Friday, March 31, 2006

U.S. stocks getting repriced

"U.S. stocks are getting repriced versus foreign stocks," according to an investment manager quoted in The Wall Street Journal's "Ahead of the Tape" column (March 29, 2006).

What does that mean? U.S. stocks are not rising in price as rapidly as non U.S. stocks, in a reflection of the declining value of the dollar. Year-to-date, of the 23 countries in MSCI's world index, "only two--New Zealand and Australia--have performed worse than the U.S. in dollar terms," says the article.

On a related noted, a front page article on the same day proclaimed, "Finally, a Healthy Japan Offers Lift for the U.S., Asian Economies: New Prosperity in Tokyo Spurs Import Surge and Helps Foreign Financial Firms."


Wednesday, March 29, 2006

Blogs on investment advice and industry developments

Today I've added some blogs on investment advice and industry developments to my blogroll.

A recent article by David Drucker in Financial Advisor magazine pointed me to two of them, CPA Money Blog and The Meridian, both of which are written by advisors.

I'm not sure how I found Steven's Thoughts, written by Steven Miyao of kasina, but I immediately took it seriously because I enjoyed hearing him speak at a NICSA technology conference. In his March 28 blog post, he mentions a couple more advisor blogs. I've got to check them out.

I wrote about the other blogs in an earlier post.


Tuesday, March 21, 2006

Google launches finance site

Google has launched a finance site.

What do you think of it?


Thursday, March 16, 2006

Gloom, Boom and Doom from Marc Faber

What's the worst possible investment you could make today?

It's to buy and hold a 30-year U.S. Treasury bond, according to economist Dr. Marc Faber of the Gloom, Boom & Doom Report in his Mar. 16 presentation to the Boston Security Analysts Society on "Investing in a world of rapidly changing global and economic trends."

Many of the best investment opportunities lie in Asia or will be driven by Asian -- especially Chinese and Indian -- economic growth, said Faber. These include:
  • Real estate in India, Vietnam and eventually China; "one day a Shanghai luxury condominium could be worth more than one in New York City or Boston"
  • Asian airports
  • Emerging and Asian (ex-Japan) stock markets, especially India, which is "becoming an asset class"
  • Equities in general vs. bonds
  • Commodities, especially farm products (because their prices are at 200-year lows relative to energy prices) and gold, which is relatively cheap vs. inflation
  • Equities in Europe, where valuations are attractive and wages are under pressure from central and eastern Europe
Some other interesting comments by Faber:
  • If Russia's president, Putin, were a hedge fund manager, he'd cut oil production in half and prices would double
  • Emerging market countries that produce commodities are in a sweet spot
  • When commodity prices rise, international tensions rise and eventually lead to war in a cycle that has historically run 25-60 years
  • U.S. GDP growth is of poor quality because it has been driven by credit expansion more than capital spending; this contrasts with China where capital spending is strong
Want to get more of Dr. Faber's flavor? Check out "Much Noise in the US--But Little Action."


Wednesday, March 15, 2006

Are you really a wealth manager?

"How many of you consider yourselves wealth managers?"

More people raised their hands at the beginning than at the end of presentation delivered by Beth Gamel of Pillar Financial Advisors to the Boston Security Analysts Society on March 14.

Why did some people drop out? It probably was due to Gamel's listing and explaining comprehensive wealth services as well as key characteristics of wealth management clients:
  • More than $5 million (preferably more than $10 million) in investable assets because otherwise their financial situation isn't complex enough to benefit from her firm's estate planning services
  • Complex financial situation

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Loomis Sayles' Rolley on global bond outlook

The questions you ask about global markets speak volumes about your opinions of those markets.

So, look at the questions raised by David Rolley, co-head of the global fixed income group at Loomis Sayles, in his March 13 presentation to the Boston Security Analysts Society.
  1. Why are yields so low?
  2. Why are spreads so tight?
  3. Why is volatility so low?
  4. How long can this last?
  5. What are the best opportunities?
  6. What are the greatest risks?
If you'd like to read another article in which I cite Rolley, go to "Foreign Indebtedness" from Financial Planning magazine.


Sunday, March 05, 2006

NYT's G Morgenson on equity research analysts

"Analysis, or Just Dictation?" asks Gretchen Morgenson on the front page of the March 5 "Sunday Business" section of The New York Times.

Morgenson discusses an instance in which, as she sees it, equity research analysts essentially said, "The company told us everything was O.K., so it must be true."

What do you think?


Whither Putnam Investments?

Here's a comment I got in response to my posting on Jack Bogle's recent talk.

Putnam’s 5,000 jobs are at grave risk of disappearing under a few scenarios I can think of. If MMC sells Putnam to a third party bidder that is either larger than Putnam or has better performance (not hard) than Putnam, the acquiring firm could make it an asset acquisition where the monies transfer to a new city but the people don’t. Given Putnam’s abysmal performance, how notoriously bad the Putnam name is, and how broken their investment process is, this is very probable. One could easily argue that the Putnam brand name is either worthless or even that it has a negative value. Me, I’d argue that it has a negative value.

I provided Jack with 4 alternatives that I thought MMC could choose and Jack thought of a fifth alternative that was better than the four I thought of. However, given MMC’s situation and their proven lack of corporate ethics, I don’t see them giving a rat’s patooie about their fund shareholders and choosing mutualization. Probably the best outcome as far as Boston and Putnam’s employees are concerned is an employee led buy-out which takes Putnam private. There’s no place for publicly held mutual fund firms.

Here’s how I see Putnam’s future:

1) MMC sells them to a third party which leads to the assets transferring and most Putnamites losing their jobs (Bad Outcome for Boston)

2) MMC sells them to a third party but the third party keeps the jobs in Boston (Okay outcome for Boston)

3) MMC spins off Putnam to its shareholders (Okay outcome for Boston but unlikely since this doesn’t get MMC paid)

4) MMC mutualizes Putnam to benefit the mutual fund shareholders (Good Outcome for Boston but Putnam fund shareholders are not MMC shareholders so I don’t see this happening)

5) Putnam employees do an LBO and take the firm private (Good Outcome for Boston)

At this point, Putnam is toast. Jack may think highly of Ed Haldeman but I am not very confident in his abilities. He’s either been Co-CIO or CEO for four plus years and Putnam’s investment process remains beyond broken. I can pick my nose better than Putnam’s PM’s can pick stocks. If they hired monkeys to throw darts they’d improve performance. The marketing staff has lost all confidence in the firm’s investment managers and believes a widespread purge of investment staff is long overdue. My bet is Putnam has less than a year to turn the ship around or they’re finished.

The commentator asked to remain anonymous.