Morningstar Advisor - Summer 2007 - (Page 9)

Keith Anderson BlackRock Bond MDHQX, BlackRock Total Return II Bob Rodriguez FPA New Income FPNIX, FPA Capital FPPTX BCBAX Steve A. Walsh Western Asset Core Bond WATFX, Western Asset Core Plus Bond WACIX John Maynard Keynes PepsiCo Ben Graham My father wouldn’t let me liquidate my coin collection to buy Studebaker. The stock went up 500%; my coin collection did not. But my father offered this sage advice: “Long after the stock is gone, you will still have your coin collection.” I still have my coin collection to this day. I can be an egomaniac and get paid for it! Seriously, when I came out of undergrad, there were only two Hispanics in business school and few in the investment area. I never liked the idea that the quality of job that I do is a function of someone else’s opinion of me. As a portfolio manager, there is an independent arbitrator validating my decisions every day. My work is not subject to someone’s personal bias. In 1979 and 1980, the bond market was getting crushed. Yields were exceeding the longterm rate of return of common stocks. That caught my attention. Credit spreads have not widened out as a result of the subprime implosion. Well, I thought the Fed would cut rates this September, but I also predicted it would in September 2006. Ultimately, it is a function of how quickly the economy turns down due to the housing decline. To outperform their benchmark; to justify their existence. I’d be in the junkyard business. You are buying things from people who don’t want them and selling things to those who desperately need them. What better market is that? Warren Buffett Nine-month CD with Bank of Tokyo in 1985. It keeps you thinking. The immediate feedback mechanism market prices give you with respect to your views on the market. They were complicated, and I’m a geek at heart. It was the opportunity given to me when I was working at ARCO in the mid-1980s. That it took so long for risky assets to start to weaken. The unemployment rate The Fed has not budged on short notes. Persistently below trend growth, led by housing, will lead them to lower rates by year-end. Market liquidity Finding ways to make money with spreads tight and volatility low. Working to help disadvantaged kids. A rock star The Good Life, by Jay McInerney Beyond Oil: The View from Hubbert’s Peak, by Kenneth S. Deffeyes South America. Everyone else is going east and west. A Long Way Gone: Memoirs of a Boy Soldier, by Ishmael Beah Nepal India MorningstarAdvisor.com 9 http://www.morningstaradvisor.com

Table of Contents Feed for the Digital Edition of Morningstar Advisor - Summer 2007

Morningstar Advisor - Summer 2007 Contents Letter from the Publisher Get to Know the Bond “All-Stars” Research Briefs Our Stewardship Test Gets Tougher Save It for Later Too Many Oranges Best of Both Worlds No Two Clients Are Alike When It Comes to VAs, It’s Seller Beware Hands On: Finding the Suitable Fund Share Class for Your Client Fund Style Can Drift Off Course Sticking to Their Style, Through Thick and Thin Marathon Man Growth, With a Chaser A Menu of Ideas to Fill Five Market Baskets Funds: Finding Funds with Conviction Stocks: So You Say You Want Income? All Eyes on China Mutual Fund Analyst Picks Undervalued Stocks Most Popular Variable Annuities What’s New at Morningstar and on the Web The Advisor’s Economic Moat

Morningstar Advisor - Summer 2007

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