Cover Story: Where is the FBM KLCI headed?

It is difficult to predict with accuracy where the FBM KLCI will stand before the annual New Year’s eve countdown. In fact, not many market observers are confident Malaysia’s benchmark index will surpass the 1,752.27 points at which it started the year. As one local head of equities research says, “You can kiss the 1,800-point dream goodbye.”

The FBM KLCI has shed 10.6% from its peak of 1,892.65 points in July 2014 and 7.56% year to date. It has seen a quiet recovery from its end-August low and is finding steady support at the 1,600-point level but analysts say equities in Malaysia have yet to go through the floor. Nagging economic concerns, unresolved domestic political issues and the prospect of weaker corporate earnings are making investors cautious, which could drag the stock market down further.

Chief on the list of market irritants is the US Federal Reserve’s indecision about its interest rate policy. Talk of when the Fed will raise rates — the last time was in June 2006 — is old and the effects have probably already been priced in by investors. But stock markets inherently react adversely to uncertainties. Analysts tell The Edge that conversations on the US interest rate policy still dominate decisions about foreign fund flow to emerging markets, causing volatility.

“Markets want to know when it (US interest rate hike) will happen, how much the increase will be and how long things will take to normalise. Once there is clarity, you will see a reversal of the current trend. Stocks will not be weighed on sentiment but fundamentals. Almost immediately, you will see the market rebounding as funds reassess their positions,” says Areca Capital Sdn Bhd CEO Danny Wong.

Without the catalyst of certainty in the US interest rate policy, Choo Swee Kee, executive director at TA Investment Management Bhd, expects the FBM KLCI to remain depressed, dropping to the 1,500-point level before recovering “sometime in November”.

Saturna Capital president Monem Salam believes the FBM KLCI could bottom at 1,450 to 1,500 points, which is close to this year’s low of 1,532.14 points recorded on Aug 25, before the usual year-end window dressing by funds and a general “seller’s fatigue” prompt investors to jump back into the market. “Things will look better in the fourth quarter. But the index wouldn’t go that much higher from where it is now,” he cautions.

In the meantime, the FBM KLCI is struggling to gain traction due to factors like the low ringgit, depressed commodity prices and an economic slowdown in China, which is one of Malaysia’s most significant trade partners and the world’s top consumer of commodities.

When crude palm oil (CPO) saw a mini-rally and touched RM2,460 a tonne — its highest since June 2014 — last Tuesday, investors were seen chasing the shares of oil palm planters. The FBM KLCI’s top gainers during the week consistently featured plantation stocks, like IOI Corp Bhd, Sime Darby Bhd, Genting Plantations Bhd and Kuala Lumpur Kepong Bhd — an indication that a recovery in commodity prices will prop up the stock market.

Also capping the upside potential of the local bourse as the year draws to a close is the anticipation of flat, if not weaker, corporate earnings.

M&A Securities head of research Rosnani Rasul points out: “We have had a 1,660-point target for the FBM KLCI since July. If you want to see how the index will perform, you can look at the stocks with large market capitalisation — the planters, the oil and gas players and the banks. As for commodity-related sectors, the current weak commodity prices are hurting them.

“For the banks, their net interest margin is very thin. Competition for deposits is stiff and cooling measures in the property sector have affected housing loan performance. I don’t expect them to surprise on the upside. When banks don’t perform, the FBM KLCI doesn’t perform. They comprise 40% of the index.”

While most emerging markets face the same economic realities, local analysts argue that the perceived inability of the Malaysian government to put an end to the long-drawn 1Malaysia Development Bhd (1MDB) saga is denting investor confidence and punishing the equity market.

Says Saturna Capital’s Salam, “It is not a matter of whether someone is guilty or not here. The ‘yes’ or ‘no’ answer is irrelevant. It is a perception problem. The market is asking what we are doing about what happened. Take the Volkswagen scandal. The shares dropped 30% in one day. What do you do about it? You fire the CEO, you come up with an action plan to address the problem. That changes perception and you can see a recovery.”

A bank-backed research analyst, who has a “seemingly high” year-end target of 1,740 points for the FBM KLCI, argues that an improvement in the political situation in Malaysia will elevate the drab local stock market. “It doesn’t take much to move the market. Catalysts … would have to include the resolution of certain domestic issues. First checkpoint: The power asset sale [by 1MDB], the outcome of which will be known sometime this month and, more importantly, the pricing, which could go some way to assuaging corporate governance concerns or exacerbating conditions if deemed undesirable.

“If we start to see clarity in this, among other things, foreign funds may be encouraged to come back in, with the ringgit being at its currently depressed level,” he says.

The near-term outlook for the FBM KLCI may not be bright but the good news is that things are not expected to get uglier. “The long-term story is still positive. All that is happening is just noise. In five years, people will know where the US interest rate is, government perception issues will be resolved by another election. Prospects for the Malaysian market are still solid and now is a good time to get your shopping list ready,” advises Salam. - The Edge Markets

Asset Allocation Often Depends on How Long You Can Afford to Stay Invested

When working with a financial adviser, the Investment Policy Statement (IPS) provides an overarching direction for how your money is managed and what is expected of your adviser. The IPS provides a framework for the investment strategy you are trying to accomplish, while spelling out who you are as an investor by defining your risk tolerance and financial goals. The IPS is not simply created after one meeting, but it is developed over time with your adviser. However, your circumstances may change, such as a substantial increase in income or your tolerance for risk may change, which may affect your investment horizons.

When working with clients, one of the most important factors financial advisers consider is your time horizon, or the time you can afford to be invested before you need access to your money. Time should allow you to weather the volatility that is inherent with the stock market; however, time alone is no guarantee of higher returns or less risk. For most investors, the longer your time horizon, the higher your risk tolerance can be. 

Generally, those with at least a 10-year investment horizon should have exposure to equities. This is especially true for your retirement accounts, since you generally cannot touch this money until you retired. This long-term money should be invested in high-quality investments, such as individual high-quality Large-cap stocks across multiple sectors or mutual funds that invest in a similar manner. According to Ibbotson’s 2015 Annual Yearbook, the average annual return for Large-cap stocks since 1926 has been around 12 percent.

Mutual funds can provide instant diversification, allowing investors with smaller amounts of money to diversify among many stocks in a cost effective manner. Your adviser may charge you a fee for managing your portfolio, which should be specified in your IPS. This could be in addition to the management fees that are included in the cost of the mutual funds. If you are working with an adviser and you have between $200,000 and $300,000 in assets, you should consider investing in individual common stocks. With individual stocks, you and your adviser can control when you recognize capital gains or losses, ideally providing you better tax efficiency, all while avoiding a mutual fund management fee.

Depending on your risk tolerance, which should be outlined in your IPS, you may allocate a percentage of the long-term portion of your portfolio to Small- and Mid-cap stocks or International stocks. These can be riskier investments, but when combined into a well-diversified portfolio, their higher volatility should be balanced by a long time horizon and other investments that may be more stable. According to Ibbotson’s 2015 Annual Yearbook, the long-term average annual return for Small-cap stocks has been 16.7 percent since 1926.

You could also use mutual funds or exchange-traded funds for specialized investments, such as International or Small-Cap stocks, because the management fee is often worth the experience and knowledge provided by the fund’s professional management.

As all advisers should tell you, past performance is not indicative of future results. Investing is inherently risky. However, with guidance from experts and your expectations outlined in your Investment Policy Statement, you should have a good idea if you are on track to meet your financial goals. - mdjonline.com

Job Insecurity in Malaysia

KUALA LUMPUR (Oct 17): After almost two decades of near-full employment in the labour market, low unemployment has become a cornerstone of Malaysia’s economic fundamentals, and might even be taken for granted despite the growing economic headwinds, according to the Edge weekly.

In its latest edition, the magazine’s write Ben Shane Lim questioned that as growth decelerates and confidence falters, was it realistic to continue assuming that the low unemployment seen since the 1997 Asian financial crisis can be maintained?

After all, news of retrenchments have been cropping up regularly, and with household debt approaching 88% of GDP, the resilience of the job market has never been more critical, said the Edge.

The magazine highlighted that the latest round of retrenchments saw Shell ( Valuation: None, Fundamental: None) Malaysia announce that it would cut 1,300 upstream jobs from its 6,500-strong workforce over the next two years.

For perspective, there were over 10,000 retrenchments in 2014. In the 12 months ended June 2015, there have been almost 12,000 already — not including Shell’s, it said.

The Edge said job cuts in the oil and gas industry may be expected because of the collapse of oil prices but there has also been a wave of retrenchments in the banking sector this year.

It began with Standard Chartered Bank cutting its Malaysian workforce by 11%, followed by CIMB Group Holdings Bhd ( Valuation: 1.65, Fundamental: 1.05) (3,599 employees, or 11% of its headcount) and RHB Capital Bhd ( Valuation: 1.65, Fundamental: 1.40) (2,700 employees, 15% of workforce), said the magazine.

It said that more recently, it was reported that AffinHwang Capital Sdn Bhd is in the midst of retrenching a couple of hundred employees as well.

The Edge said some manufacturers have also made the news for trimming their workforce, such as Naza Automotive Manufacturing Sdn Bhd, which let go of 255 workers from its plant in Gurun, Kedah. CCM Fertilisers Sdn Bhd, a subsidiary of Chemical Company of Malaysia Bhd ( Valuation: 1.80, Fundamental: 0.35), also announced that 232 employees will be affected by the shutdown of one of its plants in June next year.

The magazine added that against this backdrop, Malaysian Airline Systems Bhd (MAS) ( Valuation: 1.40, Fundamental: 0.80) retrenched nearly 6,000 employees as part of Khazanah Nasional Bhd’s plan to restructure the loss-making national carrier.

“Are the retrenchment figures something that we should be worried about? I think, yes. Apart from the retrenchment of about 11,000 to 12,000 workers, employers are not hiring. With the economic slowdown and uncertainty, employers are taking a wait-and-see approach,” it qouted Datuk Shamsuddin Bardan, executive director of the Malaysian Employers Federation, as saying.

The Edge said the Malaysian Institute of Economic Research’s Consumer Sentiment Index (CSI) for example, has fallen to a new six-year low of 71.7 points, which is comparable to the 2008 global financial crisis levels.

It explained there was no crash in the job market back in 2008, but then, Malaysia was relatively insulated from the shocks to the global economy.

The saving grace was that Asia was the sweet spot for economic growth when the western world was hit hard by the US subprime mortage crisis, it said. - The Edge

For the full report of the state of the employment scenario in the country, read the Edge edition for the week of Oct 19-Oct 25 available now at newstands.

To Weather Market Volatility, Stay Invested for the Long Haul

Even the smartest, savviest investors are unable to control the market.

A key to withstanding market volatility is staying the course when the market roller coaster begins.

There are many things about our financial future that we can control, including our budgets, our spending habits and how we save. According to a recent survey, 80 percent of Americans say they feel in control of their financial futures. But no matter how in control we feel, even the smartest, savviest investor can't control the market.

A key to weathering market volatility is staying invested for the long haul. The market will have its ups and downs, but using these tips can help you stay the course, so you can live the life you envision in retirement.

Don't withdraw. With market downturns you may be tempted to move money out of your plans or withdraw assets. If you take money out of your plan, you're missing out on compounded interest, as well as any gains that the market makes while that money isn't invested. Making decisions based on what the market is doing short-term can negatively impact your long-term goals. Plus, there are tax implications to consider surrounding a withdrawal, and you could be subject to penalties and fees if you don't pay back the loan.

Be realistic about your risk tolerance and goals. Think about what your retirement will look like. Do you want to continue to work into your retirement, or plan on having a part-time job? Would you rather focus your time on traveling, pursing a new hobby or volunteering? Then consider talking to a financial professional to understand and establish the investment strategy you will need to accomplish those goals. There are many risk tolerance questionnaires available online which, along with your financial professional, can help you understand your personal risk tolerance. A recent MOOD of America study commissioned on behalf of Lincoln Finanical Group showed that more than half of Americans believe that meeting with a financial professional is very important when it comes to taking charge of their financial futures.

Diversify your portfolio. A financial professional can help you understand the type of diversified portfolio that is right for you, based on your age, risk tolerance and goals. By diversifying among and within asset classes, you can help balance risk and return. As you get closer to retirement, you may want to move away from return-based to more income-based investments.

Rebalance to manage risk. While your risk tolerance may change as your get older and will affect how you allocate your assets, changes in the market can also change your asset allocation. Over time, your stocks and bonds may grow at different rates, which can alter your investment plan. By rebalancing your portfolio, you can get back to your target allocation. You also may be able to take advantage of auto-rebalancing if your plan offers it, or you may be able to invest in a target-date fund, which may automatically rebalance to ensure your allocation stays aligned with your goals.

Dealing with a volatile market isn't easy, and leaving your money in the market as it fluctuates can feel difficult. But with these tips, the advice of your financial professional and a solid investment strategy, you can ride out the dips in the market and have the retirement you envision. - money.usnews

Stocks And Gold: A New Balanced Portfolio

Summary

• High valuations and low rates make it necessary to build balanced portfolios.
• Gold can be a good diversifier for US stocks.
• Trend following approaches can add value.

Leonardo Da Vinci is credited with stating that "simplicity is the ultimate sophistication." Daniel Khaneman added credence to Da Vinci's belief in his book, Thinking Fast and Slow. Khaneman pointed out that "complexity may work in the odd case, but more often than not it reduces validity." In essence, Khaneman made the case that simpler is in fact better.

The same is most likely true for investing. Despite the fact that our financial system is filled with complex financial products, and often chaotic feedback mechanisms, simple investment strategies tend to work better over the long run. For example, over the last decade, an investor would have been better served to buy a low cost S&P 500 index fund over investing in active managers. Over 80 percent of the active managers failed to outperform their respective benchmarks over that period. This is despite their large research teams, sophisticated investment strategies, and years of training. The simple process of buying an index fund and holding it over the ten year period would have been superior.

Index funds are great, but buy and hold is hardly the optimal investment strategy. The macroeconomic environment, valuations, and the prevailing price trends should be considered. Simple, rules-based approaches can be used to adequately account for dynamic markets. The article, Value and Momentum: A Beautiful Combination, is a great example of using two simple, yet opposed systems, to formulate a sound overall investment methodology. The purpose of this paper is to explore a new twist on a balanced approach to investing through a simple system.

Chart 1: Four Valuation Indicators
Courtesy of Doug Short

US stocks are severely overvalued by most measures that demonstrate historical accuracy. Chart 1 gives a pretty good summary of the overvalued state of stocks using several respected measures of market valuation. Thus, long-term investors should diversify their investment in the US equities market with other asset classes. The first thought that normally comes to mind is to diversify in different asset classes of equity. Many value investors would point to the undervalued emerging and international stocks suggesting that they may offer better future returns than the US stock market. The problem with this idea is that global stocks tend to be highly correlated with US markets during periods of stress.

During the summer months of 2008, most stock market asset classes fell together. Correlations between different classes of equity moved towards one, signifying a lack of diversification and an increase in portfolio risk. Bonds are also typically referenced as a good diversifier when paired with equity investments. This is normally the case as bonds have a tendency to dampen the volatility of the overall portfolio over time. The problem with diversifying into bonds in a long-term portfolio is the fact that interest rates are historically low and we are thirty years into a bond bull market. At some point, in the next twenty years, one would expect interest rates to be higher than the current rates. That expectation could lead to poor returns for bonds, especially if all the monetary stimulus turns around to haunt us with inflation. Consequently, it made sense to us to scour other asset classes with historically low correlations to stocks but with the ability to protect a portfolio against inflation or rapidly rising interest rates.

With the backdrop of accommodative central banks, record debt levels in developed nations, slow growth, and deflationary conditions, gold became the asset class of choice. Partly for the controversy, as investors hate and love the yellow metal. Our view of gold is primarily price related as we are quantitative investment managers. However, from a fundamental perspective, gold makes a lot of sense as a portfolio hedge. It is a currency in its basic form and hedges against the fall of other global currencies. Therefore, we decided to test out a new balanced investment approach where we diversified US stocks with gold.

Since we do not believe that volatility is risk, we did not determine our weightings to stocks and gold through volatility targeting or risk budgeting approach. Living up to our heretic ways, we instead equally weighted the two asset classes and ran a comparison versus the S&P 500 from 1972 through 2014. The hypothetical results were as follows:

Chart 2: Stocks vs. Stocks & Gold
Clint Sorenson, CFA, CMT
Data Courtesy of NYU Stern School of Business, Global Financial Data, Morningstar1

The two strategies did a good job growing the initial investment over the time period. Although, the drawdown was much less for the portfolio of 50 percent stocks and 50 percent gold. The S&P 500 fell more than 55 percent during the time period referenced above. The 50 percent stock and 50 percent gold portfolio fell a maximum of 31 percent. Growth was similar between the two strategies. $1 million invested in 1972 would have become over $72 million in the S&P 500 through 2014. The same amount put into the balanced portfolio would have turned into almost $59 million. Obviously, the S&P 500 would have been the overall winner in a competition of growth over this period of time.

We decided to apply a simple trend following method to the balanced portfolio for further comparison. The rules are as follows:

1. Measure each asset class (US Stocks and Gold) against their 8 month simple moving averages
2. If the closing monthly price is above the moving average, the portion of the portfolio would be invested in the asset class (Buy Signal)
3. If the closing monthly price is below the moving average then the portion of the portfolio would be invested in the 10 year US Treasury (Sell Signal)

The following table embodies all possible portfolio allocations:


                                                              Allocation Range

Stocks (NYSEARCA:SPY)                                0-50%

Gold (NYSEARCA:GLD)                                  0-50%

US Ten Year Treasury (NYSEARCA:IEF)           0-100%

Applying the simple buy and sell discipline to the balanced portfolio makes all the difference historically. Since 1972 $1 million invested in the trend following approach grows to over $286 million. This is significantly more than the S&P 500 or the static 50/50 (Stock/Gold) portfolio. Furthermore, the growth comes on the back of reduced drawdown. The maximum drawdown of the trend following portfolio is only slightly more than 18 percent. Applying the simple trend filter allows for enhanced return and reduced risk. Historically, it has made sense to rent bonds during periods where stocks and gold have entered negative trends.

Chart 3: Trend approach to Gold and Stock portfolio
Clint Sorenson, CFA, CMT
Data Courtesy of NYU Stern School of Business, Global Financial Data, Morningstar2

It is our opinion that we are in the third equity market bubble in the past fifteen years. Historically high valuations, large amounts of public and private debt, unprecedented monetary support, and negative real interest rates have challenged the common approaches to portfolio construction. We hope we have demonstrated a way to simplify diversification using a portfolio of stocks and gold. A sound investment approach does not have to be complicated to generate attractive results.

1. For the 50/50 strategy of Stocks and Gold, we used index data through 2005 and then ETF data from 2006 through 2014. We used SPY to replicate the S&P 500 and GLD to replicate gold.

2. For the trend following strategy of Stocks and Gold, we used index data through 2005 and then ETF data from 2006 through 2014. We used SPY to replicate the S&P 500, GLD to replicate gold, and IEF to replicate the 10 year Treasury bond. - seekingalpha.com

Fund Houses Lose $700bn in ‘Particularly Brutal’ Q3

Seven of the world’s largest fund managers collectively lost more than half a trillion dollars in assets during the third quarter as they struggled to cope with the fallout from Black Monday. The slump has sparked fears investors will pull more money during the final months of the year.

The assets of BlackRock, T Rowe Price, Franklin Templeton and the fund arms of BNY Mellon, JPMorgan, Bank of America Merrill Lynch and State Street dropped between 4 and 11 per cent in the three months to the end of September, wiping $727.7bn off their collective asset base.

The slide in assets is in stark contrast to the first half of the year, when BlackRock, JPMorgan, BofA, T Rowe Price and BNY Mellon all saw a jump in assets on the back of buoyant markets and strong investor demand.

Peter Lenardos, an analyst at RBC Capital Markets, the investment bank, said the third quarter was “particularly brutal”. Equity markets slumped globally during the summer amid turmoil in China, with billions wiped off the value of world markets on Black Monday in August. US and global equities had their worst quarterly performance since 2011.

The assets managed by BlackRock, the world’s largest asset manager, fell by $215bn during the three months to the end of September, equivalent to the funds run by Nordea Asset Management.

The fall heaps more pain on asset managers whose balance sheets are already under strain because of a price war around product fees and growing regulatory costs.

Smaller fund houses Ashmore, Jupiter and Gam also reported falls in their assets under management during the quarter.

Amin Rajan, chief executive of Create Research, a consultancy, said some investors panicked during the third quarter and took flight. “Others remain, but are completely unsure which way to jump.”

He warned that investors are likely to switch asset classes during the final months of the year. “We are going to see a lot of rebalancing. If [investors] do not see a lot of returns in asset class X, they will switch to asset Y.”

Jake Moeller, head of UK and Ireland research at Lipper, the data provider, agreed: “I would anticipate more outflows. I would expect what has started [following the situation in] China to continue.” Mr Lenardos added that the third quarter was “not a one-off”.

Chart: Fall in assets under management


A decline in assets directly hits profitability. Franklin’s profits slid 44 per cent during the third quarter, while BlackRock’s fell 8 per cent compared with the third quarter of 2014.

The Dow Jones Industrial Average, the benchmark, is up around 7 per cent this month, and some analysts believe investors are unlikely to pull money from products during the final few months of the year, especially as markets have improved.

Paul McGinnis, an analyst at Shore Capital, the boutique, was doubtful the third quarter would have an impact on where investors put their money for the rest of the year. “Certainly, any institutional investors will have already been well aware of what markets were doing on a daily basis in [the third quarter] and making asset allocation decisions accordingly,” he said.

Alec Lucas, an analyst at Morningstar, the data provider, added: “My guess is that those who have been in the market will not, on the whole, be spooked.

“As for those who have yet to get back into the market, the volatility will probably continue to scare them off.”

Bank of America, JPMorgan and BNY Mellon declined to comment. The others linked the fall in assets to market volatility and some investment strategies being out of favour. - ft.com

3 Questions for Every Investor

Some financial advisors try to bowl you over with fancy language. Disarm them - and arm yourself for your future - with a few simple questions.

One complaint I hear as a financial advisor is that investment jargon - ETFs, P/E ratios, DRIP plans and other terms loaded with capital letters - bores, confuses and overwhelms people seeking advice.

To stop the buzzing in your head, apply the 80/20 rule, a.k.a. the Pareto Principle , which states that in most situations 20% of invested input drives 80% of the results. For example, 80% of the time you wear 20% of your wardrobe, or 80% of the meals you cook come from the same 20% of your recipe collection.

The principle applies perfectly to investing. Most (maybe even 80%) of your long-term financial success stems from your understanding three simple factors: asset allocation, fees and performance.

Ask your advisor:

"What is my asset allocation?" The mix of stocks, bonds, hard assets and cash you create, your allocation of assets, ranks as perhaps your most important investment decision. Studies suggest that asset allocation drives long-run performance and explains roughly nine-tenths of your returns' variability over time.

My favorite asset allocation rule comes from Vanguard founder John Bogle , who ties optimal bond-to-portfolio percentage to your age. At age 40 you commit 40% of your portfolio to bonds and 60% to stocks, for instance. Allow wiggle room to accommodate personal circumstances and your stomach for portfolio gyrations.

"What are my total fees?" Even a small increase in portfolio maintenance fees adds up fast. For example, over a 30-year period, assuming 6.5% compound annual returns, each additional 1% in fees reduces the end value of your portfolio 25%. Hard to keep calm facing that cost.

Fees come in many forms. You may pay a financial advisor a percent of assets under management , commissions or an hourly fee. If you invest in mutual funds or exchange-traded funds (ETFs, mentioned above) that track an index but trade like stock, then you pay underlying expense ratios , or what it costs an investment company to operate a mutual fund.

As I mention in a prior piece , actively managed funds almost always charge higher fees than passive index-like funds despite weighty evidence that they don't consistently beat the market.

Other types of fees can include commissions, trading spreads , loads (a sales charge or commission on a mutual fund) and even tax consequences.

Focus especially hard on the all-in fee , or every cost involved in your financial transactions. Find out what the advisor charges and  any additional fees from the investments the advisor steers you toward.

Work with an advisor who focuses on index-like strategies to help keep all-in costs to 1.4% or less. Many active portfolios' total fees are north of 2.5% - generally 1% for the advisor and 1.5% in active funds' fees.

The bargain-basement approach calls for using index funds on your own. Bear in mind that a single bad decision on your own can wipe out  way  more principal than the 1% you pay to the right advisor.

"What was my portfolio's performance?" If you set the right asset allocation and keep fees low, you don't need to review your portfolio every month. Close each year with a review of your portfolio's annual and inception-to-date performance to spot any needed changes to either your annual rate of saving or spending.

This holds especially true once you retire. Even if in retirement you spend 4% of your portfolio a year, adjusted for inflation, studies show that spending less after particularly tough market years increases the odds you won't outlive your money.

By the way, price-earnings (P/E) ratios mean the price of one share of a company's stock divided by how much the company earned per share over the previous year. Dividend reinvestment ( DRIP ) plans allow investors to reinvest dividends. Now these two won't confuse or overwhelm you.

Learning to ask - and answer - these questions also increases the odds of your financial success. - Nasdaq

Why Investors Need to Diversify Away From 'Branded' Mainstream Funds

Claire Madden, partner at Connection Capital, believes a 'radical' new approach is required to move investors away from large 'branded’ funds and towards smaller and more esoteric private equity funds

For most private investors, investing in funds usually means only one thing: traditional equity funds run by large fund managers. 

This approach is often seen as the 'safe' option, and often it is also generally the only option. But are investors’ interests being well served by managers always sticking so closely to the mainstream?

Portfolio diversification may be a core tenet of investment strategy but in reality it can be hard to achieve. The tendency to recommend larger, well established mainstream funds rather than smaller ones to investors has very little to do with performance, as the idea of a correlation between size and success is tenuous at best.

Recent research from Cass Business School commissioned by Gatemore Capital Management has shown smaller private funds outperform large ones – even in times of economic turbulence.

A radical new approach is required. After all, institutional investors are recognising the value of small or niche, yet highly-performing, funds that are offering innovative strategies.

Brand security

There are several reasons why smaller, non-mainstream funds can offer attractive returns potential. So why are there not more advisers offering them to clients?

One reason is big brand security as it is true, "no one ever got fired for buying IBM". Well-known, well-established names provide a sense of confidence, even if performance is not top quartile.

Another reason is advisers are not required to exercise anywhere near as much in the way of judgement or intensive analysis when recommending a large fund manager who has been around for some time. Therefore, smaller, more esoteric funds simply tend to go unnoticed.

"A radical new approach is required. After all, institutional investors are recognising the value of small or niche, yet highly-performing, funds that are offering innovative strategies."

We feel a radical new approach is required. After all, institutional investors are recognising the value of small or niche, yet highly-performing, funds that are offering innovative strategies ranging from private equity liquidity funding, mezzanine debt, or commercial litigation.

Why should experienced private investors with the right risk appetite and profile be locked out?

The answer is for private investors to become institutional investors themselves. That might sound like a contradiction in terms, but they can aggregate their investment power and act as a single point of contact through businesses effectively acting as an institution on their behalf.

This is not a fund of funds model – the layers of fees associated with that approach often kills returns. This is about direct access to top performing funds who have no desire to become the next BlackRock or Invesco and therefore keep a low profile.

"Private clients need to be represented by experienced and proactive investment professionals who have the expertise and industry connections to spot value."

Niche area

In order to be successful in choosing the right funds to place capital with, a similar approach is needed to sourcing, negotiating and managing investment opportunities to that of a pension fund or sovereign wealth fund.

Private clients need to be represented by experienced and proactive investment professionals who have the expertise and industry connections to spot value as well as the reputation and track record to be taken seriously as an institutional player.

This is still a highly niche area in itself, but one that is growing to fill a clear gap in the market. Our experience is there are many experienced, sophisticated private investors out there who have a higher tolerance to risk than your average retail investor and who are frustrated that their requirements are not being served.

Small, uncorrelated non-mainstream funds should all have a place in a well-rounded investment portfolio. It is time the industry started to help private investors achieve true diversification. - Investment Week

Five Key Questions to Ask About Investments as the Stock Markets Recover

One of the biggest mistakes long-term investors make is getting out of the stock market at the wrong time. We've all heard the saying "buy low, sell high," but mom-and-pop investors have a tendency to panic during market declines and sell when stock prices are down, locking in losses. But financial expert Mark Lamkin from Lamkin Wealth Services says it's predictable. Institutional investors crave market bull backs and bear markets, while many individual investors panic and sell!

Studies have shown that the majority of "ma and pa" investors not only underperform the markets but underperform their OWN investments.

To avoid becoming a casualty of the herd and selling at the wrong time, consider employing these Five strategies during a market correction:

1. Entertainment versus Advice

Do you love Jim Cramer's mad money? My opinion it's entertainment not advice. Listening to the wrong sources and reading about the dire economic predictions can heighten your nervousness. Don't look at your portfolio all the time. Turn off the TV and stop listening to your neighbor and the doom-and-gloom prognosticators. Focus on what you can control, which is your spending and saving. Don't sell because of this information!

2. Buy again?

Would you buy them again? This is the best time to increase your 401k contributions and START a DCA (dollar cost average) program. Do you want to buy cheap? If you wouldn't buy anything all over again, that no longer meet strong investment criteria are likely to decline the most in a market fall. You will be increasing your cash position, which can be used for the purchase of new stocks at attractive prices once the decline is over," Dayton says.

3. Make a list of Bargains

A declining market can offer the opportunity to add to your long-term investment portfolio at a lower price point. Long-term investors should welcome the occasional bear market if they have a good investment strategy and the discipline to see it through. The historical stock market trend is upward, and occasional bull markets are an opportunity to buy stocks while they are 'on sale.'

4. Get Diverse-Think small and mid

A portfolio allocation with 60 percent stocks and 40 percent bonds is an old benchmark and starting point for portfolio diversification. Check out stock-and-bond mixes in a target-date fund based on your age to get an idea of appropriate allocations for your time horizon. Four of the last five years, diversification has detracted from returns. Most people have migrated to Large Caps-now may be time to change that!

5. I Guarantee a Bear Market-Someday!

Lamkin says he's telling you "a Bear Market Will happen," what are you going to do?

Get a grip on your emotions. You may not be able to avoid an emotional response, but you can manage it. Following an investment process and being prepared for the inevitable market declines helps you act prudently, keep truly great companies in your portfolio for the long term, protect them during market slumps and be in a position to buy other great companies at attractive prices when others are selling them in panic.

Bottom line- People don't plan to fail, they fail to plan. Build a plan, take advantage of weak prices, add when you can and be greedy when others are fearful as Warren Buffet likes to say. - WDRB

Investing Behaviors to Avoid

Most investors lag the results of the overall stock market because they make one or more of the following mistakes:

1. Overconfidence: Stock-picking is difficult yet many people believe they can select winning stocks or stock funds.

2. Constant surveillance: Many investors check the results of their portfolios frequently. The more often they check, the more likely it is they will experience losses and decide to abandon whatever long-term plan they might have had.

3. Trend-following: Some people buy the stocks or market sectors that have done well recently while avoiding those that have done poorly. Others invest with managers who have beaten the market recently. Either way, it’s unlikely that today’s trends will continue much longer.

To avoid these errors, put together a well-diversified portfolio and stay the course, long-term. If you invest through funds, pick managers who have delivered consistent results over extended time periods.

Asset allocation is just step one, though; step two is regular re-balancing, to maintain that allocation.

Suppose, for example, your basic allocation is 60 percent to U.S. stocks, 20 percent to international stocks, and 20 percent to bonds and international stocks posted strong gains, U.S. stocks were up a smaller amount, and bonds were flat. Therefore, the value of the stocks in your portfolio would have increased while your bond allocation has dropped. To re-balance and get back to your original asset allocation, you should sell some stocks and put the money into bonds.

The need to rebalance—and the unfortunate habit of many investors not doing it—is one reason to consider lifecycle, or target date funds such as are offered by Private Equity Funds and many mutual funds. - fedweek.com

How to be a Better Investor

A dozen or more years ago, I would occasionally be invited onto a financial television channel and, if my fellow guests ever paused for breath from raving about the latest "must-own" stock, I would be asked how viewers might become better investors.

Unfortunately - if only for any dreams I harboured of becoming a TV pundit - the answer to that question does not change on a daily basis.

"Have a plan," I would always say. "Know your goals, time frame and tolerance for risk. Think long term, diversify your portfolio and pay attention to costs. Oh - and don't believe everything the media says." All very sensible stuff but hardly gripping telly, and the invitations soon dried up.

But there are simple things both newcomers and seasoned investors can do to ensure a portfolio is sensibly structured, risk is contained and costs are kept to a minimum - all of which should help to enhance returns over the longer term.

1. Risk and Reward

Let's start with what Jason Butler describes as the most important consideration. "Know why you are investing," says the founder of wealth manager Bloomsbury Wealth and author of The Financial Times Guide to Wealth Management.

"Have the context and clarity of a well-structured financial plan that takes into account why you are investing, how best to achieve your life goals and the risks that are most likely to be compensated in the form of long-term investment returns."

This view is echoed by Nick Hungerford, chief executive of online investment management company Nutmeg, who underlines the importance of investors understanding and then balancing risk and reward.

"You need to feel comfortable with the level of risk you are taking in return for the possible gains you hope to see," he explains.

"Have a goal in mind - are you saving for retirement, say, your child's education or a rainy day? How much do you want to accumulate and how bumpy a ride are you prepared to take as the financial markets inevitably ebb and flow? This is when you need to stay disciplined and focused on your long-term goal."

The importance of a long-term approach to investing is hard to overstate. "Market fluctuations are a feature of investing," says Gavin Haynes, managing director at wealth manager Whitechurch Securities.

"I have yet to meet anyone who has consistently made money by timing the markets correctly over the short term. Successful investing is largely driven by holding a blend of quality investments for the long term.

2. Diversify

In that context, "blend" is a deceptively simple term, as it effectively encompasses the key investment disciplines of asset allocation and diversification.

According to Jason Hollands, managing director of communications at financial planning firm Tilney Bestinvest, a common mistake among those who manage their own investments is making ad hoc decisions as they go along.

"Unfortunately this often results in choosing whatever investments are currently in fashion," he warns. "Over time, people can end up building a museum of yesterday's 'best ideas' rather than a well-planned portfolio with an overall strategy. Their collection of investments can become unnecessarily risky and cumbersome to monitor."

This problem is exacerbated by a tendency for financial services businesses to focus heavily on individual fund ideas, while offering little or no information to help investors decide on an appropriate asset allocation strategy - how they should best slice up their investment cake between equities, bonds, property, alternatives, cash and so forth.

When it comes to diversification, Haynes believes a portfolio that concentrates on only a few investments is likely to fail in its objectives. "Whether you have a cautious or a speculative attitude to risk, ensure your portfolio is diversified in the investments it holds," he says. "Finding the right balance will depend on your needs and risk appetite."

Both Haynes and Hollands pick 20 as a sensible upper limit of holdings for fund-based investors. "This way, the next time you want to invest in something new, you are forced to decide which fund to sell to make room," says Hollands. "You go through an almost Darwinian process where every fund must fight to survive in your portfolio."

Once you have your spread of investments sorted, your work is not over. "Periodically review your portfolio - at least annually - and if necessary, rebalance it," adds Hollands.

"Not only will this ensure it continues to meet your risk profile and goals, it will also force you to take profits in markets that have risen sharply and reinvest in areas that may now offer better value."

3. Costs and value

Like it or not, costs are a fact of investment life. One small plus point, however, is that this is an area where you can exercise some genuine control, so there is little excuse for not being fully on top of what you are being charged for owning your investments.

"Hidden costs and commissions can scupper your financial dreams," warns Hungerford, "so know exactly what you are likely to be paying in charges before you commit."

When buying funds, the key number to note is the "ongoing charges figure" (OCF), which represents the total cost of owning a fund, including the annual management charge and other recurring expenses, and is intended to make it easier to compare costs.

If you hold investments on a platform, there will be a fee attached for administering your portfolio and you should also check whether there are additional transaction costs when buying and selling investments.

"A wealth manager or adviser ought to provide clients with a monetary figure for the total cost of investing," says Haynes. "DIY investors will need to calculate the costs themselves and then decide the most cost-effective way to proceed."

The financial services sector can often tie itself in knots with the idea that cost is a more important consideration than value - that cheapness is in itself a virtue. Nowhere is this more evident than in the debate over whether it is best to invest in cheaper index-tracking funds or actively managed portfolios that cost more but are not guaranteed to outperform.

"The cheapest option is not always best, but an optimum portfolio can invest in a mix of both," says Haynes. "I will only pay higher management fees for those investment strategies that genuinely have the potential to deliver higher risk-adjusted returns and for exposure to areas that passive funds cannot access, such as commercial property or absolute return."

With the vexed issue of costs and value explained, we will end this review of ways to become a better investor on an upfront note and where we began - with an observation from Butler.

"The media is not designed to help you to make good financial decisions," he warns. "It focuses on what personal finance professionals call 'noise', in the form of negative stories or sensationalist 'get rich quick' ideas, because they are newsworthy. Remember that when forming your opinions about money."

Still, in the interests of balance, it is worth pointing out that monthly personal finance magazines, and certainly Money Observer, are about as far removed from "noise" as it is possible to find in the media these days - and certainly compared with a TV show pushing the latest stocks du jour. - interactive investor

BNP Paribas Holds Nerve in Shorting Malaysia as Ringgit Surges

• Currency among October's top five gainers in emerging markets
• Nation's problems won't be resolved soon, fund manager says

A rebound in Malaysia’s ringgit will prove short-lived as the factors that made it Asia’s worst performer this year show few signs of going away, according to an investment arm of France’s largest bank.

“We’re in a situation where nothing’s changed, so therefore the only conclusion we have is that Malaysia remains a market to be short,” said Mark Capstick, a London-based fund manager at BNP Paribas Investment Partners, which oversees 532 billion euros ($605 billion). “We’re short right across the board,” he said, adding that assets being bet against include the ringgit as well as the nation’s local-currency and global bonds.

While the ringgit has appreciated more than 6 percent in October to rank among the top five in emerging markets, it’s been dogged by a persistent drop in oil prices, slowing Chinese growth and a probe of fund transfers into Prime Minister Najib Razak’s bank accounts. Malaysia’s currency is rebounding from a 17-year low reached in September as the receding prospect of a U.S. interest-rate increase in 2015 revives demand for higher-yielding assets worldwide.

Like BNP Paribas, Pacific Investment Management Co. is also sticking to its guns and maintaining bets that the ringgit’s slide will resume. Pimco, which oversees $1.52 trillion, reported Oct. 1 it had short positions on emerging-market currencies including the ringgit, Thai baht and South Korea’s won.

Global funds have pulled 41.5 billion ringgit ($10 billion) from Malaysian debt and equities this year amid a 15 percent slide in the ringgit. The halving in Brent crude prices from a 2014 peak is crimping government revenue for Asia’s only major oil exporter, just as growth slows in China, Malaysia’s second-biggest export market.

Najib Removal

Investor confidence has also soured because of rising debt at state investment company 1Malaysia Development Bhd., whose advisory board the prime minister chairs. Najib has drawn flack over 1MDB from lawmakers, including a call from former leader Mahathir Mohamad for him to step down. The company is in the course of selling assets to appease the criticism.

“My gut feeling is that people would like him to be removed but the chances of that happening are particularly slight,” said BNP’s Capstick. “The political problems will just be a constant.”

There are a couple of “bright lights,” said Capstick, citing the winding down of 1MDB, the currency-swap lines Malaysia has with China and the “sizable” pension funds that the nation could fall back on. The Employees Provident Fund had 667 billion ringgit of assets as of June 2015, according to the state-controlled entity’s website.

The drop in Malaysia’s foreign-exchange reserves completes the “whole risk,” Capstick said, noting that the central bank will be looking to accumulate dollars during periods of ringgit gains, said Capstick. The stockpile fell 20 percent this year to $93.3 billion in September, central bank data show.
“Malaysia remains a market to be short, although we have to accept that at times when the market takes a breather, you’re going to get these slight reversals," he said. - Bloomberg

Malaysia Among Highest FX Reserve Drops Outside China

Mexico, Indonesia and Malaysia saw some of the sharpest falls in central bank reserves over the past quarter as investor flight from emerging markets forced policymakers to defend their currencies.

The issue has drawn particular attention after Chinese reserves, the world's biggest, fell by a record US$180 billion in the third quarter due to interventions to support the yuan after a mid-August devaluation.

But smaller emerging economies too are suffering steady reserve losses.

Investors withdrew a record US$40 billion from emerging stocks and bonds in the third quarter, the Institute of International Finance said. Equities fell almost 20 percent and dollar bond yield spreads rose almost 100 basis points over US Treasuries.

Amid the turmoil, most countries tried to support their currencies, which hit record or multi-month lows against the dollar.

Mexican and Malaysian reserves fell by over US$12 billion between July and end-September, while Indonesia and South Korea lost US$6.3 billion and US$6.9 billion respectively, though some losses were down to euro-dollar exchange rate effects.

Malaysian reserves are down by US$22.7 billion or almost a fifth this year, and Indonesia has lost US$10 billion or 9 percent.

"You are seeing net FX reserves depletion even when you strip out valuation effects," said UBS strategist Manik Narain, adding that pressure in the past three months had been the most acute since 2009, taking reserves to mid-2013 levels.

Nigeria has lost more than 12 percent of its reserves despite imposing capital curbs.

Some countries have been selling overseas securities, with Saudi Arabia last week reporting that the central bank's net foreign assets had fallen US$6.6 billion in August to US$655 billion, off last year's US$737 billion record high.

"With oil prices levelling off a bit, the drag on reserves for the likes of Malaysia and Saudi has reduced somewhat but overall risks are still skewed to the downside," Narain added.

News headlines ‘misleading’

What's more, headline reserve data in some countries may also be misleading. Brazilian reserves are stable at around US$370 billion, as the central bank does not tend to sell dollars directly, but it has a "forwards book" deficit amounting to US$108 billion, central bank data shows.

Taking into account this short-dollar position, reserves are much lower than they appear.

Reserves can be massaged in other ways. Turkey's headline figure is a healthy US$117 billion but this includes commercial banks' hard currency reserve deposits at the central bank. Actual reserves are reckoned by analysts to be less than US$50 billion.

Reserves are still rising in some countries. Hong Kong authorities have been selling the local currency in the face of relentless upward pressure on its dollar peg and its reserves rose US$4.3 billion over the quarter and 5 percent since December.

Russia posted a quarterly rise of US$12 billion in headline reserves although they are down 5 percent over the year.

Indian reserves were flat over the quarter but have risen almost 10 percent this year. - Reuters

A Case of Brazil Blight? Scandal-Hit Malaysia Risks Lost Decade

• Emerging market giants face distraction of political scandals
• Malaysia handouts to poor expected to rise in coming budget

Meet Malaysia, the new Brazil.

Nearly felled by the Asian financial crisis in the late 1990s, the Southeast Asian nation recovered to become a global commodities juggernaut, known for its stable government and investor-friendly policies. Now, with its premier enveloped by a multi million dollar funding scandal, Malaysia risks being infected with the kind of economic malaise that has struck its emerging market counterpart in South America.

Prime Minister Najib Razak, 62, has denied any wrongdoing. But as investigations continue and opponents like previous premier Mahathir Mohamad call for his resignation, the danger is the leadership stays in fire-fighting mode. The economy is already hit by a slowdown in prices for oil and natural gas, and Najib is expected to make bigger handouts to the poor in the budget on Oct. 23. Could Malaysia slide into a “lost decade”?

“Malaysia risks not just being left behind, but falling off the radar all together, especially with foreign investors,” said Jim Walker, managing director at Hong Kong-based Asianomics Ltd. and former chief economist at CLSA Asia-Pacific Markets. “People are definitely shying away from Malaysia,” he said, and the politics of Malaysia is “by far the biggest threat”.

Foreign investors are noticing. They pulled $4.6 billion from stocks and bonds last quarter and sent the currency to a 17-year low. While the ringgit has since recovered alongside emerging market currencies it’s still down about 15 percent this year, the worst performer in the Asia Pacific region. Approved foreign direct investment fell about 42 percent in the first half of 2015 to 21.3 billion ringgit.

Currency under attack

"The reforms are not taking place because Najib is preoccupied," said Saifuddin Abdullah, a former deputy minister in Najib’s government and ex-member of his United Malays National Organisation supreme council, who has now joined an opposition party. "It’s maintenance mode" for companies as they wait for an end to political uncertainty, he said.

A decade-long commodities boom improved the budget position and the lives of many Malaysians, with per capita gross domestic product more than doubling and the poverty rate falling to 1 percent. But as that benefit wanes -- growth has slowed from a peak of 7.4 percent in 2010 to about 5 percent now -- the government is falling back on strategies like state-led spending as foreign companies hold back on new investments.

Half a world away, Brazil is an example of how that doesn’t always work. President Dilma Rousseff increased spending at the end of her first term as growth began to slow, a move that helped fuel inflation and contributed to swelling debt.

The emerging market that was the darling of international investors is now seeing its leader fight for her political survival amid a graft scandal engulfing state-run oil giant Petroleo Brasileiro SA. Latin America’s biggest economy is heading for its deepest recession in at least a quarter century.

Credit default swaps show bond risk rising

For Najib, shoring up the economy and confidence is key as he also fends off criticism of his leadership amid a scandal over nearly $700 million that appeared in his bank accounts before the election in 2013, a ballot where his coalition lost the popular vote for the first time while keeping power. Najib acknowledged the money reached his accounts but said it was political donations from the Middle East rather than public funds, an initial conclusion reached too by the anti-corruption commission.

The government is also embroiled in claims of financial irregularities at state investment company 1Malaysia Development Bhd., whose advisory board is chaired by Najib and which nearly defaulted this year after amassing 42 billion ringgit of debt. 1MDB didn’t respond to an e-mail and calls seeking comment. It said this month the attorney-general hadn’t found evidence of wrongdoing.

Parliament Resumes

Political pressure on Najib may increase as parliament resumes Monday, with results of more 1MDB probes expected in the next three months. Mahathir has led calls for a parliamentary vote of no confidence in Najib, though the premier has the support of many of the ruling party’s divisional chiefs and the opposition remains fragmented after its alliance split this year.

“It’s the uncertainty with the investigation analogous to what we see in Brazil which adds to volatility,” said Edwin Gutierrez, who helps oversee $13 billion as the head of emerging-market sovereign debt at Aberdeen Asset Management Plc in London, comparing 1MDB to the probe at Petrobras.

Perched on the lower end of peninsular Southeast Asia, Malaysia straddles some of the world’s busiest waterways and is a conduit for trade between Europe and Asian economic powers like Japan and China. Bigger in area than all but four U.S. states, Malaysia is a net oil and gas exporter and the world’s second-largest producer of palm oil.

Ringgit Peg

The Malay-dominated party now headed by Najib has been in power since independence in 1957, the main actor in one of the longest-ruling coalitions in the world. Past premiers have steered it through a series of crises -- including the pegging of the ringgit during the Mahathir era -- and under Najib toward his oft-stated goal of turning Malaysia into a high-income nation by 2020.

There are differences with Brazil: Malaysia’s estimated budget deficit is a third of Brazil’s as a percentage of GDP, while inflation is forecast at 2 percent to 3 percent this year compared with the Latin American nation’s 9.5 percent.

Still, both leaders have become entangled in state companies. Rousseff chaired Petrobras’s board from 2003 to 2010 and has said she was unaware of corruption while at the company, while Najib has said he wouldn’t tolerate the misuse of 1MDB funds.

Political Distraction

Malaysia central bank Governor Zeti Akhtar Aziz has acknowledged the impact of the scandals. “People are distracted now because our country rarely has political developments of this nature," she said in an interview. Najib’s office didn’t respond to an e-mail and calls seeking comment.

Since 2013, when ethnic Chinese voters deserted his coalition, Najib has moved to shore up his Malay base via the retention of socio-economic privileges for the majority group. Such policies have led to concerns about the potential for racial tensions in the moderate Islamic state. He’s also ordered state investment funds to give stocks a 20 billion ringgit boost, and get government-linked companies to build more hospitals.

“Malaysia has run out of ideas,” said William Case, who teaches international political economy at City University of Hong Kong. “There are state interventions when they should be freeing up markets and embracing more openness and transparency. I don’t see any obvious drivers at this stage to lift it to the next stage of development.”

Sales Tax

The scandal has overshadowed Najib’s achievements. He fended off opposition to introduce an unpopular goods and services levy in April in an effort to widen the tax base and limit a reliance on oil revenue.  In 2010 he unveiled an economic transformation plan, and announced key areas he would focus on to help make Malaysia a high-income nation.

“Early in his tenure, I had great hopes with all the reforms that looked quite promising,” Case said. “But all of that has fallen by the way in the socio-political pressures.”

The government isn’t addressing longstanding concerns, according to the Federation of Malaysian Manufacturers. The Malaysian International Chamber of Commerce & Industry said some recommendations it tabled as part of a five-year government strategy known as the 11th Malaysia Plan were similar to what it submitted in 2000.

‘Same Old’

"Same-old same-old worked when you have high commodity prices, if there are no overwhelming financial or political scandals waiting to bury you in a huge tsunami,” said Lim Guan Eng, chief minister of Penang state and an opposition Democratic Action Party lawmaker.

Addressing investors last month in New York, Najib said Malaysia remains a good place to do business.

Not everyone is convinced. The economy is “holed below the waterline,” said Andrew Harding, a law professor at the National University of Singapore. “The country needs deep-rooted reform,” he said. "We might be at the beginning of a lost decade.” - Bloomberg