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C tant Contact
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 June
22 2010 - Vol 4, Issue 25
Dear Reader,
All too often, the biggest risks are those that we discount.
The possibility of a surge in interest rates appears to be
today's ignored risk, despite the warnings of many experts, including
David Einhorn, Bill Gross, and Seth Klarman. We discuss an
inexpensive strategy to protect your portfolios from the tail risk
of rising rates.
Investment consistency, sector allocation and credit analysis are
three of the critical ingredients of successful fixed income
management. Janus shares their views on these important
topics and how to use this information in your discussions with
clients. We thank them for their sponsorship.
Past returns provide little or no help in choosing the best fund
going forward, and Morningstar's stars are the best known example
of this failure. In this guest contribution, Tom Howard
presents new evidence of the failure of past performance to
predict future returns, and shows how strategy-based ratings offer
measurably better predictive power.
Today, we're seeing a sea change in how clients and prospects
respond to information. Everyone is swamped by the sheer
volume of email and communication. Dan Richards offers
suggestions for getting your emails read and your voice
mail returned.
More articles below...
Harvard's Niall Ferguson is arguably today's leading economic
historian. In this exclusive interview, Ferguson explains why
he fears the future is bleak for Japan, why China may
someday be the leading global superpower, and what all this means
for the US. We provide a video and a transcript.
LinkedIn is constantly evolving and has become a better marketing
tool in the process, writes Kristen Luke. If you haven't
logged in recently, here are three new ways you can use the site
to market your business.
Many fund companies are reporting high levels of Roth
conversion activity, but to date there have been only anecdotal
reports as to what investment advisors and wealth managers are
experiencing with their clients and prospects. Here are the results
from a survey we recently conducted that provides insights
into trends in Roth conversions.
Lastly, we highlight submissions to Advisor Market Commentaries.
We welcome guest submissions from our readers. For more
information, here are our guidelines.
If you are experiencing problems 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.
If you have received this newsletter in error, or you do not wish to
receive future newsletters, please use the "Safe
Unsubscribe" button at the bottom of this email.
Contact us about advertising
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Low-Cost Protection Against
Rising Rates
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Regardless of the probability of various scenarios for
future inflation or the mechanisms by which they may play out,
investors and advisors should consider how to most cost effectively
protect their portfolios against a rise in interest rates. This
article outlines one possible solution.
Low-Cost Protection Against Rising Rates
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Know Your Fixed Income Manager
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Over the past
couple of years, the fixed income market has experienced significant
structural change. More than ever, Janus believes it is critically
important to consider a manager's investment approach and what rold a
client expects fixed income to play.
Know Your Fixed Income Manager
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Rethinking Morningstar Ratings -
Moving Beyond Past Performance
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Getting Clients to Read Your
Emails
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It's harder to get clients' and prospects' attention and
harder to keep their attention - that's true in face-to-face meetings
and it's even truer on the phone or in writing. So if you want to
communicate effectively you have to change your approach - via email,
over the phone and in person.
Getting Clients to Read Your Emails
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Niall Ferguson on Japan, China, and the US
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Three New Ways to Use LinkedIn
to Market Your Business
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As LinkedIn evolves and gains popularity (it currently
has 70 million members), it will become an even more powerful marketing
tool. Keep an eye on how updated features can help you market
your business, but also make sure you have mastered the basics.
Three New Ways to Use LinkedIn to Market Your Business
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The New Roth Rules: Are Your
Clients Converting? Survey Results - April/May 2010
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Highlights from Market
Commentaries
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The thing about habits is that for good and bad they require no thinking.
Sometimes, something we do 'just once' can wind up becoming a habit and a
part of our activities for a longer time than we envisioned. While habits
can save us time, energy and unpleasant thought, they can also easily
start us down an unwholesome path. Seven of our most common irrational
habits include an overemphasis on first decisions, procrastination, the
planning fallacy, texting while driving, checking email too much,
relativity in salary and over-optimism.
The Seven Habits of Highly Ineffective People by Dan
Ariely of Predictably Irrational
Doug Short provides charts of gross U.S. federal debt as a percentage of GDP
since 1900, with key historical events and presidential administrations
highlighted. As the charts illustrate, the recent financial crisis and
steep market decline triggered a dramatic acceleration in the ratio. With
the 2001 and 2003 tax cuts expiring this year, will the gross federal
debt be a factor in determining the future direction of the country's tax
rates? Who knows? This is, after all, a congressional election year.
Debt-to-GDP, Federal Tax Brackets and Politics by
Doug Short of Doug Short
Wall Street seems to have no idea that every bit of growth we've observed
over the past year can be traced to government deficit spending, with
zero private sector expansion when those deficits are factored out.
Unless the credit spreads, the S&P 500, or the yield curve reverse, a
further decline in the Purchasing Managers Index to 54 or below would be
sufficient to confirm a 'double-dip recession.' By itself, such a level
might not be particularly troublesome. In concert with other evidence,
however, it would be sufficient to complete the syndrome of risk factors.
Born on Third Base by John P. Hussman of Hussman
Funds
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