July 12, 2011 - Vol 5 Issue 28
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Harold Evensky on the New Rules for Wealth Management
By Robert Huebscher
If you don't have a copy of The New Wealth Management on your bookshelf, you should. From gauging the risk tolerance of your clients to measuring the performance of their portfolios, this book provides comprehensive guidance for virtually every aspect of a financial advisory practice. Harold Evensky, the lead author, spoke with me last week and highlighted some key themes in the newly released second edition.
Inflation Field Manual: A Guide for a Changing World
Sponsored Content by American Century Investments
This client-approved executive summary by Senior PM Robert Gahagan and Senior PM William Martine, CFA examines the competing forces at work that will affect inflation for the months and years to come. It also provides an analysis of inflation-hedging assets in different market environments, and suggests strategies for protecting a portfolio from inflation risk.
An End-of-Quarter Letter to Clients
By Dan Richards
Given recent unrest in Europe and uncertainty about economic growth, many clients are looking to their advisors for direction. This template for an end-of-quarter letter is a starting point for your own letter to clients, one that can be a catalyst for a conversation about how to position portfolios.
A Complete Snapshot of Your Clients' Wealth Can Increase AUM
Sponsored Content by Envestnet
Join us for a webinar on July 19th at 2pm ET to hear how one advisory firm's decision to outsource back-office functions and data aggregation led to increasing assets under management. Within a single web-based platform, the advisory firm is able to access a comprehensive view of client accounts and reports on a variety of investable assets, including 401(k)s, 529 plans and annuities.
The Real Story behind Bond Yields
By Michael Nairne
One of the most important questions that individuals should ask before making any investment is 'Am I being paid enough for the risk of this investment?' I analyze the returns available today from government bonds and answer this important question for this asset class.
The Titanic Has Sailed
By Michael Lewitt
It was entirely predictable that the U.S. equity market would rally on the news that Greek would not default this month, but it does little to convince me that the long-term outlook for European sovereign debt or the global economy has improved. Markets - particularly the equity markets - are trying to pretend that the global economy is experiencing a self-sustaining recovery. A hard look at the economic numbers would tell an objective observer that no such recovery is occurring.
Profiting from the Steep Yield Curve
By Georg Vrba, P.E.
The yield curve, as measured by the spreads between the yields of the 10-year note and the 2-year note, has now steepened to levels seen only twice before since 1965. This is only the third time in the last 45 years that investors can take advantage of a flattening of the yield curve this extreme, an opportunity that should not be missed.
Second Quarter Preserves First Quarter Market Gains:
We're Still Above Water and Treading
By Ron Surz
In his award-winning commentary, Ron Surz looks at how the US market performed and then how foreign markets fared. He concludes on a lighter note with a couple of videos that address key topics in the investment arena.
Unexpecting the Expected
By Justin Locke
This is a story of a kid who lived on a farm in the Midwest. A family friend gave him an old, beat-up plywood string bass, and he started to play it just for something to do. His family couldn't afford lessons, so he taught himself out of a method book.
Letter to the Editor
A reader responds to Doug Short's commentary, A Short History of Dividend Stocks, which appeared on July 5.
Highlights from Market Commentaries
Below are the three most widely read commentaries during the last week:
Oh What Fun the Behavioral Economists Will Have
Dr. Meir Statman, a Finance professor at Santa Clara University, delivered a presentation in may at the 64th CFA Institute Annual Conference held in Edinburgh, Scotland. His presentation was based on his book "What Investors Really Want". I have been a fan of Dr. Statmen from the first time I heard him tell a story about investors making the same mistakes over and over again. Here is what Dr. Statman says are the four desires that investors to make major mistakes: to get high returns, to play and win the beat-the-market game, to banish fear, savor hope, and avoid regret and to pay no taxes.
Tags: Behavioral Finance
Oh what fun the Behavioral Economist Will Have by Kendall Anderson of Anderson Griggs
America and Britain's Economic Policies Will Soon be Similar
By imposing austerity programs,t he U.K. is hoping to free up resources that can be devoted to pay down debt. The U.S. is hoping to create resources to pay down debt via economic growth - an approach that can have disappointingly narrow feasibility. Other options include restructuring or defaulting on debt, inflating out of it and imposing financial repression by paying creditors less than they deserve.
Tags: Europe Sovereign Debt
America and Britain's Economic Policies Will Soon Be Similar by Mohamed A. El-Erian of PIMCO
Chutes and Ladders
We are all playing a game of Chutes and Ladders where it is not at all clear which game-board is applicable. To believe strongly in a certain investment outcome is to imagine that there is only one correct model of the world, and that the correct model is in hand. Investors appear very eager to apply post-war norms to the economy, and to apply the elevated valuation norms of the past two decades to the stock market. I doubt that these models represent the correct view of the world, but our approach is to allow for these possibilities and dozens of alternate ones.
Tags: Equities US
Chutes and Ladders by John P. Hussman of Hussman Funds