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Mar 12, 2013, 1:19 PM EST

The new new normal

By Brad McMillan

The is the first part of a two-part column that will be updated March 12; to read the second part, click here.I am rather proud of that headline. How often do you get to riff on Bill Gross (“the new normal”) and Michael Lewis (“The New New Thing”) at the same time? As a bonus, I think it actually reflects what we are seeing as the economy and markets evolve. “The New New Thing” (Penguin Books, 2001), for those too young to remember, is a book about Jim Clark and his role in the new Internet economy. It is a great read and recalls a time when everything seemed possible, when we were entering a new economy and it really was different this time. Freed from the constraints of geography and profitability, Internet companies were going to change the world.The funny thing is, he was right. Not in the sense that everyone thought — but see that link to Amazon.com above? That is where many people now buy ... Read full post

Mar 5, 2013, 4:03 PM EST

Why Apple will grow again

By Bob Turner

The following commentary appears in the latest quarterly letter from Turner Investments. It is a response to a question submitted by David S. Newcomb, director of portfolio management for Sterling Investment Advisors, who wanted to know whether Apple Inc.'s struggles meant its days as a growth company were over. To read more of the quarterly letter, here. .Apple's recent struggles have been widely chronicled by the business press.Apple's share price is down about 30% from its peak last September, and sales of its iPod and Macintosh products are declining. Although it is difficult to pinpoint exactly why Apple has looked uncharacteristically average lately, some observers have attributed it to the death of Steve Jobs, the company's brilliant and innovative chief executive; a lack of new market-changing consumer products; increased competition from companies such as Google Inc. and Samsung Electronics Co. Ltd.; and the company's now-... Read full post

Mar 5, 2013, 4:01 PM EST

The value investor's schizophrenia

By François Sicart

Superstar investor Warren E. Buffett is widely quoted as having said, “The best time to sell a stock is never.”But Mr. Buffett, though a proclaimed disciple of Benjamin Graham, the “pope” of value investing, was later just as much influenced by Philip Fisher, the recognized “pope” of growth investing. In fact, it was Mr. Fisher who, in “Common Stocks and Uncommon Profits” (Harper, 1958) wrote that the best time to sell a stock is “almost never.”I never met Mr. Graham and haven't met Mr. Buffet. But I did meet Mr. Fisher, who invited me to visit a company with him after reading one of my papers sometime in the 1980s. Without even a stock quote machine in his office, he was a voracious reader of company financials but also a compulsive evaluator of corporate management. Mr. Fisher wanted to know and talk to everyone he could in a company, from the chief executive to operations... Read full post

Feb 17, 2013, 2:39 PM EST

The impact of migratory patterns on munis

By James Colby

Let's give credit where credit is due. Recently, Forbes published an article that to some might seem like the kind of article that sits on the shelf until there is a slow news day and the editor is looking for a filler piece. In fact, this article raises a number of important points that, in my opinion, all touch upon the national economic recovery and just may be the locus of the revival of small business and wealth creation.Why is this important to MUNI NATION? My concern is for the economic health — no, survival — of state and local governments that issue tax-exempt debt securities in order to meet the public needs of their inhabitants. The Forbes article points to migratory population shifts (measured in part by statistics from moving companies) that I believe will have very real consequences for certain states. As there is net "out migration," there may typically be loss of tax revenues, user fees and consumption at... Read full post

Feb 12, 2013, 7:45 AM EST

Stocks: Too far, too fast?

By Mark Luschini

Equity markets have sprinted out of the blocks. The S&P 500 returned 5% last month, the best start to a year since 1997. The worst-performing sector of the market, technology, was up 1.3%, translating to an annualized gain of 17%. Needless to say, this performance prompts the question as to whether this pace is sustainable. We suggest that it isn't likely, which probably isn't a stretch prognostication, given that the annualized return for the aforementioned S&P 500 would be 78.5%. Market participants have spent much of the past few years fretting about the big macroeconomic risks, such as Europe's unsettled sovereign-debt issues, China's slowing growth, and heightened political rancor at home. Now the concern is that markets have entered a danger zone because excessive fears about the risks of the day have been replaced by an unusual degree of complacency. The Chicago Board Options Exchange Market Volatility Index, otherwise known as... Read full post

Feb 5, 2013, 3:00 PM EST

Chart of the day: Which NFL team generated the best ROI this season?

By

Since 2005, Analytic Investors has been been applying its "innovative mathematical techniques to the gridiron" to determine each team's performance — which they've coined "NFL Alphas" — for the season. What does this mean exactly? Per the firm's "NFL Alphas 2012-2013" report: "In short, an NFL Alpha is the potential return-on-investment (ROI) that is earned by placing a systematic wager on each NFL team to win each of its games outright in the regular season. This can easily be confounded with the notion that wins beget Alpha. However, we see time and again that it isn't necessarily a team's success, but a team's unexpected success that governs its profitability and hence Alpha."With that in mind, the team at Analytic Investors determined that the Indianapolis Colts provided the best ROI in the NFL this year. Although the firm notes that seven other teams equaled or bettered the 11-5 record the Colts posted this season,... Read full post

Jan 22, 2013, 1:39 PM EST

You think that was bad? Future recessions will be much worse

By Brad McMillan

A popular talking point these days is that the deficit over the past several years has been the worst since World War II. That's absolutely true, as you can see from the chart below, but the statement misses a key point.... Read full post

Jan 22, 2013, 12:01 AM EST

The danger of more uncertainty in the muni market

By James Colby

If there is one certainty that I believe municipal bond investors can lean upon as we fully commit to writing 2013 in our check registers, it is the seemingly perpetual uncertainty regarding the political deliberations about to resume in Washington, which again could include discussions about capping the benefit of the tax-free coupon. Ask yourself, "What has changed since the November elections?" and you'll probably answer, "Nothing." However, with the adjusted personal income tax rates now at higher levels, this statement is not entirely true; the market has been living with this cloud of uncertainty going on five months or more. Armed with facts and figures that demonstrate the relatively small benefit to deficit reduction this tax plan would potentially create (only 2%-4% of revenues needed), state and local treasurers and industry proponents appear to be standing ready to once again defend small local issuers and taxpayers who... Read full post

Jan 15, 2013, 12:24 PM EST

Six reasons to be bullish about stocks over the next five years

The following is excerpted from the year-end commentary by Litman Gregory. To read the full commentary, click here.Our message has been consistent, even as new information unfolds, that deleveraging will mean slower growth at the same time it raises the risk of another financial crisis. That said, an important part of our investment discipline is to minimize the risk of “confirmation bias.” Confirmation bias refers to the human tendency to seek out and favor information and data that supports one’s beliefs, arguments, etc. Confirmation bias is a powerful trait that all people are prone to, and our industry is not immune. We all want to be right and confirm our beliefs. This can lead to digging in one’s heels, dismissing counter evidence, and ultimately an avoidance of admitting mistakes. In the long run it’s valuable to be able to change one’s mind when we’re presented with new information.... Read full post

Jan 8, 2013, 10:55 AM EST

No cliff for old munis

By James Colby

In the eleventh hour of the first night of 2013, Congress passed legislation which, among tax increases and other items, left the municipal bond coupon tax-free and unscathed. As you undoubtedly know by now, the bill provides for extensions of the Bush era tax cuts and credits and permanently "patches" the Alternative Minimum Tax (AMT) going forward.Personal income taxes for individuals with income over $400,000 and households over $450,000 will increase; as will taxes on dividends and capital gains for those investors. There will be much more debate to follow as Congress must address the deficit and debt ceiling in the coming months.The rally in the equity markets and the simultaneous sell-off in Treasuries seem to be an expression of relief from investors who had sought safety in bonds while awaiting the outcome of these deliberations. What needs to occur in my view, however, is a response from business that reflects both relief and... Read full post

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