When people talk about the keys to good health, they always talk about balancing mind, body and spirit. However I believe they are missing the key ingredient of financial health. Health and wealth are interconnected and if any of the pillars of health are disturbed, it can cause sickness and even death.
Larry Summers and Keynesians love bubbles
The market is eagerly awaiting the last FOMC meeting of 2013. Will they taper or not taper? I highly doubt that Ben Bernanke will be the Grinch and choose to taper in his last Fed meeting. However even if he does, it is a few months overdue.
Larry Summers was President Obama's favorite to replace Fed Chairman Ben Bernanke. Even though Summers ended up bowing out, it is important to listen to his recent IMF Research Conference speech because his Keynesian view is very much in line with incoming Fed Chair Janet Yellen, ECB President Mario Draghi and Japan's Shinzo Abe. The simple conclusion is easy monetary policy, quantitative easing and zero interest rate policy will likely be with us for a very long time. Bubbles, crashes and more bubbles are going to be our future. This type of environment is going to be especially rough for traditional buy and hold investors.
Equity Management More Important Than Ever Before
In the years 2010-2012, investors around the world poured nearly $700 billion into bond funds, while taking nearly $300 billion out of stock funds. That was then, this is now. Today, more investors view the bond market as abnormally risky and are concerned that recent bond losses could deepen if interest rates continue to rise. ZIRP (zero interest rate policy) has come at the expense of savers and conservative investors, among them are retirees and captive insurance companies. Without an ability to find a risk-free return, much less a low-risk return, many investors have moved and continue to move into riskier assets in order to generate some returns.
Asset Protection 101: Enhancing returns with a prudent bear market strategy
My early days on Wall Street
I graduated college in May of 1997 and hit the ground running when I landed on Wall Street as a research analyst. Just a year later, Long Term Capital almost crashed the global markets but the Fed stepped in and then the fun began as the Internet bubble inflated to hysteria. Taxi drivers and barbers would tell stories of how they made thousands on eBay or Yahoo, but all bubbles end in a bust. By then I was working as an assistant portfolio manager to a multi-billion dollar fund.
Asset Protection 101: Diversification strategy gone wrong
The consensus among most financial professionals is that asset allocation is one of the most important decisions that investors make. However many people mistake asset allocation for diversification. This is the definition from the SEC:
The Magic of Diversification. The practice of spreading money among different investments to reduce risk is known as diversification. By picking the right group of investments, you may be able to limit your losses and reduce the fluctuations of investment returns without sacrificing too much potential gain.