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In The News
All articles are written by Eric Parnell, CFA, Founder & Director of Gerring Wealth Management.
Excerpts for each article are included below. To access the full article in PDF format, please click on the article title.
Why All the Fuss Over Inflation?
From the August 2008 edition of Utah CEO Magazine
Inflation fears have been weighing heavily on investment markets. At first glance, these concerns seem well founded. After all, prices for gasoline at the pump and food at the grocery store have skyrocketed. The chronically weak U.S. dollar is also adding fuel to the fire, as it makes the cost of imported goods more expensive. And the U.S. Federal Reserve has pitched in too by lowering interest rates aggressively over the last year from 5.25% to 2.00% in response to the weakening economy and the global credit crisis. Despite these influences, a closer examination of the situation reveals that the inflation threat to the U.S. economy is actually fairly limited at present, which should eventually be welcome news for both equity and fixed income investors.
Inflation Fears Overdone
From the September 9, 2006 edition of the West Chester Daily Local News
Investment markets have recently been paralyzed over inflation fears. Since the market bottomed out several years ago, investors had been enjoying a market where the threat of major price increases was largely nonexistent. But this relaxed view began to change dramatically several months ago, as spiking oil and raw materials prices coupled with an extended period of record low interest rates created the ideal breeding ground for an inflation spiral. And it has been these inflation fears that have helped keep a lid on the market since its last peak in early May. Despite these justified worries, the good news is that many structural forces are in place that should keep inflation largely in check going forward. This is good news for investment markets.
Large Caps Ready to Take the Lead
From the June 3, 2006 edition of the West Chester Daily Local News
The stock market has experienced an unprecedented trend in recent years. While large cap stocks and small cap stocks usually trade market leadership back and forth every couple of years, small caps have been trouncing large caps for quite a while now. Over the last five calendar years from 2000 to 2005, small caps beat large caps each and every year and have racked up a total annualized returns difference of over 10 percent. And this trend of small cap leadership has continued through April 2006. Despite this seemingly endless winning streak, a variety of signs now suggest that large caps may finally be ready to take the lead.
Fund Your Roth IRA Today
From the February 25, 2006 edition of the West Chester Daily Local News
Around this time of year, I often receive questions from clients asking when is the best time to fund their Roth Individual Retirement Accounts (IRAs). For those who have the financial flexibility to do it, history has shown that the best time to fully fund your Roth IRA is right around this time of year. The only twist – you should be making your contributions for the year that just started, not the tax year that just ended. This subtle timing difference can lead to thousands of extra dollars in your pocket at retirement.
Examining the 'January Effect'
From the December 24, 2005 edition of the West Chester Daily Local News
Some investors are always on the prowl looking to capitalize on unusual stock market trends. One such anomaly is known as the “January Effect”, which states that the stock market has historically posted a 4% return on average during the month of January versus a 1% return on average across all other months over the last 75 years. While this trend might seem like a slam-dunk approach, a closer look reveals that more work must be done to discover the real investment opportunity.
Point/Counterpoint: Portfolio Managers Make The Markets More Efficient
From the September/October 2005 edition of CFA Magazine
While the Efficient Market Hypothesis (EMH) first postulated by Eugene Fama over three decades ago has its theoretical merits, portfolio managers do not necessarily lead to more efficient investment markets in an applied setting. Certainly, a variety of known anomalies exist that refute the EMH, such as the time-series and cross-sectional tests that detract from semistrong form market efficiency. Several less frequently discussed factors also exist that influence portfolio managers and further refute the EMH.
How to Prepare Your Portfolio to Deal with Higher Gas Prices
From the September 10, 2005 edition of the West Chester Daily Local News
You've already felt the impact of higher gas prices on your wallet during the summer vacation season. And now following Hurricane Katrina, we are looking at the potential for gas prices well above $3.00 per gallon for the foreseeable future. While the tragic circumstances in the aftermath of the hurricane deserve our close attention and sympathies, it is also important to consider how you might be able to best prepare yourself for higher gas prices at the pump.
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