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13 comments:
As someone who manages my own portfolio, I have a lot of sympathy for your point of view. I've adopted one of your core principles--small positions to increase diversification and minimize risk--which has left me with too many investments to keep up with. And that doesn't count trying to keep current with the new stuff.
I'm beginning to pare back, taking bigger core positions using ETFs and counting on the larger number of stocks they hold to provide diversification and limit my risk. For non-core/edge bets, I'll probably stick with smaller positions.
I don't think I'm ready for a lazy portfolio, just a little less time commitment now that it's spring. Anyway, the bottom is in and a rising tide lifts all boats:)
The bottom is in??????
Can I borrow your rose colored glasses for a while?
Irreverant comment: Roger, wear your fire dept t-shirt and carry and fire extinguisher. :-)
Any news on frontier funds?
Financial Planners and research: Some of these choices such as currency can be construed as "betting". An unhedged bond etf such as BWX is better in that there is a basket of currencies. A global fund with USD in it too allows the manager to hedge and smooth out returns. DBV in some ways is the least "bet", but it really needs some actual performance history through changing currency values before its trustable.
There is a lot of to be said for simple portfolios of Total Stock Mkt, Total Intl, Total bond with a maybe a smidge of REITs and small value. Simple is usually less expensive and more tax efficient. But, every investor's situation is different.
Paul
Nothing great to tell you about frontier funds. I believe I mentioned it to the PowerShares rep--I did not mention it to the Market Vectors people but I have one acquaintance there and I will email him today because I should have asked him when i saw him.
I would be thrilled if the guy who says the bottom is in turns out to be correct.
You had a good question about financial plan. Adding cashflows to the plan definitely gives a lot of value to it..
Any books you can suggest for financial planning? :)
Roger,
Why are you so negative on Roubini? I listened to a 3 part youtube interview today and he said 1+ trillion total write offs.
Pretty much in line with other estimates
He said 12 to 18 month recession.
Yes that is not short, but it is nothing like Japan.
I do not see anything Roubini says as the sky will fall. I guess I finally listened to Roubini and thought he was realistic. I really do not think Hussman would be that different if he would ever make comments like that.
Why don't you start referring to Peter Schiff when you want to indicate sky is falling economic collapse. IMO Schiff goes off the deep end to we will never recover from this and that just seems silly. I just think it will not be a pleasant experience.
I don't think I've read any financial planning books (I don't think Multiple Streams of Income counts). I know a lot of people like Ray Lucia but I've never read anything by him. Sorry.
Roubini started using words like collapse back in 2006 expecting a bad recession to start back then. If I am recalling correctly he felt the magnitude would be very bad but perhaps I interpreted him incorrectly because of the words he uses. Housing is currently down about 10% and technically speaking we do not know if we are in a recession. To be clear I do think there is more to come on both of these fronts but the above for now is factually correct.
I take the word collapse to be much more than 10%--more than 20% probably. He turned out to be very early, too early really, and based on his choice of words, I do not think he will be correct in terms of magnitude.
That being said I have a lot of respect for him, he recognized big problems long before the market began to discount them in. Further he does stick his neck out in terms of giving time estimates and numerical estimates.
Schiff has a good track record for picking foreign stocks but that does not get the attention. What gets attention is his hyperbolic never quantified predictions of doom which I don't agree with and leaves me wondering if the whole thing really is just about selling books. If all he did was talk about stock selection and process for stock selection I would be much more open.
I enjoy and learn from your blog very much. Interesting point about certain professionals not keeping up with all the latest trends, etc. Before becoming a self-managing ETF investor, for almost 2 decades, I had a standard "wrap-fee" relationship with a well-established "full service" brokerage, with a bevy of separately managed accounts (small-med-large-cap growth, value, international, etc.) They kept me fully invested during the 2000-3 bear market, and as a result, I lost 40% of my portfolio value, and have struggled to get back to 2000 levels ever since. I started questioning my advisor about alternative asset classes, such as commodities, REIT's, emerging markets, international bonds, etc., and he told me that his focus is on "traditional" investments, and he had little knowledge of many "alternative" investments (and apparently little inclination to learn). I asked him to look into brokerage research resources and provide manager recommendations, and I came to find that my advisor/broker could not recommend or set me up (in their wrap fee program) with an active manager for many of these asset classes (in some cases because I couldn't meet the account minimum). So this is what led to my first ETF investments a couple of years ago (GLD and EEM), which of course did very well. In reviewing my long-term managed account performance after fees and taxes, I came to the realization that I wasn't even achieving market index returns in traditional asset classes, and in alternative areas where I could really use some expertise(such as commodities and emerging markets), none were available to me. I finally had enough and dumped my advisor/broker, and started self-managing an all ETF portfolio about a year ago.
I am personally able to self manage becuase I am retired and have plenty of free time, but if other people are too busy, they better have an advisor like you that does their homework on a daily basis and doesn't just rest on their laurels and knowledge of what worked in the past.
"Irreverant comment: Roger, wear your fire dept t-shirt and carry and fire extinguisher. :-)"
Irrevent comment??? What do you want to do ban a lot of what I have to say?
That would be a good idea but Roger seems more balanced than that. What do you want him to do over look upside comments like the bottom is in and ban any comments that question that thesis? I am sure your portfolio could benefit from a more balanced approach. I know mine does.
Believe it or not I read plenty of analysis both bullish and bearish because I never want to close my mind to opposing possibilities. I do not do it because I am a wonderful guy or whatever, I do it because I hate loosing money. I try very hard never to get to one way in my thinking and close my nind to the alternatives.
I think we could rally from here. I just think we will eventually (and possibly soon) head back down due to the ridiculous debt bubble the fed has created over more than 2 decades.
Perma bulls and perma bears are at a distinct disadvantage IMO.
Look at people like Hussman IMO to give guidance on market trends even if he says that is not what he does. He seems like one smart dude to me.
seg
LOL! I'm the guy who made "the bottom is in" remark and y'all took me a little too seriously. It was meant as a self-depricating knock on my ability to manage my cumbersome portfolio.
I respect Roger's use of moving averages to signal when demand for stocks is healthy. While things do seem to be looking up of late, we're obviously not there yet. Nevertheless, I have begun building one higher beta position in anticipation of the turn (and thus making my portfolio all the more cumbersome.)
Roger,
Great post! As a former advisor, now strictly a trader handling my own money, you have no idea how much I can relate to the ideas put forth in this video.
I was always amazed when I would attend conferences, and quickly learn how low the investment knowledge was out there.
The hedge fund model of 2 and 20 gets alot of criticism, but performance fees shockingly tend to encourage...performance! In the hedge fund world, you eat what you kill. And when you have a bar that is constantly being raised each year, you work much harder.
To any newbie investors out there, do not be impressed by "senior vice president" on a broker's stationery. That title was earned by how much commissions were generated, pure and simple.
You can manage your own money. Read this blog, do your own research, and you will succeed.
PS
The idiom you were searching for is "dyed-in-the-wool"
:)
It looks like the trend has changed from the last few months.
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