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September
21, 2010 - Vol 4, Issue 38
Dear Reader,
Join the
upcoming BlackRock
webinar on "Finding
Income in a Slow-Growth Environment" with Bob Doll,
Chief Equity Strategist and
Rick Rieder, CIO of Fundamental Fixed Income.
Click
here to learn more.
_______________________________________________________________________
Joel Kotkin's
inherent optimism is a welcome antidote to the gloom
and doom that's taken hold of so many in the wake of the great
recession. In The
Next Hundred Million: America in 2050, he uses
copious reference material and broad strokes to paint a relatively cheery vision of
America's future, which he believes will be driven
largely by people, place, and national character.
Individual investors have experienced painful losses in recent
years. Some have left the financial markets; others are reluctant to
recommit their assets. Financial advisors - who know there is a
correlation between risk and reward - want to get their clients off
the sidelines, out of cash alternatives, and on track toward
achieving their financial goals. In this article, American Century
Investments offers a smart risk strategy to identify, understand, and
manage risk by focusing on investment vehicles that offer higher
potential return, lower volatility, better downside protection, and
consistent compensation for risk. We thank American Century
Investments for their sponsorship.
Several
prominent analysts have written recently that the bear market in housing is
nearing its end. Writing with varying degrees
of conviction and citing a range of statistical measures, they reach
the broad conclusion that now
is the time to buy a house. We provide a
summary of those opinions - from James Grant of Grant's Interest Rate
Observer,
Dave Leonhardt of The
New York Times, and Anatole Kaletsky of GaveKal Research - along
with our own contrasting thoughts.
The economy won't suffer a double-dip recession, according to Jeffrey Gundlach.
But that doesn't mean the DoubleLine co-founder, CEO and CIO expects
strong economic growth. To the contrary, Gundlach said that we
haven't yet recovered from the recession. "The people who are
looking for robust and sustained growth are really kidding
themselves," he said.
More articles below...
One of the most important roles for advisors is being an emotional
anchor for clients ... preventing the highs from being too high and
the lows from being too low. Dan Richards offers two recent
articles that counteract
the sense of pessimism about the economy ... driven
in large measure by daunting headlines about housing prices,
unemployment, deficits and political discord in Washington.
The current tenor of political debate has amplified one-sided
arguments as each party attempts to sell their view
to voters. The same polarization has become evident in approaches to
investment, and market
bears are exhibiting all the classic symptoms of confirmation bias.
But we know better than to let these slanted arguments sway our
market convictions. As Richard Cripps explains in this guest
contribution, there
are plenty of reasons to remain invested in equities.
A fascinating
phenomenon pervades major symphony orchestras.
Whenever a new guest conductor steps onto the podium, a musician will
know - within two seconds or less - if they will be an inspiring
leader. Justin
Locke shares his experience as a professional bass player and the
insights he gleaned as to what makes for great leadership.
Frequent and
direct client communication is a critical (and
often overlooked) element in the success of a money management
firm. Daruma's
Mariko Gordon explains why, and offers five specific suggestions
for staying on track.
Lastly, we highlight the most popular submissions to 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
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an email to feedback@advisorperspectives.com requesting the
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email with the word “unsubscribe” in the subject line.
 
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 America's Demographic Advantages
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The U.S.
population will grow more than those of most other advanced countries,
and we will benefit from our unique capacity for attracting and assimilating
talented and ambitious people from diverse backgrounds. The U.S.
possesses vast undeveloped space compared to most advanced nations,
which will foster a higher rate of household formation.
America's Demographic Advantages
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Getting off the Sideline: Investing in the
Smart Risk Zone
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The Housing Elevator: Going Up or Down?
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Karl Case, the
co-creator, along with Yale professor Robert Shiller, of the
Case-Shiller Housing Index, two weeks ago said that it was the best
time to buy a house "in the last four, five years, and maybe in my
lifetime." Is he correct?
The Housing Elevator: Going Up or Down?
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Jeffrey Gundlach: No Double-Dip Recession ... but
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Even though the economy
faces severe challenges, Gundlach said that equity markets might
display strength, aided by government policies that incent investors to
take more risk, which could cause a surge of flows into stock funds.
Jeffrey Gundlach: No Double-Dip Recession ... but
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Two Compelling Articles to Send Clients
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A conference that
took place last Monday gives advisors the chance to provide clients
with some offsetting perspective on the mid- and long-term positives
for the United States. Speaking to 2,000 business and political
leaders in Montana, Warren Buffett, Steve Ballmer of Microsoft and GE's
Jeff Immelt talked about good news at their companies and their
positive outlook for the future.
Two Compelling Articles to Send Clients
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The One-Sided Fallacy
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Balancing both
sides of an argument rarely leads to bold opinions that
"sell" a particular point of view. In terms of investment
perspective, a balanced view will contribute far more insight for
achieving long-term financial goals.
The One-Sided Fallacy
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A Bass Player's Perspective on Leadership
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After having
played in the Boston Pops and other orchestras for many years and
having observed the traits that make superior conductors, Justin Locke
became fascinated by it. He spent years trying to figure out
exactly what made a great orchestral leader, and he shares the insights
he gleaned.
A Bass Player's Perspective on Leadership
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Say What You Need To Say
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Mariko Gordon
honors the confidence placed in her by her investors by being
transparent, sometimes to the point of TMI (too much information).
Specifically, she shares five things she's learned, based on what
clients have told her they like about their reports.
Say What You Need To Say
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Highlights from Market
Commentaries
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Below are the three
most widely read market commentaries during the past week:
The next three months
represent the most serious window for the U.S. economy and labor market.
The typical 23-26 week lag between leading indicator deterioration and
new unemployment claims deterioration suggests that we may observe upward
pressure on new claims for unemployment beginning about mid-October.
However, these lags can be somewhat variable, and the leading indicators
tend to have a better correlation with price fluctuations in the
securities market. By the time the coincident economic evidence is clear,
securities markets have often completed a large portion of their
adjustment.
Impulse Response by John P. Hussman of Hussman Funds
The
bond market usually gets it right, and the 0.9 percent yield on the
10-year TIPS security is back to where it was at the depths of the
recession. Something is going to have to give. If we recall correctly,
bonds led both the stock market and the economy in 1990, 2000 and again
in 2007. In the next few months we may well look back at the 130 basis
point rally in 10-year Treasury bonds this spring as an important event,
analogous to the rally we saw in the summer and fall of 2007. David
Rosenberg also comments on Tuesday's gold rally.
Stocks For the Long Run? And a Look at Gold by David
A. Rosenberg of Gluskin Sheff
One
can call it a 'growth recession,' but if Mr. Market wants to focus on the
word 'growth' and ignore the word 'recession,' then one may well see
ebullience take hold for a time. The most important factor right now is
the prospect of significant downward revisions to earnings estimates in
the next several months and quarters. The next great buying opportunity
will be when the market has come to grips with or even overreacts to
that. Therefore, patience over the near-term will be extremely important;
now is not the time for impulsive buying behavior.
Market Comment and Forecast Update by David A.
Rosenberg of Gluskin Sheff
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