Russell Bailyn -

2010 has been pretty volatile so far for most asset classes. Stocks and bond have traded all over the board and May was particularly ugly for global stocks and the corporate bond market. But one sector has held up really well: high-yield municipal bonds. I actually did a post on this a year ago and this space has been really interesting to follow since then. Prices for high-yield municipals fell off a cliff in late 2008 due to a liquidity crunch and heavy flight-to-quality trade. In May, during intense volatility, credit spreads on the benchmark high-yield corporate bond index widened by another 141 basis points to almost 7% above treasuries. However, the yield difference between investment-grade munis and high-yielding munis widened by only 2 bps to about 3.5%.

Continue reading " Impressed by High-Yield Municipal Bonds? I am. " »

Posted by Russell Bailyn at 11:11 AM | Permalink | Comments ( 0 ) | TrackBacks ( 0 )

It would be hard not to notice the recent surge in market volatility. As a firm believer in the low-cost, transparent nature of exchange-traded funds (ETFs), I wanted to provide some tips to my clients and readers about how to handle trading ETFs in this environment. I should note that large, popular ETF issues, particularly equity ETFs, can often be traded like blue-chip stocks without too much worry about volume, pricing, and liquidity. However, when it comes to new issues, obscure issues, or any ETF with low daily trading volume, it can save you money to do a little research and avoid throwing in blind market orders.

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Posted by Russell Bailyn at 03:16 PM | Permalink | Comments ( 0 ) | TrackBacks ( 0 )

As the Senate passed the Financial Reform Bill (aka FinReg) 60-39 last Thursday, many investors and financial advisors are speculating about how this legislation may affect the financial services industry—specifically the relationship between investment advisors and retail consumers. FinReg was passed for three vital reasons: to end the “too big to fail” mentality, to protect the taxpayer by ending bailouts, and perhaps most importantly to protect consumers from unscrupulous financial practices. Some advisors fear that the implementation of a fiduciary standard will somehow inhibit investment opportunities and give the SEC overpowering regulatory authority. It is important to note that passing FinReg does not automatically create a fiduciary standard for investment advisors; it merely tasks the SEC with engaging in a six-month study to determine whether brokers provide investors with advice under a fiduciary standard (as defined in the Investment Advisers Act of 1940). In my eyes, that six month period gives Wall Street a chance to ‘fight back’ against these game-changing rules, or prepare for them, or some combination of both.

Continue reading " An Advisor's Perspective on FinReg " »

Posted by Russell Bailyn at 10:48 AM | Permalink | Comments ( 0 ) | TrackBacks ( 0 )

People’s attitudes towards money obviously change as they get older. The crucial middle years of 40-60 are a time when people generally focus the most on saving, accumulating wealth, and pondering the concept of retirement. While people often attempt to hit major savings goals in their 30’s, lifestyle changes including marriage and family, along with business establishment often push savings goals back 10-15 years. Not that saving is ever an easy task: In the 40-60 range, people often deal with college-related expenses for kids, aging parents who need help, deaths in the family, divorce, etc. All of these events pose challenges and opportunities of their own. So how exactly are people in this 40-60 age range dealing with all of the recent market volatility? Studies show they are reducing risk and hoarding cash to make sure their capital lasts for as long possible.

Continue reading " Financial Planning During the Middle Years: 40-60 " »

Posted by Russell Bailyn at 04:43 PM | Permalink | Comments ( 0 ) | TrackBacks ( 0 )

Equity markets around the world have been under heavy pressure this month from a widening European sovereign debt crisis. The following commentary addresses short-term opportunities and long-term issues facing investors in light of this latest European sovereign debt crisis. There is no denying that several key charts are flashing technical caution and send an important message about global economic activity. As of this writing the important Shanghai Composite is down 34% from its August peak while the Reuters/Jefferies CRB (Commodity Research Bureau) Index has fallen 16% since January. Both are near key 50% retracement levels, which if violated, could harken moves back to the lows seen during the height of the most recent recession. The charts for several other markets are also flirting with major topping formations. That being said, corporate profits in the United States have been very strong, as the impending austerity slowdown in the European economy and stronger dollar have yet to meaningfully impact American bottom lines while companies are still reaping the benefits of prior cost-cutting measures. United States exports to Europe are still three times larger than to emerging nations, so one could argue that stocks are simply readjusting to the revised prospects for the world’s real economy. Despite the haircut for European weakness, the U.S. recovery remains intact as does the emerging market growth story.

Continue reading " The Debt End Game: Market Commentary from Advanced Equities Asset Management " »

Posted by Russell Bailyn at 01:57 PM | Permalink | Comments ( 1 ) | TrackBacks ( 0 )

With interest rates at rock bottom and a growing expectation that rates will move upwards over the next year, many investment managers are jumping back into the floating rate bank loan space—an asset class which historically performs very well in low and rising interest rate environments. However, I’ve noticed with my own clients that while the conventional bond space is fairly well understood among experienced investors, the bank loan space is not. Most people don’t know what differentiates these loans from traditional bonds and as a result abandon an asset class which may be a useful, low-correlation diversifier at the moment. So below is my attempt to demystify this asset class.

Continue reading " Confused about 'Floating Rate' Bank Loans? " »

Posted by Russell Bailyn at 01:21 PM | Permalink | Comments ( 1 ) | TrackBacks ( 0 )

The issue of financial regulation has taken center stage over the past few weeks. This was inevitable given the circumstances surrounding the recession: a bursting bubble in the real estate market exacerbated by rampant greed and a total lack of transparency on Wall Street. If history has taught us anything, it’s that capitalism thinks and acts much faster than regulation. After the damage is already done, regulators scramble to assign blame and over-regulate to compensate for their own glaring errors. My article today pertains to my end of the industry: financial planning and investment advice. While advisors are typically regulated by either FINRA and/or the SEC, there is a huge amount of confusion about the standards advisors need to follow when it comes to selling products and offering investment advice. There is also confusion about ‘who is’ an advisor because there is no state-issued designation for financial planners the way there is for accountants and financial analysts. The closest thing we have is the Certified Financial Planner (CFP) which is controversial among industry professionals for a variety of reasons ranging from the ethical requirements to the fees. As our field grows continues be in great demand, it’s important that regulators maintain some clear-cut rules and regulations for financial professionals in the business of giving advice.

Continue reading " Regulation and Financial Planning – What’s Next? " »

Posted by Russell Bailyn at 04:01 PM | Permalink | Comments ( 0 ) | TrackBacks ( 0 )

It certainly looks that way to me. Throughout my eight years in the financial planning profession I’ve watched the rapid transition from commission and transaction-based business models into fee models. Back in the 80’s and 90’s it was standard practice to buy and sell stocks and pay commissions to your broker based on the dollar value of your transaction. The same applied to other financial products which worked on a commission schedule. Nowadays, commissions tend to raise eyebrows, even in cases where the commission may be reasonable, hard-earned, or perhaps work out cheaper for the client in the long-run.

Continue reading " Are Fee-based Financial Planners Taking all the Business? " »

Posted by Russell Bailyn at 04:42 PM | Permalink | Comments ( 1 ) | TrackBacks ( 0 )

In the financial planning profession, many advisors focus on investment management. The focus is often so strongly on managing investments that all the other components of financial planning which people want and need are ignored. In today’s post I’d like to discuss MoneyCapsules, a process-oriented strategy devised by an advisor in my office which focuses on careful management of one’s entire financial life. It’s a service many people want but don’t explain clearly enough to their financial advisor to get it right. I’ve seen it first hand: once people get a handle on their full financial picture, anxiety levels decrease and decision making becomes much easier. Find the right payday lender by reviewing the easy payday loan comparison chart.

Continue reading " Organize Your Financial Life Using MoneyCapsules " »

Posted by Russell Bailyn at 03:41 PM | Permalink | Comments ( 0 ) | TrackBacks ( 0 )

If you’re a client of mine, or have ever engaged in a conversation with me about managing investments, then you know I’m a big fan of indexes and low-cost investing. I’m still a fan of the occasional manager who consistently outperforms his/her benchmark but I’m still skeptical that it’s worth the added expense over a long period of time. Today’s post is specifically about fundamental indexing. For those of you out of the loop about fundamental indexing, it’s a strategy which equal-weights the stocks in an index instead of weighting the index holdings based on market capitalization. When you weight based on market cap the way major indexes such as the S&P 500 do, your index inevitably invests the majority of its money in the top holdings. For example, the 20 largest companies in the S&P 500 comprise just over 32% of the index. The other 480 stocks comprise just under 68% of the index. While these market-cap indexes may be more accurately reflecting the economy, they may not be helping your portfolio…

Continue reading " Fundamental Indexing Shines in Volatile Markets " »

Posted by Russell Bailyn at 12:15 PM | Permalink | Comments ( 0 ) | TrackBacks ( 0 )

Roth IRAs are very trendy right now. “Trendy” isn’t a word I usually use to describe financial products and services but in this case I think it applies. Many investors are so concerned about upcoming tax rate hikes that they are more than willing to forego a tax deduction today if it means not having to worry about rising rates in the future. Starting in 2010, anyone can convert a traditional IRA to a Roth. SEP and SIMPLE IRAs can be converted as well. Before 2010, only individuals with adjusted gross incomes below 100K could do the Roth conversion. So, this opens the door for lots of wealthier Americans to make this switch. No surprise the government is looking for new sources of tax revenue now as they have plenty of fiscal problems to deal with. Below is a list of questions I’ve been fielding regarding IRAs and the Roth conversion.

Continue reading " A Closer Look at the Roth Conversion " »

Posted by Russell Bailyn at 03:53 PM | Permalink | Comments ( 3 ) | TrackBacks ( 0 )