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October 26, 2010 - Vol 4, Issue 43

Natixis

 

Dear Reader, 

 

Initially an emergency action in response to the credit crash, the Zero Interest Rate Policy has become a long-term policy.  Click here to see Cambiar's President and Director of Research discuss equities in this type of environment (registration required).

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Roger C. Gibson's fine and exemplary book, Asset Allocation: Balancing Financial Risk, Fourth Edition, shows that character and conscience-based counseling still exist, even in the financial profession. It is still possible for advisors to look out for their clients' long-term interests.

 

High-yield bonds are attractively priced - or they aren't - depending on how likely you think a double-dip recession is and how severe you think it might be.   What drives the high-yield market was the subject of a talk last week by Martin Fridson, a global credit strategist with BNP Paribas Asset Management who is a highly regarded expert on distressed debt.


Recently, Dan Richards hosted a roundtable lunch with a group of affluent investors.  One attendee was a senior partner in a leading law firm and made a comment that revealed how his advisor turned a $15 investment into a lifelong client relationship.

 

Obstacles that haven't been identified and aren't removed will rise again and again for most people and firms, and will prevent you from achieving your goals.  Here is a framework to identify and categorize the obstacles you face.

 

More articles below...

TDAI

 

The often-cited 'skin in the game,' as an indication of a money manager's personal commitment, doesn't measure what it claims. Daruma's Mariko Gordon offers three reasons why.

 

Many advisors take advantage of the holidays to reach out to their clients and prospects.  Kristen Luke offers 20 ideas you can utilize this year.

 

Georg Vrba updated the model described in his article, Improving on Buy and Hold: Asset Allocation using Economic Indicators. The ECRI U.S. Weekly Leading Index and its annualized growth rate published on October 22, 2010, together with the most recent values of the other indicators used, have been incorporated and generated a buy signal.

 

Lastly, we highlight the most popular submissions to Market Commentaries.

 

We welcome guest submissions from our readers.  For more information, here are our guidelines.

 

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star logo An Exceptional Resource for Asset Allocation

 

"I was immediately gloriously surprised by Gibson's book," writes Michael Edesess. "The book exudes professionalism, honesty, character, and conscience."

An Exceptional Resource for Asset Allocation

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star logoWhat Drives High-Yield Bonds (and Why You Should Listen to the Ratings Agencies)

 

Martin Fridson provides his outlook for the high-yield market and explains why Moody's and S&P are better than you think when it comes to rating corporate bonds.

What Drives High-Yield Bonds (and Why You Should Listen to the Ratings Agencies)

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star logoInvesting $15 to Create an Unshakeable Client Bond

 

"I don't know how she does it," a client told Dan Richards, "but my financial advisor is amazing."  Richards explains the secret behind this advisor's success.


Investing $15 to Create an Unshakeable Client Bond

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star logo Identifying - and Overcoming - Obstacles

A component of your plan must be either eliminating or otherwise addressing obstacles. If you ignore them, they will continue to come up and hamper your efforts to be as successful meeting your goals as you desire to be.


Identifying - and Overcoming - Obstacles

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star logoHaving Skin in the Game on Kill Haole Day

 

Hiring a manager who cares as much about your money as you do is absolutely critical. But please don't look for your answer by means of an ambiguous, misleading euphemism.

Having Skin in the Game on Kill Haole Day

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star logo20 Ideas to Market Your Business this Holiday Season

 

Make it your goal to have your holiday marketing activities finalized by Halloween so you aren't scrambling at the last minute.

20 Ideas to Market Your Business this Holiday Season

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star logoImproving on Buy and Hold: Buy
 

The past is not an indicator of the future, but Georg Vrba expects the S&P500 index to be at least 10% higher a year from now.

 
Improving on Buy and Hold: Buy

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star logoHighlights from Market Commentaries

 

Below are the three most widely read market commentaries during the past week:

The Recklessness of Quantitative Easing

 

With continuing weakness in the U.S. job market, Ben Bernanke confirmed last week what investors have been pricing into the markets for months - the Federal Reserve will launch a new program of quantitative easing, probably as early as November. Further attempts at QE are likely to have little effect in provoking increased economic activity or employment. This is not because QE would fail to affect interest rates and reserves. Rather, this policy will be ineffective because it will relax constraints that are not binding in the first place.

 

The Recklessness of Quantitative Easing by John P. Hussman of Hussman Funds

 

North America Losing Some Serious Momentum

 

The U.S. economy may in fact be contracting again. The monthly data from Macroeconomic Advisers showed that real GDP contracted 0.6 percent in August. While this did follow a red-hot +1.25 percent gain in July, this marks the third decline in real activity in the past four months. Maybe the bond market does not need the Fed's help after all - the super-soft economic environment is all the Treasury bond market really needs to sustain the downward trend in yields.

 

North America Losing Some Serious Momentum by David A. Rosenberg of Gluskin Sheff

 

Understanding Economic Indicators

 

Both David Rosenberg and Doug Short have used the Economic Cycle Research Institute's weekly leading index as a justification for their predictions of another recession. The problem is that the WLI itself is, by the design of the makers, a black box. Prieur du Plessis identified some of the index's likely elements in a recent series of articles. He concluded that much of the forecast is based upon the stock market, the bond market and the money supply. If someone told you that these three factors suggested 80 percent odds of a recession, would you be convinced?

 

Understanding Economic Indicators by Jeff Miller of New Arc Investments

 




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