Monthly Archives: October 2009

Is the Consumer Losing Confidence?

Consumer confidence in the United States appears to be waning after a recent wave of optimism. According to a recent Reuters/University of Michigan Survey of Consumers, consumer sentiment fell from 73.5 in September to 69.4 in October. Further, the Survey's economic outlook index also decreased, falling from73.5 in September to 67.6 in October.Read more

Interest Rates and the Value of the U.S. Dollar

The Federal Funds Target Rate has been residing within the 0.00% - 0.25% range for all of 2009 thus far. The Federal Reserve has maintained this target range with the hopes of providing additional credit opportunities to allow for economic stimulus.Read more

Understanding Treasury Inflation Protected Securities (

According to Russell Investments, as of September 30, 2009, core inflation is currently at 1.40%, below the Federal Reserve's unofficial target range of 1.50% - 2.00%. Hence, many have concluded that inflation is not present and perhaps not an imminent threat. We, however, believe otherwise. We, at Hennion & Walsh, believe that the threat of inflation may be upon us already and the impact of inflation could have a significant impact on the economy and on the portfolios of individual investors.Read more

Looking to Earnings for Guidance

According to Thomson Reuters, over 70% of companies beat their 2nd quarter estimates which marked the highest percentage of companies surpassing estimates since Thomson Reuters began tracking this type of data back in 1994. To put this in a historical perspective, in a typical quarter, approximately 61% of companies eclipse their estimates. One particular industry showing particular strength was Health Care which interestingly is also one of the only industries that has actually added jobs in the last twelve month period. However, we, at Hennion & Walsh, believe that third quarter earnings should be carefully dissected before reaching any forward-looking conclusions and further believe that this holiday season will likely disappoint and lead to lower fourth quarter earnings than many analysts are predicting at this point in time.Read more

Why Most Active Managers Often Fall Short

A recent study by Morningstar that was discussed in a Wall Street Journal article by Sam Mamudi entitled, "Active Management Loses in Risk Study," added further fuel to the fire of the ongoing debate over the merits of active and passive investment management strategies. As a reminder, active investment strategies generally attempt to outperform their associated benchmark indexes while passive investment strategies generally attempt to track, or stay in line with, their associated benchmark indexes. While it has widely been established that active mutual fund managers generally underperform their benchmark indices, the Morningstar study goes further to conclude that, on a risk adjusted basis, even more active mutual fund managers fall short. Specifically, the Morningstar study found that over the past three years, only 37% of actively managed mutual funds outperformed their associated Morningstar indexes on a risk, size and style adjusted basis. Put differently, 63% of actively managed mutual funds underperformed their associated Morningstar indexes over the past three years on these terms. The results were similar over five and ten year timeframes.Read more