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February 7, 2012 - Vol 6 Issue 6
Dear Reader,
The 7th Annual MIT Sloan Investment Management Conference will be held Friday, March 9th, 2012 at The Charles Hotel. This year's conference on "Fundamental and Quantitative Strategies for Turbulent Markets" will feature Rep. Barney Frank, and keynote addresses from Donald Sussman, Ron O'Hanley, and Professors Roberto Rigobon and Alberto Cavallo. Industry experts will lead panel discussions on emerging markets, the crisis in Europe, high frequency trading, low volatility strategies and other topics. Please visit here to register and find more information.
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 Jeremy Siegel, Rob Arnott and Other Experts Forecast Equity Returns
By Laurence B. Siegel
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.
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An Innovative Solution to Retirement Income
By Joe Tomlinson
Generating lifetime income is the ultimate goal of retirement planning. Why is it, then, that two of the most compelling mechanisms for doing just that are shunned by the investing public, despite overwhelming support from experts? I'm talking about immediate annuities and delayed claiming of Social Security, both of which are remarkably effective at securing retirement needs. 
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What Advisors Can Learn from Eli Manning:
How to Conquer the Real Threat to Your Success
By Jack Singer, Ph.D.
I don't know Eli Manning personally. But I know a thing or two about what it takes to become a champion, as he did by winning the Super Bowl on Sunday night.
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A Conversation that Tripled Referrals
By Dan Richards
Last fall, a veteran advisor contacted his retired clients with the suggestion that they meet to discuss one simple goal - to lay out detailed monthly cash flow forecasts matching funds coming in with cash going out. Not only did this exercise benefit those clients, he was able to leverage his efforts to triple his referrals.
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Neel Kashkari on PIMCO's Equity Strategy
By John Heins
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.
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Letters to the Editor
Readers respond to past articles, including Robert Huebscher's article, The Misreading of Reinhart and Rogoff, our interview with Lacy Hunt, and Wade Pfau's article, Safe Withdrawal Rates: A Do-It-Yourself Approach.
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Our Most Read Article from Last Week:
Lacy Hunt on the Roadblock to Recovery
By Robert Huebscher
'The fundamental key to prosperity is not governmental financial transactions, or even private sector financial transactions,' according to Lacy Hunt, the widely respected economist at Hoisington Investment Management, who we spoke with last week. 'The key to prosperity is the hard work and creativity of our individuals in businesses.'
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Highlights from Market Commentaries
 Warning: Goat Rodeo
We're observing an "exhaustion" syndrome that has typically been followed by market losses on the order of 25% over the following 6-7 month period (not a typo). Worse, this is coupled with evidence from leading economic measures that continue to be associated with a very high risk of oncoming recession in the U.S. - despite a modest firming in various lagging and coincident economic indicators, at still-tepid levels. Compound this with unresolved credit strains and an effectively insolvent banking system in Europe, and we face a likely outcome aptly described as a Goat Rodeo.
Tags: Equities US Europe Sovereign Debt
Warning: Goat Rodeo by John P. Hussman of Hussman Funds
 Life and Death Proposition
When interest rates approach zero they may transition from historically stimulative to potentially destimulative/regressive influences. Recent central bank behavior, including that of the U.S. Fed, provides assurances that short/intermediate yields will not change, and therefore bond prices are not likely threatened on the downside. Most short to intermediate Treasury yields are dangerously close to the zero-bound which imply limited potential room, if any, for price appreciation. We can't put $100 trillion of credit in a system-wide mattress, but we can move in that direction by delevering.
Tags: Investment-Grade Bonds Treasury Bonds US
Life and Death Proposition by Bill Gross of PIMCO
Year-End Commentary
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).
Tags: Equities US
Year-End Commentary by Steven Romick of First Pacific Advisors
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