Insights into the world of high- and ultra-high net worth investing
July 14, 2009- Vol 3, Issue 28
Grantham, the chairman of
GMO and one of the most respected investment minds of our era, believes
strongly in what he describes as market
"inefficiencies" within the "Presidential Cycle."
He is referring to the fact that stock market returns are not distributed
randomly across the four-year presidential election cycle, but rather are
strongly skewed to favor the pre-election year. Grantham believes -
and guest contributor Jerry Minton agrees - the evidence is incontrovertible: the behavior of the political class over the
election cycle systematically and profoundly effects the distribution of
stock market returns.
Investments' co-CIOs John P. Calamos, Sr. and Nick P. Calamos discuss the current market climate, implications of
Fed and government actions, and investment
opportunities in the shorter- and longer-term. Global
governmental policies have restored a degree of confidence in the financial
markets and many key financial metrics
are back to pre-Lehman levels. Many investment opportunities
will be available in the future. We thank them for their sponsorship.
Behavioral finance can improve your
client relationships during market turmoil, if you recognize
your clients' emotional right-brained reactions before you offer insights
based on your analytical left-brained analysis. By applying a three-pronged process of Recognize-Reflect-Respond,
you can adapt to new information in a thoughtful and effective framework.
Michael Jackson's Billie Jean wasn't
the first to make headlines. Back in 1973, Billie Jean
King moved the sports world a big step forward ... a step that the
financial services industry is still waiting to take. Guest
contributor Mariko Gordon of Daruma Asset Management explains why our overwhelming male-oriented industry
necessarily leaves investment returns on the table.
More articles below...
Recommendations initiated by someone
looking for an introduction to an advisor doing a good job for a
friend have always been an important
driver of referrals, but this will be especially true this summer. In some instances, your clients will be asked outright how they feel about
the job you've done and if they are comfortable recommending you. Dan Richards provides a three-step plan to
make this happen.
Robert J. Gordon, an economist
at Northwestern University, published a study in early May that found that the recession is all but over.
Gordon's statement was remarkable for its audacity and, more so, because for the last three decades he has been a member of
the prestigious Business Cycle Dating Committee of the National Bureau of
Economic Research (NBER) - the committee charged with setting the official
start and end dates of recessions. We examine Gordon's
We have a letter to the Editor regarding
our article last week, The
Q Ratio Sends a Modestly Bearish Long-Term Signal, and we
publish John Mihaljevic's response.
Lastly, we highlight submissions to Advisor
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Jerry Minton shows it is possible to develop a disciplined investment
management strategy to exploit the inefficiencies within the presidential
election cycle. Such a strategy could deliver high, risk-adjusted
returns over the long term.
Beyond Grantham: Politics and
of Life and Hope for a New Recovery
Investments' view, the reflation attempt and government policies will
prolong the economy's corrective phase. They believe that while some of the
regulatory mistakes are being corrected, structural problems remain and
their correction will take a long time and slow the potential growth in the
economy. The future path for these indicators does not have to follow the
Depression era's course. The monetary response to the deflationary global
collapse has been dramatically different this time around, with central
banks pouring money into global economies. Significant government fiscal
stimulus will also act as a buffer. They remain confident in the enduring
power of the private market's entrepreneurial spirit and creative problem
solving skills-the recovery will not happen overnight, but they believe it
Signs of Life and Hope for a New
Finance - A Three-Part Model for Client Relationships
clients who can use behavioral finance to work through a financial crisis
will develop a much deeper relationship from learning what lies underneath
clients' instinctive reactions. Gayle Buff, president of Buff Capital
Management, believes most advisors will learn that clients overestimated
their risk tolerance prior to the past year's financial crisis.
Behavioral Finance - A Three-Part
Model for Client Relationships
Jean, YOU are the One
Whether because of biology, evolution or social conditioning (or some
combination of all three), it seems pretty clear that there are important
differences between how men and women invest. And just as a diversified
portfolio is a cornerstone of sound and disciplined investing, diversified
approaches - i.e. approaches that draw upon the best tendencies of both
sexes - are needed in the battle to maximize returns.
Billie Jean, YOU are the One
Steps to a Referral Conversation that Works Today
No magic formula brings in droves of referrals. By using Dan
Richards' three step process, however, you will take maximum advantage of
referral opportunities this summer in a way that is comfortable for you and
for your clients.
Three Steps to a Referral
Conversation that Works Today
the Referee Says "Game Over" Too Soon
By focusing on the quantitative data and ignoring the qualitative aspects
of the business environment driving the recession, economist and NBER
recession dating committee member Robert Gordon ended up reading far more
into the data than was justified. Initial unemployment claims may
well be a leading economic indicator, but they are hardly sufficient
justification for the referee to say the game is over.
When the Referee Says "Game
Over" Too Soon
to the Editor: Tobin's Q Ratio
A reader responds to last week's article about Tobin's Q Ratio, and we
provide John Mihaljevic's response.
Letter to the Editor: Tobin's Q
from Advisor Market Commentaries
This is meant as no disrespect to the family of Billy Mays. Rather, it is
intended as utmost admiration of the man. My house and garage are full of
the products - almost two of each product - that Billy Mays advertised on
basic cable television. Paul Kasriel of
Northern Trust writes that he was one of the best salespersons
he has ever seen. He would purchase almost anything Billy Mays was selling.
With his passing, his personal saving rate is bound to rise and he suspects
the saving rate of many other Americans' will also for the same reason.
The Passing of Billy Mays Will Boost
My Personal Savings Rate
The United States is in the 20th month of a recession that has been by
far the longest and most severe of the post-war period. While comparisons
with the Great Depression are frequent and appropriate (especially if we
look at the pace of contraction in industrial production), the
aggressiveness of policy measures has significantly reduced the probability
of a near-depression. Economic activity fell off a cliff in Q4 2008 and Q1
2009, with two consecutive quarters of sharp contraction - by 6.3% and 5.5%
respectively - in line with the previous forecasts of Nouriel Roubini of the RGE Monitor. The
general consensus is that this recession will end sometime in the second
half of 2009.
U.S. Economic Outlook: Q2 2009
in Advisor Perspectives
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