June 28, 2011 - Vol 5 Issue 26
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An Important Challenge to 'Stocks for the Long Run'
By Geoff Considine
Jeremy Siegel's dictum - to invest in stocks for the long run - faces a new challenge. A recent paper by Robert Stambaugh, a Wharton colleague, and Lubos Pastor of the University of Chicago says that once you take into account the uncertainty of estimating future returns, stocks are not nearly as attractive to retirement-oriented investors as Siegel has claimed.
The End of QE2 - What Does It Mean for Investors?
Sponsored Content by BlackRock
The June 30 end of the Federal Reserve's bond purchase program dubbed 'QE2' represents a watershed moment for investors, prompting many to ask: will the economic recovery be negatively impacted, will rates spike higher, and will risk asset markets fall? While the global economic and market dynamics are extraordinarily complex, our view is that by itself the end of QE2 should not cause meaningful market disruption. Given the significance of the transition away from this historically stimulative policy into a still accommodative but less clear post-QE2 environment, BlackRock's CIO of Fundamental Fixed Income, Rick Rieder, and Chief Equity Strategist for Fundamental Equities, Bob Doll, offer perspectives on how investors should think about the potential market volatility and investment opportunities in this environment.
What Happens If You Outlive Your Safe Withdrawal Rate Time Horizon
By Michael Kitces
Although the research on safe withdrawal rates (SWRs) has been replicated many times by various researchers, one significant challenge has always lingered: A SWR recommendation is only as good as its associated time horizon. What's the outlook for a SWR approach if the client outlives the original time horizon?
Smart Risk Taking: Realigning Client Portfolios with Their Long-Term
Sponsored Content by American Century Investments
The financial crisis sparked widespread flight from risk. Although the crisis is over and equity prices have rebounded, many investors have not yet returned to the capital markets. For them, the safe-haven appeal of money market funds remains strong. In this paper, American Century Investments® proposes a strategy of "smart risk taking," an active asset management approach that seeks to identify, understand, manage, and be consistently rewarded for risk.
How to Get in Front of High Net-worth Prospects
By Dan Richards
Last week, I got a call from an advisor who used a simple idea to set up meetings with three $2 million prospects. This advisor used some research from one of my recent columns to jumpstart conversations about critical issues for the wealthy.
Reducing Risk through Value-Oriented Tactical Strategies
By Mark E. Ricardo
Conventional wisdom was that the best way to reduce portfolio risk is to adopt a diversified long-term strategic asset allocation. That paradigm was challenged - deservedly so - following the 2008 financial crisis. Fortunately, an improved paradigm has emerged: Investors should combine long-term strategic allocations with a value-oriented tactical rebalancing strategy.
The Diversified Portfolio Index
By Charles Fahy, Sr.
Investment rates of return that are average but consistent are the products of exceptional performance. Over longer time horizons, these returns become increasingly difficult to outperform. One such example is the Diversified Portfolio Index - a buy-and-hold strategy deployed across all major asset classes.
Six Crucial Tips for Presenting with Confidence
By Beverly D. Flaxington
Thinking through a presentation is every bit as important giving it. It is imperative that you communicate who you are and sell others on your objectives or ideas. Whether motivating an employee in a one-to-one conversation or presenting to a $25-million prospect, here are six keys to confident and clear presentations.
Where are Long Bond Yields Heading?
The Bond Value Ratio as a Predictor of Future Yields
By George Vrba, P.E.
Are long-maturity bond funds still a good investment? My analysis shows that there is currently a maximum potential appreciation of only about 10% for long-bond values. The 30-year bull market for bonds will be ending soon and the risk-reward ratio is too high to warrant buying long-bond funds now.
Letter to the Editor: Equity-Indexed Annuities
A reader responds to our article, Fantasy-world Returns for Equity Indexed Annuities, which appeared May 31.
Highlights from Market Commentaries
Below are the three most widely read commentaries during the last week:
School Daze, School Daze Good Old Golden Rule Days
The past several decades have witnessed an erosion of our manufacturing base in exchange for a reliance on wealth creation via financial assets. Fiscal balance alone will not likely produce 20 million jobs over the next decade. Government must take a leading role in job creation. A growing number of skeptics wonder whether college is worth the time or the cost.
Tags: Neutral US Employment Fiscal Policy
School Daze, School Daze Good Old Golden Rule Days by Bill Gross of PIMCO
Overseeing Systemic Risk: The 10 most systemically risky financial firms in the US
As part of the US policy response to the global crisis, the Dodd-Frank Financial Reform Act calls for regulators to identify systemically risky financial firms - the sort that took the US financial crisis global. But how to identify these firms remains unclear. Some claim the task is impossible. This column begs to differ and names the 10 most systemically risky financial firms in the US.
Overseeing Systemic Risk: The 10 most systemically risky financial firms in the US by Viral Acharya, Thomas F. Cooley, Robert Engle and Matthew Richardson of VoxEU
Five Dividend Paying Giants of Technology Trading at Absurdly Low
These five industry dominant, blue chip, leading technology stalwarts represent prima facie evidence of how absurd and irrational the stock market can be at times. The facts are that the fundamentals underpinning each of these strong and healthy technology giants are significantly better than average. Therefore, logic would dictate that the shares of these companies' stocks should command a premium valuation relative to the average company or the S&P 500. It makes no rational or business sense that they don't.
Tags: Equities Bullish US
Five Dividend Paying Giants of Technology Trading at Absurdly Low Valuations? by Chuck Carnevale of EDMP