Skjellifetti

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  • Remember, Investors: This Too Shall Pass
    TANSTAAFL:

    PFE has a dividend payout ratio that approaches 1 and a PEG ratio of 7.33. LIPITOR will run out of patent protection soon and it isn't clear what will replace it. Obama's health care reforms will have to deal with drug costs, likely resulting in lower profits for the drug makers, since those costs are one of the big drivers of health care inflation.
    Jan 07 12:52 pm |Rating: 0 0 |Link to Comment |View article
  • The Great Consumer Crash of 2009
    The author needs to learn the difference between average and median and when it is appropriate to use one vs the other. When Bill Gates builds a house, the average house price looks way out of reach.

    For an alternative take on CC debt, see:

    articles.moneycentral....
    Aug 15 16:04 pm |Rating: 0 0 |Link to Comment |View article
  • Checking In on the All-ETF Portfolio
    From your Feb article [my substitution]:

    If we have [$BLACK_SWAN], the short-term losses to any portfolio are likely to be far greater than Quantext Portfolio Planner or any other portfolio model can estimate. This kind of massive disruptive event is not what these models are capable of estimating.

    ...

    Ultimately, portfolio models are perhaps most useful because they give investors objective tools to:

    1. examine diversification benefits in their portfolios
    2. estimate total portfolio risk (albeit not very well for market crashes, wars, epidemics, etc.)
    3. estimate total portfolio returns in light of assumptions

    It is point number two that I was trying to highlight. MPT is all about creating portfolios with the best return for a given amount of risk. But if we are doing a poor job of estimating risk, then it is not at all clear that we are, in fact, maximizing expected returns per unit of risk. Tools such as QPP may thus be giving us a false sense of security when they recommend, say, a concentrated position in Malaysia over a larger more diversified basket of emerging market stocks.
    Aug 05 10:56 am |Rating: 0 0 |Link to Comment |View article
  • Checking In on the All-ETF Portfolio
    This may also show the limits of using MPT for divining the best risk-adjusted allocations. You have 5% devoted to Malaysia. But in 1998, during the Asian crisis, Malaysia, IIRC, put strict limits on the repatriation of international investments. That would have meant that 5% of your portfolio was suddenly unavailable. How does a tool like QPP account for this kind of risk (or is this uncertainty)?

    I'm not a big fan of Nassim Taleb. He is a terrible writer who is guilty of some egregious rhetorical fallacies. But his main point, that MPT has a terrible time coping with the unknown and that it is this kind of uncertainty that is the biggest source of investment losses, is spot on. That QPP would include Malaysia in a hypothetical best risk-adjusted portfolio is a good example of Taleb's point.
    Aug 04 17:04 pm |Rating: 0 0 |Link to Comment |View article
  • Delusions of Debt
    Please explain to me how you can meaningfully compare the purchasing power of a 1914 dollar with a 2008 dollar when 90% of the things that are sold in the market today did not exist in 1914.

    IIRC, one of the Rothschild's died in the 1800s from an infection that we would cure today with $4.00 worth of antibiotics. All of his gold couldn't save him. I'll happily take today's goods and prices over the goods and prices of 1914 any day!
    Aug 04 13:04 pm |Rating: 0 0 |Link to Comment |View article
  • Bonds: No Inflation Threat in Sight
    The argument that rates are low and thus don't reflect inflation because there has been a "flight to safety" seems fishy. If you expect your "safe" investment to be eaten up by inflation, then it isn't really "safe", is it?
    Jul 10 14:20 pm |Rating: 0 0 |Link to Comment |View article
  • Ben Bernanke: What Kind of Bird Is This?
    What is the MZW in your graph?
    Jun 17 14:37 pm |Rating: 0 0 |Link to Comment |View article
  • Passive Investing Wisdom from Taylor Larimore
    Neither George Soros nor Julian Robertson have been able to time the markets both successfully and consistently. They have done better than most, but they have also had blowups that cost their funds billions.
    Jun 16 12:36 pm |Rating: 0 0 |Link to Comment |View article
  • Portfolio Planning and the Lost Decade
    Your articles are consistently interesting. I'd love to try QPP, but you are going to have to port it to OpenOffice for us Linux users.
    Jun 13 13:47 pm |Rating: 0 0 |Link to Comment |View article
  • 1990 All Over Again?
    Tom Lindmark --

    Good point. That is why it pays to read the footnotes:

    Please note breaks in data: Data prior to 2003-01-01 include adjustment, extended, and seasonal credit. Data from 2003-01-01 to 2007-11-01 include primary, secondary, and seasonal credit. Data from 2007-12-01 to 2008-02-01 include primary, secondary, seasonal, and term auction credit. Data from 2008-03-01 forward include primary, secondary, seasonal credit, primary dealer credit facility, other credit extensions, and term auction credit.

    This is a graph that has apples up until it has apples and oranges.
    May 15 14:15 pm |Rating: 0 0 |Link to Comment |View article
  • Buffett's Advice to the Berkshire Faithful: Buy Index Funds
    I'll bet bearfund has never beaten the indexes over, say, any given 10 year period in the past 50 years, especially after paying for all the expenses he has incured trying to figure out what might be likely (but is just as likely not to) outperform.

    Bogleheads rule!
    May 04 23:49 pm |Rating: 0 0 |Link to Comment |View article
  • Buffett's Advice to the Berkshire Faithful: Buy Index Funds
    Vanguard Total Bond Market Index Fund -- https://personal.vangu...

    Vanguard Total Market Index Fund -- https://personal.vangu...

    Vanguard Total International Stock Index -- https://personal.vangu...

    And maybe a bit of

    Vanguard REIT Index Fund -- https://personal.vangu...

    You'll do fine.
    May 04 21:25 pm |Rating: 0 0 |Link to Comment |View article
  • Today's Lesson: Why the Fed Raised Its Rates in 1931
    China is sterilizing the dollars by issuing enough bonds to soak up the yuan they are printing to buy the dollars that are flooding into their economy through their trade imbalance with the U.S.

    While Herbert Stein has reminded us that things that cannot go on forever, don't, it is not clear to me why China is importing inflation given the sterilization policy and the fact that they have been (too!) slowly re-valuing the yuan in recent years.
    Mar 26 14:43 pm |Rating: 0 0 |Link to Comment |View article
  • The End of U.S. Investing as We Know It?
    Perma Bull vs Perma Bear? Who cares? With 20 years to go before I retire, I'll just keep maxing out my 401(k) and my IRA and each month buy a little of whatever no-load index fund is currently cheapest relative to my long-term asset allocation plan. The financial services industry hates people like me.

    But I do enjoy reading the doom and gloom scenarios on blogs like this. They provide the same kind of thrills, chills, and adrenalin rush of a B grade horror film. That reminds me - Gotta pick up some popcorn on the way home tonight.
    Mar 20 15:10 pm |Rating: 0 0 |Link to Comment |View article
  • Global 'Oil Shock' Rattles World Stock Markets
    It was James Carville who wanted to be reincarnated as the bond market, not Robert Rubin. It is a notoriously well known quote. When an author can't be bothered to fact check the attribution of simple quotes, it throws all the rest of the analysis into doubt.
    Mar 14 14:49 pm |Rating: 0 0 |Link to Comment |View article

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