Saturday, December 31, 2005

Dollar appreciates 15% vs. yen, euro in 2005

This headline about dollar appreciation reminds me that it's so difficult to forecast what'll happen in the markets and economy. Even over a period as short as one year.

One year ago, pundits were predicting the dollar would fall in value vs. the world's major currencies. Instead, the opposite happened.

However, if you followed the pundits' advice to invest in international stocks, you still would have been a winner last year. As measured by the MSCI EAFE index, international stocks were up by almost 11% in U.S. dollars, for the period Jan. 1- Dec. 30, 2005.

You could have earned even more, if you invested in an international fund that hedged away the influence of exchange rates. Over the same period in 2005, the MSCI EAFE index rose more than 25% as measured in local currencies. Quite a difference.


Tuesday, December 20, 2005

Will Boomers Have Enough Income to Retire?

Are you looking for some statistics on retirement to drop in your marketing or investment commentary? Check out the free research available from the Center for Retirement Research at Boston College.

For example, the Center recently published "The House and Living Standards in Retirement" by Alicia H. Munnell and Mauricio Soto." This third "brief" on retirement income concludes that households with pensions are in good shape. Those without pensions "do not fare well, even after taking housing into consideration."

On a lighter note, the Center offers a "game that helps women plan for retirement." It's called "Get Rich Slow." I was too lazy to download the game to test it. I wonder how many others will react similarly.


Sunday, December 18, 2005

Do investment & financial services companies belong in the blogosphere?

Do you know if any legitimate investment management or financial services companies have blogs? I haven't stumbled across any yet.

An interesting article called "Does Your Company Belong in the Blogosphere" got me thinking about whether blogs are right for financial services companies. Technology companies have led in the introduction of corporate blogs, said author Katherine Heires. She didn't cite any financial services blogs.

Here's a quote that suggests one reasons why I doubt blogging will take off quickly at large, conservative financial services firms. "Advises Pete Blackshaw of Intelliseek, a marketing intelligence firm: 'If your legal department requires three weeks' review time before you turn around a posting for your blog, you are not a candidate for blogging.' " I imagine that Compliance Departments will be very leery of blogs that are written in a blog-like voice.

After reading this article, I surfed over to Debbie Weil's blog, BlogWrite for CEOs, to see if she linked to any financial services blogs. Nothing doing. I couldn't even find the term "financial services" on her blog.

What do you think?

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Monday, December 12, 2005

Prof. J. Siegel: What happens when Baby Boomers retire?

You've probably read about the coming crisis in Social Security. As the Baby Boomers retire, there'll be a big rise in the ratio of U.S. retirees to U.S. workers.

If nothing changes, said Prof. Jeremy Siegel, "You'll live longer, but you'll have to work much longer." Retirement age must rise to 73 by the year 2050 to keep the system funded. Siegel made his comments as part of a presentation to the Boston Security Analysts Society.

Of course, things do change, so Siegel ran computer models testing how retirement age might be affected by:
  1. Increased productivity growth in the U.S.
  2. Increased immigration into the U.S.
  3. High rates of GDP growth in the developing world, which would allow people in those countries to produce goods for the U.S. and buy assets from the U.S.
According to his computer calculations, number 3 would have the greatest impact on the retirement age. It would lower the retirement age in his scenario from 73 to 68.

To learn more about Siegel's ideas, visit his website.

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Sunday, December 04, 2005

Creative writing about international investing

Here's a good example of creative writing that's conservative enough to get by a mutual fund compliance dept.
"Why invest internationally? Over the past 34 years, not once did the United States emerge as the world's top-performing market...."

The quoted material cleverly -- and inaccurately -- implies that an international portfolio would have outperformed a U.S. portfolio during these years. Of course, you would have consistently outperformed the U.S. only if every year you had correctly identified the market that would perform best in that year. Even the best international investment managers can't consistently deliver that kind of performance.

Of course, to be fair to the ad, I've got to mention that it gives other reasons for international investing. Moreover, the recommended
Laudus International MarketMasters Fund invests in portfolios managed by four subadvisors. Laudus clearly believes in the value of a diversified international portfolio.

I found this ad in the Nov. 28 Investment News.


Love this fixed income headline!

This headline made me laugh: "If you enjoy interpreting yield curves, we suggest these ETFs. And we pity your dinner company."

I laughed because:
  • It's great to see a humorous ad for a financial services company. This is an ad for iShares' fixed income ETFs.
  • There's a little bit of "fixed income nerd" inside me. Not that I'm a skillful interpreter of yield curves. Rather, that I could have listened for hours to a fixed income strategist at one of my former employers. I felt intrigued by how she built an investment strategy recommendation by pulling together clues from economic indicators and market behavior.
  • The headline is a great hook for a specific subset of investors. Also, the product opens up new opportunities for those investors. It's worth those investors' time to consider this product.
I found this ad on page 7 of the Nov. 21 issue of Investment News. I wish I could link you to a hard copy of this ad.