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Bob Wilson  

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  • How I Can Explain 96% Of Your Portfolio's Returns, Part 2 [View article]
    HeWho, thanks for taking the time to write such a detailed explanation. Yes, I found it quite helpful. I'm guessing that modern portfolio management requires having on staff some number of quants such as you and Kiran who can help provide views of risk to performance based on high level statistics. In that sense I'm a convert. --Bob
    Jan 31, 2014. 03:01 PM | Likes Like |Link to Comment
  • How I Can Explain 96% Of Your Portfolio's Returns, Part 2 [View article]
    If you mean as a surrogate for the DFA U.S. Small Cap Value fund, my answer would be "probably". But this assumes we aren't overly concerned with fees or whether we're comparing a passive index to a managerial style. It also assumes comparable performance and that you'd not be timing the market.
    Jan 31, 2014. 11:10 AM | Likes Like |Link to Comment
  • How I Can Explain 96% Of Your Portfolio's Returns, Part 2 [View article]
    Kiran, I seem to have a fundamental misunderstanding about your article. You say F&F explained 96% of a portfolio's return in the 1920s. Forgeting about the pros for a minute, how does this help the "average investor" managing his/her portfolio? If my primary interest is in modern portfolio theory and in making wise choices about managing securities, then how am I helped by knowing how to explain 96% of my portfolio's return, which has already happened?

    I think we agree that risk, whether or not one agrees with Wall St's view that risk translates as standard deviation, is of great importance. I also agree with your criticism of beta, or the way some investors might cling to it. I didn't mean to denigrate the possible importance of what you call "these measures". --Bob
    Jan 30, 2014. 10:52 PM | Likes Like |Link to Comment
  • How I Can Explain 96% Of Your Portfolio's Returns, Part 2 [View article]
    I don't question the author's expertise with the math analysis he presents. However, this exercise is not especially helpful with portfolio management. I disagree that most investors have a vague notion of risk. Risk, to them, is the chance they'll lose money. I also disagree that risk assessment should be 99% of every investment decision. There are many factors that contribute to a balanced view of risk vs opportunity, Some are quantitative but many, including the most important, are not.

    Trying to explain why a portfolio has had the performance it shows is a fool's errand. This sort of exercise is just another form of paralysis by analysis. Do we buy GE tomorrow or not? If you asked the vast majority of mutual/pension fund managers if they spend much time evaluating their portfolio's performance risk, you would hear consistently varieties of, "No, we don't." What you have, in claiming to explain 96% of portfolio performance, is a booby prize.
    Jan 30, 2014. 02:40 PM | Likes Like |Link to Comment
  • 3 Indicators That Signaled The 2007 Top: They're Back [View article]
    Chris, congratulations on an interesting bit of data mining. Of the three, the A/D line is probably the best, long term. I agree that a market decline now is perhaps a higher risk than it usually is, but my experience with using various indicators to predict a market top leaves me unconvinced of their value. Bottoms seem easier. There seems to be a healthy amount of skepticism about the market now, sentiment indicators are perhaps bullish. We see an historically large spread between the S&P and its long term MAs, which suggests the market is rolling over. But what is the risk that we fail to see a market drop compared to the risk that we fail to see
    the start of the ensuing recovery cycle? Market timing has rarely been a winning strategy.
    Sep 11, 2013. 02:46 PM | Likes Like |Link to Comment
  • A Bubble Continues To Form In The Stock Market [View article]
    James, your articles are well thought out. This probably reflects your fine education, with which I'm familiar. Your advice not to be too sanguine about what you see as a pre-bubble market now is understandable, but I have a question a lot of your readers might be interested in: How would your current market stance translate to your recommended asset allocation for a typical investor with a moderate risk tolerance? Let's define asset allocation in terms of stocks, bonds, gold and cash, plus whatever refinements you'd care to put on those categories. Thanks.
    Sep 2, 2013. 01:05 PM | Likes Like |Link to Comment
  • 3 Good-Yielding Stocks With Low Price To Free Cash Flow And Low Payout Ratio [View article]
    I'd hold off on NSU until it breaks out up through resistance and has a successful retest. Arie doesn't say where in Africa NSU has properties, but this could be important given various unstable areas there. Still, this might be a pretty good speculation. (Minor point: the text probably refers to chalcopyrite, the most common copper ore mineral, not "pyrite" which is fool's gold, iron sulfide--6th Highlight)
    I'm not enthused about the property-casualty business in FL. The hurricane risk could be serious. Then too, very long term, rising sea levels will increasingly pressure coastal weather and property values.
    Of these three stocks, PDLI looks like the best bet to me.
    Aug 31, 2013. 10:58 AM | 2 Likes Like |Link to Comment
  • Newmont Mining: Yielding Just Over 3% And Worth A Look As Things Start To Improve [View article]
    It seems, Heather, you were unaware of NEM's dividend being tied to the price of gold (London). There isn't IMO any need to be overly cautious about NEM. It's the largest USA gold miner (only one in the S&P 500), so should be able to ride out current weakness in gold. But make no mistake, gold will ride again. Nobody knows what the driver will be, but when big names and banks are backing off the paper gold market, after a huge decline, it's a good bet they're wrong (again?). Physical is still pretty strong in Asia and Central Europe. Reduced production will eventually support the price. We might not see a parabolic takeoff, but we should see decent growth in gold's price. It's not if, just when.
    Aug 19, 2013. 06:39 PM | 1 Like Like |Link to Comment
  • Chimera: Billionaires Are Invested In This Sub $3 Stock With A 12% Yield [View article]
    I'm with Special-Sit. Dividend yields in the mid-teens reflect a healthy correction in share price that often is the tip of the iceberg. These big REIT payouts are another form of junk. If you're thinking you'll be well paid while waiting for the share price to recover, well, maybe, but you could also be waiting to have your head handed to you. Big yields tempt lots of naive investors. Quality REITs with much lower yields usually have long term records of growing share prices. That's where most people will be better off.
    Jul 9, 2013. 08:33 AM | 1 Like Like |Link to Comment
  • Do You Know How To Handle A Bear Market? My Answer: With Faith [View article]
    When I get back to the US I'll do the math to show the percent of repair on the loss. I agree that would have been helpful, despite the column headings being perfectly clear as they are. I use "mostly" to mean greater than 50%.
    Jul 6, 2013. 02:50 AM | Likes Like |Link to Comment
  • Do You Know How To Handle A Bear Market? My Answer: With Faith [View article]
    sethmcs, I like your idea of selling puts, so long as you do it when prices have already come down a good deal. I think you're right about miners, in general, now. I can't yet see an upside driver for gold, but that might be a decent buy signal: the price will start to recover and that'll be the buy signal, visible driver or not.
    Jun 29, 2013. 12:11 PM | Likes Like |Link to Comment
  • Do You Know How To Handle A Bear Market? My Answer: With Faith [View article]
    Yes, I agree about courage, although I wasn't talking about religious faith. I recall having dinner in Edgartown with the Hon. Paul Nitze several years ago (our spouses were old friends). I asked him in his experience (he had been Sec. of the Navy and had advised several US Presidents) what was a man's most important personal asset. He looked me in the eye and with no hesitation answered in one word: "courage".
    Jun 28, 2013. 10:20 PM | 2 Likes Like |Link to Comment
  • Ganging Up On Gold [View article]
    It's hard to imagine a much more negative deviation in MACD than we have now. Normally I'd agree with the article's estimated time frame for a bottom, but gold's pricing seems not to enter consolidations much, if at all. The cash price in Shanghai has dropped 11 days in a row now. Conversely, Central Europeans are buying all the physical gold they have cash for (according to a knowledgable observer in Austria). The rupee has just hit an historic low, just after India puts in a levy against gold imports.

    Gold's trend is still bearish, but there is also still retail demand in the background. I agree that unanimity of opinion among banks is a good thing to bet against. JPM was the only smart bank with the early perception that gold was heading down (you'll recall their call to short gold in early April). I will not turn bullish again until I see a dead cat bounce and successful retest (higher low).
    Jun 26, 2013. 01:04 PM | 1 Like Like |Link to Comment
  • BP: Another Week Of Accelerating Business Economic Loss Claims [View article]
    This article tries to point out risks to BP, but it strikes me as too superficial to be taken seriously. How does BP's situation contrast and compare with the Exxon-Valdez problem? Are the claims of states based on lost tax income, actual or projected?

    If this author has an understanding of issues facing BP that is better than the market's, why doesn't he at least outline the general nature of this understanding? Is he a corporate attorney who has worked on liability settlements? Commenting on the daily changes in claims seems similar to watching daily stock prices in that both suggest lack of a broad perspective and inadequate discriminatory judgments. The author might have a valid position, but this article doesn't establish it, in my opinion.
    Jun 25, 2013. 12:16 PM | 2 Likes Like |Link to Comment
  • Norfolk Southern Corp. Looks Like A Solid Investment [View article]
    This is a well presented article, but it's hard for me to see the driver for a turnaround in coal. I don't have the data showing the number of coal fired power plants that utilities have switched or are switching to NG, but this could be a long term trend. NSC has a strong record of dividend growth, but it could stay undervalued for some time. Some railroads are starting to haul oil now. This is more expensive than pipelines, but refineries can get what they want quicker and with almost no environmental/political opposition. My bias is to invest in dividend payers with solid earnings growth. I'm all in favor of sometimes buying turnarounds, but I just don't see the earnings leverage for NSC.
    Jun 25, 2013. 11:16 AM | 1 Like Like |Link to Comment
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