It's not easy being the Notorious these days...is there anything he can really communicate this week that keeps everyone calm?

Source:

CNBC

Source:

CNBC

Hilarious to see Jordan and the crew getting the full-on Hollywood treatment.

Source:

BAML

via Aurelija Augulyte

Stuff I'm Reading this Morning...

US dollar jumps overnight, Asian and European stocks recover as Fed Week gets underway...  (Reuters)

Hlsenrath tells us to pay attention to the Fed's economic outlook report, not just the FOMC's press release, for clues.  (BusinessInsider)

"A couple months from now we will look back at this Yen carry concern as completely idiotic." - Gangsta  (DynamicHedge)

70% of economists now expect a reduced QE by year-end, a big jump in expectations since May.  (USAToday)

Samsung's new marketing deal with Jay-Z, will give away one million new copies of his album to Galaxy buyers.  (Speakeasy)

Economic blog nerds choose their sides, fiscalist or monetarist, and Cardiff Garcia throws on the referee jersey. A guide to who's who.  (FTAlphaville)

New Bill Gross mixtape hits the streetz - "Droppin' Bonds on Yo Moms".  (PIMCO)

New interview with the world's most important financial blogger, Tadas Viskanta of Abnormal Returns.  (SeeItMarket)

10 great Jesse Livermore quotes.  (JoeFahmy)

Is this the end of the secular bear market? Or just an interlude?  (BusinessInsider)

The three worst predictions of the last five years.  (PragCap)

Stanley Druckenmiller: Here's what's going to happen to China.  (ZeroHedge)

Speaking of China, the St Louis Fed is freaked out about the housing bubble there.  (StLouisFed)

How Johnny Cash and Bob Dylan saved country music (Salon)

This is a simple, yet remarkable insight that's sure to make one want to re-think some things about portfolio construction. At my shop, we believe it is a combination of active and passive management that's necessary given the interest rate and economic environment but we are underweight bonds in general relative to the target risk indices we benchmark to. 

Check this out!

***

At the start of every sports season, commentators, fans and analysts all put out the names of teams they feel will perform the best along with the reasons why this team will do better than that team.

For some, the teams and justifications change year by year. For others, especially die-hard fans, it almost doesn’t matter how good or bad their team did LAST season, THIS season their team will be champions.

The same is true with investing. Some people become enamored with a manager or style (active vs. passive) and choose to keep their money invested in that style/manager year after year regardless of comparable results. Others choose to revisit their decisions on a regular basis.

This is where the debate usually starts about how best to invest. I’ve read plenty of articles about which is a better way to invest in the stock market, passive vs. active, but I haven’t come across analysis about the bond market so I ran the reports myself.

Here are five findings of after comparing bond fund returns across the Morningstar Intermediate-Term Bond category. Data as of April 30, 2013:

• 22.3% or 413 of the 1,153 intermediate term bond funds Morningstar tracked for the one year April 2012 – April 2013 outperformed their index.
• 24.7% or 426 of the 994 intermediate term bond funds Morningstar tracked for the 3 years April 2010 – April 2013 outperformed their index.
• 34.7% or 391 of the 868 intermediate term bond funds Morningstar tracked for the 5 years April 2008 – April 2013 outperformed their index.
• 14.9% or 130 intermediate term bond funds outperformed their index over two different time frames (example 1 Year and 3 Year, or 1 Year and 5 Year, or 3 Year and 5 Year)
• 25.5% or 221 intermediate term bond funds outperformed their index over all three (1, 3 and 5 Year) time frames.
  • This last point surprised me the most. I actually expected more funds would outperform over two time frames rather than all three time frames.

Before the Index crowd runs out and declares their team the victor, be aware of the wide mix of bond investing styles Morningstar places in the Intermediate Term Bond category. Here are just a few:

• Funds that invest primarily in mortgage bonds such as DoubleLine Total Return
• Funds that invest in corporate and government bonds such as PIMCO Total Return or Vanguard Total Bond Index
• Funds that invest primarily in corporate bonds
• Funds that invest primarily in preferred stocks
• Funds that invest using leverage or derivatives and as well as funds that have no leverage or derivatives
• Funds that invest only in investment grade bonds and as well as funds that have exposure to both investment grade and high yield bonds
• Funds that have exposure to international bonds and as well as funds that have no exposure to international bonds

***

Ummm....wow.

Source:

YourWealthEffect.com

Check this out:

People always spend more on Mom than they do on Dad. This year on average Americans said they planned to spend about $169 on Mother’s Day compared to about $120 for Father’s Day, according to the National Retail Federation. But this year the disparity is the biggest it has been since the depths of the recession in 2008. While people boosted spending plans for Mom by 11%, the money expected to be shelled out for Dad rose a measly 2.3%.

So, does Mom deserve the premium?

Probably. Most Dads would be just fine with that, I know I would.

Source:

Number of the Week: Americans Spend 41% More on Mom Than Dad (WSJ)

I read research and news for hours, thousands and thousands of words each day, to make sure that I'm aware of everything that's happening. I blog or link to much of what I read in an effort to distill this acquired knowledge into some semblance of an understanding or an action plan. I attend events and listen to conference calls. I devour the presentations of analysts and strategists. I rarely miss much, and if I do I make it a point to hunt it down.

And then I take all of this and I write about it.

I write to find out what I think. I share this process on the web in real-time as an exercise in crystallizing my own comprehension. It is working. I knew very little when I began years ago compared to what I know now. I hope I can say the same thing in the years that follow. My time spent doing this is in lieu of spending my time in other ways - prospecting, networking, marketing, fantasy footballing, office-golf-putting, watching TV news, sitting in sales meetings with middle managers, instant messaging, talking about golf, etc.

To call myself a Scholar would be a bit much, so I prefer to think of myself as a Learner. I would rather be a Learner than a Salesman. I did the salesman thing already, got really good at it and despised it so much it almost killed me.

Doing this learning in such a public way has earned me a platform with which to connect with a broad audience. It has also opened a lot of doors for me professionally. It's allowed me to meet and become acquainted with virtually all of my investing heroes - many of them to the point where I can regularly consult with them as I develop my skills and knowledge base even further. It's also allowed me to make friendships that I hope will last a lifetime with some of the most brilliant traders, investors, market writers, economic thinkers and researchers currently working today. Making new friends is a great experience, but making new friends who can inspire and teach you new things can be life-changing.

The blog has forced me to read books. Countless books, piled up on my shelves and windowsills, loaded onto my devices. I hungrily consume them one by one, attempting to hold onto the most important insights I can glean from the men and women who've spent a lifetime accumulating the wisdom to fill these books with.

The blog has shown me who to listen to and who to tune out. When to stop reading an article and when not to bother clicking its headline at all. What is a precious gem of understanding and what is a black hole of noise and nonsense. I've learned who can be trusted and who can not in the financial media. Which commentators are permanently and irreparably conflicted and which are honest, empirically-driven in their analyses.

The blog has also taught me recognize everything investors do wrong, everything I myself was doing wrong for so many years. There are patterns of success and failure that become evident when you read every market-related research report, economic paper, investing outlook, autopsy and anecdote from the world's greatest writers, researchers, journalists and money managers for weeks, months, quarters and years on end.

I now know all about inherent biases and human nature and the fight-or-flight reflex and the dangers of commingling personal politics with money and the Recency Effect and the sunk cost dilemma and performance chasing and blind faith in any particular strategy and hubris and emotional stubbornness and high costs and heavy friction and all of the other tragic and timeless pitfalls that we all face. I've learned all about the follies of forecasting and the double-edged nature of having deep convictions. I've learned how little things have changed in the history of investing, how perennially prone we are to the same mistakes and manias and misunderstandings.

To say nothing of the skills I've acquired or honed - the importance of position sizing and diversification and situational awareness. The importance of humility in the face of wrongness, agility in the face of new or contrary information. The importance of respecting the technicals and the fundamentals, maintaining an elevated awareness of the best and worst attributes of these disciplines, even when this means balancing two contradictory thoughts in one's head concurrently.

I've learned how sentiment, both my own and the mass-sentiment of the entire investor class, can hurt or help me in my efforts each day.

More than any of these things, it's awoken me from the trance-like execution of my daily to-do list and exposed me to a much wider world and some very large truths. The perspective I've gained will be invaluable, I suspect, as time marches on and new challenges await.

The good and the bad news is that I am never done. There is no finish line. Some things I learn are forgotten while others are eventually proved to have been fallacious in the presence of new evidence. But this was never about the destination, it was always about the journey - so I can live with that.

The purpose of this site is self-improvement, both for my own benefit and for the benefit of those I serve and work with. I am sure there are other ways to do it, but this way is mine.

Read Also:

On Financial Blogging (Aleph Blog)

"How Do You Have So Much Time To Blog?" (TRB)

***

This post originally appeared on January 13th, 2013. To get The Reformed Broker by email, subscribe here.

My story and the story of how Wall Street came to Main Street told in the book Backstage Wall Street

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