New posts on my NEW Investment Writing blog

If you’re not visiting my InvestmentWriting blog in its new location, you’ve missed the following posts over the last month:

• Should the Morningstar style box go 3-D? Quality counts, says Atlanta Capital
• Guide to e-newsletters
• Guest post: “Generate Quality, Low Cost Leads with Facebook Ads”
• Great blog posts don't matter...
• E-newsletters: Great marketing tool for financial advisors and writers
• “CFA credential implies a standard of care not always upheld,” says Forbes opinion piece
• A top technique of financial advisors who blog successfully
• Introverts, steal this idea for your next conference!
• Poll: Should you make investment predictions that can backfire?

Also, you still have time to sign up for "How to Write Blog Posts People Will Read: A 5-Week Teleclass for Financial Advisors" starting Sept. 23.
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  Receive a free 32-page e-book with client communications tips when you sign up for my free monthly newsletter.  

Copyright 2010 by Susan B. Weiner All rights reserved

Guest post: "Talking to clients about social investing"

Socially responsible investing can make for a difficult conversation between investment managers and their clients. But it doesn't have to be that way if you follow the tips provided by my friend Annie Logue, the author of Socially Responsible Investing for Dummies.

Talking to clients about social investing
By Ann C. Logue

Often, an individual client will walk into an office with a list of industries and companies that he or she does not want to own. Some clients have well-thought out objections or religious obligations that set the tone, but others have a vague idea of the goodness or badness of an industry without any real reasoning behind it.
 
How do you deal with such a customer?
 
Social criteria can be legitimate investment constraints, so one tactic is to approach it as a constraint. Get the client to identify the real issues, ideally in writing. Are they religious? Well, you can’t argue with religion! If they are more vague, then use some good questioning to get them onto paper, or ask the client to do some research. Some good sources are CSR Wire and Triple Pundit.
 
The real conversation is about what your client would rather invest in. Social investing doesn’t have to have lesser performance than traditional investing; the KLD Social Select 400 Index has minimal tracking error to the S&P 500 and, right now, outperforms it slightly. The secret is making sure that the companies you do invest in have a similar risk and return profile. If your client wants to sell BP, then you’d better find a company with similar characteristics. Replace BP with a speculative green tech company, and you're changing the portfolio’s nature. Replace it with a large multinational food company with responsible business practices, paying a high dividend, and subject to commodity price fluctuations, and you’re getting closer to the portfolio contribution of BP without the oil exposure.

Keep holding the conversation, too. BP had a great reputation for its social responsibility right up until April of 2010. Social investing is still investing, and you still take on company risk. Just as there is no perfect job and no perfect boyfriend, there is no perfect investment. Remind your client of the long-term goals. Many clients prefer to separate their investing from their philanthropy, figuring that the more money they make, the more money they can donate and the more time they have to volunteer.
 
Finally, turn your clients into activists. Talk to them about proxies. They can vote their proxies and have an influence on companies even if they do not change their ownership positions. That gives the client power without disrupting an investment position.
 
Social investing doesn’t have to underperform, and it doesn’t have to be a wedge between you and your client. You can use a client’s interest as an opportunity to educate them and to show how you can add value to their portfolio.
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Copyright 2010 by Susan B. Weiner All rights reserved

If you enjoy my #CFA2010 tweets...

...you may also enjoy my free monthly e-newsletter with practical tips for your client communications. You'll also find at least one investment or wealth management article. 

I often report on presentations to the Boston Security Analysts Society, so you know you'll see topics of interest to CFA charterholders.

Topics in the May 2010 issue included

• Watch out for inflation, says veteran value investor, Jean-Marie Eveillard
  Treasurys vs. Treasuries--Which is the right spelling? 
• How to guest-blog on personal finance or investing 
• Poll: How do you sign your business emails? 
• Last month's reader poll about ghostbloggers 
• Morgan Creek Capital's Yusko on investing

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Receive a free 32-page e-book with client communications tips when you sign up for my free monthly newsletter.  

Copyright 2010 by Susan B. Weiner All rights reserved

Small-cap investing opportunities according to Artio's Dedio

"Opportunities in Smallcap Investing" was the title of the presentation that Samuel Dedio, head of US equities for Artio Global Management, delivered to the 2010 annual conference of the Financial Planning Association of Massachusetts. The growth of options trading was his most interesting theme, in my opinion. By the way, if you don't recognize the name Artio Global Management, it was formerly Julius Baer. 

Where the opportunities lie 
Dedio identified opportunities in financials sector, including regional banks, online brokerage companies, and insurance. He figures that "industry consolidation and stimulus spending may potentially benefit this area." 

Industrials and materials stocks will benefit from emerging markets' demand. For example, Dedio likes silver, where supply is not keeping up with demand. Compared with gold, silver has many more industrial applications, yet it trades at a discount to gold.

In healthcare, Dedio likes companies that can help implement cost savings. This means companies in diagnostics, medical technology, pharmaceuticals, and home healthcare providers.

The survivors of the 2009 shakeout in retailers will benefit in 2010. "We expect margins (and earnings) to recover more rapidly than in prior cycles," wrote Dedio in the consumer discretionary section of his handout.

Finally, in technology, Dedio focused on the undervalued importance of semiconductors. 


Options: Why online brokerage may thrive 
Dedio particularly likes online brokerage companies with exposure to options trading as a play on demographics and rising interest in making money through options. 

"The younger generation eats it up," said Dedio, referring to options trading. This is apparently tied to younger investors growing up with computers and to educational efforts by companies such as Think or Swim.

"Don't 85% of options expire worthless?" asked an audience member. That's exactly what makes options a great business, according to Dedio. Investors have to buy more options on an ongoing basis. 

Dedio displayed a graph showing that total monthly equity option trading volume has more than doubled since the year 2000. Monthly trading volume, which was under 100 million until January 2004, has been  200 million--and sometimes exceeded 350 million--during the period January 2008 to September 2009.

Dedio's one concern about options trading is pricing pressure. However, cost cutters are at a disadvantage in the options arena, where education remains critical. Education requires more robust margins than cost cutters manage.
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Copyright 2010 by Susan B. Weiner All rights reserved

Watch out for inflation, says veteran value manager Jean-Marie Eveillard

Value investing was the focus of the presentation by Jean-Marie Eveillard, senior adviser and board trustee to the First Eagle Funds and senior vice president of First Eagle Investment Management, LLC, to the Boston Security Analysts Society (BSAS) on April 13. Eveillard also opined on the world economic outlook.

Three economic scenarios
Eveillard thinks there are three potential directions for the U.S. from here.
1. A typical post-WWII expansion-- In this scenario, the authorities lever up the system again, so we get a three- to five-year expansion, Eveillard said. This would mean that we are still in a post-World War II environment. Eveillard is concerned about the short-term, even speculative orientation of investors in an environment in which equity mutual funds average 100% annual turnover.
2. Japanese-style stagflation--As the private sector continues to deleverage, the U.S. might fall into stagflation similar to that experienced in Japan for the past 20 years. This would happen if lenders don't want to lend and borrowers don't want to borrow, despite the government's efforts to combat their resistance. Eveillard considers this unlikely because, unlike the Japanese, Americans are not resigned to economic stagnation. We'll act.
3. Negative, unintended consequences including inflation--Eveillard is concerned about the unprecedented scale of the U.S. government's intervention. This includes a gigantic budget deficit, zero interest rates, and the ballooning of the federal balance sheet.

The third scenario is most likely, said Eveillard, who spoke about the lessons of the Austrian school of economists. The main lesson: If you're stupid enough to get into a really bad credit boom, you'll have a bad credit bust. However, the Austrians also say not to do a short-term patch after a bust because you'll compromise the medium-term and long-term recovery. This seems to be one of the roots of Eveillard's fear of the third scenario.

But Eveillard's inflation fears haven't made him give up on stocks. People make the mistake of thinking that inflation is all bad for stocks, he said. He believes in owning the stocks of companies that are able to raise prices as their costs rise. For example, that's something that newspapers were able to do back in the 1970s.

Eveillard did not comment on specific stocks that he favors now. "If I knew what my five best ideas were, that's all I would own," he quipped.

Benjamin Graham and The Intelligent Investor
Eveillard spent most of his time with the BSAS talking about the history of value investing. For him, the two big names are Benjamin Graham, author of The Intelligent Investor, and well-known investor Warren Buffett.

Graham's emphasis on the role of humility, caution, and order in investing make sense to Eveillard. He illustrated Graham's approach to investing as finding a business with an intrinsic value of $50 per share, buying it at $30-$35 per share, and starting to sell it at $40. This is what Warren Buffett called the cigar butt--one puff and it's over, said Eveillard.

Although Eveillard conceded that Graham's approach to investing is static and balance sheet-oriented, it still offers opportunities. There are "Ben Graham-type stocks" in Japan, especially among small caps, he said. Because "net cash is greater than market cash...you get the business for less than nothing," he said.

Warren Buffett added qualitative to quantitative
Benjamin Graham was "all about numbers." Even today,  value investors all start with companies' publicly available financial information, and then move on only if they're satisfied with the public numbers, said Eveillard.

Warren Buffett added qualitative analysis on top of Graham's quantitative analysis, said Eveillard. For example, Buffett likes companies that have a "moat," a sustainable competitive advantage.

Comparing Graham and Buffett, Eveillard said that the Graham approach is much less time-consuming, though potentially less rewarding, than the Buffett approach. The First Eagle Funds started out in Graham style, then switched to Buffett's style after adding the analysts that enabled them to do the necessary research, said Eveillard.

The case for value investing
Eveillard gave two reasons for pursuing value investing. First, it makes sense. Second, it works over time. He doesn't buy the argument that value investing works only in the U.S. In fact, First Eagle has never opened offices overseas because it doesn't want to be influenced by how the locals think. Still, he noted, "There are few genuine value investors in the U.S., but even fewer outside the U.S."

Why so few value investors? For starters, it's hard work. "Sell-side research is seldom useful" because of its six- to 12-month time horizon, said Eveillard. When your time horizon is five years, it makes a big difference in how you look at a business. That's why First Eagle's 11 analysts are "the true heart of our operation," he said.

The psychological hurdle to value investing is even higher than the research hurdle. It's not easy sticking with value investing's long-term time horizon. That's especially true when it means your investment performance may lag its benchmark in the short-term. First Eagle lost seven out of 10 investors during the period when its performance lagged from Fall 1997 to Spring 2000, said Eveillard.

To be a value investor, "there has to be a willingness on the part of the investor to take the short-term pain." In addition, you have to be willing to move away from the herd when it's nearing the cliff, said Eveillard, citing Warren Buffett. Value investing takes a temperament that many lack.

If you'd like to learn more about Eveillard's views, he's scheduled to appear on Bloomberg TV on Wed., April 14 April 14 at 5 p.m. EST, according to the First Eagle Funds website.
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The next session of "How to Write Blog Posts People Will Read: A Five-Week Teleclass for Financial Advisors" starts April 22. Sign up to receive my free monthly newsletter.Copyright 2010 by Susan B. Weiner All rights reserved

Technical analysis of stocks can boost the power of your fundamental research

You can use technical analysis in combination with your firm's fundamental equity analysis to help decide when to buy or sell stocks. This is the message I took away from "Applying Technical Analysis to a Fundamental Investment Strategy," a March 23 presentation to the Boston Security Analysts Society by David Keller, who oversees technical analysis as a managing director of research for Fidelity Investments. 

Technical analysis is not voodoo science, throwing darts at a board, or even a prediction of the future, said Keller. Rather, it's a way to analyze supply and demand using patterns, he said.

Fundamental research and technical analysis tackle different parts of the decision to trade a stock. Here's how Keller described them.

1. Fundamental research analyzes the company for the what and why of buy and sell decisions.
2. Technical analysis analyzes the stock, looking purely at market activity for when and how to buy or sell

These two approaches overlap, in the opinion of Keller and the Fidelity portfolio managers who use his team's research. Technical research helps to identify the best time to execute a fundamental strategy, he said. You can think of technical analysis as a trigger, he said.  

When the results of technical analysis diverge from those of fundamental research, portfolio managers should pay attention, according to Keller. He referred to point and figure charts as "a gut check on how I look at individual stocks."

Relative strength indicators are among the most important technical indicators, Keller said. They can be warning signs, he added.

Keller's message was warmly received by members of the audience, most of whom raised their hands when asked if they regularly consulted technical indicators. 

Related post
* Fidelity's head of technical research addresses "Where will the stock market go from here?"
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The next session of "How to Write Blog Posts People Will Read: A Five-Week Teleclass for Financial Advisors" will start in April. For more information, sign up to receive "Information on upcoming classes, workshops, and other events" as well as my free monthly newsletter.
Copyright 2010 by Susan B. Weiner All rights reserved

Fidelity's head of technical research addresses "Where will the stock market go from here?"

Will the bull market continue? 

Investment professionals are always curious. So naturally the question came up during a Q&A session with David Keller, who oversees technical analysis as a managing director of research for Fidelity Investments. The question followed Keller's March 23 presentation to the Boston Security Analysts Society on "Applying Technical Analysis to a Fundamental Investment Strategy."

The bottom line: It appears that the market is in an uptrend and the offensive sectors will outperform their defensive peers. 

However, Keller framed his comments cautiously, saying that there is little evidence that the stock market is not in a sustained uptrend. Nor does he see evidence that the market is overbought.

"I can't say," replied Keller, when asked to identify his favorite sector. He's looking at groups that are traditionally considering offensive. "But it's not as clear cut as in the past," he said.


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The next session of "How to Write Blog Posts People Will Read: A Five-Week Teleclass for Financial Advisors" will start in April. For more information, sign up to receive "Information on upcoming classes, workshops, and other events" as well as my free monthly newsletter.
Copyright 2010 by Susan B. Weiner All rights reserved

J.P. Morgan Funds' measured optimism about U.S. economy

The economy is on a rebound, but it's a long way back to normal, said David P. Kelly, chief market strategist, J.P. Morgan Funds, to NICSA's East Coast Regional Meeting on Jan. 14, 2010. 

A Jupiter of a recession
Economists have seen recessions like 2008-2009 before. so they can predict the broad shape of the economic recovery, according to Kelly.

U.S. recessions are just like the solar system. There are big planets and little planets, but no medium planets, said Kelly. "This was a Jupiter among recessions," said Kelly. Even though it's the largest recession since World War II, it's not unprecedented. In fact, it's not that different in size from the recessions of 1957, 1980, and 1982. As a result, he foresees a robust recovery.

"The bigger the recession, the bigger the bounceback," said Kelly. 

Keys to U.S. economic growth 
The U.S. economy will rebound strongly because the following areas became so weak, they must bounce back, said Kelly.
1. Auto consumption
2. Residential construction
3. Equipment
4. Inventories 

Employment outlook 
Kelly made the following predictions

• Jobs will begin to grow in the first quarter of 2010, which will produce income to support economic expansion.
• Unemployment will rise as new jobs are created. This is because unemployment statistics are calculated using the number of people actively seeking jobs. People will return to the market as they see better prospects for success.
• It'll take five years to get back to full employment. Employment may rise to 9% by year-end 2010. 

More predictions by Kelly

• Corporate profits will improve. This is because of low costs, low interest rates, and especially because of the lack of upward pressure on wages. On the wage issue, Kelly quoted the singer Beyonce, saying that employees realize that employers know "I can have another you in a minute."
• The risk of deflation is greater than the risk of inflation.
• The biggest risks to Kelly's positive scenario are conflict with Iran, which would drive up oil prices; and  banks finding it difficult to lend due to regulation, taxes, and uncertainty about regulation and taxes.

Opportunities 

• It's not too late to get back into stocks. Some people worry that maybe they "missed the train." Davis' reply? "This is a very long train on a very long platform." He noted that stocks have recovered less than half of what they lost during the bear market. Also, there's a lot of cash on the side lines that will eventually flow back into the stock market. On the flip side, bonds have become more risky, so now is a good time to overweight stocks relative to bonds, he said.

• Non-U.S. economies will continue to outperform the U.S., and international stocks are cheaper than U.S. stocks. Also, a modest fall in the dollar will amplify gains somewhat for U.S. investors.
• During Q&A, Kelly said, "I think buying a house will turn out to be a good investment, even over the next five years."
• On the topic of gold, Kelly said he wouldn't put his mother into gold, even though the gold bubble has the potential to continue. The fundamentals don't support gold's price rise in 2009 because gold is supposed to appreciate in times of rising volatility and rising inflation. Meanwhile, volatility, as measured by the VIX has fallen and so has inflation. This bubble will eventually pop, he said.

Interesting graphs supported Kelly's presentations. Financial advisors who participate in the J.P. Morgan's Market Insights program can find the graphs in the firm's quarterly Guide to the Markets.
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Susan B. Weiner, CFA
Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.
Copyright 2010 by Susan B. Weiner All rights reserved

Funds using alternative investment strategies gain steam

Alternative investments that are less correlated to major market indexes are gathering momentum in the advisor community. Two trends are fueling the movement. First, the sharp market declines since September 2008 have boosted the attraction of strategies that don't dive along with stock market. "This year, people are looking to dial down risk in their portfolios," says Bill Harding, director of research at Morningstar Investment Services in Chicago. Second, these strategies are increasingly available to those who don't qualify as accredited investors (with investable assets of $1 million or more).

Continue reading "Against the Grain," my article in the March 2009 issue of Financial Planning magazine (free registration may be required for access).

Also, here's some information that didn't make it into the article. It's the list of funds used by the advisors whom I interviewed.

Absolute Opportunities
Absolute Strategies
Arbitrage
Diamond Hill Long-Short
Direxion Commodity Trends
Gateway
Highbridge Statistical Market Neutral
Hussman Strategic Growth
Merger
Nakoma Absolute Return
PIMCO CommodityRealReturn Strategy
Robeco Boston Partners Long/Short Equity
Rydex Managed Futures Strategy

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Susan B. Weiner, CFA
Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.
Copyright 2009 by Susan B. Weiner All rights reserved

"James Grant: A Positive Lesson from the Great Depression"

Great price tags on a number of investments are the silver lining of the current recession, according to James Grant, founder of Grant’s Interest Rate Observer. 

Grant shared his “Thoughts on the Financial Markets and the Current State of the Economy” with the Boston Security Analysts Society on February 11. He spoke at length about the virtues of value investing, as exemplified by the Depression era strategies of Floyd Odlum of Atlas Corporation. Today’s investors can learn from Odlum’s strategy of underpaying for assets, Grant said.

Continue reading "James Grant: A Positive Lesson from the Great Depression," my article in Advisor Perspectives.

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Susan B. Weiner, CFA
Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.
Copyright 2009 by Susan B. Weiner All rights reserved

Provocative quote about target date fund (TDF) advisers

Are target date fund advisers swayed by a conflict of interest?

On p. 41 of CFA Magazine (Jan./Feb. 2009), Mark Ruloff, director of asset allocation for Watson Wyatt Investment Consulting, says, "Advisers...are implementing the glidepath. They might have a bias toward keeping higher equity allocations longer because it helps their own fees.... There are legitimate reasons for advisers to arrive at different glide paths, but there's the appearance of a conflict of interest."

What do you think?

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Susan B. Weiner, CFA
Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.
Copyright 2009 by Susan B. Weiner All rights reserved

"Jeremy Siegel on why Equities are 'Dirt Cheap' ”

"I may be the lone optimist in this market," said Prof. Jeremy Siegel in a Q&A published in Advisor Perspectives. 

He was responding to a question about his Oct. 31 Yahoo finance column, in which he said, "I would be very surprised that if an investor who bought a diversified portfolio today did not make at least 20% or more on his investment in the next twelve months."

Are there any other optimists out there?


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Susan B. Weiner, CFA
Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.
Copyright 2008 by Susan B. Weiner All rights reserved

Independent investment research will suffer in the near term

The recent decline in commissions generated by buy-side equity trading will cut funding available for independent and sell-side investment research, according to "Integrity's Outlook for Independent Research." Michael Mayhew of Integrity Research Associates says that commissions are expected to fall by 40% next year.

However, there is a silver lining to this dark cloud. Integrity says, "However, once the dust settles (in late 2009 or early 2010) we anticipate that the market for investment research, and particularly non-traditional independent research, is likely to improve markedly." Why? Because buy-side research staffs will have shrunk and the supply of good research will be tighter.

Interested in more news like this? Visit Integrity ResearchWatch or  subscribe by email or RSS feed.


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Susan B. Weiner, CFA
Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.
Copyright 2008 by Susan B. Weiner All rights reserved

Prof. Andre Perold on "Stable Risk Portfolios: A Timely Alternative to Static Asset Allocations?"

Risk matters. October’s wild stock market swings have reminded investors that volatility can be painful. They simply can’t stomach as much risk as they thought they could.

In this environment, it’s no surprise that Professor André F. Perold’s October 21 talk on “Risk Stabilization and Asset Allocation” attracted a bigger than usual crowd to the monthly meeting of the Boston chapter of the Quantitative Work Alliance for Applied Finance, Education, and Wisdom, affectionately known as QWAFAFEW.

Perold’s premise: A stable-risk portfolio that keeps risk constant is a viable alternative to investors’ classic static policy portfolio, such as 60% stocks and 40% bonds, and it may offer superior risk-adjusted returns. 

Continue reading about stable risk portfolios in my Advisor Perspectives article.


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Susan B. Weiner, CFA
Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.
Copyright 2008 by Susan B. Weiner All rights reserved

Optimism watch: S&P 500 Index and major global events

If you have a long time horizon, you can survive just about anything. At least, that's the implication of a graph I looked at today.

Fidelity Investments is showing off a graph called "S&P 500 Index & Major Global Events" in "Putting Short-Term Market Turmoil in Perspective: U.S. stocks have proven resilient over the long term."

It's a graph of the S&P 500 index with major events from JFK's assassination in 1963 to this year's collapse of Bear Stearns.

The article concludes:  "U.S. stocks have proven to be resilient over the long term. A $10,000 hypothetical investment in a diversified mix of large-cap domestic stocks at the start of 1963 would have been worth more than $865,000 at the end of June 2008."

$865,000 is a nice big number. But how many investors think in terms of a 45-year time horizon? 

On the other hand, maybe that's the point. A 45-year time horizon isn't just for college kids. Even middle-aged folks may live another 45 years.

Does this graph give you comfort?
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Susan B. Weiner, CFA
Investment Writing
Writing that's an investment in your success

Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.

Optimism watch: "Could Bear Talk Be a Contrary Signal?"

"Doing the reverse of the crowd has often worked well," as New York Times columnist Floyd Norris points out in "Could Bear Talk Be a Contrary Signal?"

So the fact that consumers feel unusually gloomy about the stock market, according to the Conference Board's latest consumer confidence report, may bode well for stocks.

More than half of those polled expect stocks to decline over the next 12 months. However, as Norris reports:

In the past, there have been only six market cycles when the proportion of bears reached 36 percent. Five of them were excellent times to buy stocks, and the other one was followed by a decent return.

If you only want to read an optimistic spin on these numbers, do NOT read Mark Hulbert's "The Stars Have Yet To Align For Stocks," also published in The New York Times.

This blog post is part of a recently launched "Optimism watch" series on this blog.


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Susan B. Weiner, CFA
Investment Writing
Writing that's an investment in your success

Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.

Optimism watch: The case for maximum pessimism

Is the stock market getting you down? I'm starting an "Optimism watch" on this blog. 

In "Optimism watch" posts, I'll highlight the case that other writers make for you and your clients to hang in there.

Let's start with a quote from "Nowhere to Hide: Foreign Funds are Falling, Too," from Morningstar's Bridget Hughes.

...before you fall into deep despair, I'd remind you that the late Sir John Templeton made a highly successful career investing where he saw "maximum pessimism." We've been here before. Markets are cyclical. Keeping a truly long-term perspective (10 years or more) can be liberating, and you may realize this is a time to add to your holdings.

Related posts on the Investment Writing blog:

• "Cheer up your clients with views of Dallas Fed authors" 
• "Can you help your clients to control their fears?" 

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Susan B. Weiner, CFA
Investment Writing
Writing that's an investment in your success

Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.

Are buy-side analysts inferior?

Buy-side analysts aren't as good as sell-side analysts. At least not in the opinion of some researchers.

"...buy-side analysts made more optimistic and less accurate forecasts than their counterparts on the sell side," according to "Buy-Side vs. Sell-Side Analysts' Earnings Forecasts," an article by Boris Groysberg, Paul Healy, and Craig Chapman of Harvard Business School in the July/August issue of the Financial Analysts Journal.  

"The performance differences appear to be partially explained by the buy-side firm’s greater retention of poorly performing analysts and by differences in the performance benchmarks used to evaluate buy-side and sell-side analysts."

Do you buy the authors' conclusions?  

As of August 19, there's a poll on the right-hand side of this blog that will let you vote on the accuracy of buy-side vs. sell-side analysts. It's a temporary poll, so vote now! If you think the issues are too complex to be addressed by a poll, please add your comments below.


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Susan B. Weiner, CFA
Investment Writing
Writing that's an investment in your success

Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.

Useful quarter-end fact from The Wall Street Journal

Here is a useful tidbit for your quarterly investment commentary from the June 28-29 issue of The Wall Street Journal:

• Bear markets average 14 months and recover within a year of their bottom, according to Sam Stovall of S&P in "What to Do to Survive This Market"

The 14-month average is also cited in "Dow Hits Bear-Market Territory, Signaling Woe for Economy," but attributed to Ned Davis Research. It's accompanied by a graph showing the healthy gains the Dow has earned in the year following each bear market's end since the 1960s.
 
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Susan B. Weiner, CFA
Investment Writing
Writing that's an investment in your success

Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.

Time to invest in frontier market stocks

"If you remember China 20 years ago, you get a sense of the potential for frontier markets today." 

This quote from Larry Speidell, chief investment officer of Frontier Market Asset Management, kicks off my article on "Time to invest in frontier market stocks?" in Advisor Perspectives.

Are YOU ready to invest in frontier market stocks? Leave your comments here. 
 
_________________
Susan B. Weiner, CFA
Investment Writing
Writing that's an investment in your success

Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.