I have been struggling with the recent response to the Eurozone debt crisis. Quite simply, the EU has made it evident that they will print money to pay the debt of a member that is in trouble. Although this may seem reassuring in the short term, a basic problem exists. With much of the EU counties' debt denominated in Euros, this fundamentally ensures the devaluation of the Euro, to the detriment of global investors. By allowing debtor nations to pay back the debt with essentially devalued currency, the EU does little to ensure the fundamental economic reforms will happen in the weaker member nations, referred to as the PIGS (Portugal, Italy, Greece, and Spain, with honourable mention to Ireland).
We have seen how well received Greece's austerity measures have been. Less notice has been given to the electoral rebuff dealt to Angela Merckel on the weekend. Reforms will be unwelcome in both the weaker, and stronger states of the Euro.
If that is not troubling enough, read this Financial Post article (CLICK HERE) on the emerging sovereign debt crisis in the US.
Stay tuned. This story is far from over!
Tuesday, May 11, 2010
Saturday, May 1, 2010
Seasonal Investing Interview
This morning, I am interviewing Brooke Thackray, author of several books, about his work on seasonal investing. Tune in to hear his thoughts on the following;
What is seasonal investing?
What causes the seasonal fluctuations in the market place?
Does it always work?
Does seasonal investing only work in the stock market?
What are some of the seasonal trends at this time?
Are there any seasonal investments in the summer time?
How long does the average seasonal trade last?
How can an average investor profit from seasonal investing?
If you would like a copy of his book, I have a limited supply available...send me an email with your name and address!
What is seasonal investing?
What causes the seasonal fluctuations in the market place?
Does it always work?
Does seasonal investing only work in the stock market?
What are some of the seasonal trends at this time?
Are there any seasonal investments in the summer time?
How long does the average seasonal trade last?
How can an average investor profit from seasonal investing?
If you would like a copy of his book, I have a limited supply available...send me an email with your name and address!
Wednesday, April 14, 2010
Loonie Soars
After flirting with parity for weeks, the Loonie closed the deal, ending above par with the greenback for the first time since 2008. This is another step in the apparently ineviitable march higher of our currency. In fact, the surging Loonie has meaningful implications for global investment choices by Canadian investors. Tune in this week, for Beyond Funds |Market Weekly, and I will discuss investment alternatives in a world where the strength of our currency may work against you
Tuesday, April 6, 2010
Why Bonds May Still Be Good For You
The Current & Future Environment For Fixed Income Markets & Investors:
Most new investment dollars put into mutual funds last year went to bonds. Most bonds across the board (provincials, corporates, high-yields, short-term, long-term, real return) rallied to a significant degree during 2009 due to a lowering rate environment, a contraction in credit spreads and lower than anticipated bond defaults. The outlook for long-dated federal, provincial and high-quality corporate bonds will be poor if we experience rising interest rates The Bank of Canada overnight lending rate has been drawn down to 0.25% - most analysts are expecting the rate to be upwardly adjusted in small increments during the years to come beginning Q3 of this year. With interest rates due to rise, what should an investor do?
Short-Term bonds and bond funds that were widely sold as money market alternatives may be a liability since while their durations are short, the quality of the issues is extremely high and thus more liable to rate increases.
How Can We Make Money in the Bond Market this Year and Years to Come?
Interest rates will be adjusted upward when overall economic conditions improve and GDP growth is also on the rise. At 0.25 percent, there really is nowhere to go but up, once the economic recovery gains traction. As we experience better overall economic conditions and improved GDP growth, defaults within high-yield bonds will decline. In relation lower credit quality investment-grade bonds, improved GDP growth and better overall economic conditions will mean credit qualities improve.
This means that the potentially negative effect of rising interest rates may well be off-set by the positive effect lower default rates have on high-yield bonds and the progression in credit quality, lower quality investment-grade corporate bonds experience, spurred by improved economic conditions.
Yet another consideration is that under these circumstances: It is anticipated that many high-yield bonds will become investment-grade (going from BB to BBB ratings) and become eligible for purchase by a variety of institutional purchasers (Pensions, Endowment Funds, Corporations etc...) increasing demand volume.
In other words, corporate and high yield bonds may be the ideal fixed income alternative in an improving economic environment.
Most new investment dollars put into mutual funds last year went to bonds. Most bonds across the board (provincials, corporates, high-yields, short-term, long-term, real return) rallied to a significant degree during 2009 due to a lowering rate environment, a contraction in credit spreads and lower than anticipated bond defaults. The outlook for long-dated federal, provincial and high-quality corporate bonds will be poor if we experience rising interest rates The Bank of Canada overnight lending rate has been drawn down to 0.25% - most analysts are expecting the rate to be upwardly adjusted in small increments during the years to come beginning Q3 of this year. With interest rates due to rise, what should an investor do?
Short-Term bonds and bond funds that were widely sold as money market alternatives may be a liability since while their durations are short, the quality of the issues is extremely high and thus more liable to rate increases.
How Can We Make Money in the Bond Market this Year and Years to Come?
Interest rates will be adjusted upward when overall economic conditions improve and GDP growth is also on the rise. At 0.25 percent, there really is nowhere to go but up, once the economic recovery gains traction. As we experience better overall economic conditions and improved GDP growth, defaults within high-yield bonds will decline. In relation lower credit quality investment-grade bonds, improved GDP growth and better overall economic conditions will mean credit qualities improve.
This means that the potentially negative effect of rising interest rates may well be off-set by the positive effect lower default rates have on high-yield bonds and the progression in credit quality, lower quality investment-grade corporate bonds experience, spurred by improved economic conditions.
Yet another consideration is that under these circumstances: It is anticipated that many high-yield bonds will become investment-grade (going from BB to BBB ratings) and become eligible for purchase by a variety of institutional purchasers (Pensions, Endowment Funds, Corporations etc...) increasing demand volume.
In other words, corporate and high yield bonds may be the ideal fixed income alternative in an improving economic environment.
Sunday, March 21, 2010
Building a New Strategy
Tune in this Saturday, to Beyond Funds Market Weekly, as I wrap up my ten themes for rebuilding your portfolio after the lost decade. Learn how you can strategize, with an advisor, to implement new and fresh ideas after the devastating markets of the first decade of this century. Your investment strategy may need to change after the lessons we have learned from the two major market meltdowns of the last ten years. Tune in next week to determine if you can benefit from a new and different approach to your financial future.
Learn how these 10 key themes matter to you;
1) Diversification means more than just stocks from around the world
2) Move up the balance sheet…consider bonds
3) Learn about convertible debentures as a stock alternative
4) Seg funds make sense to keep you in the market and secure your retirement income
5) Guarantee your principal with a strip bond
6) Look at ETFs as a mutual fund alternative
7) Buy at least one fun or interesting stock this year
8) Use covered calls to generate income
9) Look at a hedge fund for diversification
10) Take a serious look at the cost and performance of your mutual funds
Learn how these 10 key themes matter to you;
1) Diversification means more than just stocks from around the world
2) Move up the balance sheet…consider bonds
3) Learn about convertible debentures as a stock alternative
4) Seg funds make sense to keep you in the market and secure your retirement income
5) Guarantee your principal with a strip bond
6) Look at ETFs as a mutual fund alternative
7) Buy at least one fun or interesting stock this year
8) Use covered calls to generate income
9) Look at a hedge fund for diversification
10) Take a serious look at the cost and performance of your mutual funds
Saturday, March 13, 2010
Today's show
Key topics from today's show
I discussed the subject "What is a Hedge Fund?" and "Why Invest in Hedge Funds?"
Hedge funds can increase portfolio diversification and provide some protection against market downturns. A hedge fund is a private pool of assets with an investment objective to generate positive returns under all market conditions. It employs a wide range of financial instruments and alternative investment strategies. The fund depends less on market direction and more on the skill of the fund manager than long-only portfolios.
I then covered the defining characteristics of a hedge fund. A hedge fund tends to display a low correlation to traditional markt indices. It has an absolute return objective with no benchmark considerations. Typically, it pays a performance-related incentive fee to the fund manager in addition to a management fee. The manager pursues a wide variety of strategies such as concentrated positions, leverage, arbitrage, and stock shorting. These strategies are not for everyone, but are the principal reason hedge funds are able to minimize their correlation to the market.
Typically hedge funds are structured as a limited partnership. Since most hedge funds are privately placed, provincial investment minimums apply. This should be discussed with an advisor. If you wish to discuss one on one, visit http://www.jeffwareham.ca/, or email me at jwareham@mgisecurities.com
I discussed the subject "What is a Hedge Fund?" and "Why Invest in Hedge Funds?"
Hedge funds can increase portfolio diversification and provide some protection against market downturns. A hedge fund is a private pool of assets with an investment objective to generate positive returns under all market conditions. It employs a wide range of financial instruments and alternative investment strategies. The fund depends less on market direction and more on the skill of the fund manager than long-only portfolios.
I then covered the defining characteristics of a hedge fund. A hedge fund tends to display a low correlation to traditional markt indices. It has an absolute return objective with no benchmark considerations. Typically, it pays a performance-related incentive fee to the fund manager in addition to a management fee. The manager pursues a wide variety of strategies such as concentrated positions, leverage, arbitrage, and stock shorting. These strategies are not for everyone, but are the principal reason hedge funds are able to minimize their correlation to the market.
Typically hedge funds are structured as a limited partnership. Since most hedge funds are privately placed, provincial investment minimums apply. This should be discussed with an advisor. If you wish to discuss one on one, visit http://www.jeffwareham.ca/, or email me at jwareham@mgisecurities.com
Saturday, March 6, 2010
Next Saturday's Show
Thanks for tuning in to Beyond Funds Market Weekly.
Tune in Saturday at 9:30 A.M., for Beyond Funds Market Weekly. I will be continuing my discussion on lessons investors may learn from major pension plans. Many of the most important principles of investing are followed by pension plan administrators, and most traditional mutual fund strategies miss some, if not many, of these principles. Real estate, options, managed futures, commodities, and hedge funds are all financial instruments that may improve the overall risk adjusted return of your portfolio. Pension managers understand these principals, but I rarely see individual investors taking advantage of this opportunity to diversify. Tune in this Saturday, and learn how you, as an investor, may improve your returns, and reduce your risks, by following these basic principles..
Tune in Saturday at 9:30 A.M., for Beyond Funds Market Weekly. I will be continuing my discussion on lessons investors may learn from major pension plans. Many of the most important principles of investing are followed by pension plan administrators, and most traditional mutual fund strategies miss some, if not many, of these principles. Real estate, options, managed futures, commodities, and hedge funds are all financial instruments that may improve the overall risk adjusted return of your portfolio. Pension managers understand these principals, but I rarely see individual investors taking advantage of this opportunity to diversify. Tune in this Saturday, and learn how you, as an investor, may improve your returns, and reduce your risks, by following these basic principles..
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