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Advisor Perspectives
Insights into the world of high- and ultra-high net worth investing
October 13, 2009- Vol 3, Issue 41
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Sign
up here for a free webinar on October 28 at 9am
EDT where Dan Richards will review how things
have changed in the past year and what advisors need to do in response.
Extravagance is out and frugality is in. Finding happiness
in what we can afford is what sells. With many investors implicitly or
explicitly bracing for the New Normal and lower returns from the capital markets, advisors need to
rethink their marketing programs to be
consistent with their clients' tempered expectations.
Vitaliy Katsenelson doesn't do movie reviews, and he hasn't
watched Michael Moore's
previous movies. But when a Denver Post reporter invited him to a
private showing of Moore's latest flick, "Capitalism:
a Love Story," its subject matter enticed the Russian-born
author to check it out, and he has a few
choice words for Moore and his anti-capitalistic views.
A long-standing research thread has shown that professionally-managed portfolio returns strongly resemble a random
walk about the market average. This is interpreted to mean that
professional money managers cannot predictably beat the market. A new study by Eugene Fama and Kenneth French uses
a novel statistical approach to add
evidence to that record- but with an important caveat.
Consistently committing
the time to think critically can lead to a dramatic boost in overall productivity. So
how do we go about ensuring we're "working
smart"? Dan Richards
offers five opportunities to build
thinking time into your business - you can do this annually,
quarterly, monthly, weekly ... or even daily.
More articles below...
Barry Eichengreen and Kevin H.
O'Rourke update their article, "A
Tale of Two Depressions," and report that global industrial production shows clear signs of
recovery, but weak consumer spending in the US may prevent a rapid recovery.
Advisors may think they are excellent
communicators, but in Beverly Flaxington's experience many have
a lot to learn. Whether they are developing new business, engaging
with centers of influence, introducing themselves to new prospects, or
simply building existing relationships, five
key techniques can improve their communication skills.
Leveraged and inverse exchange traded funds (ETFs) have been a
lightning rod for controversy. Reasonable concerns underpin criticism of
them, but these funds are largely
misunderstood. Tom Lydon sets the record straight and
identifies those investors for whom
leveraged and inverse funds are appropriate.
Lastly, we highlight submissions to Advisor Market Commentaries.
We welcome guest submissions from our
readers. For more information, here are our guidelines.
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version. Please send an email to feedback@advisorperspectives.com requesting the "text-only" version.
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Connecting with prospective clients in today's market means shelving
brochures laden with anachronistic Grecian columns and gold compasses in
favor of something more tangible. Nancy Opiela offers seven ways
advisors can adjust their marketing efforts to connect with prospects in
the current economic climate.
Seven Ways to Reach Prospects in the
New Normal
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Michael
Moore - Take This!
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This past weekend,
Americans voluntarily spent a few million dollars to see a movie by Michael
Moore - "Capitalism: A Love Story."Any who believed they were seeing
a documentary were kidding themselves.
Michael Moore - Take This!
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Luck vs. Skill in Mutual Fund Alpha Estimates
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Two highly-respected researchers, Eugene Fama and Ken French, have a new
study that fails to find any statistically significant evidence of alpha
among mutual fund returns - but with an important caveat.
Luck vs. Skill in Mutual Fund Alpha
Estimates
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Work
Smart by Building Thinking Time into Your Day
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Being busy is good
to a point - as long as it's not the "hamster on the wheel"
effect - where the faster we go, the faster the wheel we're on turns (the
source of the expression "spinning our wheels.") And being busy
is also good provided it doesn't get in the way of periodically stepping
back and thinking about our business - that's the only way we ensure we're
working smart as well as hard.
Work Smart by Building Thinking Time
into Your Day
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A Tale of Two Depressions: October 2009 Update
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This is a sharp divergence from experience in the Great Depression, when
the decline in industrial production continued fully for three years. The
question now is whether final demand for this increased production will
materialize or whether consumer spending, especially in the US, will remain
weak, causing the increase in production to go into inventories, leading
firms to cut back subsequently, and resulting in a double dip recession.
A Tale of Two Depressions: October
2009 Update
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Five Secrets to Effective Communication
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Improving communication is not a difficult task. It takes knowledge and
practice - and a willingness to look in the mirror to find your personal
biases and preferences. In order to improve communication, we have to first
know our filters - and be willing to drop them when we engage with others.
Five Secrets to Effective
Communication
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In
Defense of Leveraged and Inverse ETFs
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Inverse and
leveraged ETFs are doing what they're supposed to do. They've proved to be
immensely popular, and the regulatory authorities should not impose limits or
consider doing away with such innovative products that thousands of
investors and financial advisors have used with success.
In Defense of Leveraged and Inverse
ETFs
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Highlights from Advisor Market Commentaries
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Aside from diversification, one of the biggest advantages of owning a bond mutual
fund is that you can benefit from professional management at a very low
cost. Bond fund managers spend all day figuring out what the best bonds are
and how best to structure a portfolio. Realistically, most individual
investors are not likely to do this much work. We'll be the first to admit
that there are plenty of mediocre bond fund managers out there, but by
owning a good one, you get several things...
"Bond Funds vs. Individual
Bonds" by Litman Gregory
At this time, I see no one questioning the current Keynesian thought
process that the only way out of this economic mess is for government
spending to replace private spending until "things get better."
President Obama and Fed Chairman Bernanke's motto is seemingly to
"Walk softly and carry a big checkbook." The amount of capital
being created from thin air is staggering: TALF at $900 billion, TARP at
$700 billion, authorizing the Fed to be buyer of last resort for commercial
paper at $1.6 trillion, buyback of mortgage securities (GNMA, FNMA, and
FHLB) at $1.5 trillion, Public-Private Investment Fund at $900 billion,
bailout of Freddie Mac and Fannie Mae at $400 billion. That's $6 trillion
of additional debt!!!
"Financial Exigency: Capitalism
to Fascism" by Cliff Draughn of Excelsia Investment Advisors
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Perspectives
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