May 3, 2011 - Vol 5 Issue 18
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My Breakfast with Dave
By Robert Huebscher
A month ago, one of the most closely followed market observers, Gluskin Sheff's David Rosenberg, moved his Breakfast with Dave commentaries behind a pay-wall, ending an era of free access to his insights. Last Friday, however, he presented his views publicly to an audience of 500 advisors and investors, your author included.
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Gary Shilling - Five Things that can Derail the Recovery
By Robert Huebscher
Die-hard deflationists - those who foresee a continued bull market in bonds - are so few in number these days they could all share an elevator, according to Gary Shilling. One is Gluskin Sheff's David Rosenberg, whose views are considered elsewhere in this issue. But the loudest such voice belongs to Shilling himself, who has advocated for a long position in Treasury bonds continuously since 1980, a stance that has always proved prescient so far.
Martin Barnes - How Safe is the Equity Market?
By Robert Huebscher
When members of the Federal Reserve Board seek counsel on tough issues, one of the economists to whom they turn first is Martin Barnes. Speaking publicly last week, Barnes addressed two themes in the US economy and markets: the potential for a sustained bear market in equities and the likelihood of higher taxes. These two distinct questions are both are critically important to investors.
P/E: Future on the Horizon
By Ed Easterling
Most people expect P/E to measure current valuation and to show historical patterns. But more features are available from some versions of P/E. The methodology behind the Crestmont P/E enables investors to anticipate the future. It may not precisely predict the market ten years away, but it frames within a relatively tight range the likely outcome. One component from determining the Crestmont P/E is a means to assess the future trend line for EPS using estimates of future economic growth (GDP).
When to Bring up Referrals
By Dan Richards
Advisors often ask me what should be the right frequency with which to raise referrals with clients. Some advisors are hesitant to introduce the topic of referrals at all. Balancing that reluctance, one advisor told me about a direct connection between how frequently he talks to clients about referrals and the chances that referrals will follow as a result - the more often he raises this, the more often referrals will follow.
The Tension between Belief and Permission
.. By Justin Locke
It's advice we all get often, but what does it mean to 'believe in yourself?' Such rhetoric sounds great on the surface, but whenever I hear that expression I cringe.
Highlights from Market Commentaries
Below are the three most widely read commentaries during the last week:
Time to Wake Up: Days of Abundant Resources and Falling Prices Are Over
The world is using up its natural resources at an alarming rate, and this has caused a permanent shift in their value. We all need to adjust our behavior to this new environment. It would help if we did it quickly.
Tags: Commodities (ex Oil, Gold)
Time to Wake Up: Days of Abundant Resources and Falling Prices Are Over Forever by Jeremy Grantham of GMO
The End of QEII: It's Time to Make the Donuts
With quantitative easing the Federal Reserve has in essence picked the pockets of Treasury bond investors throughout the world. Ultimately, the U.S. must own up to its past sins and let the deleveraging process play itself out. The U.S. must invest in its people, its land, and its infrastructure, as well as promote free trade, to achieve economic growth rates fast enough to justify consumption levels previously supported by debt.
Tags: US Monetary Policy Sovereign Debt
The End of QEII: It's Time to Make the Donuts by Tony Crescenzi, Ben Emons, Andrew Bosomworth and Lupin Rahman of PIMCO
The Hour of the Dividend Stock Has Arrived
"Now is your chance to get blue-chip names at blue-light-special prices." Post-crisis, there was no shortage of articles with headlines like this touting dividend stocks. What better way to dip your toe into the equity market water after being burned in 2008? But investors didn't come. The minority dove headfirst into the low-quality rally in pursuit of big gains, while the majority fled to bonds in droves or simply held cash, waiting on the sidelines for sure signs that the economic comeback was here to stay. Some are still there. Memories of the crisis haven't faded.
The Hour of the Dividend Stock Has Arrived by Team of Columbia Management