Four Things you probably don't know

We continue to believe that we are in the earlier phases of a much more normal bull market than most investors realize. By our reckoning, stock markets have four phases:


1. Denial: The bull market can’t happen. Shouldn’t be happening. Won’t continue.

2. Acceptance: Fear of missing out leads investors to increasingly participate.

3. Brainwashing: New investment world. The bull market is never going to end.

4. Bear market: The end of investing as we know it.

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Eleven Themes for 2011

Here are our eleven investment themes for 2011. Each of these is either specifically or generally embedded in our investment strategies.

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Investing with an eye on the future

Pretend for a moment that it’s 2001, and that you are reading this report in the midst of the deflation of the technology bubble. It is likely that the most important investment question on your mind is, “When will technology stocks rebound?” You are also probably quite content to continue your strategy of buying and holding US stocks because you have read so much about how those stocks will outperform for the “long run”.

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Non-US groups reaped fruits of Bush tax cuts

Continuation of the Bush tax cuts has been the subject of much discussion in US political and economic circles. Those on the right object to most forms of increasing government revenue, while the left wants to narrow disparities of income and wealth.

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The Bush Tax Cuts: Investment Implications

There has been considerable discussion recently regarding the continuation of the Bush tax cuts. Much of that discussion seems to be based on philosophical differences, not on economic facts.

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The US is Cheap

The US stock market is cheap. That doesn’t mean that a sustainable bull market is at hand, but the US appears to us to be quite undervalued when viewed in isolation, and fairly valued when compared to global markets.

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Mid-Year Review

Last December, we issued our 10 predictions for 2010. As it is now mid-year, it’s time to review those predictions and see how they have fared so far.

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Muni Metamorphosis

We have pointed out for many years that fewer and fewer asset classes provide diversification to an equity portfolio. Now, it appears as though the already short list of diversifying asset classes has lost another member: municipal bonds.

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