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Forbes is running
what promises to be a very exciting virtual conference on Wednesday,
Dec 9. Some of the speakers include Steve Forbes, former
Schwab CEO David Pottruck, fund manager Ron Muhlenkamp and hedge
fund guru Mebane Faber. You can earn up to 7 hours of
continuing education credit by attending this one day online-only
event. To register for this conference, please click here and use promo code
"adpersp" for complimentary
admission.
When active
managers are tested, as they were during the 2008 bear market
and 2009 bull market, so are the
systems used to predict their performance. Perhaps no
system is as widely used as Morningstar's "star" rating
system. In an update to a study we originally did two years
ago, we show that Morningstar's
ratings fail to offer any predictive ability when measured over a
full market cycle.
"A manager who limited losses last year
went a huge way toward helping investors accumulate wealth over time
and meet their long-term goals," Morningstar's Don Phillips
told the Wall Street Journal in early November for an article
titled, "The Cruel Math of Big Losses." "It's the kind of victory
that often goes unnoticed," Phillips said. Read how American Century® Equity Income provided
its 80,000 shareholders with such a victory last year.
We thank them for their sponsorship.
The recent market
decline coupled with, tax, custodial, management fees and estate
planning issues make the decision to
use a 529 plan less than straightforward. In this guest
contribution, advisor Mary Ann Lambert briefly reviews the history
of college savings plans and shows how the current landscape favors 529s for some
clients but not for others.
In a newly released
study, Yale Professor Will Goetzmann shows that changes in art prices over long periods of
time are mostly explained by changes in income
inequality. As income inequality - the percentage of
income earned by the top 0.1% of the population - grows, so does the
value of art. Art has little
diversification value with respect to equities.
Whether it's
a phone call to a difficult client, a meeting with a retiree
whose portfolio has been hit hard, a tough conversation with an
underperforming staff member or getting through a mountain of
filing, most of us have at least one
issue on which we have been procrastinating for weeks,
months, maybe even years. Dan
Richards gives some tips for dealing with tough issues.
Dubai is like NASA; both
have proven that anything is possible when you ignore economic
costs. As Vitaliy Katsenelson writes, many technological discoveries
were made in the process of putting
a man on the moon; but the project did have, and was expected
to have, a negative return on
capital.
When he meets with financial advisors, Jason
Lampa always asks them whether they have integrated event marketing into their strategic
marketing plan. In this guest contribution, he writes
that rarely are such programs part of a firm's overall marketing
strategy; moreover, most advisors have no process in place to
execute an event marketing plan.
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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Morningstar Ratings Fail over a Full Market
Cycle
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It is
precisely because markets are unpredictable that active managers are
valuable, and when predictive systems meant to assess those managers
fail in volatile conditions, one must ask whether those systems
serve any useful purpose.
Morningstar Ratings Fail
over a Full Market Cycle |
Equity Income: Performance and Wealth Preservation
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American Century Investments' most conservative value-oriented
portfolio captured only 55% of the downside of one of the steepest
bear markets in history. That performance in 2008 relative to both
the broad market and peers hardly went unnoticed by financial
professionals who recommended the portfolio to their clients, or
Morningstar, which ranked the fund highly.
Equity Income: Performance
and Wealth Preservation
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Which
clients should use 529 plans depends on a set of well defined
criteria. If and when a 529 is appropriate, there are two decisions
that are more critical now than ever: which type of 529 plan to use
and how to allocate the funds.
The 529
Dilemma |
The Investment Value of
Art
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Don't buy art as a diversifier, Will Goetzmann advises, because
when markets go down, art is likely to go down as well, as demand
diminishes from the ultra-wealthy. "The last thing those
people will want to do in those times is to think about buying a $5
million painting," he said. The Investment Value of
Art |
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It's human
nature to defer unpleasant tasks. The truth of the matter, though,
is that difficult tasks and decisions never get easier with the
passage of time.
Cleaning up
Messes
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Dubai is
the exemplar of economically impossible activities that have taken
place everywhere, and why one can't be optimistic that demand for
stuff will return to levels even remotely close to what they were in
the days when everything was economically possible and financeable.
Dubai's Moon
Shot
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Attracting Clients through Event
Marketing
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Having an event marketing plan can greatly increase your
success as a financial advisor, through the event attendees
themselves and through referrals that come from
them. Attracting Clients through
Event Marketing
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Highlights from Advisor Market
Commentaries
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When
selecting managers for our clients' portfolios, philosophically
we're agnostic in the debate between active and passive management.
We consider all managers, but we do end up with a heavy passive
allocation. There is a good reason; as in the fable of the rabbit
versus the turtle, the turtle usually wins.
"President's Newsletter" by
Harold Evensky of Evensky & Katz
As I define it,
qualitative easing. If the Fed were pursuing a quantitative easing
policy, its balance sheet would be growing at an unusually high
rate. The Fed allegedly began to engage in quantitative easing at
its mid-March FOMC meeting this year. So, let's look at the rate of
growth in the Fed's balance sheet from the last Wednesday in April
through the last Wednesday in November and compare this current rate
of growth with rates of growth in the Fed's balance sheet for
comparable periods in previous years.
"Is the Fed Engaged in
Quantitative or Qualitative Easing?" by Paul Kasriel of Northern
Trust
What is the geographical distribution of CO2
emissions? This column identifies the Earth's "polluting centre of
gravity" since 1970. It is heading east faster than GDP, which
suggests that Asian production is getting more
carbon-intensive.
"The Global Distribution of
Carbon Emissions" by Robert Barro and Charles Redlick of
VoxEU
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