Blog

29 Jan 2010

Posted at 15:03h in The Friday Brief by
Approaching President Obama’s Wednesday state of the union address, many expected he would steer a new direction, away from a decidedly liberal agenda toward the center. He obliged with more than a few promises on how he would do just that. He took a clearly more populist/centrist tone, berating bankers, rebuking congressmen and senators for partisan bickering, reminding critics of his many “tax cuts,” and doing it all in his own version of “I feel your pain.” He even nodded to the right on initiatives such as nuclear power and offshore drilling. He urged Congress to pass a new jobs bill, called for the extension of a big business tax break, and the creation of a small business tax credit. In a follow-through today, it is reported that the president plans to propose tripling loan guarantees for new nuclear reactors to more than $54 billion.

15 Jan 2010

Posted at 15:17h in The Friday Brief by
We will get to the economic data shortly, but a good self-evaluation is appropriate every so often, particularly at the first of a new year. When you consider your investments do you make your most significant decisions according to a plan which looks well into the future, or do you tend to let the daily price, data, and tongue wiggles wag those decisions? Consider carefully, because the answer could well impact the quality of your lifestyle.

08 Jan 2010

Posted at 15:28h in The Friday Brief by

“If pro is opposite of con, then what is the opposite of progress? Congress!” Found in the US House of Representatives restroom

The critical number for our economy is in; unemployment remains at 10%. While the headline number shows signs of topping, a significant rebound in job growth remains frustratingly elusive for the economy and for an administration that could use a boost. The economy lost an unexpected 85,000 jobs in December after showing the first increase in payrolls in almost two years. Economists fear that this recovery will be jobless just like the prior two.

18 Dec 2009

Posted at 15:41h in The Friday Brief by
Last week we discussed the possibility of a “W”-shaped recovery/recession. In such a scenario the economy rallies for a few quarters (two or three) then falls back into recession lacking sufficient momentum for recovery. Our economy started its growth trajectory surging 2.8% during the third quarter and is expected to continue growing for several months. The Conference Board released its index of leading economic indicators showing steady economic growth continuing into the new year. But the recovery is saddled with issues that will not quickly dissipate.

11 Dec 2009

Posted at 15:44h in The Friday Brief by
This week’s economic reports brought further evidence of economic recovery. The Commerce Department reported today that retailers saw a 1.3% increase in November sales. And it was privately reported that hiring by US discount, grocery, restaurant, and specialty chains in November rose to the highest level in 2009, signaling that retailers may be anticipating a gradual recovery in consumer spending. Consumers are still buying autos without government incentives. And manufacturers are especially optimistic as they look forward to 2010 sales growing by 5.74%, as reported by the Institute for Supply Management.

04 Dec 2009

Posted at 15:47h in The Friday Brief by
Today’s news that unemployment dropped from 10.2% to 10% indicates that the deepest recession since the 1930s may be over, says the head of the government agency responsible for officially calling recessions. “Today’s report makes it seem that the trough in employment will be around this month,” said Robert Hall, head of the National Bureau of Economic Research’s Business Cycle Dating Committee. “The trough in output was probably sometime in the summer. The committee will need to balance the midyear date for output against the end-of-year date for employment.”

27 Nov 2009

Posted at 15:56h in The Friday Brief by
For three weeks running the Dow has traded between 10,200 and 10,400. This week’s news was mostly positive with the Federal Reserve trimming its forecast for the jobless rate, home re-sales and new home sales rising, and consumer spending climbing more than forecast.

06 Nov 2009

Posted at 16:03h in The Friday Brief by
After falling 5.5% from its recent peak in mid-October the S&P 500 roared back this week with a near 3% rally. A steady flow of good news soothed recent worries that the recovery was growing anemic. Ford led the good news parade waving a banner quarter of almost a billion dollars in profits. Tool-maker Stanley Works agreed to buy Black & Decker for $4.5 billion and the next day Warren Buffett announced that he was in the railroad business with a $26 billion “all-in” bet on the US economy purchase of Burlington Northern. What was bad news for Mr. Obama and Democrats was good news for investors as Tuesday’s Republican victories suggested the possibility of future gridlock and perhaps some near-term restraint in big government growth and spending.

30 Oct 2009

Posted at 16:09h in The Friday Brief by
The US economy expanded in the third quarter, reversing a year-long contraction of 3.8% for the world’s largest economy. It was the worst economic performance in seven decades. As for duration, the four consecutive quarterly declines were the longest since quarterly records began in 1947. But in the third quarter, the economy came roaring back with a 3.5% gain, well ahead of the 3.2% median forecast of economists surveyed by Bloomberg news.

23 Oct 2009

Posted at 16:48h in Briefs about our Process, The Friday Brief by
There is a steady and dramatic shift occurring in the investment world toward Exchange Traded Funds. ETFs as they are called, represent baskets of stocks which are managed only to match specific indexes, not to beat them, as is the case for actively managed mutual funds. According to a recent study by Barclays Global Investors US listed ETFs climbed to an all-time high of $607 billion at the end of August. The study suggests that a "conservative" growth rate of 20% compounded annually, would put ETFs above $1 trillion by mid-2011. That total would represent 10% of the US mutual fund industry.  Brad Hintz, an analyst at Bernstein Research, in a Sept. 23rd research note said the growth of passive index products in general and ETFs in particular represent "a threat to traditional asset managers." He expects investors will focus even more on fees and tax efficiency with a sluggish outlook for stock and bond returns after the financial crisis. In this Brief I will demonstrate that there are even more significant advantages to the passive approach offered by ETFs than simply lower costs and taxes.