Morningstar Advisor - Winter 2008 - 16

Advisor Profile Janet Briaud, President, Briaud Financial Planning she has about 20% of clients’ assets in commodities. She also has 10% stakes in private real estate, including TIAA CREF’s real estate fund, and TIPs for the same inflation purpose. Deflation Danger Her biggest concern, however, is deflation. The main reason, Briaud says, is debt. Income for most Americans has stagnated, but debt is up—which means an increase in foreclosures and late credit card payments, she says. Also, about 80% of baby boomers are not prepared for retirement, she says, and the economy will slow if they begin to save and reduce spending. “There’s a balance-sheet recession by individuals,” Briaud says. “I studied what happened in Japan [earlier this decade], and I’m convinced that it can happen here. So we want to make sure that we have assets that would protect us in that kind of environment.” Those assets are cash and government bonds, which make up about 35% of her portfolios. She’s also advising clients to pay off their debt, including their home mortgages. “Jeremy Grantham’s current estimate of real returns over the next seven years is negative 2%,” she says. “If he’s right, and your house is paid for, you’ve made 5% or 6% return risk-free.” Briaud also still thinks U.S. stocks are overvalued, so she has kept clients’ equity stakes at 25% of assets, mostly in value and international value mutual funds. An Economic Winter How she caught our eye: Moved clients’ assets out of harm’s way before the crash of 2000. Career path: Received a master’s of physical education from the University of Ottawa and got job teaching at Texas A&M in early 1980s. Was burned by a broker who put her in a high-load technology fund at height of tech market. Decided she could do it herself better. Earned CFP designation and opened her fee-only firm in 1986. Was president of NAPFA in 1993; chaired NAPFA board of directors in 1994. Served on TIAA-CREF Investment Advisory Board from 1999 to 2002 and 2005 to 2006. Personal: 56, married with two grown children. Some favorite value funds: Third Avenue Value TAVFX, Longleaf Partners International LLINX, Fidelity Diversified International FDIVX, First Eagle Global SGENX. a 403(b), she uses gold bullion, Vanguard Precious Metals and Mining VGPMX, and USAA Precious Metals and Minerals USAGX. To some, Briaud might as well had been advising clients to build bunkers and stock up on canned goods. “Everybody told us how stupid we were,” Briaud says. “It got to be so embarrassing that I stopped telling people we did it.” Gold has since more than doubled in price, and as prices rise and fall, she rebalances the portfolios to maintain that 10% stake. “To this day,” she says, “if you mention gold to my colleagues, they would think you are crazy.” Oil and gas are other commodities Briaud uses, and living in Texas, she’s had an intimate knowledge of them for a long time. She uses Fi- delity Select Energy Service FSESX and Select Natural Gas FSNGX for her 403(b) clients but would prefer holding oil and gas directly. So for clients who qualify, she goes to the source, buying into oil and gas master partnerships and interests in natural gas royalties. They’re less aggressive, she says, and negatively correlated with the market. More recently, she also has taken an interest in Canadian energy trusts, such as EnerPlus Resources Fund ERF and Penn West Energy Trust PWE. These trusts are difficult to value because of their complicated structures. For that, she uses Morningstar’s Fair Value Estimate and Consider Buying/Selling prices. Commodities also position the portfolios to benefit from any increases in inflation. All told If 1999 taught her anything, it’s that advisors must adapt to the turning points and cycles in the markets. She points to an analogy by economist Woody Brock. “It is very easy for us as advisors to do the traditional 60/40 allocation and close our eyes and hope that it’s going to be okay,” she says. “It’s much harder to say, ‘We are now in a winter economic season, and in a different season, I’m going to plant different crops.” K 16 Morningstar Advisor Winter 2008

Morningstar Advisor - Winter 2008

Table of Contents for the Digital Edition of Morningstar Advisor - Winter 2008

Morningstar Advisor - Winter 2008
Contents
Letter from the Editor
Inbox
How Do You Use the Morningstar Style Box?
Real Estate Investing Goes Global
The Golden Touch
Investment Briefs
Learning to Fly with Equity Options
Another Block in Building a Portfolio
In a League of Their Own
Unlock the Box
Fashion Change
The View from the Investment Side
Unpredictable Style
Weighting the Fundamentals
Wire-to-Wire Consistency
The Secret's Out
Focus on Financials
Strongest Homebuilders Will Withstand the Wrecking Ball
Breaking Style Conventions
Playing It Safe with Financials
Back to Bond School
Mutual Fund Analyst Picks
Undervalued Stocks
Most Popular Variable Annuities
New at Morningstar
The Style Counsel
Morningstar Advisor - Winter 2008 - Intro
Morningstar Advisor - Winter 2008 - Morningstar Advisor - Winter 2008
Morningstar Advisor - Winter 2008 - Cover2
Morningstar Advisor - Winter 2008 - 1
Morningstar Advisor - Winter 2008 - 2
Morningstar Advisor - Winter 2008 - Contents
Morningstar Advisor - Winter 2008 - 4
Morningstar Advisor - Winter 2008 - 5
Morningstar Advisor - Winter 2008 - 6
Morningstar Advisor - Winter 2008 - Letter from the Editor
Morningstar Advisor - Winter 2008 - 8
Morningstar Advisor - Winter 2008 - Inbox
Morningstar Advisor - Winter 2008 - How Do You Use the Morningstar Style Box?
Morningstar Advisor - Winter 2008 - 11
Morningstar Advisor - Winter 2008 - Real Estate Investing Goes Global
Morningstar Advisor - Winter 2008 - 13
Morningstar Advisor - Winter 2008 - 14
Morningstar Advisor - Winter 2008 - The Golden Touch
Morningstar Advisor - Winter 2008 - 16
Morningstar Advisor - Winter 2008 - 17
Morningstar Advisor - Winter 2008 - Investment Briefs
Morningstar Advisor - Winter 2008 - 19
Morningstar Advisor - Winter 2008 - 20
Morningstar Advisor - Winter 2008 - 21
Morningstar Advisor - Winter 2008 - Learning to Fly with Equity Options
Morningstar Advisor - Winter 2008 - 23
Morningstar Advisor - Winter 2008 - 24
Morningstar Advisor - Winter 2008 - 25
Morningstar Advisor - Winter 2008 - Another Block in Building a Portfolio
Morningstar Advisor - Winter 2008 - 27
Morningstar Advisor - Winter 2008 - 28
Morningstar Advisor - Winter 2008 - 29
Morningstar Advisor - Winter 2008 - In a League of Their Own
Morningstar Advisor - Winter 2008 - 31
Morningstar Advisor - Winter 2008 - 32
Morningstar Advisor - Winter 2008 - 33
Morningstar Advisor - Winter 2008 - 34
Morningstar Advisor - Winter 2008 - 35
Morningstar Advisor - Winter 2008 - Unlock the Box
Morningstar Advisor - Winter 2008 - 37
Morningstar Advisor - Winter 2008 - 38
Morningstar Advisor - Winter 2008 - 39
Morningstar Advisor - Winter 2008 - Fashion Change
Morningstar Advisor - Winter 2008 - 41
Morningstar Advisor - Winter 2008 - 42
Morningstar Advisor - Winter 2008 - 43
Morningstar Advisor - Winter 2008 - The View from the Investment Side
Morningstar Advisor - Winter 2008 - 45
Morningstar Advisor - Winter 2008 - 46
Morningstar Advisor - Winter 2008 - 47
Morningstar Advisor - Winter 2008 - 48
Morningstar Advisor - Winter 2008 - 49
Morningstar Advisor - Winter 2008 - 50
Morningstar Advisor - Winter 2008 - 51
Morningstar Advisor - Winter 2008 - Unpredictable Style
Morningstar Advisor - Winter 2008 - 53
Morningstar Advisor - Winter 2008 - Weighting the Fundamentals
Morningstar Advisor - Winter 2008 - 55
Morningstar Advisor - Winter 2008 - 56
Morningstar Advisor - Winter 2008 - 57
Morningstar Advisor - Winter 2008 - 58
Morningstar Advisor - Winter 2008 - 59
Morningstar Advisor - Winter 2008 - 60
Morningstar Advisor - Winter 2008 - 61
Morningstar Advisor - Winter 2008 - Wire-to-Wire Consistency
Morningstar Advisor - Winter 2008 - 63
Morningstar Advisor - Winter 2008 - 64
Morningstar Advisor - Winter 2008 - 65
Morningstar Advisor - Winter 2008 - The Secret's Out
Morningstar Advisor - Winter 2008 - 67
Morningstar Advisor - Winter 2008 - 68
Morningstar Advisor - Winter 2008 - 69
Morningstar Advisor - Winter 2008 - Focus on Financials
Morningstar Advisor - Winter 2008 - 71
Morningstar Advisor - Winter 2008 - 72
Morningstar Advisor - Winter 2008 - 73
Morningstar Advisor - Winter 2008 - Strongest Homebuilders Will Withstand the Wrecking Ball
Morningstar Advisor - Winter 2008 - 75
Morningstar Advisor - Winter 2008 - Breaking Style Conventions
Morningstar Advisor - Winter 2008 - 77
Morningstar Advisor - Winter 2008 - Playing It Safe with Financials
Morningstar Advisor - Winter 2008 - 79
Morningstar Advisor - Winter 2008 - 80
Morningstar Advisor - Winter 2008 - Back to Bond School
Morningstar Advisor - Winter 2008 - 82
Morningstar Advisor - Winter 2008 - Mutual Fund Analyst Picks
Morningstar Advisor - Winter 2008 - 84
Morningstar Advisor - Winter 2008 - 85
Morningstar Advisor - Winter 2008 - 86
Morningstar Advisor - Winter 2008 - 87
Morningstar Advisor - Winter 2008 - Undervalued Stocks
Morningstar Advisor - Winter 2008 - 89
Morningstar Advisor - Winter 2008 - 90
Morningstar Advisor - Winter 2008 - 91
Morningstar Advisor - Winter 2008 - Most Popular Variable Annuities
Morningstar Advisor - Winter 2008 - 93
Morningstar Advisor - Winter 2008 - New at Morningstar
Morningstar Advisor - Winter 2008 - 95
Morningstar Advisor - Winter 2008 - The Style Counsel
Morningstar Advisor - Winter 2008 - Cover3
Morningstar Advisor - Winter 2008 - Cover4
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