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Advisor Perspectives
Insights into the world of high- and ultra-high net worth investing
February 3, 2009- Vol 3, Issue
5
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Digging ourselves out of the current financial crisis will likely take many
years, according to a study of similar
historical crises around the world. Carmen Reinhart discusses her research showing the recovery times for financial crises in other
countries, and the implications for the current crisis.
Rob Arnott, founder and CEO of
Research Affiliates, responds to a series of tough questions about fundamental indexing, such as
whether capitalization weighted indices have a greater proportion of their
holdings in over-valued securities. Arnott is very bullish on fundamental weighting in the
current market environment, and he explains why.
Getting through last year's downturn was the biggest test of mental
toughness most advisors will ever face. Dan Richards' column offers a dozen ways advisors can manage and overcome the obstacles created by
unfavorable market conditions.
The concept of volatility as an asset
class is the latest result of the never-ending quest to create
products for consumption by the investor community. But while
volatility might serve a useful purpose as a measure of investor sentiment, it is only a true asset class for the marketing purposes
of Wall Street's financial engineers.
Adam Jared Apt's column answers the question "how to think about investing" from
the perspective of an educated laymen. Apt traces the development of classical finance, modern portfolio theory, and
behavioral finance, and shows the role each plays in the
construction of a properly diversified
portfolio.
There has been a lot of rhetoric and not a lot of facts about the current economic and financial crisis.
Housing expert John Burns uses
facts to assess the current situation and
provides his recommendations to save the U.S. economy from collapse.
Lastly, we highlight submissions to Advisor
Market Commentaries.
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"A key finding of my work is that crises, especially banking crises,
tend to be protracted," says Carmen Reinhart who, along with Harvard
economist Ken Rogoff, has studied the history of financial crises.
She believes the U.S.
experience will mirror these historical averages, she said, because
"the crises that make up those averages were extremely severe crises
and we are in an extremely severe crisis."
Read the article
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Rob
Arnott Defends Fundamental Indexing
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Rob Arnott
responds to our questions about fundamental indexing, asserting his belief
that the alpha in this strategy is not dissipating. He argues markets
- specifically the relationship between value and growth stocks - are now
priced such that fundamental weighting will deliver "exceptional
value."
Read the article
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Twelve
Tips for Motivation in 2009
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Staying positive is Job One - a positive attitude allows you to be
effective in everything you do. Just recognizing the need to be positive
wasn't enough, though -explicit strategies need to be in place to ensure
you're operating at peak effectiveness. Here are twelve strategies to
help you get through the challenges of the period ahead.
Read the article
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Volatility
as an Asset Class
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Does pure volatility - as an asset class - have a legitimate role in
investor portfolios? Some recent Wall Street research suggest this is
the case. We explore the characteristics of the most common measure
of volatility - the VIX index - and explain why its investment value does
not extend beyond its ability to measure investor sentiment.
Read the article
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How
to Think about Investing
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There is a right way and a wrong way to think about investing. The
right way, according to Adam Apt, employs a structure in the
process of investing. Apt identifies the key characteristics of a
good structure, and how it helps construct properly diversified portfolios.
Read the article
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Unlocking
the Housing Market Recovery
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This downturn is unlike others experienced in the nation's past. The
problem does not lie solely with consumer confidence; rather the lack of
confidence is built upon real fears that cannot be alleviated with
rhetoric. John Burns offers four recommendations for stabilization
the housing market and economic recovery.
Read the article
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Highlights
from Advisor Market Commentaries
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Lew Altfest of L.J. Altfest & Co. provides a broad overview of current
market conditions, along with his forecast for 2009 and beyond.
Read the commentary
Fortigent's commentary provides some insight into the question of the
utility of spending versus tax cuts, as well as support for a previous
article we wrote about David Swensen's views on hedge funds-of-funds.
Read the commentary
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Advisor
Perspectives
Box 380
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(781) 376-0050
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