Nov/Dec 2010
Special points of interest:
The Message from our President John Scott
Goals Based Investing: Integrating Traditional and Behavioral Finance, click on direct link to view article.
Revisiting the Capital Reserve Requirements on Banks and Unemployment , click on direct link to view article.
A Peek at future
articles to come:
Contentment vs. Financial Freedom
Why Family Meetings
Are important
Cedrus
350 Indiana St.
Suite 200
Golden, CO 80404
Phone: 303 273-0100
Fax: 303 273-0300
cedrusfinancial.com
Don’t Want To Be an American Idiot
We purposely did not write a newsletter the past few months to let the “silly season” pass. Elections seem to bring out the worst in our emotions. Unfortunately every year seems to usher in a new level of information technology and media manipulation to stimulate the actions and behavior of voters. Both sides of the aisle now realize the power of this in determining elections and we the people are the pawns in the battle to win votes. Worse yet, the most effective type of emotional engineering seem to be the effective use of fear and paranoia. Emotions drive behavior. For further reading about how SEI is addressing this with your assets, click on this link. Nevins Behavioral Investing.
“Don’t want to be an American Idiot” is the first line of the title song from a very successful rock/ punk band from San Francisco named Green Day. While their views of the world are a bit angry like all punk bands, the song has a profound and reflective line, “welcome to the age of paranoia”. We think this thought deserves merit in how most Americans craft their decisions in buying, hiring, travelling, investing, and even general thinking. As we have written of before (see past newsletters on our website www.cedrusfinancial.com) , the proliferation of information via too many sources seems to only enhance fears and uncertainty instead of truth and contentment. All this fear causes rash and irrational decisions thus turning us into American Idiots. This has nothing to do with politics but instead everything to do with what is important in our lives. What is important in your life? Are you discontent or fearful about any of it?
Clients of Cedrus’ full offering know first and foremost that we are in the Contentment business. What does this mean? We are committed to families finishing well. And we know they will never make the needed steps to finish well if there are pockets of discontent in their lives. In fact, most families have several of these pockets that they try to articulate and manage cerebrally resulting in the unfortunate action of doing nothing, or the dreaded but easy “stunned deer in the headlights” effect. We continually challenge our clients to share their various pockets of discontent so we can then craft a deliberate process to address them make decisions and then find contentment. Do you have several of these pockets holding you and your family back? If so, that is where we can be the most help.
This is the Cedrus way to help us avoid becoming an American Idiot. We hope you will gain value in using Cedrus in this light or recommend us to friends or loved ones who are discontent. We really do welcome those opportunities to make a difference in people’s lives. This may seem different that what you expect from Cedrus, but frankly that is what makes us different.
Dedicated to us all finishing well,
President
Cedrus
Click to Read: Goals Based Investing: Integrating Traditional and Behavioral Finance
By Dan Nevins
Research from SEI Investment Management Unit
Having trouble? Copy and paste this link into your
browser window:
http://www.cedrusfinancial.com/pdfs/NevenBehaviouralResearch.pdf
Revisiting The Capital Reserve Requirements on Banks and Unemployment
Earlier this year we wrote about the Feds backing into a corner in continuing to enforce extreme capital reserve requirements of banks across the country. While this level of governance seemed appropriate in the shadows of the financial crisis in the fall of 2008, other measures affecting “mark to market” rules and shoring up Fanny Mae and Freddie Mac were since eased up on. Our government may have made a political bet on keeping these capital reserve requirement rules in place feeling that punishing the banking system was more important than economic growth.
We speculated that due to the election this fall, the fed would HAVE to return these rules to pre crisis conditions to stem growth in our economy and create jobs. Obviously that did not happen. But in our view it is still yet an obvious next step that a new congress will have to consider. Click on this link to read the article: Employment Growth in a Jobless Recovery.
If the fed does in fact address this last issue, it should be excitingly bullish for the economy and the stock market. Let’s see what happens.
Having trouble? Copy and paste this link into your
browser window: http://www.cedrusfinancial.com/pdfs/EmploymentReportSEI.pdf
All material represents an assessment of the market environment at a specific point in time and in not intended to be a forecast of future events, or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice. This information is for education purposes only. Index performance returns do not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results. There are risks involved with investing, including loss of principal.
Information presented in this letter is believed to be factual and up-to-date, but we do not guarantee it accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expression opinion reflect the judgment of the author as of the date of publication and are subject to change.
Information presented does not involve the rendering of personalized investment advice, but is limited to the dissemination of thoughts and opinions on investment topics. All investment strategies have the potential for profit or loss.
Changes in investment strategies, contributions or withdrawals may materially alter the performance, strategy and results of your portfolio.
Information presented is not an offer to buy or sell, or a solicitation of any offer to buy or sell the securities mentioned herein.
Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will either be suitable or profitable for a client's investment portfolio. Cedrus does not provide tax advice. Please note that (i) any discussion of U.S. tax matters contained in this communication cannot be used by you for the purpose of avoiding tax penalties; (ii) this communication was written to support the promotion or marketing of the matters addressed herein: and (iii) you should seek advice based on your particular circumstances from an independent tax advisors. Sources: Information provided by SEI Investments Management., a wholly-owned subsidiary of SEI Investments Co.
Click to Read: Goals Based Investing: Integrating Traditional and Behavioral Finance
By Dan Nevins
Research from SEI Investment Management Unit
Having trouble? Copy and paste this link into your
browser window:
http://www.cedrusfinancial.com/pdfs/NevenBehaviouralResearch.pdf
Revisiting The Capital Reserve Requirements on Banks and Unemployment
Earlier this year we wrote about the Feds backing into a corner in continuing to enforce extreme capital reserve requirements of banks across the country. While this level of governance seemed appropriate in the shadows of the financial crisis in the fall of 2008, other measures affecting “mark to market” rules and shoring up Fanny Mae and Freddie Mac were since eased up on. Our government may have made a political bet on keeping these capital reserve requirement rules in place feeling that punishing the banking system was more important than economic growth.
We speculated that due to the election this fall, the fed would HAVE to return these rules to pre crisis conditions to stem growth in our economy and create jobs. Obviously that did not happen. But in our view it is still yet an obvious next step that a new congress will have to consider. Click on this link to read the article: Employment Growth in a Jobless Recovery.
If the fed does in fact address this last issue, it should be excitingly bullish for the economy and the stock market. Let’s see what happens.
Having trouble? Copy and paste this link into your
browser window: http://www.cedrusfinancial.com/pdfs/EmploymentReportSEI.pdf
All material represents an assessment of the market environment at a specific point in time and in not intended to be a forecast of future events, or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice. This information is for education purposes only. Index performance returns do not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results. There are risks involved with investing, including loss of principal.
Information presented in this letter is believed to be factual and up-to-date, but we do not guarantee it accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expression opinion reflect the judgment of the author as of the date of publication and are subject to change.
Information presented does not involve the rendering of personalized investment advice, but is limited to the dissemination of thoughts and opinions on investment topics. All investment strategies have the potential for profit or loss.
Changes in investment strategies, contributions or withdrawals may materially alter the performance, strategy and results of your portfolio.
Information presented is not an offer to buy or sell, or a solicitation of any offer to buy or sell the securities mentioned herein.
Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will either be suitable or profitable for a client's investment portfolio. Cedrus does not provide tax advice. Please note that (i) any discussion of U.S. tax matters contained in this communication cannot be used by you for the purpose of avoiding tax penalties; (ii) this communication was written to support the promotion or marketing of the matters addressed herein: and (iii) you should seek advice based on your particular circumstances from an independent tax advisors. Sources: Information provided by SEI Investments Management., a wholly-owned subsidiary of SEI Investments Co.
