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What comes to mind when you hear the word confidence? You might think about the assurance of your own ability to accomplish a task or to succeed in some endeavor, great or small. You might also consider it as faith in somebody else; that they will do right or act in a trustworthy manner. Confidence in this light can also be associated with things that act in a predictable or reliable manner. It can mean a secret shared and it can describe the relationship of trust that exists to make sharing the secret possible.

The week’s economic numbers continued their trend toward improvement with manufacturing store sales, consumer confidence, and jobs growth all moving ahead. Even Greece looks to end the week on a strong note as arm-twisting forced enough bondholders to swallow losses of more than 100 billion euros ($132 billion) and allow the beleaguered country to move forward with its next phase of debt re-structuring.

It is now two and a half years since the Great Recession officially ended. The 18-month downturn was the longest and most severe since World War II according to the National Bureau of Economic Research, a private, nonprofit research group which officially calls the beginning and ends of recessions. But things are getting better you say. Why bring up the ugly past? Some economic data have indeed shown improvements, particularly of late. Manufacturing has been a steady stalwart of the recovery. Exports have been generally strong for months, while the much touted automobile industry has made a ‘remarkable’ turnaround domestically. GM regained the lead over Toyota for goodness sake.

Alpha or Wealth: Seeking alpha, or out-performance relative to similar indexes, can actually result in less wealth than might be achieved with efficiently allocated index funds, when cash flows badly align with the investor's sequence of returns.

Last week in Measuring Uncertainty I focused on the pitfalls of using performance alone to measure progress toward reaching your financial goals. It’s only natural to use returns because they are the universal language of the financial services industry. And if the language of the industry is returns, then the methodology for producing them is active management; where managers make specific investments with a primary goal of outperforming an investment benchmark index. But with return alone as your guide, you are left to wonder just how effectively your managers are improving your situation relative to your goals, how are they managing your wealth?

In the investment process there are things which can be controlled; such as expenses, taxes, and under-performing market indices, and there are things that cannot; the uncertainty of markets. It is, however, quite possible to measure uncertainty not only of historical market returns, but also of potential market returns. So why is it important for investors to measure uncertainty and how is it measured?

It has been a busy week for news on the economy and most of it has been good. The best comes today with news that unemployment in the US has fallen to a three-year low of 8.3%.Payroll jobs grew 243,000 in January following gains of 203,000 December and a 157,000 rise in November. The averages for workweek and hourly earnings improved which will continue to propel consumer income growth which got a bump first of the week

Some air went out of investors’ hopes today as the government reported lower-than-expected growth for the fourth quarter. Economists had projected a 3.0% increase. Still, the 2.8% pace represents the fastest growth for the economy since the second quarter of 2010. The government also said that consumer spending in the US rose 2% in the fourth quarter, improving the 1.7% rate of the third quarter and 0.7% in the second quarter. As the trading session gets started, stocks are mixed. Bonds remain higher.

Equity investors believe that the domestic and global economies are on the mend judging by their behavior so far. Since the end of September the US Total Market Index, S&P 500, and Dow are up 21%, 19.5%, and 18.5%, respectively. Global stocks as measured by the FTSE All-Worldex-US index are up 11.3%. In contrast, investors are shunning the safety of Treasuries as theBarclay’s 7-10 Index is down .25%. But last year the index soared 15% compared to a meager2% for the S&P 500.

If the attack ads between the Republican primary candidates seem negative now, we need only wait until the general election ramps up full court and speed to plunge to new depths of attacks on person and ideas. Our leadership and candidates for replacement seem bent on stressing the negative. Pessimism seems to trump optimism at every turn. Did you ever wonder why negative attacks are so effective, especially when we claim to prefer ideas, values, and optimism to characterize the public debate?