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Advisor Perspectives
Insights into the world of high- and ultra-high net worth investing
September 23, 2008- Vol 2, Issue 39
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Michael Lewitt is a hedge fund
manager and editor of the one of the most respected market newsletters, the
HCM Market Letter. Lewitt, who is scheduled to appear on 60 Minutes this week, gives us a quick
recap of the significance of last week's events, and what investors should
expect over the short- and long-term. We also have Lewitt's most
recent article, "The Fall of Lehman:
How To Fix It - Part II," which foretold the failure of AIG
and offers a detailed prescription for fixing the financial markets.
There are significant costs to the
government's bailout programs, and they are not what you think
they are. Robert Pardes looks at the true costs, which include the
inflationary impact of gas and food prices hitting those with more modest
income.
EAFE has been under fire for
being an inadequate way to gain foreign equity exposure. But, in
spite of its inadequacies, the index
continues to perform very well, reports Eric Uhlfelder.
Uhlfelder, who also writes for Barron's and
the Financial Times, looks at
ways advisors can sidestep structural issues with EAFE.
When the dust settles from the landslide of bankruptcies and mergers on
Wall Street, we will still be left with the fundamental problem that created
this mess - the housing bubble. We
look at some new data to see whether the supply
and demand imbalance in the housing market is nearing a correction.
We take a step back in the debate over
the role of luck versus skill in active management, in order to
summarize the key issues and the points of disagreement among the
debaters. We also present new data from Tom Howard showing the alpha
trend for US equity mutual funds against the Russell 3000 index.
For advisors looking for a well-written
summary of recent events and what it means for typical
investors, we recommend this posting, which was edited by Freakonomics author Steven Levitt.
Lastly, we highlight some recent Advisor Market Commentaries.
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Michael Lewitt on the Key Issues in the
Credit Crisis
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Michael Lewitt is not your average hedge fund manager. He is a highly
sought-after analyst and editor of one of the most respected market
newsletters. His advice for today's markets is not encouraging -
among other things, he advocates avoiding the global equities markets for
the next couple of years. See Michael Lewitt's article below as well.
Read the article
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Averting
Moral Hazard: When, at What Cost, and to Whom
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Calls for more transparency have been a rallying point for investors and
regulators amid the ongoing credit crisis, but recent actions taken by the
Treasury and Federal Reserve are anything but. Whether through
practical ignorance of the challenge average families face or measured
intent, the Fed (with bipartisan support) has engineered an expensive,
immediate transfer of the credit crisis' costs that is both inequitable and
regressive.
Read the article
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A
Death Greatly Exaggerated: Understanding and Profiting from EAFE; Current
Prospects
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A common way investors voyage into overseas markets is though a mutual or
exchange-traded fund that tracks the MSCI Australasia Far East Index,
better known by its acronym, EAFE. This well-established benchmark, which
dates back to 1969, tracks approximately 85 percent of the world's
developed markets outside of the Americas.
But as this article explores, it may not be the most effective index to
gain international exposure.
Read the article
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The
Bubble Unburst: Housing Woes Persist
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Jeffrey Gundlach, Chief Investment Officer of the TCW Group, provides an
update on the state of the housing market and the likelihood of a
recovery. He says advisors should steer clear of REITs as well as any
fund that uses non-cash instruments. Gundlach also discusses where he
is finding good value in the mortgage markets.
Read the article
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The
Fall of Lehman: How To Fix It - Part II
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Michael Lewitt, who we interview in this issue (above) provides a
prescription for fixing the problems in the credit crisis. Lewitt
says we are now on the deck of the Titanic, and we cannot afford to wait to
implement his recommendations.
Read the Article
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Luck
versus Skill in Active Management: A Perspective on the Debate
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We summarize the issues in the debate over the role of luck versus skill in
active management, specifically the points of disagreement among the
debaters.
Read the article
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Highlights
from Advisor Market Commentaries
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We highlight recent submissions to Advisor Market
Commentaries:
John Mauldin takes us inside a hypothetical securitized debt obligation,
and explains how the default rates affect valuation.
Read the Commentary
Many advisors share with us their communications with clients during this
time of crisis. Here are a couple of samples.
R.W. Roge & Co.
Beacon Pointe
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Advisor
Perspectives
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