December 7, 2010 - Vol 4 Issue 49
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The Dangers of Rebalancing
By Michael Edesess
Every portfolio should be rebalanced to its targeted asset allocation, we are taught. Indeed, there may be no other precept as routinely and studiously practiced among financial advisors. But does rebalancing either increase expected return or reduce risk? If so, why? The answers to those questions reveal that it may be prudent to rebalance, but not for the reasons you think.
Research-Driven Market Insights: 4Q Market Perspectives
Sponsored Content by Janus Investments
Offer clients research-driven market insights. Every quarter, Janus equity and fixed income teams share their insight and outlook on global market sectors and key macroeconomic indicators in Janus' Market Perspectives Series. We thank Janus Investments for their sponsorship.
An Uncertain Future for Housing Prices
By Robert Huebscher
A renewed decline in housing prices would surely impede economic growth. Yet that is a strong possibility, according to housing expert Laurie Goodman of Amherst Securities. Goodman was joined in Boston last week to discuss the housing market by Karl Case, who, along with Yale professor Robert Shiller, created the Case-Shiller index.
Are You Billing Enough on Held Away Assets?
Sponsored Content by ByAllAccounts
Share your opinion by taking a short survey and receive a summary of the results to see how you stack up to other financial advisors. (Please note, individual answers will remain 100% anonymous.) This dynamic survey is driven by your answers. It should take approximately 5 minutes to complete and the first 100 participants can receive a $5 e-gift card to a major online retailer. We thank ByAllAccounts for their sponsorship.
Why You Aren't Getting Referrals - And What to Do About It (Part 2)
By Dan Richards
In his previous column, Dan Richards discussed seven misconceptions that prevent advisors from getting referrals. Here, he concludes with eight more referrals fallacies.
Real Return Expectations
By Michael Nairne
There is nothing more important to long-term investors than the real rate-of-return that they can reasonably expect to earn on their investments. We forecast the expected real annual return for US stocks over the next 10 years and then set out ways to potentially improve on what many will find to be a discouragingly low expected return.
The Worst Boss in the World
By Justin Locke
Since good bosses are the exception and not the rule, early in my professional life I decided to strike out and work for myself. It was an alternative that sounded great on paper, but there's one little thing that I wish someone had told me: When you work for yourself, you are working for many clients, and they are often the worst bosses imaginable.
The Silver Bullet of Marketing
By Kristen Luke
One of the first questions advisors ask me is, 'What is working these days?' This always amuses me, since what works for one advisor is not necessarily going to work for another advisor. However, I have found there is one thing that is "working these days" and has always worked.
Creating a Mirage of Economic Growth
By Doug Carey
Bubble formation is not random. Some may believe it is, but bubbles are in fact a predictable byproduct of the fractional reserve system upon which our economy is built. By stimulating and amplifying lending through its fractional reserve system, the Federal Reserve systematically creates the mirage of growth, from which deception systemic crises inevitably result.
Turkeys, Cheerleaders and Buzz Lightyear's Butt
By Mariko Gordon
Looking at things from all possible directions is critically important. Just like watching a parade at street level or from above, investment opportunities should also be admired from many angles.
Highlights from Market Commentaries
Below are the three most widely read commentaries during the last week:
The global economy is suffering from a lack of aggregate demand. In the U.S. and Euroland, many policies only temporarily bolster consumption while failing to address the fundamental problem of developed economies: Job growth is moving inexorably to developing economies because they are more competitive. Unless developed economies learn to compete the old-fashioned way - by making more goods and making them better - the smart money will continue to move offshore to Asia, Brazil and their developing economy counterparts, both in asset and in currency space.
Allentown by Bill Gross of PIMCO
Open and Shut
Today some assets are fairly priced and others are high, but there are no bargains like those of 2008. Capital and nerve can't hold the answers in such an environment. We're no longer in a high-return, low-risk market, especially in light of the inability to know how today's many macro uncertainties will be resolved. Instead of capital and nerve, then, the indispensable elements are now risk control, selectivity, discernment, discipline and patience.
Open and Shut by Howard Marks of Oaktree Capital
Is the Stock Market Cheap?
In times of critical importance, the conventional P/E ratio often lags the index to the point of being useless as a value indicator. "Why the lag?" you may wonder. "How can the P/E be at a record high after the price has fallen so far?" The explanation is simple. Earnings fell faster than price.
Is the Stock Market Cheap? by Doug Short of Doug Short