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Editor's Letter: Climbing the Wall of Worry

Readers of this space know my fondness for The Leuthold Group’s research. Whenever the Greenbook arrives (so called because of the color of its cover), I typically find interesting facts, observations and/or opinions. (Oh, full disclosure: I own LCORX, Leuthold’s core fund.)

In a recent monthly column, “Inside the Stock Market,” Doug Ramsey, the firm’s CIO, asks, Where is the economic crisis?

Readers of my blog ( know that I am a libertarian and not fond of the current administration’s policies on anything. But Ramsey makes a fair point: Despite the screaming headlines about the Fiscal Cliff, there actually were some favorable economic developments recently. [And, naturally, retail investors continue to sell U.S-focused equity mutual funds (although ETFs are attracting assets) even as the S&P 500 has been on the rise since bottoming in March 2009.]

At the time of this writing, a deal on the Fiscal Cliff had not been reached. Ramsey notes that Fed chief Ben Bernanke, “pulled every imaginable scare tactic out of the bag in rationalizing his extension of the crisis-based monetary policies three-and-a-half years into an economic expansion. Where is the crisis in the set of statistics below? [emphasis original].” Ramsey went on to cite an assortment of good news.
And  I quote:

· S&P 500 up 12 percent YTD through December 4; MSCI AC World Index (which lagged badly in 2012 and 2011) up 11 percent.

· Real year-over-year GDP growth of 2.5 percent through the third quarter.

· U.S. civilian unemployment rated down a full percentage point to 7.9 percent in the latest 12 months.

· Nonfarm payroll employment 1.9 million higher than a year ago (1.4 percent growth).

“These stats might surprise readers still dazed by their daily media [fearmongering], and we don’t blame them,” Ramsey noted. “If the national mood is this dour during what (in many empirical ways) has been a ‘good’ year, we worry what new depths it might reach during the next recession and accompanying bear market. (And we worry how, with no ‘conventional’ arrows left in its quiver, the Fed might respond to it.) Ironically, then, while we’re busy bashing the worrymongers, we’ve become one.”

Talk about stocks climbing a wall of worry. . .

Online Additions

Our website,, will launch a column called “The NAVigator,” focusing on closed-end funds, in early January. It will be written by closed-end fund specialist John Cole Scott, CIO of Closed-End Fund Advisors, a consultancy and portfolio manager. (Get the title? CEFs are all about the NAVs of the funds’ holdings vs. share price.) There are 630+ closed-end funds. Issuance was up this year over 2011. Domestic municipal bond funds are the largest sector of CEF, by the way.

In addition, we’ve also got in the bullpen Dennis Gallant of GDC Research, an industry consultant. He is partnering with Howard Schneider, president of Practical Perspectives, also a research house and consultancy. Their column will be called “Approaching Retirement.” Their focus is not just how advisors should focus on 401(k)s, but also about retirement income—to wit, how to get it. Look for their column in the first quarter.


David A. Geracioti


TAGS: Industry
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