Insights into the world of high- and ultra-high net worth investing
September 15, 2009- Vol 3, Issue 37
off this year's Schwab Impact conference in San Diego, Mohammed El-Erian told
an audience of nearly 1,000 advisors on Sunday night that the US financial system has not fully emerged
from the financial crisis.
El-Erian and his co-presenter, Larry Fink
of Blackrock, addressed a range of topics, including the safety of the financial system, the future of
regulation, and the outlook for inflation.
At key moments investors refuse to take
those chances that will make them money. Behavioral finance has
a term for this - risk intolerance. Research supporting these claims
comes from two divergent pastimes - the
games of golf and blackjack.
We are once again privileged to offer the latest edition of the HCM Market Letter, edited by Michael Lewitt, titled The 'Cash for Clunkers' Economy.
Lewitt examines the drivers behind the
current market rally, the
health of the banking system and the housing industry, the the future for
derivatives regulation. If you enjoy this newsletter, we
encourage you to subscribe directly though the link provided with our
The reasons why one should sell the cat, pawn the mother-in-law,
and use the proceeds to buy gold are
well known. However, in this guest contribution, Vitaliy Katsenelson offers arguments
why one should think twice before jumping
in bed with the gold bugs, or at least remain sober while
determining gold's weight in the portfolio.
More articles below...
In this guest contribution, Keith Goddard matches an appropriate
descriptive theory about how asset markets work with our recently published
normative theory using Ted Wong's moving
average crossover as an indicator for timing portfolio changes in
active portfolio management strategies. He proposes that the theory of
"Rational Belief Equilibrium" in asset markets, developed by Stanford University professor, Mordecai Kurz, helps to explain why moving
average crossovers have demonstrated predictive value in the stock market
in the past, and why they might continue to offer predictive value in the
If you have clients with
children heading off to college or university this fall,
consider emailing these tips
which Dan Richards provides,
both for them to read and perhaps to pass on to their children.
Chances are those tips will be particularly appreciated where kids are
leaving home and living on their own.
In this guest contribution, Paul Weisbruch argues that an ETF does not require a certain amount of
trading volume in order to be liquid. The underlying securities
of the ETF determine its liquidity. Many within the industry do not grasp
this reality and are missing out on a lot
of quality ETFs.
Facebook is not a good strategy for every advisor, but it may be
appropriate for advisors with strong personal and community relationships. Kristen Luke shows how a business page allows you to share information with
your "fans" just as you would with your "friends"
through your personal profile.
Lastly, we highlight submissions to Advisor
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El-Erian, the CEO and co-CIO of the global manager PIMCO, calls the crisis
a "sequential contamination of balance sheets," which initially
hit the sub-prime and housing markets. In 2007 it spread to the
financial services industry and a year later to the global economy.
Now public finance balance sheets are strained, creating a new level of
concern for policy makers. Fully emerging from the crisis is
analogous to a rocket reaching its escape velocity - and the US
economy will be not there until the process of balance sheet contamination
Mohammed El-Erian: We Have Not
Reached Escape Velocity
Lessons from Golf and Blackjack Players
of loss outweighs perceived gains. Professional golfers don't putt as
accurately when going for a birdie (which they perceive as a gain) as they
do when trying to avoid a bogey (which they perceive as a loss).
Investing Lessons from Golf and
'Cash For Clunkers' Economy
Stability may be an essential phase on the way to growth, but it should not
be mistaken for growth. More importantly, it must be examined closely
to determine if it is sowing the seeds for growth or merely throwing dirt
over a rotten crop that will never make it to harvest. One cannot
avoid the uncomfortable observation that even with all of this huffing and
puffing on the part of the government, employment, corporate revenues,
housing prices and retail sales are still declining!
The 'Cash For Clunkers' Economy
Reasons to Avoid the Gold Rush
Though gold bugs
make it sound as such, gold is not the only and not the best alternative if
the worst fears come to pass. The best way to deal with the risks of dollar
devaluation and high inflation - with a much lower cost of being wrong - is
to own stocks of companies that have pricing power in their products.
Five Reasons to Avoid the Gold Rush
Support for the Moving Average Crossover
Although Ted Wong did not expand into descriptive theory to support his MAC
System in his articles, such a theory does exist. It is called "Rational
Belief Equilibrium," and it was developed at Stanford
over the past 15 years by Economics professor Mordecai Kurz
Theoretical Support for the Moving
Advice for Students Entering University
Smart advisors look for every opportunity to let clients know they're
thinking of them and to tap into important moments in clients' lives.
Consider whether there are some cases where the start of university this
fall provides that opportunity.
Practical Advice for Students
Key to Trading and Investing in ETFs
the quality of an ETF offering or its suitability for a client, the issues
of trading volume and liquidity come up often. Due to a general
shortage of information on of the nuances of ETFs and a lack of education
about ETFs in the investment advisor community, these issues have become
driving forces in determining which ETFs are best tailored for client
The Key to Trading and Investing in
to Setup a Facebook Business Page
Facebook business pages allow you to do more than what Kristen Luke
outlines here. She provides steps to help you get a basic page up and
How to Setup a Facebook Business
from Advisor Market Commentaries
No, we are not talking about an automobile. We are talking about the economic recovery currently underway.
Will it be a V shaped recovery or a W shaped recovery? Initially, we were
anticipating a W shaped recovery with an initial bounce followed by several
false starts. A W shaped recovery now seems to be the consensus. Not to be contrarian, but we are now leaning
towards the V shaped scenario.
VW by Michael Dana of Dana
Robert Shiller of Yale University talks to Romesh Vaitilingam about his book,
co-authored with George Akerlof, Animal Spirits: How Human Psychology
Drives the Economy, and Why it Matters for Global Capitalism. The interview
was recorded in London in May 2009.
Animal Spirits (Robert Shiller
interview) by Romesh Vaitilingam of VoxEU
in Advisor Perspectives
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