Insights into the world of high- and ultra-high net worth investing
April 7, 2009- Vol 3, Issue 14
On March 31, an icon of value investing, Jean-Marie
Eveillard, transitioned from his role as Portfolio Manager of
the First Eagle Funds to Senior Advisor to the Funds. We were granted the distinction of having the final
interview with Eveillard, as he and co-manager Abhay Deshpande share their views on opportunities in the markets. We
also report on a panel discussion earlier
in the day, where Eveillard and Marty
Whitman of the Third Avenue Funds discussed value investing in
the current environment.
With a comprehensive analysis of consumer
spending, the housing market, and the financial sector, Robert
Gahagan and David MacEwen of American Century Investments provide their forecasts for the economy and the market.
We thank them for their sponsorship.
A bull market requires three things -
attractive valuations, excess liquidity, and strong economic growth.
Two of those three appear to be in hand, and the third, economic growth,
may soon follow, according to Louis-Vincent
Gave, CEO of the Hong Kong-based consulting firm GaveKal.
Dan Richards explores the phrase "The
Pendulum Never Stops," which his business school professor
used in the context of market valuations
and market sentiment. That phrase has other implications for advisors today,
which Richards explores in his guest contribution.
More articles below...
Ron Surz provides his award-winning
market commentary, reviewing the first quarter's and the past
decade's stock market performance around
the world, as well as a measure of fear to see if we can find a
glimmer of hope. He goes on to offer some suggestions
for fixing a few things that have been broken for quite awhile.
In her guest contribution, marketing consultant Kristen Luke shows how you can implement a marketing plan for under $3,000, including
webinars, emails, networking events, roundtable discussions, and greeting
In a letter to the Editor, Kenneth Solow of
the Maryland-based Pinnacle Advisory Group responds to last week's article,
Glass Houses? An Open Letter to Bob
Veres. Solow looks at the question
of whether buy-and-hold or active investors are more sophisticated, and the
implications for advisors.
On March 31, President Obama announced
his plan to provide the automakers with
additional time to restructure their
businesses. In his speech, he ordered General Motors and
Chrysler to accelerate their restructuring efforts and brace for possible
bankruptcy. In this Editorial,
we have taken the liberty of preparing a
speech that Mr. Obama is welcome to deliver at the expiration of GM's
deadline, on June 1.
Last week's article, The Market Valuation Q-uestion,
featured research by John Mihaljevic. Mihaljevic's own publication,
the Manual of Ideas, has an interview this week with Tom
Gayner of the Markel Corporation that we found very interesting.
Lastly, we highlight submissions to Advisor
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Jean-Marie Eveillard's track record is unsurpassed among global value
investors, as he has consistently placed in the top percentile of his peer
group. In his final interview prior to transitioning to his new role
of Senior Advisor to the First Eagle Funds, he and co-manager Abhay
Deshpande discuss the role of gold in their portfolios, why they like
Japanese companies, what went wrong with their investment in American
Express, and a host of other topics.
Eveillard and Marty Whitman of the Third Avenue Funds spoke at a panel
discussion on value investing, and we provide highlights from their talk.
Au revoir Jean-Marie Eveillard: A
Whitman and Eveillard on Value
Credit Crisis and Repricing of Risk, 2007-2009
The credit crisis that began with the "Summer of Subprime" in
2007 remains in full effect, stifling economic growth and causing continued
volatility in the U.S. bond market. Fixed income investment team
leaders G. David MacEwen and Robert V. Gahagan discuss how the crisis
developed, how the fixed income team positioned its portfolios, and what
the team sees coming next.
The Credit Crisis and Repricing of
Building Blocks of the Next Bull Market
Based on common
metrics such as P/E ratios and market capitalization as a percentage of
GDP, Louis-Vincent Gave of the consulting firm GaveKal says US
equity markets are "at least close to historically low
levels." Gave was similarly confident that sufficient liquidity
is present to fuel a bull market, a judgment he based on money market and
The Building Blocks of the Next Bull
Pendulum Never Stops...
A key role for financial advisors is to serve as an emotional anchor for
their clients - to prevent the lows from being too low and the highs from
being too high. To do that, of course, advisors themselves first have to
resist the impulse to succumb to the pendulum's extremes.
The Pendulum Never Stops...
Glimmers in the Stock Markets
If losing less reduces market fears, we should all feel a little braver
today than we did three months ago. Following 20%+ losses in the fourth quarter
of 2008, 2009 started with "only" a 10% loss in the first
quarter. Foreign markets fared a little better with an 8% loss in the
quarter. The really good news, however, came in the last month of the
quarter, when U.S markets rallied 9% and foreign markets returned 7.5%,
including a 2% positive currency effect.
Hope Glimmers in the Stock Markets
$3,000 Marketing Plan
There are many low cost options that will have great impact on your
business. Recognizing the need for an effective strategy that requires very
little money, Kristen Luke created the $3,000 Marketing Plan. Here's what
you can do to grow your business for as little as $250 per month.
The $3,000 Marketing Plan
to the Editor: Re Clark M. Blackman's letter to Bob Veres
Advisors can buy and hold with the virtual certainty of underperforming expected
historical average returns, desperately hoping that better days are just
around the corner for their clients, says Ken Solow. Or they
can choose to actively manage portfolios with a good probability of
outperforming the vast majority of advisors who seem to think that
valuation either doesn't matter, or good values can't exist.
Letter to the Editor: Re Clark M.
Blackman's letter to Bob Veres
An Advance Copy of Obama's Speech on June 1, 2009
On June 1, at the expiration of GM's 60-day deadline to restructure its business,
President Obama will need to address the nation as to the future of the
automakers. In this Editorial, we have prepared a speech that he is
welcome to deliver.
Editorial: An Advance Copy of
Obama's Speech on June 1, 2009
from Advisor Market Commentaries
In his commentary, John Mauldin looks at the performance of the Dow Jones
Index, and shows that the "Original Dow," without any of the
changes made by the Dow selection committee since the inception of the
index in 1928, outperformed the Dow. The analysis is very
interesting, but it is also naive, since it does not take into account
risk. Additional risk in the "Original Dow" may be the
source of this outperformance.
Read the commentary
Chris Whalen of Institutional Risk Analytics is not impressed by the PIPP,
and he explains why.
Read the commentary
in Advisor Perspectives
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