Why Currency Movements Matter

For U.S. investors, foreign currency fluctuations can be a critically important – but much overlooked — factor to consider when investing in international stock or bond fund. If a foreign currency is appreciating relative to the U.S. dollar, it can provide a boost to returns, but if the currency is weakening, it can detract from them.

No-One Told Gold About the Currency Wars

One of the hot investment phrases streaming through the investment media lately is “currency wars.” This refers to the idea that governments around the globe are fostering weak currency policies in order to export their way to prosperity at a time when world aggregate demand is weak. Japan is the latest country to weaken its currency, as new leadership has recently diluted the value of the Yen materially in an attempt to jumpstart their way out of deflation. So with all these countries racing their currencies to the bottom, shouldn’t gold be the store of value that we can all depend on? One look at the chart below tells you that gold has not received the memo.

Why You Should Evaluate Portfolio Returns Over A Complete Market Cycle

How to determine the proper time horizon to evaluate portfolio performance is always a subject for an interesting conversation. In a recent client survey on investment issues, we asked our clients “What time horizon do you feel is the best time frame to evaluate portfolio returns?” The results varied: 16% said “Monthly,” 43% said “Quarterly,” 37% said “Annually,” and 4% said “Over a complete market cycle.” (As an investment professional, I would have selected the last option.)

Will This Industry Surprise in 2013?

Every now and then I scan various Exchange Traded Fund (ETF) options to find out what is working to determine if new trends are emerging. During this scanning process I recently came across a very interesting industry that looked quite promising to me. It has been wise for investment professionals to ignore this industry over the past six years, but this year could be different. Fair warning: Before I proceed, you need to leave your opinion at the door.

Should You Convert Your Traditional 401k to a Roth 401k?

One of the more interesting provisions in the recently passed American Taxpayer Relief Act (ATRA) is the ability to do a Roth conversion within a 401(k) plan. Before January 2nd, employees were mostly prevented from moving assets from the traditional, pre-tax portion of their 401(k) to a Roth component of the same 401(k) plan. While it was available to those employees who otherwise were eligible to take a distribution from the plan, that was rather limited. With the passage of ATRA, Congress has opened up the opportunity for anyone to move assets from the traditional, pre-tax portion of the 401(k) plan to the tax-free, Roth portion of their 401(k).

Can the Data Be Trusted?

Just two days ago the 4th quarter GDP came out as a negative number, which was much worse than expected. In fact, not one of 83 analysts had anticipated a negative number, meaning they were all too bullish on the 4th quarter growth number. But yesterday the Chicago Purchasing manager’s index, a growth barometer, was way above expectations for growth, and not one of 48 analyst estimates was in the ballpark, meaning they were all too bearish on growth.