflects not health, but despair, and explains why real disposable income has grown by only 0.3% over the past year.
Tags: US Employment
Is the Fed Promoting Recovery or Merely Desperation? by John P. Hussman of Hussman Funds
Diversification Remains Difficult
Our firm believes three principles build long-term wealth: Extend the investment time horizons. Compound dividend income. And truly diversify portfolios. Although obvious, few investors actually follow them consistently. In particular, we remain quite concerned that investors appear grossly under-diversified. Diversification is not dependent on the number of asset classes, but rather it depends on the correlations among those asset classes. Because correlations among asset classes have been so high, investors must be extra careful to ensure portfolios are indeed well-diversified.
Tags: Equities US
Diversification Remains Difficult by Richard Bernstein of Richard Bernstein Advisors
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