Monthly Archives: April 2010

Ride the escalator up but the elevator down

I drink daily from the firehose of information (it seems 24×7)  and I love a great statement when I hear it.

The following is an excerpt from the Jay Compson’s Q1 Portfolio Commentary of Absolute Strategies which most of our clients own. See the link for the full commentary  “The past few market cycles have been highly compressed as investors appear to recognize risks only after they occur (ex: leverage and sub-prime problems were clear red flags in 2006, not September 2008). As such, the discounting mechanism of the markets has also become compressed as all assets go through stages of an escalator up and then an elevator back down (there are very few floors where you can get off).”

Jay Compson is the portfolio manager for the Absolute Strategies Fund and Principal and Co-Founder of
Absolute Investment Advisers LLC

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Is the Glass Half Empty or Half Full?

This link will bring you to our 20 minute economic presentation called “Economic Recovery 2010- Is the Glass Half Empty or Half Full?”

www.compasssecurities.com/economicrecovery2010.htm it works in Internet Explorer browsers- when it loads, click past slides 1& 2 then click on the “play slideshow” button in the lower right corner and it will automatically play with narration.

In SEI’s view, the global economy should continue to improve, but growth will not be uniform across all regions. Emerging markets are the clear leaders so far. The outlook remains uncertain for how the European recovery will progress, as uncertainty around how to handle problems with Greek sovereign debt revealed weaknesses in the structure of the eurozone. Developed countries face a delicate balancing act. There is growing pressure on high-deficit nations to rein in government spending, but it is necessary to maintain sufficient fiscal support in order to prevent a relapse into recession.

SEI continues to hold a positive view toward equities, although year-to-date performance has been choppy. Fixed-income markets are being pulled in different directions. Developed-market sovereign debt has been hurt by deficit concerns, but helped by the slow recovery and generally low inflation. Emerging-market debt has been relatively strong, as investors continue to re-evaluate the relative riskiness of the asset class. Opportunities in investment-grade (bonds with relatively better credit quality) and high-yield (rated below investment grade and perceived to be riskier) credit also remain strong, reflecting robust corporate financial positions and expectations of continued economic expansion.

Real or Fake? (not that…the money)

Courtesy of my partner Omar Mian here is an interesting interactive link to see the features of the new larger denomination bills. For more information see:

Advisors Roles in Times of Crisis- Part 3

The 2009 Fidelity Millionaire Outlook survey reveals three critical roles that advisors played during the recent financial crisis. According to their clients, advisors acted as: Guides to Future Opportunities. (role #3)

Advisors are guides to future opportunities. A greater optimism may be one of the reasons that millionaires who use advisors are more bullish on equities: 33% of millionaires with advisors plan to increase their exposure to stocks in the next year, versus 28% of millionaires without advisors. Millionaires who work with advisors are also twice as likely to see opportunities in alternative investments in the next 12 months. And while the vast majority of millionaires expect higher taxes within five years, millionaires who work with advisors are more prone to take action now to minimize future taxes. 17% of millionaires who use advisors plan to start/increase contributions to a trust to decrease estate taxes vs 9% without advisors.

Concrete Canoes & proud dads

I’ve found from reader feedback that the personal content is often of more interest than the investment and financial content- so if you’ll allow me a proud dad moment I’ll share with you a quick story about my oldest daughter Kelly (interviewed in this link) who is a civil engineering major at the University of Massachusetts and for the last three years has been involved in the concrete canoe competition. We saw her team compete this past weekend on the very windy and cold Charles River in Boston.

In 2009, UMass Amherst hosted the regional semifinal of the American Society of Civil Engineers’ National Concrete Canoe Competition, for which students design and build a fast, floatable canoe of concrete and paddle it in an endurance and sprint race. More than 160 students from 12 northeast universities competed  and scholarships totaling $9000 were awarded to the winners’ undergraduate civil engineering program. The race was held at Lake Wyola in Shutesbury, Mass. ASCE Student Groups have been involved in constructing and racing concrete canoes on the local and regional (now conference) level since the early 1970’s. The first National Competition came to fruition in the summer of 1988.  The objectives of the National Competition are as follows:

• To provide civil engineering students an opportunity to gain hands-on, practical experience and leadership skills by working with concrete mix designs and project management.

• To increase awareness of the value and benefits of ASCE membership among civil engineering students and faculty in order to foster lifelong membership and participation in the Society.

• To build awareness of the versatility and durability of concrete as a construction material among civil engineering students, educators and practitioners, as well as the general public.

• To build awareness of concrete technology and application among civil engineering students, educators and practitioners, as well as the general concrete industry.

• To increase awareness among industry leaders, opinion makers and the general public of civil engineering as a dynamic and innovative profession essential to society.

• To generate and increase awareness of ASCE’s and national sponsors’ commitment to civil engineering education among civil engineering students, educators and practitioners, as well as the general public.

Test Your Savings Knowledge

Courtesy of AmericaSavesWeek.org

Q. What is the only free money for savings that is available to many Americans?

A. An employer’s match to a contributory workplace retirement plan such as a 401(k). Some employers, up to a certain level, will match each employee dollar contributed, thus guaranteeing at least a 100% yield on this savings.

Q. If they have no other income, how much must someone who retires at 65 have saved in order to be assured of an annual income of $50,000?

A. For a male at age 65, he should have $620,000 saved to ensure an average income of $50,000 a year for life, for a female at age 65, she should have $665,000.

Q.  What percentage of elderly individuals depend entirely on Social Security payments for income?

A. In 2006, 25% of individuals age 65 and older relied 100% on Social Security payments for their income.

Q. What is the most effective way to save $100,000?

A. Tell your employer or bank to transfer, each month, as much of your paycheck as possible automatically to a savings or investment account. This is a far more reliable way to acquire $100,000 than to buy lottery tickets or wait for an insurance settlement.

Q. If one saves $200 a month with a 5% annual yield, after 30 years how much savings will have accumulated?

A. Over $170,000 will have accumulated, and most of this amount will represent interest earned and compounded.