Tuesday, June 27, 2006

"Confessions of a Therapist for the Very Rich"

"Confessions of a Therapist for the Very Rich" from Gulf Shore Life (June 2006) offers insights into the psychological issues of retirement of affluent retirees in Florida.

The article by Tracy Jones discusses "why those who might seem to have everything can still be in psychological pain—and what can be done to relieve it."

Thanks to The Publicity Hound's weekly e-newsletter for bringing it to my attention. Her newsletter is one of my few regular weekly reads.


Monday, June 26, 2006

MarketingSherpa: "How to Get a High Conversion Rate for Financial Services New Account Marketing (Hint: 48 Landing Pages)"

This financial services case study from MarketingSherpa, which non-members can view until June 30, gives clues about advertising that'll land clients.

A key findings: target your market as narrowly as possible.


Twelve-month stock market predictions from the experts in Montreal

What are prominent experts predicting for world stock markets over the next 12 months?

In my June 2006 e-newsletter, I reported some of the more interesting predictions made at the Montreal CFA Society's Annual Forecast Dinner on June 8.

Here are their percentage forecasts for the next 12 months' returns by the S&P 500, Canadian, Japanese and emerging market stocks. Sorry, but I can't get tabs to work, so the numbers are squished together.

Speaker S&P 500 Canada Japan Emerging markets

DR flat -5% +10% -5%

VP +10% +5% + 5% +20%

CB +6% to +8% +10% +15% +15% to +25%

VS +15% flat +20% +>15% excepting BRIC countries*

* Templeton launching a BRIC fund is the "kiss of death" for those stocks, said VS. BRIC stands for Brazil, Russia, India, China.

Here's the key to the prognosticators:
DR =
David Rosenberg, Chief Economist for North America, Merrill Lynch (US)

VP =
Vinay Pande, Managing Director, Global Strategy in the Global Markets Division, Deutsche Bank Europe)

CB =
Carl Bang, CFA, President & Managing Director, State Street Global Advisors

VS =
Vincent Strauss, Managing Director, Member of the Executive Committee, Head of Asian Emerging Markets team, Comgest Far East Limited (Hong Kong)


Tuesday, June 20, 2006

How can you report underperformance in your client letters?

Are you dreading the composition of your quarterly client letter because you've got to report underperformance?

Check out the suggestions below, which I compiled with the help of the 50+ participants in my Boston Security Analysts Society presentation on "The Six Deadly Sins of Investment Commentary."

  1. Explain why you underperformed -- For example, one stock blew up or a sector was out of favor
  2. Give the context for your underperformance -- For example, your style was out of favor, but you expect it to recover in the next quarter. Or perhaps you've underperformed in the short-term but your long-term performance more than compensates for that.
  3. Accept responsibility for underperformance -- BSAS participants were divided over whether to apologize for underperformance. Some feel that an apology is refreshing and disarming. Others prefer to put a positive spin on underperformance. For some, it depends on whether underperformance is a short- or long-term phenomenon.
  4. Be proactive about improving performance, if it's something within your control
  5. Emphasize the consistency and quality of your investment process
  6. Discuss performance vs. client expectations -- Perhaps you need to help your clients develop more realistic expectations
  7. Don't overpromise -- Remember your compliance professional loathes guarantees that you'll make up for underperformance

Do you have comments, suggestions or questions? Please use the comments section below to share them.

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Special note to participants in The Six Deadly Sins of Investment Commentary: How to Write What Your Clients Will Read

Thank you for contributing to our enjoyable session on writing investment commentary!

Have you got follow-up questions?

Post them in the comments section below. I will try to reply within 48 hours.

In the meantime, you can review my Five Questions for Better Articles. These questions ensure that your investment commentary is relevant to your readers.

Happy writing!

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Saturday, June 17, 2006

Larry Tabb, "Strolling With My Alpha" from Wall Street & Technology magazine

Larry Tabb's "Strolling With My Alpha" is a well-written, short article about alpha and beta. It originally appeared in Wall Street & Technology magazine on May 15.

His conclusion? "What I am saying is that if you can really manage beta and alpha separately, it is major industry change, creating both tremendous dislocations and significant opportunities. Automation is hitting the portfolio manager, and the cream is skimmed by hedge funds and their community."

Do you foresee changes of this kind?


Friday, June 16, 2006

Montreal vs. Boston: Which market outlook dinner is better?

I attended my first market outlook dinner in Montreal on June 8, sponsored by the Montreal CFA Society. As I shmoozed before the meal, another Bostonian said "I've heard that Montreal's market outlook blows Boston's out of the water." Technically speaking, Montreal has an "annual forecast" dinner, while Boston has a "market outlook" dinner.

Here are my thoughts on that topic:

Montreal beats Boston on glitz and laughs
A robust sound system blared recorded music. My favorite musical moment came when bagpipes announced the arrival of Moderator Martin Barnes, Managing Editor of The Bank Credit Analyst.

Four oversized video screens shot pictures of the podium to the back of the room, which was packed with more than 600 attendees. The Society used the video screens to display video highlights from the previous year's dinner. Naturally, they highlighted the 2005 predictions farthest off the mark. It appeared that nobody foresaw the robust upward moves in Canadian stocks or gold.

Of course, it's easy to take potshots at one-year predictions. Dear readers, have any of you been consistently right in your predictions? Don't you have at least one year-old prediction that folks could laugh at?

Between the video highlights and Barnes' sense of humor -- which Bostonians didn't experience fully when he spoke at our Market Outlook dinner -- Montreal beats Boston on laughs as well as glitz.

Do I understand the reasoning behind the speaker(s)' predictions?
Boston wins on this score. Why? Because each speaker gets a good chunk of time to describe his or her market outlook and the reasoning that underpins it.

Montreal's market outlook is conducted as a question & answer session. The same question is directed to each speaker in rapid succession. I had to pull together their rationales on my own. In addition to moderator Martin Barnes, there were four speakers representing different geographic regions.

Good food
Sorry, Montreal.

My very subjective judgement is that Boston's Ritz-Carlton beats the Queen Elizabeth on market outlook dinner food. My beef at the Ritz was cooked to perfection, whereas it was overdone at the Queen E.

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Ben Stein gives heartfelt speech on ethics to Boston Security Analysts Society

Aside from a few jokes, I wasn't sure what to expect from a keynote speech to the Boston Security Analysts Society (BSAS) by Ben Stein, who was billed as an author, actor, lawyer, humorist, and observer. Stein is best-known for his role in the movie Ferris Bueller's Day Off.

He surprised my modest expectations by delivering a heartfelt speech about ethics in American business. He focused on a case study -- the example of Richard Kinder of Kinder Morgan attempting to take the firm private.

This is not a philanthropic act, said Stein. Why would Kinder try to buy the firm unless he knows he's underpaying for Kinder Morgan's assets? There's a problem: As chairman and CEO, Kinder has an ethical duty to shareholders to put their interests first. But a management buyout, by definition, must put management first. Indeed, management got fantastically rich in every buyout that Stein covered back when he wrote for

Stein draws these lessons from management buyouts:
  1. It'll be possible to make real money by arbitraging this deal
  2. There's a fantastic amount of value to be derived from controlling both sides of a deal, although it's unethical
  3. Superior knowledge is a great thing, whether it's acquired ethically or not
Stein also spoke about his work with the Tragedy Assistance Program for Survivors, which he wrote about recently for American Spectator. He concluded his speech by urging BSAS members to help make more secure the lives of widows and others left behind by the war on terrorism.

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Monday, June 05, 2006

Arthur Laffer: U.S. is world's highest performing economy

The U.S. economy is the highest performing economy in the world. And it's on track to stay that way, said economist Arthur Laffer in a June 1, 2006 presentation to the Montreal CFA Society.

How does Laffer characterize the current U.S. economy?
  • Fourteen consecutive quarters of real GDP growth mostly in the range of 3%-4%
  • 4.7% unemployment rate
  • Profits as percentage of GDP are at highest ever levels (Note: Laffer uses Dept. of Commerce profit statistics)
  • Spectacular productivity growth
  • Extremely low inflation, with 10-year bond around 5%
Furthermore, Laffer sees no serious threats from the four policy areas that he considers "killers of bull markets": fiscal, monetary, trade and incomes policy.

Stock prices are way too low, given the economics of the U.S., said Laffer.


Friday, June 02, 2006

Arthur Laffer: Next presidential race to pit John McCain vs. Hillary Clinton

The next U.S. presidential race will pit Senator John McCain of Arizona vs. Senator Hillary Rodham Clinton of New York, predicted Arthur Laffer, during the Q&A portion of a presentation to the Montreal CFA Society.

Laffer said of McCain, "He's not a supply-sider, but we hope to make him one." Laffer expects McCain to win the presidential election.

As for Hillary, she's "extraordinarily competent."

I plan to post more next week about this event.