November 6th, 2013
Monday’s Wall Street Journal discussed the intermediate term future for emerging markets. A growing number of analysts find the recent rebound in emerging markets troubling. Developing country equities are up 16% since June. Theeir message: Proceed at your own risk. Based on a five year forecast, U.S. small cap stocks are still a better growth story than emerging markets. There are currently three issues with emerging markets.
1. The global economy has cooled and so has the global export boom that fueled developing-world growth.
2. Stock gains in developing economies relied heavily on huge inflows of foreign money. This has decreased and will continue to decrease as monetary policies tighten. Few countries are ready to shift to domestic financing.
3. Rising interest rates. Recent signs of U.S. strength could push the Fed to taper its spending in December or the first months of next year. When domestic yields rise it will create pressures in the emerging markets. This may be further exacerbated by a strengthening dollar.
To read the complete article from the Wall Street Journal please CLICK HERE.
October 14th, 2013
A client of ours shared an article with us from the October 6th, 2013 issue of the Los Angeles Times titled, With stock funds, ‘passive’ keeps beating ‘active.’ But many investors still gamble.
I guess he remembered me making this same statement, as I am sure most of my clients have also heard. Although it is not always true, with regard to most domestic small cap, mid cap and large cap funds ‘passive’ beats ‘active”. The article points out many reasons for this but singles out internal expenses, that is the fees that the mutual fund companies take for their services, as a significant factor for the disparity.
As your Wealth Manager, seeking out the funds with the lowest expenses, all things considered, is one of the important functions we perform. It’s also one of the benefits of working with a Fee Only Investment Adviser. Since we receive nothing from the mutual fund companies, we have no conflict of interest and are free to choose those funds that keep their expenses low and track closely their broad indexes or said another way, ‘passively managed funds.”
To view the Los Angeles Times article please CLICK HERE.
October 9th, 2013
Investors fled Real Estate Investment Trusts en mase since mid May when Federal Reserve Chairman Ben Bernanke suggested that the Federal Reserve’s accomodative monetary policy might soon come to a close. Their concerns appear to be twofold; there’s concern that higher borrowing cost will impair REIT’s ability to continue to pay handsome dividends and also concern that as prevailing rates increase there will be more investment alternatives which offer income streams that will compete with REITs and in turn provide more competition for them as a compelling investment alternative . Although both arguments carry weight, neither consider the appreciation potential of the underlying properties that could come with a higher inflation environment. To view the entire article from the Wall Street Journal CLICK HERE.
October 9th, 2013
In an op-ed post in today’s Wall Street Journal (to read CLICK HERE), Representative Paul Ryan, R-Wis, proposed broading the Congressional dialouge beyond a conversation on the Affordable Care Act (aka Obamacare) to include a conversation about changing the tax code and tackling Medicare funding–two topics that, at least in theory, garner broad bi-partisian support.
His suggestions immediatly drew it ire of several Tea Party Representatives who took issue with the fact that Ryan never mentioned Obamacare in his op-ed. NPR documented the Tea Party response in a piece which can be viewed by CLICKING HERE.