Articles You Can Send Clients (August 26, 2009)

Tuesday, August 10th, 2010

Dur­ing the last week there has been a great deal of inter­est­ing and unusual but pos­i­tive com­men­tary about the upturn in the mar­ket and the economy.

In our first selec­tions this week, Las­zlo Birinyi, who runs an excel­lent asset man­age­ment shop, a long-time con­trib­u­tor to Forbes Mag­a­zine, and runs Tick​ersense​.com, com­ments that the mar­ket rally is a sig­nal that the eco­nomic recov­ery will be far stronger than fore­cast­ers’ con­sen­sus esti­mates. In a fol­low up arti­cle, Birinyi says that wait­ing for an econ­omy Roubini can believe in means miss­ing rally.

Birinyi Says Stocks Rally Sig­nals Eco­nomic Rebound, August 24, 2009, Bloomberg​.com

Birinyi said on May 20 that the S&P 500 would climb to a record 1,700 in the next two or three years, a 66 per­cent gain from its cur­rent level. The index has ral­lied 14 per­cent since his fore­cast. The bench­mark for U.S. stocks may rise 6 per­cent to 1,087 within the next three months “if it con­tin­ues to progress at the rate it’s been pro­gress­ing,” he said

Wait­ing for Econ­omy Roubini Can Believe In Means Miss­ing Rally, August 26, 2009, Bloomberg​.com

“We’re look­ing at a bull cycle in phase one,” Las­zlo Birinyi said in a tele­phone inter­view yes­ter­day. Birinyi was the top-ranked Dow Jones Indus­trial Aver­age fore­caster for most of the 1990s on PBS’s “Wall Street Week with Louis Rukeyser.” “No one wants to come out and say, ‘This is a bull mar­ket.’ Everyone’s just danc­ing around the term,” he said.

John Lip­sky, First Deputy Man­ag­ing Direc­tor at the IMF states that there are ‘Clear’ signs of a global rebound under way.

IMF’s Lip­sky Sees ‘Clear Signs’ of a Global Rebound, Bloomberg​.com, August 24, 2009

The global econ­omy is show­ing “clear” signs of a rebound and cen­tral banks are unlikely to raise bor­row­ing costs for many months, the Inter­na­tional Mon­e­tary Fund’s No. 2 offi­cial said.

“The signs are clear — if still ten­ta­tive — of renewed growth,” John Lip­sky, the IMF’s first deputy man­ag­ing direc­tor, wrote today on its Web site. “With infla­tion threats dis­tant, there is lit­tle doubt that cen­tral bankers intend to keep pol­icy inter­est rates very low for some time to come.”

Ken­neth Rogoff, for­mer Chief Econ­o­mist, IMF and Har­vard U Prof says “There is no ques­tion the global econ­omy is heal­ing and emerg­ing from reces­sion,” in an Bloomberg TV inter­view August 21, 2009.

World Econ­omy Emerg­ing From Worst Reces­sion Since World War II, Bloomberg, August 22, 2009

The global econ­omy may be com­ing out of the worst reces­sion since World War II as record-low inter­est rates and tril­lions of dol­lars in fis­cal stim­u­lus spur demand.

Sales of exist­ing U.S. homes jumped in July to the high­est level since August 2007, and Ger­man ser­vice indus­tries expanded this month for the first time in almost a year, reports yes­ter­day showed. The Japan­ese econ­omy grew for the first time in five quar­ters, accord­ing to a report ear­lier this week.

Next, and most dear to Cana­dian investors, there has been excel­lent news on the retail sales and bank­ing front at home. Stew­art Hall, Econ­o­mist for HSBC Canada says “All in, the month of June is shap­ing up nicely with man­u­fac­tur­ing, whole­sale and now retail sales all post­ing upside sur­prises and sug­gest­ing that the econ­omy is sta­bi­liz­ing and begin­ning to tran­si­tion over to the recov­ery phase.”

Surg­ing retail sales lift hopes for Canada econ­omy, Thom­son Reuters, August 24, 2009

Cana­dian retail sales grew much faster than expected in June, the lat­est in a series of upbeat eco­nomic num­bers to raise hopes the econ­omy is pulling out of recession.

Sales jumped 1 per­cent from May, far sur­pass­ing fore­casts for a 0.2 per­cent increase, Sta­tis­tics Canada said on Monday.

But much of the gain was due to ris­ing prices, espe­cially for gaso­line, while the vol­ume of sales inched up by just 0.4 percent.

Sales were down 4.4 per­cent from a year earlier.

The report points to a recov­ery in con­sumer demand dur­ing the sec­ond quar­ter, after two straight quar­ters of sharp declines in spending.

“All in, the month of June is shap­ing up nicely with man­u­fac­tur­ing, whole­sale and now retail sales all post­ing upside sur­prises and sug­gest­ing that the econ­omy is sta­bi­liz­ing and begin­ning to tran­si­tion over to the recov­ery phase,” said Stew­art Hall, an econ­o­mist at HSBC Canada.

Our long stand­ing love affair with our banks stocks have been war­ranted all along despite last year’s losses. BMO’s report today indi­cates that  loan defaults have peaked, as BMO reported lower than expected loan loss pro­vi­sions and $1 per share in today’s earn­ings report.

BMO Shows Credit Storm is Pass­ing, Andrew Willis, Globe and Mail, August 26, 2009

Better-than-expected loan per­for­mance at Bank of Mon­treal is expected to boost all the Cana­dian banks, as ana­lysts pre­dict indi­vid­ual loan defaults have peaked.

Bank of Mon­treal (BMO-T) turned in earn­ings of $1 a share on Tues­day, well above the con­sen­sus fore­cast of 90 cents. Ana­lyst John Aiken at Dundee Secu­ri­ties said: “The big sur­prise in the quar­ter was spe­cific pro­vi­sions of $357-million, well below expec­ta­tions of above $400-million.”

Finally, a video fea­tur­ing George Vasic, ana­lyst from UBS:

Div­i­dend Stocks: Get Paid to Wait for a Rebound, George Vasic and Rob Car­rick, August 19, 2009

You also get tax ben­e­fits and sta­bil­ity, says George Vasic, equity strate­gist at UBS Securities.

If you have any arti­cles to con­tribute to our weekly “Arti­cles You Can Send to Clients” fea­ture, please for­ward them to info@greenlightadvisor.com.

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Tags: Central Banks, Consensus Estimates, Dow Jones, Economic Rebound, Economic Recovery, Forbes Magazine, Forecasters, Global Economy, Imf, International Monetary Fund, John Lipsky, Laszlo Birinyi, Market Rally, Phase One, Roubini, Telephone Interview, Time Contributor, Upturn, Wall Street Week, Wall Street Week With Louis Rukeyser
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More Articles to Send Anxious Clients

Wednesday, July 14th, 2010

Last week’s post with arti­cles to send ner­vous clients got a great response.

In light of that, here are more arti­cles from this weekend’s Barron’s , New York Times and Wall Street Jour­nal that might reas­sure anx­ious clients.

First, the Chief Invest­ment Offi­cer of Har­ris Pri­vate Bank in Chicago looks at val­u­a­tion, the econ­omy, liq­uid­ity, psy­chol­ogy and momen­tum to make a strong case for U.S. equities.

Bar​rons​.com – For Stocks, the Signs Point Up

And the cover story in today’s Barron’s out­lines how the high­est qual­ity stocks have lagged in the recent run up – but are posi­tioned to out­per­form going forward.

Bar​rons​.com – Qual­ity Counts

A story in Saturday’s Wall Street Jour­nal high­lighted the first upturn in man­u­fac­tur­ing in nine months – with no signs of accom­pa­ny­ing infla­tion pressures.

WSJ​.com – Indus­trial Out­put Climbs, While Prices Stay Steady

An arti­cle in last week’s New York Times reported on a pos­i­tive out­look from the Fed­eral Reserve Board.

BUSINESS / ECONOMY | August 13, 2009
Fed Views Reces­sion as Near an End

And on Fri­day the New York Times also reported on pos­i­tive indi­ca­tions for global trade.

BUSINESS / ECONOMY | August 15, 2009
Off the Charts:  Hints of a Rebound in Global Trade

For more arti­cles to email clients, every Wednes­day Green​ligh​tad​vi​sor​.com posts arti­cles from the pre­vi­ous week to their website.

For last Wednesday’s arti­cles, click here:

http://​green​ligh​tad​vi​sor​.com/​a​d​v​i​s​o​r​/​?​p​=​548

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Tags: August 15, Barron, Board Business, Business Economy, Chief Investment Officer, Email Clients, Federal Reserve, Federal Reserve Board, Global Trade Business, Inflation Pressures, Liquidity, New York Times, Nine Months, Positive Outlook, Private Bank, Quality Stocks, Recession, Upturn, Wall Street Journal, Wsj
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Articles You Can Send Clients (August 12, 2009) — Quality, Quality, Quality

Wednesday, June 30th, 2010

Each Wednes­day we are send­ing you 3 arti­cles you can send to clients to stay in touch and to pro­mote open lines of com­mu­ni­ca­tion with them. Its espe­cially dif­fi­cult to be moti­va­tional when there is so much skep­ti­cism about the econ­omy and the mar­ket. When the mar­ket was a scream­ing buy, clients were not exactly beat­ing down your door, and now that the mar­ket has had a mas­sive rally, the skep­ti­cism turns back to down­side concerns.

This is what the leg­endary investor Jeremy Grantham, founder of Boston-based GMO, referred to as rigor mor­tis, the immo­bi­liza­tion that sets in, and what to do about in his pre­scient and res­o­nant March 2009 newslet­ter, “Rein­vest­ing When Ter­ri­fied.” In late July, Grantham fol­lowed up on his views of what to do at this stage of the market’s advance, mostly by dis­cussing what he is doing and why, in “Bor­ing Fair Price!,” and shares his Plan C, What to do if the mar­ket overruns:

Plan C: What to do if the Mar­ket Over­runs
Given our view that we are in for seven lean years in which the mar­ket will be look­ing for an excuse to be cheap, we rec­om­mend tak­ing some risk units off the table, includ­ing becom­ing under­weight in equi­ties – between 1000 and 1100 on the S&P, if it gets there this year. Around 880 you should con­tinue to move slowly to fair value, twid­dle your thumbs, and wait to see what hap­pens. Boring!

Oth­er­wise, it is time to focus on the lesser issues: which types of equi­ties are cheaper or more expen­sive than the mar­ket. This leads us back once again to the bet on qual­ity stocks.

This week I thought it would be inter­est­ing to focus on some thought pro­vok­ing, but pos­i­tively bal­anced sub­jects of dis­ci­pline and direc­tion. Ideas, that is, that would spur calls to action. This week’s selec­tion is about the impor­tance of Qual­ity in invest­ing, now and timelessly.

Jeremy Grantham, a quiet giant in the pan­theon of great investors says this week, in Reuters, that the time has come to focus on qual­ity and value, and get rid of junk. Seems like a log­i­cal thing to do, but nat­u­rally it is not. Get­ting out of invest­ments that have had a strong run is emo­tion­ally very dif­fi­cult, and then tak­ing the pro­ceeds and putting them to work in high qual­ity assets, but have under­per­formed the mar­ket, is even more dif­fi­cult. Sep­a­rat­ing the wheat from the chaff is an idea that is eas­ier said than done.

In short, Grantham says its time to be “long qual­ity, and short junk,” as those stocks and bonds that were most bat­tered in the cri­sis had the best performance.

Qual­ity in focus after investor binge on cheap assets, Reuters, August 11, 2009

U.S. investor GMO cal­cu­lates that the 40 stocks in the S&P 500 with prices above $50 ral­lied 21 per­cent on aver­age between March and April. The 50 stocks with prices below $5 ral­lied 115 percent.

Credit mar­kets have seen a sim­i­lar trend with Bank of America-Merrill Lynch’s once bat­tered global high-yield bond index gain­ing some 45 per­cent since March.

Now, how­ever, investors are look­ing for the cream to rise to the top.

“Long qual­ity (or long qual­ity and short junk) is sub­stan­tially the most out­ly­ing bet avail­able today in all global equi­ties,” GMO Chair­man Jeremy Grantham wrote to the firm’s clients.

By the way, Grantham’s new focus is high qual­ity energy and energy tran­si­tion stocks. This is all cov­ered in “Bor­ing Fair Price!”

It should be obvi­ous from sim­ple arith­metic that pop­u­la­tion growth is on a direct col­li­sion course with increas­ingly scarce resources. For mil­len­nia, food con­straints held the world’s pop­u­la­tion nearly con­stant. About 12,000 years ago, these con­straints were altered sig­nifi cantly with the start of orga­nized agri­cul­ture. Then, around 200 years ago, the so-called Agri­cul­tural Rev­o­lu­tion – the intro­duc­tion of sci­ence to farm­ing – allowed for another dou­bling in out­put. All of this was dwarfed, how­ever, by the har­ness­ing of hydro­car­bons – the sun’s energy stored over hun­dreds of mil­lions of years. This remark­able pat­ri­mony is now about half gone, and some time in the next 10 to 40 years, half of all of our resources will have been used or, stated another way, one last dou­bling will remain.

David Rosen­berg, Gluskin Sheff’s Chief Mar­ket Econ­o­mist, attests to the over­bought nature of low qual­ity stocks in this rally with these facts in his July 27th notes:

• The 50 small­est stocks have rebounded 17.2% from their nearby July 10th lows, out­per­form­ing the largest 50 stocks by 750 basis points.
• The 50 most shorted stocks have ral­lied 17.6%, out­per­form­ing the 50 least shorted stocks by 880 basis points (over the same time frame).
• The 50 stocks with the low­est ana­lyst rat­ings have out­per­formed the 50 with the high­est rat­ings by 380 basis points.
• 85% of the mar­ket has already bro­ken above their 50-day mov­ing aver­ages, which in some sense high­lights an over­bought mar­ket, but the other three fac­toids still attest to a low-quality rally.

Bloomberg reports that the US econ­omy is defy­ing its most irrefutable skep­tics by turn­ing around, that the Obama stim­u­lus is working:

U.S. Enters Recov­ery as Stim­u­lus Refutes Skep­tics (Update1), Bloomberg​.com, August 12, 2009

Recov­ery from the worst reces­sion since the 1930s has begun as Pres­i­dent Barack Obama’s fis­cal stim­u­lus — derided as insuf­fi­cient and budget-busting months ago — takes effect, a sur­vey of econ­o­mists indicated.

The econ­omy will expand 2 per­cent or more in four straight quar­ters through June, the first such streak in more than four years, accord­ing to the median of 53 fore­casts in the monthly Bloomberg News sur­vey. Ana­lysts lifted their esti­mate for the third quar­ter by 1.2 per­cent­age points com­pared with July, the biggest such boost in sur­veys dat­ing from May 2003.

“We’ve averted the worst, and there are clear signs the stim­u­lus is work­ing,” said Ken­neth Gold­stein, an econ­o­mist at the Con­fer­ence Board in New York.

The new pro­jec­tions, fol­low­ing better-than-anticipated reports on man­u­fac­tur­ing, employ­ment and home con­struc­tion, echo gains in investor con­fi­dence that have pro­pelled the Stan­dard & Poor’s 500 Stock Index to its high for the year.

Finally, high qual­ity dividend-paying stocks have under­per­formed the mar­ket dur­ing the recov­ery, and while they are never a sure bet, div­i­dends and the abil­ity to main­tain one, serve as evi­dence of a company’s rel­a­tive strength and qual­ity. Con­sider wad­ing into dividend-paying stocks or funds as a way to get into the mar­ket at a time when focus is shift­ing towards being “long quality.”

Stock Div­i­dends Make a Dif­fer­ence, Wall Street Jour­nal (via Yahoo, with­out a sub), August 12, 2009

As the stock mar­ket con­tin­ues to recover, more investors are eas­ing back into the mar­ket. While stocks have had a good run, they remain well off their record lev­els reached in 2007.

Given the car­nage of the past two years, it’s unsur­pris­ing that some peo­ple are hes­i­tant to invest in the stock mar­ket. One strat­egy to con­sider when wad­ing back in is to look at dividend-paying stocks. Such stocks, or mutual funds that focus on dividend-paying stocks, often called “equity income” funds, pro­vide you with an income (the div­i­dend) while giv­ing you a chance to ben­e­fit from cap­i­tal appre­ci­a­tion of the stock.

Beyond the div­i­dend income, there are sev­eral rea­sons for invest­ing in dividend-paying stocks. One, com­pa­nies that can main­tain or even increase their div­i­dend pay­outs in the cur­rent envi­ron­ment are prov­ing their strength. Also, in the wake of var­i­ous account­ing scan­dals, a steady div­i­dend is proof that a com­pany is actu­ally mak­ing the money it says it is mak­ing. While accoun­tants can fudge lots of num­bers in a quar­terly finan­cial state­ment, they can’t con­jure up the cash required to make div­i­dend payments.

Update: Globe and Mail’s David Berman asks how much longer this low-quality rally can last? No div­i­dend, low growth: Big returns: But how long can low-quality stocks lead the mar­ket?

On a final note, we would love to hear from you with your sug­ges­tions and your feed­back, as well as arti­cle sub­mis­sions. Please let us know if there are some other areas that we could help you to cover. Thank you!

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Tags: Amp, Bet, Discipline, Downside, Excuse, Gmo, Immobilization, Investor, Jeremy Grantham, Lean Years, Massive Rally, Overruns, Pantheon, Quality Quality, Quality Stocks, Quiet Giant, Reuters, Rigor Mortis, Skepticism, Underweight
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Articles You Can Send Clients (September 2, 2009)

Thursday, May 6th, 2010

Dur­ing the last week, mar­kets have been volatile, and have been accom­pa­nied by ris­ing con­cerns about the sus­tain­abil­ity of the rally in the con­text of earn­ings and eco­nomic growth. On one hand, Mer­rill Lynch reports fund man­agers have been buy­ing this rally in a big way, and on the other hand TrimTabs, an inde­pen­dent invest­ment research firm, reports that cor­po­rate insid­ers are sell­ing stakes at lev­els not seen since June 2004. Its hard to know if the mar­ket can sus­tain the rally or suc­cumb to a profit-taking blow-off of some kind. It may indeed be time to take some money off the table, given the 50% equi­ties run-up we’ve seen since March.

In this week’s selec­tion of arti­cles you can send we high­light Canada’s rel­a­tive strengths, given that it is the invest­ment focus of your clients. So much of what hap­pens here rests on what hap­pens south of the bor­der, but there are indi­ca­tions that Canada is in a posi­tion to pull away from US related woes, because of our stronger fis­cal posi­tion and bank­ing sys­tem, mas­sive com­modi­ties base, and the inter­est in both by large for­eign investors, for exam­ple China.

Macleans Mag­a­zine fea­tures “Our Big Chance,” an excel­lent arti­cle about our chance as a coun­try to shine, to pull away from the rest of the west­ern world. Our bank­ing finances, fis­cal posi­tion are stronger. Hous­ing has sta­bi­lized, and our dis­pos­able incomes are ris­ing, all this while the rest of the west is floun­der­ing under moun­tains of debt. And, we have what the fastest grow­ing coun­tries of the world need. In fact, for this last rea­son, we do, per­haps, need to real­ize as a nation of investors, that we need to pro­tect our great­est assets by fund­ing them and own­ing them our­selves. I’m not sug­gest­ing for one sec­ond that we adopt a pro­tec­tion­ist stance, but lets stop giv­ing away our best busi­nesses and resources to drag­ons in return for fund­ing, and start sup­port­ing and spon­sor­ing them our­selves. Let’s lead, not fol­low, for­eign­ers into our markets.

Our big chance, Macleans Mag­a­zine, August 27, 2009

For Canada, a coun­try that has spent the bet­ter part of 20 years ner­vously wring­ing its hands over its per­ceived inad­e­qua­cies, the dra­matic rever­sal over the past year has been strik­ing. Our banks were once seen as lack­ing inno­va­tion; now world lead­ers hail the bor­ing Big Five as being among some of the safest and most prof­itable banks in the world. We fret­ted that our econ­omy was overly reliant on com­modi­ties; now our rocks, oil and gas are seen as a nat­ural hedge against havoc in the man­u­fac­tur­ing sec­tor. We wor­ried that Canada’s strict mort­gage rules were a drag on our hous­ing mar­ket; now we can brag that we don’t put peo­ple into homes they can’t afford. Almost any way you look at it, Canada is uniquely posi­tioned. So as other devel­oped nations strug­gle, the ques­tion is: will we squan­der this once-in-a-generation oppor­tu­nity or take advan­tage of our good for­tune to punch above our weight?”

Bloomberg reports that Cana­dian credit mar­kets, are return­ing to nor­mal well ahead of the U.S. and U.K.

Canada Loans Rebound as Gov­ern­ment Pares Liq­uid­ity, Bloomberg, Sep­tem­ber 1, 2009

The report sug­gests nor­mal credit mar­kets are return­ing after the fed­eral gov­ern­ment and the Bank of Canada offered emer­gency cash to pull the coun­try through the worst global credit cri­sis since the Great Depres­sion. Com­pa­nies took advan­tage of “favor­able bond rates” and con­sumers bor­rowed to buy new homes and cars, the report said.

“Canada remains head and shoul­ders above a num­ber of other mar­kets such as the U.S. and U.K. by way of the func­tion­ing of over­all finan­cial mar­kets,” said Derek Holt, an econ­o­mist at Sco­tia Cap­i­tal in Toronto, in a note to clients

Finally, here is an indi­ca­tion, that over the longer term, we should take greater inter­est in what is in our own back­yard. The arti­cle itself is old news already, but the point here is, of course, that for­eign­ers may see more value in our assets right now than we do. In the case of the Chi­nese, they are going around the planet and buy­ing up these and our assets indis­crim­i­nately. Con­sid­er­ing this, Canada is, geo-politically, the safest coun­try on the planet to invest par­tic­u­larly in energy and com­mod­ity assets.

His­tor­i­cally, we have a well-noted record for sell­ing some of our key busi­nesses and nat­ural resources to for­eign­ers in return for long term fund­ing. For­eign investors seem to have more faith than Cana­di­ans, where long term invest­ment is con­cerned. It recalls one of my favourite quotes by Don Coxe, sev­eral years ago, when dis­cussing the oil and gas com­pany execs who sold out their stakes too early as energy prices were rising.

“The peo­ple who know it the best, like it the least.” - Don­ald Coxe, Coxe Advi­sors LLC (then BMO Har­ris Chief Invest­ment Strate­gist), refer­ring to oil patch exec­u­tives, though there is a uni­ver­sal­ity to it.

PetroChina Agrees Biggest North Amer­ica Acqui­si­tion, Bloomberg, Sep­tem­ber 1, 2009.

PetroChina Co. has agreed to pay C$1.9 bil­lion ($1.7 bil­lion) for a stake in a Cana­dian oil sands project in its biggest North Amer­i­can acqui­si­tion, widen­ing the search for energy resources overseas.

China’s largest oil com­pany will buy 60 per­cent of Athabasca Oil Sands Corp.’s MacKay River and Dover oil-sands projects, the Cana­dian com­pany said in a state­ment yesterday.

Feel free to take this and mod­ify it to your lik­ing in the event you want to use it.

Have a great month and every success!

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Tags: Banking System, Commodities, Corporate Insiders, Countries Of The World, Disposable Incomes, Dragons, Economic Growth, Fiscal Position, Foreign Investors, Foreigners, Fund Managers, Independent Investment Research, Investment Focus, Macleans Magazine, Merrill Lynch, Protectionist Stance, Rally, Relative Strengths, Sustainability, Woes
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4 Articles to Send Nervous Clients

Tuesday, March 30th, 2010

Even with the mar­ket bounce­back in 2009, many clients are still anx­ious, often stem­ming from neg­a­tive media cov­er­age of prospects for the econ­omy and markets.

If you run into this, here are recent arti­cles that might help calm ner­vous clients.

Emerg­ing mar­kets soar past their doubters

New York Times — Tues­day Decem­ber 29

http://​www​.nytimes​.com/​2​0​0​9​/​1​2​/​3​0​/​b​u​s​i​n​e​s​s​/​g​l​o​b​a​l​/​3​0​e​m​e​r​g​e​.​h​t​m​l​?​t​h​&​a​m​p​;​e​m​c​=th

Jeremy Siegel on the Under­val­u­a­tion in US equities

Advi­sor Per­spec­tives — Tues­day Decem­ber 29

http://​www​.advi​sor​per​spec​tives​.com/​n​e​w​s​l​e​t​t​e​r​s​0​/​J​e​r​e​m​y​_​S​i​e​g​e​l​_​o​n​_​t​h​e​_​U​n​d​e​r​v​a​l​u​a​t​i​o​n​_​i​n​_​U​S​_​E​q​u​i​t​i​e​s​.​php

The best is yet to come — the full ben­e­fits of tech­nol­ogy are on their way

Wall Street Jour­nal — Mon­day, Decem­ber 28

http://​online​.wsj​.com/​a​r​t​i​c​l​e​/​S​B​1​0​0​0​1​4​2​4​0​5​2​7​4​8​7​0​4​9​0​5​7​0​4​5​7​4​6​2​3​2​2​1​3​2​2​2​3​4​8​5​0​.​h​t​m​l​?​m​o​d​=​d​jem

The case for opti­mism on the economy

Wall Street Jour­nal — Tues­day Decem­ber 15

WSJ​.com — Opin­ion: The Case for Opti­mism on the Economy



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Three Articles You Can Send to Nervous Clients

Wednesday, March 10th, 2010

Despite the more pos­i­tive tone to mar­kets, anx­i­ety is still high among many Canadians.

Here are three arti­cles from this past weekend’s Barron’s, New York Times and Wall Street Jour­nal to reas­sure ner­vous clients.

On Sat­ur­day, the Wall Street Jour­nal  wrote that “the U.S. economy’s nat­ural heal­ing ten­den­cies are assert­ing them­selves and the Amer­i­can econ­omy is poised for a rebound.”

WSJ​.com – Opin­ion: A Jobs Bottom

Also on Sat­ur­day, an arti­cle in the New York Times out­lines how a recov­ery is under­way, in large mea­sure due to U.S. actions to fore­stall a more seri­ous eco­nomic decline. 

BUSINESS   | August 08, 2009
Eco­nomic Scene:  As Econ­omy Turns, Wash­ing­ton Looks Bet­ter
By DAVID LEONHARDT

Finally, today fea­tures pos­i­tive com­ments in Barron’s from the chief global equity strate­gist at the Mer­rill Lynch unit of Bank of America.

Bar​rons​.com – Bid­ding Farewell to the Reces­sion*

As well, here are recent inter­views with Whar­ton finance pro­fes­sors Franklin Allen and Jeremy Siegel offer­ing con­trast­ing reac­tions to the large second-quarter prof­its at Gold­man Sachs and J.P. Mor­gan.
Wall Street Report.http://​knowl​edge​.whar​ton​.upenn​.edu/​i​n​d​e​x​.​c​f​m​?​f​a​=​v​i​e​w​f​e​a​t​u​r​e​&​a​m​p​;​i​d​=​2​291

On a dif­fer­ent topic, for clients con­sid­er­ing tak­ing advan­tage of beaten down U.S. real estate prices, here’s a use­ful arti­cle from last Friday’s New York Times.

YOUR MONEY   | August 08, 2009
Wealth Mat­ters:  There’s Value in Real Estate, if You Find Your Florida
By PAUL SULLIVAN
Seek places like the slump­ing Sun­shine State, where a rebound in real estate is more likely when baby boomers even­tu­ally begin to retire there.

Many advi­sors have got a  pos­i­tive response to arti­cles such as these emailed to clients. For advi­sors look­ing for a reg­u­lar source of arti­cles to email clients, every Wednes­day Green​ligh​tad​vi​sor​.com posts arti­cles from the pre­vi­ous week to their website.

For last Wednesday’s arti­cles, click here:

http://​green​ligh​tad​vi​sor​.com/​a​d​v​i​s​o​r​/​?​p​=​528

And if you’re look­ing for even more evi­dence that the worst is behind us, here are two more sto­ries from Saturday’s New York Times:

BUSINESS / ECONOMY   | August 08, 2009
Job Losses Slow, Sig­nal­ing Momen­tum for a Recov­ery
By LOUIS UCHITELLE and JACK HEALY
The most heart­en­ing employ­ment report since last sum­mer sug­gested on Fri­day that a recov­ery is under way despite the reluc­tance of the nation’s busi­nesses to resume hir­ing or even stop shed­ding jobs.

BUSINESS   | August 08, 2009
Stocks and Bonds:  Bulls Send Mar­kets to Heights Last Seen in 2008
By JACK HEALY
An unex­pected drop in the job­less rate and a profit at A.I.G. sent investors into a frenzy of buying.

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Tags: American Economy, Baby Boomers, Bank Of America, Bidding Farewell, David Leonhardt, Economic Decline, Economic Scene, Email Clients, Finance Professors, Franklin Allen, Global Equity, Goldman Sachs, Jeremy Siegel, Merrill Lynch, Paul Sullivan, Positive Tone, Quarter Profits, S Real Estate, Sunshine State, Wall Street Journal
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Articles You Can Send Your Clients (August 5, 2009)

Wednesday, March 10th, 2010

This last week has been marked with the con­tin­u­a­tion of the great melt-up in the mar­kets, with more con­fir­ma­tion com­ing from the mar­kets in the form of tried and true rules of thumb pass­ing a stamp of approval, such as Dow The­ory Let­ters call­ing of the bull mar­ket. In addi­tion, their has been renewed strength com­ing from the com­modi­ties sec­tor with oil prices creep­ing still higher, a rea­son for many Cana­dian investors to be happy. On the eco­nomic front, the Case Shiller Hous­ing Index reg­is­tered what some are say­ing is a bot­tom, and that was taken as very pos­i­tive news. Whether this is a sec­u­lar or cycli­cal “bull,” there are still rea­sons to believe that we are far from the end of this rally, at least for now.

Here are today’s arti­cles you can send clients. Our selec­tion arti­cles focuses on invest­ing fun­da­men­tals, con­fir­ma­tion of the com­modi­ties com­plex play from Nouriel Roubini, and the new val­ues required for “Buy and Hold” Investors.

Invest­ing fun­da­men­tals are an impor­tant area of focus, as it turns out that often the very best advice is the clas­si­cal advice, from none other than Ben­jamin Gra­ham, on how impor­tant it is that you pay the right price, the best price for equi­ties and other assets, no mat­ter the con­di­tions of the market.

Pricin­ples of Value Invest­ing Still Hold True, by Dan Richards, August 4, 2009

At a recent lunch with a group of finan­cial indus­try insid­ers, a debate arose over the top investor of all time.

Some of the names put for­ward were obvi­ous: War­ren Buf­fett, Peter Lynch, John Tem­ple­ton and George Soros; one con­trar­ian made the case for J.P. Mor­gan or the Roth­schilds. Per­son­ally, I was with the contrarian.

But when con­ver­sa­tion shifted to the most influ­en­tial investor, the one per­son whose beliefs most trans­formed the invest­ment pro­fes­sion, there was uni­ver­sal agree­ment on Ben­jamin Gra­ham, con­sid­ered the father of value invest­ing, yet a name unknown to the aver­age investor.

Nouriel Roubini, the her­alded perma-bear pro­fes­sor, and econ­o­mist from NYU and RGE Mon­i­tor, con­firms that com­mod­ity prices may rise in 2010:

Roubini says Com­modi­ties May Rise in 2010, Rebecca Keenan, Bloomberg

Com­mod­ity prices may extend their rally in 2010 as the global reces­sion abates, said Nouriel Roubini, the New York Uni­ver­sity econ­o­mist who pre­dicted the finan­cial crisis.

“As the global econ­omy goes toward growth as opposed to a reces­sion, you are going to see fur­ther increases in com­mod­ity prices espe­cially next year,” Roubini said today at the Dig­gers and Deal­ers min­ing con­fer­ence in Kal­go­or­lie, West­ern Aus­tralia. “There is now poten­tially light at the end of the tunnel.”

FT​.com pub­lished an excel­lent arti­cle about how “Buy and Hold” investors may have to adjust their mind­set to this mar­ket, and pro­vides the point of view of sev­eral of the mar­kets fore­most strategists:

Buy and Hold investors need to learn a new set of val­ues, David Stevenson

“Buy and hold” invest­ing – to cap­ture the long-term out­per­for­mance of west­ern equity mar­kets over other asset classes – is now being called into ques­tion by a num­ber of lead­ing ana­lysts, who sug­gest that a new approach to “value invest­ing” will deliver bet­ter returns.

In a chal­lenge to the received wis­dom of hold­ing stock mar­ket invest­ments for 20 years or more, to smooth out short-term volatil­ity, some sug­gest that mea­sures of cheap­ness can be used to make buy­ing deci­sions and enhance performance.

These new approaches have emerged from a series of FT Money inter­views with invest­ment strate­gists, econ­o­mists and aca­d­e­mics – now avail­able as a two-part audio doc­u­men­tary at www​.ft​.com/​m​o​n​e​y​s​how.

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Tags: Benjamin Graham, Canadian Investors, Case Shiller Housing Index, Commodities, Confirmation, Continuation, Dow Theory Letters, Economic Front, George Soros, Industry Insiders, J P Morgan, John Templeton, New Values, Nouriel Roubini, Oil Prices, Perma, Peter Lynch, Positive News, Rally, Rothschilds, Rules Of Thumb, Stamp Of Approval, Universal Agreement, Warren Buffett
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Articles You Can Send Clients (November 3, 2009)

Thursday, January 21st, 2010

This week’s ‘arti­cles you can send’ focus on 3 themes. First, Canada’s strength, par­tic­u­larly in the bank­ing sec­tor, and sec­ondly, argu­ments for why a strong Loonie isn’t such a bad thing. Last week we fea­tured David Rosenberg’s upbeat com­men­tary on the dol­lar; there have been oth­ers, BMO’s Sherry Cooper has made strong argu­ments in sup­port of the strong dol­lar. Finally, whether you believe we are in a bull mar­ket or bear mar­ket rally, we fea­ture the Buf­fett acqui­si­tion of Burling­ton North­ern, and the Dan Chung pro­file from Barron’s mag­a­zine, This Bull Isn’t Done.

Please do send us your arti­cle sub­mis­sions too. We would love to fea­ture your picks as well on a weekly basis.

North­ern Composure

By Dim­i­tra Defotis

Barron’s Mag­a­zine, Octo­ber 31, 2009

Yes, the shares of banks in the Great White North were badly bruised dur­ing last year’s global melt­down, but they deserved bet­ter. Thanks to strict reg­u­la­tion, Canada’s banks don’t make sub­prime loans, and a typ­i­cal mort­gage term is only five years, greatly mod­er­at­ing balance-sheet risk. The largest banks have a vir­tual monop­oly, con­trol­ling their regional mar­kets for res­i­den­tial mort­gages, credit cards, retail deposits and bro­ker­age ser­vices. With their stout bal­ance sheets and con­ser­v­a­tive bent, Canada’s banks look healthy. Indeed, a recent World Eco­nomic Forum report rated the Cana­dian bank­ing sys­tem as the world’s sound­est. In com­par­i­son, Switzer­land was No. 16. The U.S. limped in at No. 40, just behind Ger­many (at No. 39) and ahead of the U.K. (at No. 44).

Strong Cana­dian Dol­lar Good for Busi­ness, Quebec’s Gignac Says

By Fred­eric Tomesco and Chris Fournier

Bloomberg, Novem­ber 2, 2009

“A weak dol­lar such as the one we had for sev­eral years was a tax on pro­duc­tiv­ity,” Gignac, for­mer chief econ­o­mist at National Bank Finan­cial, a part of Canada’s sixth-largest bank, told reporters today in Mon­treal. It cost com­pa­nies up to 50 per­cent more to upgrade equip­ment to boost pro­duc­tiv­ity, he said. “Now that we are get­ting closer to par, com­pa­nies no longer have this tax.”

Scotiabank’s Waugh Says Cana­dian Dol­lar Helps Attract Employees

By Sean B. Pasternak

Bloomberg, Novem­ber 2, 2009

Bank of Nova Sco­tia Chief Exec­u­tive Offi­cer Richard Waugh said the ris­ing Cana­dian dol­lar is help­ing com­pa­nies attract top employ­ees abroad. “We have a strong Cana­dian dol­lar, so just like our hockey teams, we can afford bet­ter tal­ent,” said Waugh, speak­ing to reporters fol­low­ing a speech at the Cana­dian Club of Toronto today. Employ­ers can pro­vide “good vis­i­bil­ity of a long and suc­cess­ful career. The brain drain is over,” he said.

This Bull Isn’t Done

By Leslie Norton,

Barron’s Mag­a­zine, Novem­ber 2, 2009

DAN CHUNG IS BULLISH — AND, DEEP into third-quarter earn­ings sea­son, the num­bers bear him out. Many of his favorite com­pa­nies are beat­ing Wall Street fore­casts, but­tress­ing his belief that the stock mar­ket still has room to run.

“We’ll see more fun­da­men­tal upside [earn­ings] sur­prises in the third and fourth quar­ters, and the wall of cash on the side­lines” that’s fetch­ing “ter­ri­ble” yields will even­tu­ally spur investors back into the mar­ket, says the ami­able, ani­mated Chung, 47 years old. “A 5% real­lo­ca­tion from cash and short-term bonds could drive a 17% appre­ci­a­tion in the stock mar­ket,” he adds.

Berk­shire Buys Burling­ton in Buffett’s Biggest Deal

By Andrew Frye

Bloomberg, Novem­ber 3, 2009

Berk­shire has been build­ing a stake in the Fort Worth, Texas-based rail­road since 2006 as Buf­fett looked for what he called an “elephant”-sized acqui­si­tion allow­ing him to deploy his company’s cash hoard, which was more than $24 bil­lion at the end of June. Trains stand to become more com­pet­i­tive against trucks with fuel prices high, he has said.

“It is War­ren being War­ren, tak­ing advan­tage of a mar­ket that is soft at a time when the pos­si­bil­ity for com­pet­i­tive bids is rel­a­tively low,” said Tom Russo, a part­ner at Gard­ner Russo & Gard­ner, which holds Berk­shire shares. “He looks at this as a busi­ness that has advan­tages against other forms of transportation.”

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Articles You Can Send Clients (October 28, 2009)

Thursday, December 3rd, 2009

This weeks selec­tion is a the­matic group of arti­cles which focus on the Canada/Emerging Mar­kets theme.

The first three arti­cles are focused on a dis­cus­sion of strong Cana­dian fun­da­men­tals, and led by pro-Canada, pro-commodities argu­ments from David Rosen­berg, Chief Mar­kets Econ­o­mist, Gluskin Sheff. The sub­se­quent three arti­cles pro­vide strong indi­ca­tions of demand from emerg­ing mar­kets, par­tic­u­larly China, whose sav­ings are unequalled any­where in the world, where more cars are now sold than in the US, and an out­look from Merrill’s Fran­cisco Blanch that oil could reach $100 in the next year.

Mak­ing a case for Canada and com­modi­ties

This is where Cana­dian strength rel­a­tive to the United States comes into play — nearly 45 per cent of the TSX com­pos­ite index is in resources; almost triple the share in the United States. Almost 60 per cent of Canada’s exports are linked to the com­mod­ity sec­tor, roughly dou­ble the U.S. exposure.

This explains how it is that the Cana­dian equity mar­ket has man­aged to out­per­form the S&P 500 this year by a cool 2,000 basis points (in this sense, Canada is basi­cally a low-beta way to play the emerg­ing mar­kets via com­mod­ity exposure).

More­over, con­sid­er­ing that the Cana­dian dol­lar enjoys a 65-per-cent cor­re­la­tion with the CRB index, the added boost from the appre­ci­a­tion in the loonie means that an Amer­i­can investor putting money in Canada would have gar­nered a 28-per-cent gain on a currency-adjusted basis (ver­sus a 4.0-per-cent gain from the S&P 500).

Source:  http://​www​.the​globe​and​mail​.com/​g​l​o​b​e​-​i​n​v​e​s​t​o​r​/​i​n​v​e​s​t​m​e​n​t​-​i​d​e​a​s​/​f​e​a​t​u​r​e​s​/​e​x​p​e​r​t​s​-​p​o​d​i​u​m​/​m​a​k​i​n​g​-​a​-​c​a​s​e​-​f​o​r​-​c​a​n​a​d​a​-​a​n​d​-​c​o​m​m​o​d​i​t​i​e​s​/​a​r​t​i​c​l​e​1​3​0​7​6​53/

If a coun­try is too good to be true … then diversify

The Cana­dian stock mar­ket has been the star of the show over the past decade. With the help of a strong cur­rency, the S&P/TSX com­pos­ite index has beat the S&P 500 in eight of the past 10 years (in Cana­dian dol­lar terms), and nine out of 11 when 2009 is included. And there are per­sua­sive argu­ments why this will continue.

A report by Sco­tia Cap­i­tal enti­tled “Why you want to own Canada” nicely sum­ma­rizes them. It points out that Canada’s main attrib­utes are: 1) emerging-market expo­sure with lower volatil­ity; 2) cheaper val­u­a­tions rel­a­tive to the MSCI World Index; 3) stronger domes­tic fun­da­men­tals; 4) Cana­dian dol­lar strength rel­a­tive to the U.S. dol­lar and British pound; 5) prox­im­ity to the U.S. econ­omy; and 6) above-average mar­ket cap­i­tal­iza­tion com­pa­nies in finan­cials, mate­ri­als, tech­nol­ogy and industrials.

In a recent Globe col­umn, David Rosen­berg referred to Canada as a “low beta [less volatile] way to play the emerg­ing mar­kets via com­mod­ity expo­sure.” He went so far as to say, “this period when the Cana­dian mar­ket out­per­forms its south­ern peers is barely halfway done.”

Source:  http://​v1​.the​globe​and​mail​.com/​s​e​r​v​l​e​t​/​s​t​o​r​y​/​L​A​C​.​2​0​0​9​1​0​1​7​.​R​B​U​Y​S​I​D​E​1​7​A​R​T​1​8​2​5​/​T​P​S​t​o​r​y​/​T​P​B​u​s​i​n​e​ss/

Don’t loathe the lofty loonie

If there is one thing that Cana­di­ans are never happy with (in addi­tion to their local hockey team) it is the Cana­dian dol­lar. When it was flirt­ing near that record low of 62 cents nearly a decade ago, every­one lamented the future of the loonie. It was too expen­sive to buy any­thing that was imported, it was too costly to make that annual trip to Florida, and tick­ets on Broad­way were pro­hib­i­tively expen­sive. We felt poorer. We must have been doing some­thing wrong.

Source:  http://​v1​.the​globe​and​mail​.com/​s​e​r​v​l​e​t​/​s​t​o​r​y​/​R​T​G​A​M​.​2​0​0​9​1​0​2​5​.​w​r​o​s​e​n​b​e​r​g​1​0​2​6​/​B​N​S​t​o​r​y​/​B​u​s​i​n​ess

Finan­cial stay­ing power gives China an edge

If Amer­i­cans have been the world’s great­est con­sumers, the Chi­nese have been its great­est savers

It is tes­ti­mony to the resilience and resource­ful­ness of the Chi­nese peo­ple that, so soon after these ter­ri­ble times, their coun­try is posi­tioned to lay claim to the para­mount role in a new world order of the 21st cen­tury. Only 15 years ago, China’s man­u­fac­tur­ing out­put was only one-fifth that of the United States. Now, it is about two-thirds and ris­ing; IMF data show a dra­matic rise of annual per capita income to $3,180 (U.S.) in 2008 from only $350 in 1990, lift­ing more than one-third of a bil­lion peo­ple into China’s stan­dard of mid­dle class.

Source:  http://​www​.the​globe​and​mail​.com/​r​e​p​o​r​t​-​o​n​-​b​u​s​i​n​e​s​s​/​c​o​m​m​e​n​t​a​r​y​/​f​i​n​a​n​c​i​a​l​-​s​t​a​y​i​n​g​-​p​o​w​e​r​-​g​i​v​e​s​-​c​h​i​n​a​-​a​n​-​e​d​g​e​/​a​r​t​i​c​l​e​1​3​2​0​3​91/

Motor­ing ahead: More cars are now sold in China than in America

CHINA’S car mar­ket has over­taken America’s in sales vol­ume for the first time, sev­eral years ear­lier than ana­lysts had pre­dicted before the finan­cial cri­sis. Plum­met­ing demand in the West is to blame. Ear­lier this year, as the Amer­i­can gov­ern­ment was buy­ing 61% of Gen­eral Motors and 8% of Chrysler to pre­vent them from col­laps­ing, the two man­u­fac­tur­ers’ sales in China were rock­et­ing. GM’s sales in China in August more than dou­bled on a year ear­lier. For 2009 as a whole the com­pany pre­dicted a 40% rise. Sales of all car brands in China in August were up by about 90%, helped by a cut in the pur­chase tax on smaller, more fuel-efficient cars. There is also huge pent-up demand as a new mid­dle class takes to the road.

Source:  http://​www​.econ​o​mist​.com/​d​a​i​l​y​/​c​h​a​r​t​g​a​l​l​e​r​y​/​d​i​s​p​l​a​y​s​t​o​r​y​.​c​f​m​?​s​t​o​r​y​_​i​d​=​1​4​7​3​2​0​2​6​&​a​m​p​;​f​s​r​c​=​rss

Oil could exceed $100 next year

Octo­ber 26 2009 19:40 | Last updated: Octo­ber 26 2009 19:40Crude oil prices could push above $100 a bar­rel head­ing into 2011 due to a com­bi­na­tion of a cycli­cal improve­ment in demand, the rapid weak­en­ing in the US dol­lar and strong global liq­uid­ity growth, says Fran­cisco Blanch, head of global com­modi­ties research at Bank of America-Merrill Lynch.

Source:  http://​www​.ft​.com/​c​m​s​/​s​/​0​/​5​4​2​b​b​6​d​6​-​c​2​6​4​-​1​1​d​e​-​b​e​3​a​-​0​0​1​4​4​f​e​a​b​4​9​a​.​h​t​m​l​?​f​t​c​a​m​p​=​r​s​s​&​a​m​p​;​n​c​l​i​c​k​_​c​h​e​c​k=1

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Tags: Adjusted Basis, American Investor, Basis Points, Canadian Dollar, Canadian Equity, Canadian Stock Market, Commodities, Commodity Sector, Crb Index, David Rosenberg, Dollar Terms, Emerging Markets, Globe Investor, Gluskin Sheff, Investment Ideas, Investor Investment, Loonie, Star Of The Show, Thematic Group, Tsx Composite Index
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