September 20, 2011 - Vol 5 Issue 38
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Counterparty Risk in Large Total-Return Funds
By Robert Huebscher
We can add another to the list of concerns facing advisors: counterparty risk - a potential loss from the failure of a bank or broker-dealer. Underscoring this threat, DoubleLine's founder and chief investment officer, Jeffrey Gundlach, recently warned advisors to avoid all funds with counterparty risk. Heeding his warning, however, is not easy; it is virtually impossible to gauge the extent of counterparty risk in most funds.
Are you Charging Enough for Held Away Accounts?
The Power of Dividends - And What They Say About Future Returns
By Lance Paddock
The return on equities is driven by dividends, since companies must ultimately distribute their hard-earned cash to shareholders. Given that reality, recent history of dividend yields portends a disappointing future for equity investors, one of sub-par returns relative to historical averages - no matter their investment approach.
The Irrational Optimist
By Michael Lewitt
'Most past bursts of human prosperity have come to naught because they allocated too little money to innovation and too much to asset price inflation or to war, corruption, luxury and theft,' writes Matt Ridley. These words hit the proverbial nail on the head. The misallocation of capital in today's economy is a severe threat to future prosperity and perhaps survival itself.
Own Your Brand
By Kristen Luke
Your company's brand is too important to not have total control of your logo. Your designer may have created your logo, but you should have full control over these files. This means having appropriate versions for different applications and owning the rights to your logo.
Our Most Read Article from Last Week
Highlights from Market Commentaries
Below are the three most widely read commentaries during the last week:
Is the Next Leg Down in the Secular Bear Market Already Underway?
It has been our view since the opening years of the decade that US equities are in a secular bear market. That opinion was based on several long-term indicators reaching the kind of extremes seen at previous secular peaks. Examples would include readings in the Shiller P/E ratio in excess of 22.5, the Tobin Q above 1.07 and the dividend yield below 3%. Since recent readings of 20.25,1.05 and 2.25% respectively have been closer to those seen at secular peaks than the 7.5,.3 and 6.5% normally seen at secular lows we are holding fast to the conclusion that the secular bear has further to run.
Tags: Equities Bearish US
Is the Next Leg Down in the Secular Bear Market Already Underway? by Martin J. Pring of Pring Turner Capital Group
Fed Policy: No Theory, No Evidence, No Transmission Mechanism
One of the main factors prompting a benign response to what is now a recession and virtually certain Greek default is the hope that the Fed will launch some new intervention. Many view the present weakness as a replay of 2010, however, the evidence tells a different story. While we have to allow for the possibility of a knee-jerk response in the event of further Fed intervention, it is also much clearer now than it was in 2010 that quantitative easing does not work. To a large extent, the only basis for further Fed action here is superstition in the absence of either fact or theory.
Tags: US Europe Monetary Policy Sovereign Debt
Fed Policy: No Theory, No Evidence, No Transmission Mechanism by John P. Hussman of Hussman Funds
How the Government Can Create Jobs
On Tuesday, September 13, Peter Schiff will testify before the House of Representatives Subcommittee on Regulatory Affairs, Stimulus Oversight and Government Spending. The hearing entitled, "Take Two: The President's Proposal to Stimulate the Economy and Create Jobs" will examine federal job creation efforts. Mr. Schiff is well known for his views on how federal regulatory activism and irresponsible monetary and fiscal policy is actively destroying jobs in America. The following statement from Mr. Schiff will be read into the Congressional Record this morning.
Tags: US Employment Sovereign Debt
How the Government Can Create Jobs by Peter Schiff of Euro Pacific Capital
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