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Posts Tagged ‘market’

If The Market Declined 15% . . .

Posted by Larry Doyle on October 28th, 2009 9:22 AM |

. . . would you be surprised? What would you do? What if the market declined by 20%? Would you be surprised? What would you do? How about if the market rose by 10% to 20%? Would you be surprised? I would.

The reason I ask these questions is an attempt to address the fundamental question as to what the market is telling us and what American consumers believe.

The equity market has traditionally been a reliable indicator of the future economy. The market provides a discounted valuation of future earnings. Those earnings drive companies and the economy at large.

As the market declines and prospects wane, businesses and consumers react accordingly. On the other side of the coin, as the market improves forecasting an improving economy, businesses and consumers react accordingly . . . until now. What is going on? (more…)

Poll Indicates Investing Has Declined Significantly

Posted by Larry Doyle on October 15th, 2009 3:56 PM |

Have you given up on the market? Do you not trust the financial industry? Have you stuffed your money under the mattress? To an ever increasing extent, more and more Americans have become more risk averse when it comes to investing.

Alix Partners, a consulting firm, produced Half of Americans Have Stopped or Reduced Investing and a Quarter Don’t Intend To Invest for at Least Three Years:

Americans will be investing significantly less in the future, according to a new survey released today by AlixPartners LLP, the global business advisory firm, indicating that the financial crisis is likely to have a significant impact on investor behavior over the next several years.

While the U.S. financial services industry is slowly recovering from its biggest losses in decades, investor confidence appears to be recuperating tepidly at best.  A staggering 49% of people surveyed who identified themselves as “previous investors” reported either having stopped or reduced investing in stocks or mutual funds and 26% said they had no intention of investing in these bedrock financial vehicles in the next three years. The survey also found that among higher-income households, those earning more than $75,000 per annum, 21% of previous investors reported having stopped investing altogether in stocks or mutual funds.  These results could point to a significant structural contraction in the market for financial services firms and financial advisors, while also suggesting that financial companies should be thinking about how to better focus their marketing dollars in today’s uncertain market.

“Investors who had placed their trust in the investment industry are cross, cautious and confused,” observed Clarence Hahn, AlixPartners’ Financial Services Improvement practice co-lead.   “And while the collective loss of wealth in the past year has had a deep impact psychologically as well as financially, the irony is that the lost wealth can only be rebuilt through participation in the markets.  Financial-advisory firms therefore have two key challenges:  to figure out who really is going to start investing again; and to win back trust by building into their offerings a level of oversight, due diligence and risk management that will eradicate the possibility of similar meltdowns in the future.”

While brokers and financial planners will need to figure out how to reengage with a client base that was often ill-served, I strongly believe individuals will need to assume a greater degree of the burden to truly understand the art of investing. What does that art entail?  Let’s start with the following:

1. Learn about risk: how to measure risk, how to identify risk, what are the risks in different investments.

2. Learn about the values of diversity across asset classes and regions.

3. Learn about the impact of policy implemented in Washington and the influence it has on Wall Street specifically and finance and investing in general.

4. Learn about the differences in fundamentals and technicals.

How do you start to undertake the above four steps?

5. Read Sense on Cents.

Don’t necessarily give up on investing. Get started on educating yourself.

LD

Why is George Soros Short the Euro? MUST READ!

Posted by Larry Doyle on March 3rd, 2009 6:10 AM |

In very short order, I have gained a deep respect and regard for our Economic All-Star, John Mauldin. I have come to appreciate that Mauldin and I view the market through the same lens focused on the global economy. While many media outlets focus on the day to day, if not hour to hour trading activity, I believe they are truly missing the forest for the trees.

While I have written twice over the last week about eastern Europe being the weakest link in the world of global finance, Mauldin and his colleague Niels Jensen of Absolute Return Partners provided insights and analysis that is numbing.

Why is George Soros short the euro? Let me provide a synopsis of Mauldin’s and Jensen’s “Europe On the Ropes.” Assuming those visiting Sense on Cents have an interest in the markets and economy, this piece is somewhat lengthy, but a MUST READ!! A link is provided at the end of my review. (more…)






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