Will the ADP Translate, and Will it Matter?

Yesterday the ADP employment report surprised sharply to the upside when it reported a December employment gain of 297,000 jobs, versus an estimate of 100,000. That was certainly good news, and it may just be confirming some of the positive trends that we’ve seen lately in such things as unemployment insurance claims, the Conference Board’s…

Looking at Alternative Investments

Pinnacle clients will soon be noticing that their statements have a slightly different look. Instead of all of the alternative investments in the portfolio being reported together at the end of the holdings reports, we now split them up into equity alternatives and fixed income alternatives. When asked I usually define alternative investments as those…

Investing in the Neutral Zone

I remember the old Star Trek episodes that began with distress calls from some poor spaceship stuck in the Neutral Zone, a vast negotiated area of neutral space designed to separate the Federation of Planets (the good guys) from the Klingons or the Romulans (the bad guys). For the most part, things never went well…

China Plays the Role of Grinch

On Christmas Day, as investors in Whoville were away from their Bloomberg terminals celebrating with family and friends, China did their best Grinch impression and surprised markets by raising interest rates a quarter point in response to surging inflation. They raised their 1-year lending to 5.81%, while the 1-year deposit rate was increased to 2.75%.…

Letter to Santa

Dear Santa, I know I’m sending this from my work address and your organization usually only serves the consumer market, but our analysts here at Pinnacle have worked very, very hard this year and have been very good. If it’s OK I thought I would ask your elves to make a few special gifts for…

The Ghost of Lehman Past

Oh, it was a great day yesterday. We can breathe a sigh of relief because the S&P 500 hit its pre-Lehman bankruptcy level. Lehman Brothers filed for Chapter 11 on September 15th, 2007 and the S&P 500 high that day was 1250.92. Yesterday, the S&P 500 closed at 1254.60.

Can’t Model the Art of Investing

At Pinnacle we are constantly reading investment views from some of the world’s smartest people. Recently I picked up a piece written by Howard Marks of Oaktree Capital called “All That Glitters.” The focus of the article was on gold, and it raised some great points to consider regarding the shiny metal and whether or…

10.2% Prediction for U.S. Market Next Year

Last week someone showed me a USA Today article where they rounded up the usual suspects who weighed in with their 2011 market predictions. I don’t have the article in front of me but the Chief Investment Strategists for Blackrock, Goldman Sachs, and other massive institutional investors fearlessly jumped in with their predictions. What surprised…

Divergence Developing in Volatility

At Pinnacle we tend to view volatility extremes as a contra-indicator for financial markets, with very low volatility associated with complacency and very high volatility associated with fear. Reaching such extremes can present very compelling investment opportunities at times. Currently, there is a big divergence in volatility measures between the stock and bond markets.

Silly Season for Asset Allocation

I suppose it is that time of year for strategic, buy and hold, asset allocators to offer their best suggestions for the asset allocation that will, in their opinion, offer winning returns for the next decade. In a recent Wall Street Journal article, Burton Malkiel, one of the best known champions of passive investing, offered…