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Understanding what drives behaviors is a starting point for establishing acceptable family norms as well as addressing the unacceptable. It also may provide insight that can help reduce conflict, establish better communication patterns, and increase levels of trust among family members.

Although a multitude of risks remain, including the unresolved situation in Europe, geopolitical risks from Iran, and fiscal austerity in developed nations around the globe, markets are enjoying the moment, allowing risk assets to flourish and volatility, at least as measured by the VIX index, to retrench to a seven-month low.

While the outcome of many global issues remains uncertain, we believe the risk/reward equation favors taking well-calculated, above-average risk. Investor psychology can change at any moment. When the market returns its focus on individual company fundamentals, we expect significant alpha will be generated by portfolios that own high-quality companies with above-average beta.

The world continues to ride the same train of global imbalances. While short-term solutions have allowed us to arrive at the next station, few are attempting to address the long-term issues. We believe that capital markets will continue to assail the weakest links in the financial system, which, hopefully, instills the required discipline for policymakers to make needed, but difficult, decisions. Unfortunately for long-term investors, this suggests that we will continue to encounter a series of market crises, leading to continued market volatility that can test investor resolve.

Despite continued concern about sovereign debt, particularly in Greece, the bank’s 11-member investment committee is encouraged by improved business surveys in the U.S. and some emerging markets as well as tentative improvements in Europe. Here, committee members assess the outlook for fixed income, equities, commodities, real estate, and currencies.

Tail risk can be reduced by enhancing a portfolio's overall risk-return characteristics. Often this approach will blend several distinct strategies: broader diversification, volatility-based risk management, and drawdown control, perhaps combined with active management strategies such as managed futures or low-beta equities.

As we briefly review 2011, one thing is apparent: corporations generally had a better year than politicians, job seekers or investors. Despite 2011’s economic volatility, companies delivered better earnings than the consensus had forecast last January. Yet despite solid corporate profitability, macro uncertainties kept stocks under pressure for most of the year and ignited a simultaneous flight to the safety of U.S. Treasuries. With 2012 being an election year, we can expect to see even more sparring in Washington, D.C.

This latest quarterly issue of “ViewPoint” features an interview in which the bank’s chief investment officer discusses his outlook for the global economy and capital markets for 2012. He notes that the U.S. should exhibit positive growth, boosted by capital spending, and that a growing U.S. economy should keep the global economy in positive territory despite the situation in Europe.

Income-generating vehicles make a lot of sense in this environment. Last year, a key part of our message was to focus on yield-oriented strategies, ranging from high-yield equity managers to energy MLPs to floating rate debt and emerging market bonds. We believe that adding to the enhanced yield strategy through a position in non-investment-grade debt may improve risk-adjusted portfolio results in the months ahead.

The financial crisis that began almost five years ago is still with us, and we are still dominated by the events unfolding in Europe. What are some of the root causes of the crisis, and what is the future likely to hold? This white paper examines the evolution of the financial crisis and offers advice on how investors might best navigate the complex future we face.