Podcast #21 Perspective For Long-Term Planning

January 13, 2012

Podcast #21 Perspective For Long-Term Planning
Mike Moody and Andy Hyer

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The Golden Years?

January 13, 2012

From the Washington Post, an article about older Americans in the workforce:

Though the recession has thinned the ranks of other generations in the workforce, more people older than 55 are employed than ever before, according to the latest figures from the Bureau of Labor Statistics.

The reasons for the surge of older workers are complex, experts said, but one of the primary economic forces behind it is the growing fear among older Americans that they lack the means to support their retirement needs.

The phenomenon is closely linked to the broad shift in the United States that began in the ’80s away from reliance on company pensions toward the adoption of 401(k) plans and other personal savings.

“Fear is a wonderful motivator,” said Alicia Munnell, director of the Center for Retirement Research at Boston College. “Some of these people are just clinging by their fingernails to jobs.”

Fear is a wonderful motivator?  It’s horrible that people have relied on cultural guidance to spend, instead of the guidance of a qualified financial advisor to save and invest.  As the article mentions, many people are still working only because they have not saved enough, whether in their 401k or in their personal accounts.

If you are a financial advisor, here is a way for you to have a huge positive impact on the lives of your clients–become their savings and investment coach and you will never lack for business.

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From the Archives: A Shocking U-Turn

January 13, 2012

After decades of some consultants and institutions ridiculing proponents of tactical asset allocation or deriding it as “market timing,” some have now apparently become convinced of its benefits as a risk diversifier and return enhancer.  OMG!  According to this article in Pensions & Investments, a number of firms are now poised to roll out their own tactical asset allocation solutions.  Bar the door and hide the children.

—-this article originally appeared 10/7/2009.  In the last couple of years, tactical asset allocation has actually become fashionable—because buy-and-hold isn’t working.  Of course, I don’t think buy-and-hold proponents are dead.  Like Monty Python’s parrot, they’re just resting.

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Fedspeak

January 13, 2012

The Federal Reserve Open Market Committee (FOMC) transcripts from 2006 were just released.  This is the committee of Federal Reserve personnel and rotating regional Fed bank presidents that make monetary policy.  The Fed has awesome resources and access to the best data on the planet to aid their decisions.  Calculated Risk reproduced some of their comments on housing in 2006.

You’ve got to check it out.  Simply amazing.  It will be really interesting to see if this line of thinking continued through 2007 when those transcripts are released next year.  (There’s a five-year lag.)  Most real estate securities peaked in 2007 and then plummeted, but you can see from some of the comments that there was very little concern about that outcome in 2006.

If the Fed has no idea that Armageddon is a few months away, why would you think that any private forecaster with access to less information would be any more accurate?  Relative strength is based on price–good old supply and demand–and not on anyone’s guess, however well-informed it might appear.

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Sector and Capitalization Performance

January 13, 2012

The chart below shows performance of US sectors and capitalizations over the trailing 12, 6, and 1 month(s).  Performance updated through 1/12/2012.

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