We hope you’re enjoying our new blog. It’s written to keep our clients and friends updated on a few important things going on in the markets and economy. We will briefly summarize some of the articles we have read over the past week that help keep us informed. If you want to read the entire article, you can click on the link at the end of the summary.
ECRI Weekly Leading Indicator – The Economic Cycle Research Institute (ECRI) reports their weekly leading indicator each Friday. This indicator tells the general direction of the economy but it does not predict exactly when a recession may occur. We use it to follow the trend, which has been declining for the last three weeks. http://advisorperspectives.com/dshort/updates/ECRI-Weekly-Leading-Index.php
Diversification: Still The Only Free Lunch – This article by Adam Butler and Mike Philbrick discusses traditional diversification among many different asset classes compared to diversification based on correlations between asset classes. Since correlations vary over time and are not constant, a portfolio weighting has to be adjusted in order to control risk. This is what Invesco is doing with their balanced risk allocation fund. http://advisorperspectives.com/dshort/guest/BP-120509-Diversification.php
A Gold Standard? – John Mauldin has printed a copy of Jim Grant’s speech to the New York Federal Reserve. Grant has been very critical of the Federal Reserve’s policies. In his speech, Grant discusses the history of the gold standard, benefits of this standard, and why President Nixon took us off this standard in 1971. http://www.johnmauldin.com/frontlinethoughts/a-gold-standard
The Big Picture – One news column we read every morning is called the Big Picture and is published in Investor’s Business Daily or online at Investors.com. This column gives a very short but informative overview of the market for the prior day and the current outlook. Unfortunately, this is not a free publication but the subscription is reasonable. http://news.investors.com/article/610784/201205081900/stocks-lose-ground-but-end-well-off-lows.htm
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John R. Day and Bill W. Ennis