John Wasik

Five questions to get to brass tacks with your money manager

Mar 22, 2013 13:30 UTC

CHICAGO (Reuters) – When interviewing a money manager, most investors want to know investment performance. It is a natural question, but there is much more you need to know beyond absolute returns.

In lieu of focusing exclusively on annual performance, it will be more important to know about a money manager’s record on capital preservation and expenses.

Anyone can do well in a bull market and many have lucky years. But when you are looking for a money manager, you want to find out what capacities he or she has beyond that – what makes them earn the fee? Here are some questions that will help you get beyond the surface:

1. How well do you do against a standard index, not just absolute returns?

A manager’s relative performance, when judged against a specific index, is different than the absolute return, because it lets you know how he or she fared relative to a benchmark. But if you ask this question, the manger can really fudge the numbers, so you have to be sure to press for specifics.

You have to choose an index that matches the style and market capitalization strategy being employed. For instance, if the manger primarily invests in large-company U.S. stocks, you should see how the record compares – after expenses of course – against the S&P 500 Index.

When sluggish economies are good for stocks

Mar 19, 2013 15:20 UTC

CHICAGO, March 19 (Reuters) – A sluggish U.S. economy can
actually give stocks a boost.

According to a recent study from Ned Davis Research, when
the U.S. gross domestic product growth rate was 0.5 percent or
less, the S&P 500 Index rose at a rate of 10.5 percent
per year. Conversely, when the GDP rose above 6 percent, the S&P
500 lost 4.6 percent a year.

Of course, the stock market is not always a reliable
indicator of an economy. It often displays an exaggerated
reaction to most economic news from day to day.

The cost of missing rallies is huge

Mar 15, 2013 12:59 UTC

CHICAGO, March 15 (Reuters) – Will Rogers, the great cowboy
and humorist from Oklahoma, entertained America during the
darkest days of the Great Depression. His investing advice? “The
best way to make money is to buy a stock. Then, when it goes up,
sell it. If it’s not going to go up, don’t buy it.”

Today’s individual investors still seem to be playing this
fool’s game. Despite overwhelming academic evidence to the
contrary, most investors think that they can time the market.

But in reality, they are often just following herd instincts
or their own irrational impulses and getting trampled. While
being out of the market when it is tanking is no sin, not being
invested during a rally carries a steep price.

Why it is worth investing in Britain now

Mar 11, 2013 18:03 UTC

CHICAGO, March 11 (Reuters) – Despite all the evidence to
the contrary, I am bullish on John Bull. Although Britain’s
economy is struggling, it may be poised for a decent long-term
rebound, but not for the usual reasons.

The struggles are evidenced by recent news out of London
that the British Chambers of Commerce lowered their economic
growth forecast for 2013 to 0.6 percent from 1 percent. That is
below the 1.2 percent rate predicted by the Office for Budget
Responsibility, which is considered an official prediction.

I saw this stagnation in action when I visited London and
Cambridge recently, and noticed a lot of empty restaurants.
Service employees told me there was little new work at a time
when immigrants from ailing European Union countries such as
Greece, Italy and Portugal were still trickling in for the few
low-skilled jobs available. One local business owner told me the
economic climate in the city is dour.

U.S.-China manufacturing cost gap is closing

Mar 8, 2013 16:36 UTC

CHICAGO, March 8 (Reuters) – A long-term U.S. manufacturing
rebound is under way, and it will likely endure because the
United States is becoming more competitive with China and other
emerging economies.

According to a recent report by the Boston Consulting Group
titled “Made in America, Again,” the cost advantage China has
over the United States is shrinking fast. “Within five years,
rising Chinese wages, higher U.S. productivity, a weaker dollar,
and other factors will virtually close the cost gap between the
U.S. and China for many goods consumed in North America,” the
report said.

That means jobs that were once outsourced to the People’s
Republic and elsewhere may be coming back to America. Coleman
Co, for instance, is bringing manufacturing of its plastic
coolers back to Wichita, Kansas, from China. Ford Motor Co
is repatriating some 2,000 jobs. Increased productivity through
automation combined with competitive wages is moving many U.S.
companies to “in-source” production. Here are some other key
factors in this trend:

As tech sector goes for an upgrade, it is time to invest

Mar 1, 2013 17:23 UTC

CHICAGO, March 1 (Reuters) – Despite the drama concerning
U.S. agencies potentially dimming lights due to the sequester
saga, global companies are brightening the scenario for
technology purchasing. That could spark a turnaround in the
sluggish sector.

Telecommunication services and information technology are
laggards in the U.S. stock market’s current bull rally, up only
3.6 percent and 2 percent year-to-date, respectively, through
Feb. 22. That compares with a 6.6 percent rise for the broader
S&P 500 Index.

This contrasts with consumer staples and discretionary
items, which are up more than 9 percent and 5.8 percent,
respectively, according to S&P. This reflects widespread
optimism that consumer spending will return.