April 26, 2011 - Vol 5 Issue 17
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Why Demographics will Drive Global Growth
By Sam Parl
When economic pundits trade heated predictions about the massive economic shifts we see internationally, it is easy to forget the subtleties that shade their forecasts. One such shadow overhanging any intelligent debate about our global economic future is global age demographics, according to Harvard Professor Richard Cooper.
Sponsored content from RidgeWorth Investments
RidgeWorth Investments has published research detailing six distinct reasons why investors should consider a specific allocation to mid-caps. Specifically, it explores historical performance, evaluates current conditions that favor mid-caps as well as examines how mid-caps have performed during different points in market and economic cycles. Finally, the research looks at the incremental benefit of adding an allocation of up to 40% of mid-cap stocks to a portfolio of solely large and small cap stocks. We thank RidgeWorth Investments for their sponsorship.
Ethics Among Thieves - a review of the movie Inside Job
By Michael Edesess
'Inside Job' is a thoroughgoing indictment of the financial industry that has its virtues but relies on some unsavory vices. On the one hand, through interviews, congressional testimony, and other video, the film exposes cronyism, corrupt ethics, and excessive power at the core of the financial industry. On the other, the movie at times unfortunately feels more like a polemic than a hard-hitting, fact-finding investigative reporting piece.
How Three Top RIAs Are Locking in Clients' Retirement Assets
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Check out this whitepaper to learn how 3 different firms are embracing technology to help broaden client relationships, and grow both assets under management (AUM) and revenues. Altfest Personal Wealth Management, Fairlane Investment Advisors, Inc., and World Equity Group share how you can introduce the concept of advising and billing on retirement assets to clients, and how the actual mechanics of generating invoices. We thank ByAllAccounts for theri sponsorship.
A Unique Way to Engage Key Clients
By Dan Richards
Many advisors struggle with ways to deepen relationships with top clients. My conversations with top-performing advisors have shown that many succeed at building those relationships by rejecting the approach most advisors employ, and instead adopting an unconventional and low-cost approach built around special events.
Last Week's Most Read Article
Gundlach: Treasuries will Rally When QE2 Ends
By Robert Huebscher
The bonds that PIMCO's Bill Gross sold to take a 3% short position in the Treasury market may have found a buyer in Doubleline's Jeffrey Gundlach. In a conference call with investors last week, Gundlach said that Treasury prices would rise in the near term, once QE2 expires on June 30.
Long-term Failure with Short-term Bonds
By Hildy and Stan Richelson
Fear of an impending rise in interest rates has many recommending short-term bonds. Such fears are misplaced, however, and investors can better position their portfolios by constructing a ladder of high-quality individual bonds, rather than moving assets into only short maturities.
How to Take Advantage of the CFP Awareness Campaign
By Kristen Luke
If you are a CFP, you will be directly affected by the Let's Make a Plan campaign, even if you take a passive role. Those who take a more active role can use the toolkit provided by the CFP Board to promote themselves in local markets. Here's what's entailed and what you can personally do to take advantage of the campaign.
When is a Fiduciary not a Fiduciary?
By Jeffrey Briskin
You would think every investment professional who claims to be acting in a fiduciary capacity for his or her clients understands exactly what that entails. But the results of a recent survey of brokers and RIAs indicates that many apply their own personal 'fiduciary litmus test' when determining where these responsibilities start and end.
Cerulli Survey Results: Advisor Use of Tactical Allocation
By Tyler Cloherty
Advisors have increasingly turned to tactical allocation to manage client risk. While there has been abundant discussion on how this approach should be executed in theory, our survey results show what advisors are doing today in their practices.
Highlights from Market Commentaries
Below are the three most widely read commentaries during the last week:
Approaching the Eraser
Market conditions in stocks continue to be characterized by a hostile syndrome of overvaluation, overbought conditions, overbullish sentiment, and rising interest rates, which has historically been associated with a poor return/risk profile, on average, across a wide variety of subsets of historical data. Though I question the ability of the economy to "pass the baton" to the private sector as government stimulus effects run off in the coming 8-10 weeks, I should emphasize up front that our present defensive position is not driven by those economic concerns.
Tags: US Monetary Policy
Approaching the Eraser by John P. Hussman of Hussman Funds
Does Unreal GDP Drive Our Policy Choices?
Gross Domestic Product is used to measure a country's economic growth and standard of living. It measures neither. Unfortunately, the finance community and global centers of power are wedded to a measure that bears little relation to reality, because it confuses prosperity with debt-fueled spending. Washington is paralyzed by fears that any withdrawal of stimulus, whether fiscal or monetary, whether by the Administration, the Fed, or the Congress, may clobber our GDP. And they're right. But, GDP is the wrong measure.
Tags: US Monetary Policy
Does Unreal GDP Drive Our Policy Choices? by Robert D. Arnott of Research Affiliates
Inflation, the Education Bubble, and the Odds of a Disastrous Retirement
Mish Shedlock featured an article with a title that summarizes a huge financial problem: The Education Bubble; Student Loan Debt Passes Credit Card Debt, Expected to Hit $1 Trillion. Mish's article especially resonates with my own research on the astonishing inflation in college tuition and fees, an imminent disaster that's been in the making for decades. This chart shows the relative growth of education costs as compared to the consumer price index. College tuition and fees is a mere 1.5% of the overall CPI. But for households that pay these expenses with student loans, the burden is high.
Inflation, the Education Bubble, and the Odds of a Disastrous Retirement by Doug Short of Doug Short