Investing
High Net Worth Investors Have Apparently Decided To Wait Out The European Crisis
Thursday, May 31, 2012 09:48

Tags: high net worth | investment strategies | investor behavior

The wealthy are becoming disheartened by the flagging US economic recovery. Spectrem Group’s most recent survey of millionaires has found them less confident despite the strong start to the year, both in the equity markets and in improving economic reports.

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Europe is the primary damper on millionaire investors’ enthusiasm. The Spectrem Millionaire Investor Confidence Index showed a reading of 10 in March, 8 in April, and 3 in May. The reading has not seen a five-point drop since before this time last year.
 
Investors seem poised to keep their investment powder dry until some type of realistic resolution to the  crisis in Europe becomes apparent.

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Hedge Fund Managers Going Abroad To Pick Up Bargains For Their Portfolios
Thursday, May 31, 2012 09:33

Tags: alternative investments | European crisis | global investing | US investing

Alternatives may be losing their luster here in the States but many hedge fund managers are going abroad to try to pick up cheap assets for their funds. Foreign banks may be forced to dispose of distressed assets in the process of managing the European crisis and these managers are going over as ready buyers.

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Some managers are traveling so often that jet lag has become a non-event. They get to know areas they frequent so well that some even become regulars at the local pub. Beaten-down equities, corporate bonds, and loans have garnered the most interest. Hopefully, there are strong returns in store when market values recover.
 
Not only are existing funds going abroad to take advantage of opportunities, new funds are also being created. At this point, opportunities, particularly in Europe, may hold much less risk since they have already been battered in the marketplace.
 
Fund managers are being prudent and meeting regularly with bankers, foreign investors, and policy makers to develop a better feel for the political and economic environment. This also helps them learn who to trust and who to avoid. This may be a case when going against the crowd in the US might be worth considering.

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The Rush Into Alternative Investments Is Slowing Down, Especially In Equities Strategies
Thursday, May 31, 2012 09:02

Tags: alternative investments | investment strategies | investor behavior

Enthusiasm in the alternatives market seems to be ebbing as advisors’ expectations for performance have backed off. Morningstar, Inc. and Barron’s released a survey that showed both institutional and individual investors are investing less money in alternatives, primarily in market neutral and long/short equities strategies.

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Currencies, managed futures, and commodities strategies are still attracting investment dollars despite their less than optimal returns of late. And alternatives sector flows in general are still stronger than flows in equity mutual funds.
 
Alternatives have become popular investment vehicles for retirement funds and annuities. Clients with a long time horizon may be disappointed in the short term if they rushed into alternatives because of their recent popularity. The downdraft in equities strategies also may indicate continued distrust of corporations by the investing public as well as fears of short-term market volatility.

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Former Fed Bank Head And Outgoing World Bank Chief Call For More Economic Stimulus
Thursday, May 31, 2012 08:40

Tags: economy | global investing | U.S. economy

Former Federal Reserve bank president Eric Rosengren says the Fed should do more to stimulate the economy. He thinks the current Fed is acting too slowly and that the unemployment rate needs to be addressed more aggressively.

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The Fed’s Operation Twist program is scheduled to be complete at the end of June. At that point, the total amount of the short-term bond that have been converted through sales to longer maturities will be $400 billion.
 
Rosengren’s concerns lie primarily in the political arena, specifically regarding actions that leaders in both America and Europe might take. The future health of the US economy is directly tied to those decisions and he feels a structural problem can be pre-empted if more stimulus is added to spur job growth.
 
Although the private sector has been growing, less government spending is counteracting the effect of those gains. World Bank president Robert Zoellick adds that the global economy is in danger. Europe is the largest direct threat but global economic factors are also affecting developing countries, which have conglomerately been the primary global growth engine to this point.

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May Jobs Reports Continue To Disappoint, Adding More Uncertainty To The Health Of The US Recovery
Thursday, May 31, 2012 07:59

Tags: economic indicators | economy

The report on private sector jobs fell short of the hoped for 150,000 in new jobs created during the month of May. The April report was revised downward from 119,000 to 113,000 and the May report showed that privately held businesses added 133,000 new jobs.

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Today’s ADP report (May 31st) precedes the Bureau of Labor Statistics (non-farm payroll) report due Friday, June 1st. The ADP report only covers private sector jobs; the Bureau’s report includes government jobs, as well.
 
Estimates call for 155,000 new jobs to have been created on the non-farm payroll report. The last two months have fallen short of estimates, adding to the uncertainty surrounding the health of the US recovery.
 
The breakdown of the ADP report shows that jobs at businesses with over 500 employees increased by 9000; jobs at mid-sized business increased by 57,000; and jobs at small businesses (less than 50 employees) increased by 67,000.

 

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