|
|
Advisor Perspectives
Insights into the world of high- and ultra-high net worth investing
January 17, 2009- Vol 3, Issue 2
|
|
|
|
|
|
|
|
Brian Wesbury, Chief Economist
of First Trust Advisors, says "the
market is significantly undervalued." We review his valuation model, as he explains why the
economy will recover later this year,
and why investors should be worried about inflation
and not deflation.
As the investment community marked the anniversary of 2007's stormy
"Summer of
Subprime" and the damaging credit crisis waves it spawned, we were
tossed and turned again by new credit and
financial storms that had spread throughout the financial sector during the
past 15 months. American Century Investment's article,
"The Credit Crisis and Repricing of Risk, 15 Months Later," looks
at the current market outlook.
We welcome their sponsored content.
As government bailout money flows
into the coffers of banks and automobile companies, one of the ways it is
being spent is to maintain naming rights
deals on professional sporting arenas. We look at the
history of these naming deals, and show that, while corporate executives
may enjoy some perquisites, shareholders
of these companies are suffering below market returns.
Fund manager Mariko Gordon of Daruma Asset Management has a useful and
interesting follow-up to our article last week on due diligence. She outlines
several steps advisors should take to
better understand the people and process at work at the firms who manage
your assets.
The "fundamental indexing"
debate continues in the January/February 2009 Journal of Indexing.
Guest contributor Michael Edesess says the latest defense of fundamental indexing rests on an optical illusion,
and there is no reason to believe a market-cap-weighted portfolio is
necessarily undervalued. Along with this article, we have Edesess'
paper on fundamental indexing, which was originally submitted to The Financial Analysts Journal.
Guest contributor Ron Surz says the decimation
in the financial services sector has created distortions index performance.
The major vendors of market indices are providing different results for
growth versus style, and complex performance evaluation is required for
accurate Q4 and 2008 analysis.
A portion of our interview last week with Bruce Berkowitz of Fairholme Fund
was picked up by The Manual of Ideas, a site
geared to sophisticated value-oriented investors. The site offers a
subscription-based newsletter, and we encourage you to review their
offering.
Lastly, we highlight submissions to Advisor
Market Commentaries.
We welcome guest submissions from our readers. For more information, here are our guidelines.
If you are experiencing problems opening or navigating through our
newsletters, we can send you a text-only version. Please send an email
to feedback@advisorperspectives.com
requesting the "text-only" version.
If you have received this newsletter in error, or you do not wish to
receive future newsletters, please reply to this email with the subject line
"unsubscribe."
|
|
|
|
|
Brian Wesbury of First Trust Advisors:
The Market is Significantly Undervalued
|
|
In our interview with Brian Wesbury, he explains his firm's valuation model
and why it says the US
equity market is now significantly undervalued. Wesbury defends his
views on why the economy is headed for a v-shaped recovery and the threat
posed by inflation. He also explains why mark-to-market accounting
poses grave risks to economic recovery
Read the article
|
The
Credit Crisis and Repricing of Risk,15 Months Later
|
|
As the American
Century Investments Fixed Income team sensed would be the case 15 months
ago, the credit crisis launched during the "Summer of Subprime"
is still with us: housing prices are still declining, home inventories
remain high, and consumer spending continues to be constrained. Take a look
at this white paper discussing what we saw, how we positioned our fixed-income
portfolios and what we see coming next.
Read the article
|
|
69
Reasons Why You Shouldn't Invest in Stadium Naming Deals
|
|
Our examination of the 69 naming deals by publicly traded companies shows
that the performance of companies that purchase naming rights trails the
S&P 500 index by 4.7% over the course of the deal. If you invested in a
company the day it announced a naming agreement and sold when the agreement
was done (or still held onto it for current name holders), your portfolio
would be down 9.1%, as compared to -4.5% for the S&P 500.
Read the letters
|
|
Breakfast
of Charlatans
|
|
Sound investment has always been about the people behind the numbers. And
while past performance may not be a guarantee of future returns, past
behavior - good or bad - usually is. Here's some advice from a fund manager
on how to conduct due diligence on one of her own.
Read the article
|
Fundamental
Indexing: A Verbal Optical Illusion
|
|
Fundamental indexing can be viewed merely as a low-cost, automated way to
tilt a diversified portfolio toward value stocks-a strategy that has a
foundation in empirical historical results. That is where fundamental
indexing advocates should leave it. But its advocates make a further claim
for the practice, one that relies on the argument that the
market-cap-weighted portfolio is necessarily overvalued. That
argument rests of a verbal optical illusion, as Michael Edesess explains.
Read the article
Michael Edesess also provides his full paper debunking the arguments behind
fundamental indexing. This paper was originally submitted to The Financial Analysts Journal, and is
now published here in its entirety.
Read the article
|
Index Alert: Beware
the Distortions Wreaked by the Crisis
|
|
As we begin 2008 performance reviews we expect some heads will fly, and
some deserve it, but we need to be especially careful this year about our
judgments of success or failure. The economic crisis has wreaked havoc on
style indexes, causing S&P and Russell to disagree, and distorting
sector compositions, especially allocations to financial stocks.
Read the article
|
|
Highlights
from Advisor Market Commentaries
|
|
John Mauldin of Millennium Wave Advisors offers his 2009 forecast - a mix
of recession and inflation - along with his picks for the asset classes to
invest in and to avoid.
Read the commentary
Along the same lines, Nouriel Roubini of the RGE Monitor provides his
forecast for 2009, along with projected asset class returns.
Read the commentary
|
|
Advertise
in Advisor Perspectives
|
|
Our newsletter goes to over 70,000 RIAs, wealth managers, and financial
advisors. See how you can deliver your message to our sophisticated
audience.
Read more
|
|
Advisor
Perspectives
Box 380
Lexington, MA 02420
(781) 376-0050
|
|
|
|
|
|
