Archive for October, 2013

With stock funds, ‘passive’ keeps beating ‘active.’

Monday, 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.

Investors Turn From Once-Hot REITs

Wednesday, 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.

Paul Ryan: Here’s How We Can End This Stalemate

Wednesday, 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.

IMF’s Pessimism on Global Growth Widens

Wednesday, October 9th, 2013

The International Monetary Fund cut its world growth forecast Tuesday amid deteriorating emerging-market prospects, urging authorities to shore up their economies as the U.S. prepares to exit its easy-money policies and wrestles with a budget impasse that threatens to derail the global recovery.  To view the entire article from the Wall Street Journal CLICK HERE.