This post provides links to a number of interesting articles I have read over the past few days that you may also enjoy.

• Jason Clenfield and Norihiko Kosaka (Bloomberg): US risks Japan-like “lost decade” on stimulus exit, Koo says, October 23, 2009. US officials contemplating an exit from record fiscal stimulus are in danger of repeating mistakes that plunged Japan into its lost decade of stagnant growth, according to Richard Koo of Nomura Research Institute. “This isn’t a cold, its more like pneumonia,” said Koo, author of “Balance Sheet Recession,” a 2003 book about the malaise that hit Japan after its stock and real-estate markets crashed in 1990. “We still need more government spending,” he said, adding it could take “three to five years to get out of this mess, even under the best of circumstances.”

• Brad DeLong (Caijing.com.cn): A moment too soon after the

This post provides links to a number of thought-provoking articles I have read over the past few days that you may also find of interest.

• Andy Kessler (The Wall Street Journal): The Bernanke market, July 16, 2009, We won’t get real growth until Congress and Treasury get policy right.

• Irwin Stelzer (Times Online): American account: Barack Obama’s cures may just kill any recovery, July 12, 2009.

• Paul McCulley (Pimco - Global Central Bank Focus): What if?, So what should Washington do, if and when - and I stress “if and when”; I’m not making a forecast here! - private sector aggregate (nominal) demand growth looks like it’s going to languish in Japan style for the indefinite future? The answer: Take one cup of Krugman’s advice for Japan and two cups of Bernanke’s advice for Japan - responsibly

Research Affiliates' Rob Arnott follows up the article 'Bonds: Why Bother' by answering audience questions from his recent webinar. 

In a follow-up to his popular JoI article 'Bonds: Why Bother?,' Research Affiliates founder Rob Arnott partnered with the Journal of Indexes for a live webinar examining where investors should be looking for opportunity today.

As a bonus, Arnott has provided written responses to all the questions that were asked by the audience during the webinar. His answers follow below. (In some cases, for efficiency's sake, multiple similar questions on a single topic have been condensed into a single question.)

Audience Question: Given the prospect of heavy or hyper-inflation, how do you find a reasonable return that can keep pace? Do you have any expectations on how this may play itself out in the coming few years?

Rob Arnott: TIPS provide protection against inflation; as

In a follow-up to his ground-breaking JoI article, 'Bonds: Why Bother?,' Research Affiliates founder Rob Arnott discusses the best asset allocation mix for investors today.

In a follow-up to his ground-breaking JoI article, 'Bonds: Why Bother?,' Research Affiliates founder Rob Arnott partnered with the Journal of Indexes for a live webinar examining where investors should be looking for opportunity today.

IndexUniverse.com is proud to present a  full, recorded video version of the webinar here.

A PDF of Arnott's Arnott's Powerpoint presentation is also available. 

In a follow-up to his JoI article 'Bonds: Why Bother?,' Research Affiliates founder Rob Arnott discusses the best asset allocation mix for investors today.

In a follow-up to his ground-breaking JoI article 'Bonds: Why Bother?,' Research Affiliates founder Rob Arnott partnered with the Journal of Indexes for a live webinar examining where investors should be looking for opportunity today.

A PDF of Arnott's PowerPoint presentation is also available. 

Well done, Jim: Rob Arnott invites you to his board meeting, and you call him out for under-performance.

(See Jim's blog about the Research Affiliates board meeting here.)

Remind me not to invite you over to dinner anytime soon.

I'm kidding, of course: Rob can take it, and there's no getting around the terrible performance of the RAFI indexes in 2008. The indexes made a big bet on financials, and we all know how that turned out.

Recently, however, that relative performance has reversed. Over the past month, the fundamentally weighted PowerShares FTSE RAFI US 1000 ETF (NYSEArca: PRF) is up more than 20%, while the cap-weighted iShares S&P 500 ETF (NYSEArca: IVV) is up just 11%. That's a huge performance gap for a single month.

What's driving the outperformance? If you approach it from a sector level, you can see that PRF is making a few concentrated bets.

Is fiduciary responsibility compatible with craps-style investing and high fees?

It was a weekend of the legends in Dana Point, Calif. On hand for the Research Affiliates advisory board meeting were Harry Markowitz, Burton Malkiel, Peter Bernstein, Mohamed El-Erian, Jack Treynor and of course ... Rob Arnott. And the topic was fiduciary responsibility. 

Rob Arnott brings out a lot of strong feelings in people, who either seem to love him—as a smart, articulate, largely investor-focused researcher—or to hate him—as a self-promotional, flamboyant, market-grabbing shyster. Love him or hate him, he's not dumb, and he is extremely articulate, and often right in the vicinity with his market observations.

And it's been hard times for Rob's RAFI indexes, which I was not shy about bringing up during the Q&A of his cleverly titled (Rob is great at clever titles) "Clairvoyant Value" presentation. I believe the term actually came out of something

The video clips below come via my hotel room at Dana Point, California, where I am attending a conference hosted by Rob Arnott’s Research Affiliates. Also present are financial luminaries such as Peter Bernstein, Burton Malkiel, Harry Markowitz and Jack Treynor. It will be fascinating to hear whether these gentlemen see any signs of the economy starting to bottom, and how they are investing at this juncture.

On the video front, the IMF upped its forecast of total global credit crisis-related losses to $4.1 trillion by the end of 2010 and the Congressional Oversight Panel on Tarp conducted a hearing on Capitol Hill, whereas a host of commentators - including Martin Feldstein, Joseph Stiglitz, Nouriel Roubini, Frederic Mishkin, Paul McCulley and John Mauldin - weighed in with a combination of gloomy and “bottom-in-sight” economic forecasts, as well as comments on the imminent results of the

I will find myself in Dana Point, California over the next few days, attending a partners’ conference hosted by Rob Arnott’s Research Affiliates. (Our investment management company, Plexus Asset Management, has a licensing agreement with Research Affiliates for managing and distributing its enhanced Fundamental Index™ methodology in the Pan-African region.)

I am always thrilled about attending this event as it affords me the opportunity to meet with financial luminaries such as Peter Bernstein, Burton Malkiel, Harry Markowitz and Jack Treynor.

Posting will be slow while I am on the road and “Words” from the Wise” will take a break this coming Sunday (April 26). The normal blogging service will be resumed on my return to Cape Town by the middle of next week.

However, I will be “tweeting” regularly throughout my trip.

So Then, Bonds for the Long Run? … P/E Ratios at 200? Really? … Mark-to-Market Slip Slides Away… Housing Sales Improve?  Not Hardly

Investors, we are told, demand a risk premium for investing in stocks rather than bonds. Without that extra return, why invest in risky stocks if you can get guaranteed returns in bonds? This week we look at a brilliantly done paper examining whether or not investors have gotten better returns from stocks over the really long run and not just the last ten years, when stocks have wandered in the wilderness.

This will not sit well with the buy and hope crowd, but the data is what the data is. Then we look at how bulls are spinning bad news into good and, if we have time, look at how you should analyze GDP numbers. Are we really down 6%? (Short answer: no.) It should make for