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Advisor Perspectives
Insights into the world of high- and ultra-high net worth investing
July 28, 2009- Vol 3, Issue 30
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How
long must one be invested in the equity markets to have full confidence that they will earn superior
returns (as compared to bonds) and overcome the risks of bear
markets? We look at the historical record to see how stocks have fared against bonds for various
holding periods, and we look at research by Zvi Bodie and Mark Kritzman on this topic.
Buy-and-hold remains deeply entrenched in
the financial planning community, despite many of the flaws Ted Wong's
previous articles have illustrated. Although many
financial advisors suffer dearly from their buy-and-hold practices, they
are reluctant to change their approach. Who dares to challenge investment
sages like Bogle, Siegel, and Malkiel who emphatically support this
long-standing investment principle? Academic
research studies overwhelmingly endorse buy-and-hold. How can they all be
wrong?
To forecast economic growth, it's essential to understand the trajectory of the housing market. Most
observers rely on widely publicized data like the Case Shiller index, but those metrics
can be very misleading if you
don't understand how they are calculated. If you don't understand that
there are factors beyond Case and Shiller's control that impact the data,
according to John Burns, the
founder and CEO of John Burns Real Estate
Consulting, a 20-person firm based in Irvine, California.
Some words are particularly effective when talking to clients and
prospects, says Dan Richards.
For example, when it comes to advertising and direct mail, nothing beats
the word "Free" in a headline. Among the words used by advisors, arguably the single most powerful phrase is "Tell me
more."
Kristen Luke's philosophy is that the best marketing activities
are the ones that are in line with the advisor's preferences and
interests. Social media offers a
rich array of tools - all you have to do is choose the one that best fits your personality and
preferences.
In a letter to the Editor, a
reader challenges the thesis of
Jerry Minton's article two weeks ago, Beyond Grantham: Politics and
Investment Strategy.
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
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version. Please send an email to feedback@advisorperspectives.com requesting the "text-only" version.
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"unsubscribe" in the subject line.
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Most retirement-oriented investors have horizons of greater than ten years.
Is there a time horizon at which the risks of equity investing (both the
probability and the magnitude of potential losses) decreases to the point
where equities become a far more compelling choice than bonds or TIPS?
How Long is the Long Run?
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Moving
Average: Holy Grail or Fairy Tale - Part 3
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Ted Wong shows why
the buy-and-hold strategy that worked so well in the past has proven so
fallible since 2000. The question is whether you believe the secular bull
of the past is likely to return after the current recession is over. If you
think that the next decades will not match the good fortune of the
post-WWII era, you should start looking for an alternative investment
approach.
Moving Average: Holy Grail or Fairy
Tale - Part 3
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Flaws
in the Case Shiller Methodology
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John Burns says
the recovery in the housing market is at least a year away and will not be
a rebound, but the beginning of "flat and boring" market
conditions. New construction will be at very low levels, foreclosures will
remain high, and prices will be stable - not increasing.
Flaws in the Case Shiller
Methodology
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Three
Powerful Words in Client Conversations
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We all know that changing established habits is hard and takes real effort
- change doesn't happen on its own, it happens because we make it happen.
Make getting clients to talk more in meetings a priority - chances are
you'll be surprised at the difference this makes in your interactions.
Three Powerful Words in Client
Conversations
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Which
Social Media Tool is Right for You?
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From her experience across the advisory industry, Kristen Luke finds that
no single social media tool has been more successful than another.
The tool that will be most successful for you will be the one you are most
passionate about and enjoy using. Choose the one that fits you the
best and get started!
Which Social Media Tool is Right for
You?
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Letter
to the Editor - Beyond Grantham: Politics and Investment Strategy
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In a letter to the Editor, a reader responds to Jerry Minton's article two
weeks ago about Jeremy Grantham, politics, and investment strategy.
Letter to the Editor - Beyond
Grantham: Politics and Investment Strategy
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Highlights
from Advisor Market Commentaries
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John Mauldin writes that a lot
of bullish commentators are talking about a recovery being in the works,
and they may very well be right. But it is not going to look like any
recovery worthy of the name. This week we look at what I will call The
Statistical Recovery. But first we take a look at what China is doing, as
we continue our look at the rest of the world and ponder whether it is time
to brace ourselves for an extended bout with the Muddle Through Economy*.
(And yes, there is an asterisk.)
The Statistical Recovery
Michael Nairne of Tacita Capital says
that to the thoughtful investor, the volatility of the value premium is
reassuring. A premium which showed up with any regularity would disappear
almost immediately since it would be arbitraged away by traders.
Instead, the value premium is available to patient, long-term
investors who are interested in beating the market. Impatient investors
will need to look elsewhere.
Beating the Market
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Advisor
Perspectives
Box 380
Lexington, MA 02420
(781) 376-0050
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