moneyreport“Smart beta” has become A hot topic in the financial world. It has certainly captured the interest of investors, underwriters and brokers.

According to Morningstar, a quarter of all exchange-traded fund investments in the first 11 months of 2013, over $41 billion, went into funds using smart beta strategies.

So what exactly is “smart beta?” It’s a concept used rather broadly to describe alternate investment strategies, which, proponents claim, address the shortcomings of both traditional managed mutual funds, and unmanaged index fund investments. Not all smart beta strategies are alike, so here’s a brief overview.

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marcfrey150Since I’m in a forecasting mood, I took a look at what the future may hold for our own region. It’s not just one thing that will cause the continuous expansion of our region but a number of things that will work in synchronicity.

1. Peace of mind

As the world around us seems to get more turbulent, there is something very reassuring about living in Bluffton, Hilton Head or anywhere in between Beaufort and Savannah. Our world in the Lowcountry seems pretty darn normal, and for once, that is a really good thing.

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marcfrey150Can a company, which was started in 2009, has 55 employees and no revenues be worth $19 billion dollars? The answer is YES, and NO depending on how you look at it.

For traditional thinking investors, this valuation defies everything we thought we knew about how to value a company. As a comparison, companies with similar market valuation include: HJ Heinz, CBS, Yahoo!, PG&E, Charles Schwab, Marathon Oil, Allstate, Kellogg, T. Rowe Price, Sun Trust to name a few. Mostly companies with strong brands that have been around for a long time and have a proven track record.

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moneyreportAfter a gut wrenching recession, and the collapse of a property bubble that had concentrat ed the small county’s wealth into a highly leveraged real estate sector, Ireland, theCeltic Tiger, was forced to ask for a bailout in 2012, as well as to adopt a painful EU mandat ed austerity budget.

However, there are signs of a turnaround; in 2013 the Irish stock market gained 35.2%, making it the fifth best performing market in the world (the U.S. was ninth.) While it’s still early days, there may be worthwhile opportunity for investors to consider as we celebrate St. Patrick’s Day this month.

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marcfrey150As of January 2014, 20 million more people were on food stamps compared to 2007. The total number of recipients is now around 47 million, more than 15 percent of the population. The SNAP (Supplemental Nutritional Assistance Program) is just one of many federal and state supported programs. I merely chose this one to drive home my point.

Granted, we lived through the second worst depression in modern U.S. economic history, but since then the economy has been making progress and unemployment figues have come down. Unfortunately, the amount of money spent on social welfare keeps climbing. The cost of the SNAP program is now 2 1/2 times higher ($74 billion) compared to 2007 ($30 billion). How can this be fied?

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moneyreportIt’s important to check out the background of your broker or financial advisor, just like you would any profes sional. Unfortunately, there are a number of different regulatory agencies that oversee brokers, advisors and insurance agents, and it’s not always easy to be sure you’re going to the right place, or getting the relevant information. Here’s a short primer.

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marcfrey150If your life is perfect, skip this column. Send me an e-mail sharing your secrets to a fulfilled life. If by chance you are one of the 100 million Americans that makes a New Year’s resolution or helps to fuel the 2.5 billion self-help industry, read on.

First know that according to surveys, a very high percentage of resolutions remain unfulfilled. If you are a cynic you might rightfully conclude that given the odds, it makes no sense to bother making one in the first place … unless you read this column, which is aimed at improving your chances of resolution success.

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marcfrey150The news that Amazon, the largest Internet retailer, and the U.S. post office are collaborating to make Sunday delivery of packages a reality in an attempt to forever paint every Friday black (order on Friday, deliver on Sunday) might in itself seem trivial. Just another spoke in the wheel to make it possible to always shop, always consume, always be inundated with marketing plots, in a never-ending quest to squeeze out the last ounce of profit and the titanic fight for market share taking shamelessly advantage of our conveniencedriven habits.

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We asked somebody much more qualified than myself that very question. Edward Jay Epstein is an investigative journalist and former political science professor at Harvard. He wrote 15 fascinating books starting with “Inquest. The Warren Commission and the Establishment of Truth” in 1966 all the way to his latest work, “The JFK Assassination Diary: My Search for Answers to the Mystery of the Century” (2013).

Here is his answer:

Here is my view on the surveillance state.

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moneyreportf you were angling for the job of feature reporter for the “Mansions” section of the Wall Street Journal, you blew through your deadline; applications closed on Oct. 15. It’s a pretty good beat, reporting on the rich and famous, and where they live and play.

Since it only required three years of journalism experience, one would suppose the successful applicant would have already spent a great deal of time going in and out of these over-the-top luxury homes.

Our guilty fascination with the rich and their lifestyle of luxury is perfectly understandable.

 

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marcfrey150A few month back I wrote that we need BIG thinking and bold decision-making in order to strengthen our community and our brand.

T his month I want to call attention to three events that serve as prime examples of this kind of thinking, the kind that can propel a community such as ours from an ordinary seaside resort to a world-class community.

The three events are the Public Outdoor Art Exhibition at Honey Horn Plantation, Imagination 2013 at the same venue and the Concours d’Elegance, which this year is around the clubhouse at Port Royal Golf Club.

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moneyreportA Biotech stocks have been on a tear in 2013. Initial public offerings or IPOs, totaled $1.7 billion in the first half of the year, greater than in 2011 and 2012 combined. The Nasdaq Biotech Index, a measure of industry performance, is up over 42% year to date. According to Deutsche Bank, consensus for annual earnings growth in the biotech industry over the next 3 years is estimated at 21 percent, compared with 9 percent for the S&P 500. In 2012, the FDA approved 39 drug therapies, more than in any year since 1996.

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moneyreportA few weeks ago Berkshire Hathaway Inc. (BRKB) announced a second-quarter profit increase of 46 percent, reflecting improvement in their core businesses of auto insurance, energy and railroads, as well as gains from investments and derivatives. We shouldn’t be surprised. Investors have long marveled at the success of Berkshire Hathaway in building value for its shareholders; their business portfolio includes General Re, Berkshire Reinsurance, Geico, Burlington Northern Santa Fe, Mid-America Energy, Union Tank Car, Clayton Homes (the country’s leading builder and financer of manufactured homes), CORT Furniture, and a slew of common stock investments in publicaly traded companies. Berkshire owns 13.7 percent of American Express, 8.9 percent of Coca Cola, 8.7 percent of Wells Fargo and 6 percent of IBM, to list just a few. They have also acquired 28 daily newspapers across the United States, pursuing Buffett’s strategy of investing in these businesses for their ability to deliver local news not obtainable elsewhere.

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marc freyThree things: The envisioned outcome, a plan and the xwillingness to execute it over a long period of time.

Three years ago such a general road map was delivered to the town council and the public titled the “Mayor’s Vision Task Force Vision 2025.” A progress report contributed by Lisa Allen can be read on page 76 of this issue. If you are interested in reading the original document, go to www.hiltonheadmonthly.com/taskforce.

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