19
Dec
2014
The Allure of Market Timing
The performance of the S&P 500 over the past two days has reminded me of charts that I have seen over the years that show the impact of missing the best days in the market. These charts offer a good message about remaining fully invested, which I wholly agree with, but the charts are also a little misleading in my view. I decided to create one of my own to… Read More
18
Dec
2014
ALM Insights – December 2014
ALM Insights is focused on banks and other institutions that use their portfolio to manage risk on both sides of their balance sheet. It takes an in-depth look at securities investment strategies, balance sheet and asset/liability strategies, regulatory topics and general economic information. To view this issue, click the image below. In This Issue: King Dollar Finally, A Regulation You Can Opt-Out Of Reading The Tea Leaves
18
Dec
2014
Splitting Hairs with Janet Yellen
In the new minutes, Janet Yellen and her friends at the Fed did lose the ‘considerable time’ phrase, in the sense that it had been part of a sentence that said that ‘it will likely be appropriate to maintain the zero to one-quarter percent target range for the federal funds rate for a considerable time following the end of its asset purchase program.’ In this statement, they say that they… Read More
17
Dec
2014
New Dilemma at the Federal Reserve
The second day of the Federal Reserve’s Open Market Committee concludes later today and the big question is whether or not they will drop the term ‘considerable time’ from their forward guidance statement. The phrase has denoted how long the Fed expects to wait between the end of quantitative easing and the beginning of actual interest rates hikes. Earlier this year, Yellen indicated that ‘considerable time’ refers to six months… Read More
16
Dec
2014
Bonds Surprise and Delight
While no one expected the yields on bonds to fall materially this year (and remember, falling yields translate into higher prices), some elements of the bond market performance have been perfectly normal. The chart below shows the year-to-date performance of selected bond indexes through Friday, December 12, in blue. The orange bars show the performance of each index since inception of the indexes in 1976 through the end of November,… Read More
15
Dec
2014
There’s A Sucker Born Every Minute: High Yield Products
A client called me last week and asked if I had seen an exchange traded fund (ETF) with a 20 percent yield. In fact, I hadn’t. The client said that he was sure that the yield was phony since it was so high that it was ‘too good to be true,’ but wondered how the ETF could have such a high yield. Good question. In this case, the product is… Read More
12
Dec
2014
Portfolio Construction: Get Your Yellow Hard Hat On
Sometimes I inadvertently slip into financial jargon that is meant to convey a very specific message but ends up being gobbledygook that is off-putting for a lot of people. Recently, I used the term ‘portfolio construction’ in a meeting and the client, understandably said, ‘Dave, I know you mean how it’s built, but what exactly are you talking about?’ It’s true, the term portfolio construction sounds obvious but isn’t necessarily…. Read More
11
Dec
2014
Participant Insights: 2014 Q4
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11
Dec
2014
Tony Robbins: From Life Guru to Markets Master
Growing up, I watched get-rich-quick infomercials, from selling vitamins through tiny classified ads in thousands of newspapers ($50,000 per week!) to flipping real estate (buy a home with nothing down and walk away from the closing with a $30,000 check!). Although Tony Robbins didn’t sell get-rich-quick schemes, he sold something even more enticing: how to unleash the power already within you to live an extraordinary life – achieving your ultimate… Read More
10
Dec
2014
Index Funds Transform Investment Landscape
The Wall Street Journal reported yesterday that a new study suggests that index funds account for 23.1 percent of all 401k fund balances (read the full article here; subscription may be required). The study by BrightScope, a financial information company, reviewed 35,000 Federal Form 5500s that 401k plans are required to file each year with the Department of Labor, from 2012, the most recently available data. As of 2012, 401k… Read More