Brad Zigler

Ag Stocks Still Outdoing Ags

The fatal flaw is the time assumption. Investment horizons for rmany investors don't allow the time needed to clawback large losses. Funding needs for such events as retirement, home purchases and tuition payments may be near term.



On Jun 12 08:52 PM E.D. Hart wrote:

> If the NAV of a business is $45 per share, and the shares trade at
> NAV, and the shares lose 10%, who cares if the market has to claw
> back 11%?
>
> Over time the market is a weighing machine...so that 11% is not greater
> than 10% as hard as that is to comprehend, its a return to a NAV.
> It doesn't matter.
>
> Commodities are volatile, and Treasuries are less so. Nevertheless,
> treasuries are much more risky than commodities.(assuming no leverage
> is used) because of the environment of quantitative easing.
>
> If you had to invest all of your net worth for ten years, and lock
> it away, and you could only choose T-bills, or gold--what would you
> choose?
>
> I'm going with gold, and I'm not a gold bug, I'm a dollar bear. What
> do I care if gold is highly volatile?
>
> Risk is about 100% that you will lose money after inflation in t-bills,
> in spite of their so called "safety", and low volatility. I'm guaranteed
> to lose my money slowly with low volatility. What a deal.
>
> Also, what do I care if oil prices are volatile if the supply/demand
> fundamentals are highly favorable to higher oil prices? The risk
> is almost nil that oil will be cheaper in ten years, but the volatility
> will be all over the map. Again, volatility is not risk of loss of
> capital.

Ag Stocks Still Outdoing Ags

Volatility IS risk. More particularly, downside volatility, as measured by the Sortino rato, is. Keeping the size of your maximum drawdown small demands less of a market recovery to reach breakeven.

After a 10% loss, for example, an 11% recovery is needed to break even; after a 50% loss, a 100% clawback is required.


On Jun 11 04:19 PM predictorman1000 wrote:

> Great article. I am in an IRA so that precludes me from directly
> shorting.
>
> My problem with the short ETFs is that I have been burned EVERY time
> I have owned them. Some of it is market manipulation, and I have
> no reason to believe that can't happen with these also. Also if you
> are holding a short ETF long term, the decay kills you.
>
> I don't trust ETNs, let alone short ETNs. I have owned both, but
> got out once I understood what was underlying them. A scandal waiting
> to happen.
>
> I own both DBA and MOO and I'll rely on market momentum and swallow
> the risk. In this market the risk is not being on board (I know people
> don't like to here it but it's true- it just doesn't seem to want
> to correct).