November 23, 2010 - Vol 4 Issue 47
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Why Three Top Bond Managers Like Equities
by Robert Huebscher
You'll rarely - perhaps never - hear a fund manager say that market conditions do not favor investing in their chosen asset class. That's why it was so remarkable when several prominent managers recently admitted that they favored equities over their own discipline - fixed income.
Ned Davis - Still Positive on Stocks
By Robert Huebscher
Just over a year ago, Ned Davis correctly forecast a continuation of the cyclical bull market in stocks. In February of 2008, he foresaw that year's market upheaval, and a year later he predicted the rally that began in March of 2009. Today, Davis is moderately bullish on stocks, as long as the Fed maintains its policy of quantitative easing.
Five Words that Get Emails Opened
By Dan Richards
The escalating volume of email means that fewer and fewer emails are being opened. A key challenge is creating a sense of urgency around opening your emails - something that can be achieved with five key words in the subject line.
Will Municipal Bonds be the Next Disaster?
By Dennis Gibb of Sweetwater Investments
It has been an article of faith that municipal bonds are safe investments, but this complacency about the safety of munis may soon be proven unwise.
Stop Front-Running the Fed
By Keith C. Goddard of Capital Advisors
A change of mindset is in order for bond investors, who must recognize that it is no longer wise to 'front-run' monetary policy by purchasing the same bonds the Fed Reserve is targeting with its latest round of quantitative easing.
The Kings of Cash Flow: Investing in Tomorrow's Potential Winners Today
By David Vincent and Kevin Collins of Fred Alger Management
Companies generating a lot of free cash flow generally represent attractive investment opportunities over time. The 'Kings' - companies with the highest free cash flow yields - have historically outperformed companies with lower free cash flow yields and are currently experiencing what may be one of their longest and most drastic periods of underperformance in the last 50 years.
By Adam Jared Apt of Peabody River Asset Management
Although diversification is commonly regarded as a good thing, there are nonetheless those who regard it as a guarantee of mediocrity. It isn't, but there are right ways and wrong ways to go about diversifying a portfolio. Let's explore how diversification works.
Seeking Beta in the Bond Market: A Math-driven Investment Strategy for Higher Returns
By Georg Vrba
Investors seeking permanent exposure to the bond market should invest in high-beta funds during up markets and low-beta funds during down markets. This simple strategy provides consistent long-term returns that are considerably higher than what a static investment in bond funds would achieve.
Letter to the Editor
A reader responds to Jack Falvey's article, Through the Looking Glass with Steven Rattner, which appeared last week.
Highlights from Market Commentaries
Below are the three most widely read commentaries during the last week:
We estimate that the S&P 500 is priced to achieve sub-5% returns, albeit with significant risk, for every horizon out to a decade. Treasury securities are clearly priced to deliver similarly low returns. It's possible that internals will improve sufficiently to shift the expected return/risk profiles we observe in stocks, bonds and precious metals. For now, we are tightly defensive.
Tags: Investment-Grade Bonds Equities Neutral US
The Cliff by John Hussman of Hussman Funds
Can You Handle The Truth
The S&P 500 has been locked in a rough 1,000-1,200 range now for 14 months. Most pundits still believe we are in a cyclical bull market but that is not the case - it has been a sideways market now for over a year. Moreover, after testing support in July, the market hit resistance levels in November, so it would seem logical to expect the index to make a run at the low end of the range. The only question is whether support will hold up once again.
Tags: Bullish US Canada Monetary Policy Fiscal Policy Housing
Can You Handle The Truth by David Rosenberg of Gluskin Sheff
I Wonder What Milton Friedman and Karl Drunner Would Say About Allan Meltzer
On November 9, I wrote a commentary entitled ''Quantitative Easing in the mid 1930s Appeared to be Successful''. In my commentary, I did not mention what happened to the U.S. unemployment rate as a variation on quantitative easing was taking place. So, let's do this now.
Tags: Gold Oil Commodities (ex Oil, Gold) US Employment Monetary Policy
I Wonder What Milton Friedman and Karl Drunner Would Say About Allan Meltzer by Paul Kasriel of Northern Trust