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Advisor Perspectives
Insights into the world of high- and ultra-high net worth investing
January 12, 2010- Vol
4, Issue 2
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We will shortly introduce a new service, Research Perspectives, which
is a daily newsletter featuring commentaries from fund companies, research
firms and advisors. This service, which is free, has been in
"beta test mode" for the last couple of weeks. We will
provide this to all our readers. Prior to its release, we will
provide information in a separate email as to how to unsubscribe if you
don't want to receive it.
Bruce Berkowitz, manager of
the Fairholme Fund, was just
named Morningstar's US fund manager of the year. In our interview,
he discusses current market conditions, the thesis behind several of his
largest positions, his views on health care reform, and the elements of the
macro environment that concern him most.
Let's say your spouse sends you out
to buy a quart of milk and you take along a bag of soda cans to
return. You use the deposit from the cans to buy the milk. Was
the milk free? Of course not. But
that's essentially the argument the government is using when it claims
universal health care will reduce the deficit by $132 billion over the next
decade.
Since the stunning collapse of America's financial system in 2008, questions have swirled around how we got here and who's to blame. The
subsequent finger-pointing has yielded few answers, but now one economist
has taken a cue from CSI's Gil Grissom and Law and Order's Jack McCoy. He performed an
autopsy.
Olivier
Blanchard is the chief economist at the International Monetary Fund,
a position he has held since September 1, 2008. In Dan Richards'
interview, Blanchard discusses the steps being taken to revive
the global economy and what he believes
is in store for beleaguered debtor nations - particularly Greece.
For those advisors who are allowed to have a LinkedIn profile but are restricted
in their use of the site, there are still strategies that can be
utilized to make LinkedIn a valuable sales and marketing tool. Kristen Luke provides four strategies to implement
even if you can't use LinkedIn to its fullest potential.
In past articles, Dan Richards has
discussed how to get prospects off-the-fence when they are thinking about
leaving their advisor - by providing concrete proof as to why they would be
better off with us than where they are now. Now, Dan provides a strategy to use when you are
competing with other advisors for referral business.
Our interview last week, Paul Krugman on Deficits, Taxes,
Inflation and Recovery, drew a number of responses, all of which
expressed the same sentiment. We
publish one of those letters.
Lastly, we highlight submissions to Advisor
Market Commentaries.
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readers. For more information, here are our guidelines.
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"Last year, there were outstanding managers who had significant
amounts of capital withdrawn, who were unable to execute their
strategies. Fairholme did not have significant net outflows.
It's hard for me to remember if we had even a month of net outflows.
That is a huge weapon and a big advantage - having the right shareholders
who will stick with us while others are running for shelter. Without
that we couldn't execute."
Bruce Berkowitz on the Keys to
Success for the Fairholme Fund
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The True Cost of Insuring the Uninsured
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The
Christmas Eve passage of the health care bill by the Senate carried with it
the promise of reducing the Federal budget by $132 billion over the next
decade. The Obama administration and prominent economists, among them
Paul Krugman, have argued that this proves we can provide universal
coverage while reducing the deficit.
The True Cost of Insuring the
Uninsured
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The Financial Crisis Post-Mortem: Suicide, Accident or
Murder?
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For Ross Levine, the James and Merryl Tisch Professor of Economics at Brown University, too much time spent analyzing the minutiae of heated
decisions made in September 2008 obscures a more interesting question: did
the underlying factors that precipitated the collapse constitute a suicide,
an accident, or a murder? Did investors' irrational behavior lead to their
own demise, was the government somehow responsible, or was it all just an
unforeseeable tragedy?
The Financial Crisis Post-Mortem:
Suicide, Accident or Murder?
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Olivier Blanchard on Global Stability
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"I think when financial markets indicate that they are unhappy,
governments can't ignore that. It is essential that governments and
parliaments act. We may go through a number of these crises and Greece will be the first."
Olivier Blanchard on Global Stability
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How to Use LinkedIn When Your Compliance Department Says
No
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Kristen Luke provides strategies she has found to be acceptable by most
compliance departments who allow advisors to use LinkedIn.
How to Use LinkedIn When Your
Compliance Department Says No
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As
clients get more knowledgeable and competition intensifies, advisors will
need strategies to obtain referrals and methods to win the ensuing
competition for clients. What Dan Richards describes works for one advisor.
Competing for Referrals
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Letter to the Editor - Paul Krugman
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Our interview last week, Paul Krugman on Deficits, Taxes, Inflation and
Recovery, drew a number of responses, all of which expressed the same
sentiment. We publish one of those letters.
Letter to the Editor - Paul Krugman
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Highlights from Advisor Market Commentaries
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"This will be my tenth annual forecast issue. Time has flown by, and I
enter a new decade of writing Thoughts from the Frontline. And even as I
write about the high level of uncertainty of the current times, I am
optimistic that at the opening of the next decade we will look back and
realize that there has been an enormous amount of progress made. None of us
will want to revisit the pleasures of the past ten years in some nostalgic
dream. I am so ready for a new decade."
"2010 Forecast: The Year of
Uncertainty" by John Mauldin of Millennium Wave Advisors
"This paper will begin by outlining the nine U.S. bear markets since 1926 and discuss what sorts of stocks
performed well during and after those markets. During the nearly nine
months since the March 9th market bottom, market trends have closely
mirrored those of other severe bear markets. If history continues to repeat
itself, the lessons from this study could prove to be extremely valuablefor
the next two years."
"The Same Old Bear: A Study of
Bear Markets and Stock Returns Since 1926" by Patrick O'Shaughnessy of
O'Shaughnessy Asset Management
"So we begin the year with the expectation of at least somewhat better
valuation, and significantly better clarity, in the coming months. Whether
we clear the current overvalued, overbought, overbullish, yields-rising
condition with a major decline or a minor one, the flexibility we obtain from
improved economic clarity should allow us more flexibility to accept market
risk as opportunities arise. Here, however, we remain defensive on the
basis of observable conditions."
"Green Shoots, Weak Roots"
by John Hussman of The Hussman Funds
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Perspectives
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02420
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