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Advisor Perspectives
Insights into the world of high- and ultra-high net worth investing
November 10, 2009- Vol 3, Issue 45
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If you missed Dan Richards' webinar, It's not Business as Usual: Five New Imperatives
for Effective Client Communications, you can view a replay of it here.
Bruce
Greenwald is a professor of
finance at Columbia University,
the Director of Research at First Eagle
Funds, and perhaps the foremost
expert on value investing. In part one of our two-part
interview, he discusses the structural
problems facing the economy, the parallels to the Great Depression, and the
implications for the unemployment rate.
Since the onset of
the global financial crisis in late 2007, there has been an increasing
number of papers and articles in financial journals and the popular
financial press pointing out that actively
managed investments of all types did not fare well relative to
passive investment strategies. In this article, American Century
Investments provides four fundamental
reasons why those who have forecast the demise of active investment
management are mistaken, in part due to one of the most common
errors of behavioral finance-the Recency
Effect (placing undue emphasis on the recent past to form future
expectations). We thank them for their sponsorship.
At the end of the 3rd quarter, the S&P 500® Index posted its strongest back-to-back quarterly performance since
1975. While the economy continued to stabilize and the U.S. consumer showed signs of life, concern over the health
of the consumer remained. Learn more about the key drivers of global financial markets from the
perspective of the Janus investment team through this 3Q Financial Markets Review. We
thank them for their sponsorship.
Nouriel Roubini, the
once-obscure economist who gained celebrity and the title "Dr.
Doom" after correctly forecasting the financial crisis, believes that current Fed policies are destabilizing the markets
and pushing the economy toward another collapse.
More articles below...
Case studies rank as one of the most effective ways to tell your story to prospects. As Dan Richards writes, well-written case
studies can be more persuasive and memorable than the typical
marketing material which advisors use with prospects.
In the latest installment of his articles intended for an educated layman,
Adam Apt addresses the relationship
between risk and return, and shows that the connection between them
is neither rigid nor obvious, and that we
can be cheated of our money by disregarding risk and fixating only on
return.
In a letter to the Editor, a
reader responds to our article, The "V" Points Downward
We review the changes in the
Advisor Perspectives Universe of assets held by high- and
ultra-high net worth investors, and show the changes in asset allocation, performance of the most popular mutual
funds, and those mutual funds
that gained and lost popularity among advisors.
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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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.
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In our interview, Greenwald discusses what the US
must do to replace its diminishing manufacturing base, and the government
policies that are necessary to eventually solve the current crisis.
Bruce Greenwald on Structural
Problems in the Economy and Unemployment
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4
Reasons to Emphasize Active Investment Management
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Active investment
management has recently "taken it on the chin" primarily because
of the recent global financial market crisis. However, there are very good
reasons to emphasize active investment management as part of your overall
portfolio investment strategy.
4 Reasons to Emphasize Active
Investment Management
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3rd
Quarter Financial Markets Review
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Janus offers their quarterly Financial Markets Review, which provides
insight into the key drivers of global financial markets from the
perspective of the Janus investment team. Covered topics include quarterly
performance of global equity and fixed income markets, significant
macroeconomic developments and their impact on financial markets during the
period and key factors to watch going forward.
3rd Quarter Financial Markets Review
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Roubini:
Fed Policies are Destabilizing the Financial System
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Using
Case Studies to Make Your Case
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As you think about how you're going to tell your story to prospects, consider
using case studies. Well-written and relevant case studies can be among the
most powerful weapons in your marketing arsenal.
Using Case Studies to Make Your Case
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Not
by Return Alone: Judging Investment Performance
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If you believe, rightly, that return and risk are related, you may be inclined
to stride further down this path on the assumption that return is always
proportional to risk, that higher risk implies higher return, and vice
versa. Stop. This path will lead you into a swamp of bad investment
decisions.
Not by Return Alone: Judging
Investment Performance
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Letters
to the Editor - The "V" Points Downward
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In a letter to the
Editor, a reader responds to our article, The "V" Points
Downward.
Letters to the Editor - The
"V" Points Downward
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Changes
in the Advisor Perspectives Universe
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We review the changes in the Advisor Perspectives Universe of assets held
by high- and ultra-high net worth investors.
Changes in Asset Allocation
Q3 2009 Performance among the Most
Popular Mutual Funds
Changes in the Most Popular Mutual
Funds
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Highlights
from Advisor Market Commentaries
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The recent global recession has made the efficacy of fiscal-stimulus
packages one of the most prominent policy debates in economics today. This
column finds that the multiplier of defence spending falls in a range of
0.6 to 0.8 and argues that non-defence multipliers are unlikely to be
larger. It says we should be sceptical when policymakers claim
government-spending multipliers in excess of one and suggests tax cuts may
be preferable to spending increases.
"Design and Effectiveness of
Fiscal-stimulus Programmes" by Robert Barro and Charles Redlick
The mess this country finds itself in was not caused by bankers, or greed,
or a collapse of the capitalist system. It's been caused by not allowing
the free market system to work. A 10-12 year wave of misplaced government
policies and Fed interventions are the root cause of the problems we face
today. These policies and interventions created a massive mis-allocation of
capital and resources for more than a decade in an effort to cater to large
public corporations and other political factions through fiscal and
monetary policy and banking disintermediation.
"Third Quarter 2009 Portfolio
Commentary" by Jay Compson of Absolute Investment Advisers
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Perspectives
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