Morningstar Advisor - February/March 2012 - (Page 10)

On Topic How Concerned Are You About Europe? Let us know your thoughts at “Extremely concerned, due to the level of debt and the fact that the European banks are so heavily involved. Nearly 80% of the loans on the books with European banks are sovereign debt.” Dean Barber Barber Financial Group Lenexa, KS the world’s largest debtor nation may ‘not have any clothes’ either. “At the portfolio-management level, trying to figure out how much euro exposure to have has been a huge question. Do we stick with our foreign funds, use a fund that hedges euro exposure like Tweedy Browne Global Value TBGVX, or use a fund that sometimes hedges like Oakmark International OAKIX? “So, I’m very concerned for a myriad of reasons that are not likely to be resolved anytime soon.” Taylor Welz Welz Financial Services Stockton, CA Quick Poll (Given Dec. 6, 274 responses) 1 The effect of Europe’s crisis on the U.S. will be: Negligible Hurtful but won’t deter a U.S. recovery Harmful enough to delay the recovery a bit Catastrophic, causing another recession or something worse 1.8% 19.5% 64.8% 13.9% “Of most concern is the possible failure 2 What country are you most concerned about? Portugal Ireland Italy Greece Spain Other 1.1% 0.7% 63.0% 12.8% 10.3% 12.1% of a big bank in Europe that forces the hand of the eurozone, as happened here in the U.S. We saw in the U.S. how solvency issues and liquidity tie-ups poured fuel on the fire of an alreadyfaltering economy. We anticipate a recession in Europe, which can be mild or more extreme depending upon the strength of the financial sector.” Elliot B. Herman PRW Wealth Management Quincy, MA “Very concerned. It appears that the underlying fundamentals of equities will continue to be ignored until some of the uncertainty in Europe dissipates.” Alma E. Faerber RCM Investments Provo, UT 3 Has the composition of your clients’ portfolios changed in response to the crisis? Yes No 52.8% 47.2% 4 What percentage of your client portfolios have exposure to European debt problems? 76%–100% 51%–75% 26%–50% 0%–25% 10.4% 5.9% 14.0% 69.7% “I am very concerned about the crisis in Europe for several reasons. Suffice it to say that the financial crisis in Europe has been driving the markets for much of the last year or more, and it continues to be at the forefront of the business news every day. And, apparently, “I’m concerned that the markets will cut off or severely limit credit to euro banks and sovereigns. Credit makes the world go ‘round. Limited credit markets or forcing governments to refinance at 6%+ interest rates is not sustainable.” Brian T. Sells Peak Financial Advisors Denver, CO there is no real end in sight. 5 Do you think the European Union is on the right track toward resolving the situation? Yes No Not sure 15.7% 38.5% 45.8% The crisis appears to be putting Europe into recession and, hopefully, the USA can avoid the same fate. “The government debt/GDP ratio for Europe as a whole is not that different from the United States, which means we could be 6 What will be the final result of this crisis? A European financial meltdown A long-term “new normal” for Europe investors Short-term troubles but no significant long-term impact 21.3% 66.2% 12.5% watching a preview of what will be in store when the world realizes that 10 Morningstar Advisor February/March 2012

Table of Contents for the Digital Edition of Morningstar Advisor - February/March 2012

Morningstar Advisor - February/March 2012
Letter From the Editor
Make a Difference Stories, Not Debates
How Concerned Are You About Europe?
Analytical and Independent
What to Ask When a Fund Manager Leaves
Past, Present, Future
Have Financials Gotten Cheap Enough?
Four Picks for the Present
Investment Briefs
Tactical Funds Miss Their Chance
Specialty Retail: Ad Hoc Opportunity
How Europe Is Making Its Crisis Worse
Impact on U.S. Economy Will Be Minimal
European Banks: Bargains or Value Traps?
Don’t Count the Euro Out Yet
Europe on the Brink
GoodHaven Realizes Its Vision
How Index Trading Increases Market Vulnerability
Nonlisted REITS: Handle With Care
Safety Picks for the Many Moods of Mr. Market
On the Prowl for Large- Blend Index-Beaters
Our Favorite Mutual Funds
50 Most Popular ETFs
Undervalued Stocks With Wide Moats
The Math That Matters

Morningstar Advisor - February/March 2012