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Eric Parnell, CFA  

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  • Stocks Are So Overrated [View article]
    Hello TheUnknownInvestor,

    Thanks for your comment and your great points including highlighting the many references throughout history. Thanks again!
    May 28, 2015. 01:45 PM | 2 Likes Like |Link to Comment
  • Stocks Are So Overrated [View article]
    Hello RAKJ,

    Thanks so much for your comments both here as well as on some of my other recent articles. I appreciate it! And I too look forward to the comments that follow on this article, as it is in the comment section where the greatest insights are expressed and shared in my opinion.

    Thanks again!
    May 28, 2015. 01:43 PM | 2 Likes Like |Link to Comment
  • Stocks Are So Overrated [View article]
    Hello market flaneur,

    Thanks for your comment and excellent points. The only point that I would add is that from a portfolio construction standpoint, the inclusion of a very small allocation to something that may be volatile in isolation can serve the purpose of meaningfully lowering the risk profile of the overall portfolio if its price performance is uncorrelated to negatively correlated with the other assets in the portfolio. In this way, the strategic use of higher risk securities can actually lower an overall risk profile. But to your point, such instruments must be used tactically and with great care.

    Thanks again.
    May 28, 2015. 01:42 PM | 1 Like Like |Link to Comment
  • Stocks Are So Overrated [View article]
    Hello u01bsb0,

    Thanks for your comment and for building on the point raised by Sam in his comment above. You are right that zooming into specific time periods would show a greater disparity in the lines. But when seeking to view the markets from the perspective of a typical investor, the difference between roughly $18,000 in stocks versus $1,100 in bonds in 1986 feels very different in absolute dollar terms than $290,000 in stocks and $7,000 in bonds today. But your point is well taken and I appreciate your raising it.

    Thanks again!
    May 28, 2015. 01:39 PM | 2 Likes Like |Link to Comment
  • Stocks Are So Overrated [View article]
    Hi Sam,

    Thanks for your comment and your point is well taken. You'll notice that in most of my articles I chart price on a logarithmic scale, but I purposely used a standard scale for this article given the fact that part of its purpose is to consider the perspective of the typical investor, as most people I have encountered do not track the dollar value of their wealth on a logarithmic scale. But your point is every well taken and I agree with what you are trying to express by making this point.

    Thanks again and I look forward to your future articles on SA. I particularly enjoyed your recent post on Volkswagen. Great work.

    http://seekingalpha.co...
    May 28, 2015. 01:33 PM | 7 Likes Like |Link to Comment
  • Stocks Are So Overrated [View article]
    Hello dieuwer,

    Thanks for your comment and for raising a very good point on gold. It is to this very point that you've made here that I gave it a nod at the end of my article. And given that stocks and gold have moved back and forth with each other over long-term periods of time, I suspect gold will have its day back in the sun before it's all said and done.

    Thanks again and great point.
    May 28, 2015. 01:29 PM | 5 Likes Like |Link to Comment
  • Stocks Are So Overrated [View article]
    Hello fripp1,

    Thanks for your comment and I agree - high quality companies at attractive valuations with low price volatility that are big free cash flow generators and pay consistently growing dividends are the best. The attractive valuations part has been increasingly elusive over the last several years, but market cycles will provide good entry points again in the future I'm sure.

    Thanks again!
    May 28, 2015. 01:27 PM | 11 Likes Like |Link to Comment
  • Just Be Careful Out There [View article]
    Hello Sensible Investor,

    Thanks so much for your comment and for sharing your personal profile and experiences. As mentioned in my article, my raising your previous comment was not at all meant to be directed at your own expertise and the process that you are using. And I have seen first hand and have a great deal of respect for the abilities that one can gain from having different abilities such as those that you have described here.

    Thanks also for your messages. I have included a link to the article that we discussed, as I found it very interesting and thought others might enjoy the opportunity to read it as well.

    http://bit.ly/1HHItln

    Thanks again for your comments. I appreciate it.
    May 26, 2015. 12:19 AM | 1 Like Like |Link to Comment
  • Just Be Careful Out There [View article]
    Hi Bob,

    Thanks as always for your comments. I have favored SPLV (USMV is good alternative too) for the fact that it is equal weighted and it favors the types of holdings that have the ability to perform well during the early stages of a bull market cycle. As for the financials and industrial exposures, this is an excellent point, although much of the financials exposure is less toward the traditional banks and more focused on specialty financials/insurers while the industrial allocations are to the more broadly diversified and defensive industrials like environmental services, conglomerates and aerospace/defense. While all of these sectors certainty have their sensitivities, they often have betas below one and can behave relatively better during early bear phases. But to your point, if we enter into a prolonged bear market phase, I would eventually expect to exit my SPLV position and move more toward concentrating on selected individual positions. This is an excellent point.

    On a related note since you mentioned interest rates, it is worth mentioning that XRLV was recently launched in April 2015 that combines the principles behind the SPLV with low interest rate sensitivity. I intend to monitor this product going forward as it gets up to speed.

    Thanks again Bob. I hope you are doing well.
    May 26, 2015. 12:02 AM | Likes Like |Link to Comment
  • Just Be Careful Out There [View article]
    Hello Harm,

    Thanks so much for your comment and for sharing your perspectives and experiences. I appreciate your taking the time to post a comment and I wanted to reiterate as I mentioned in my article that my inclusion of your comment in my article was not in any way a statement directed at you, for I have enjoyed reading your work on SA and you by your extensive experience clearly have a firm understanding of how to manage your leverage exposures. To some of the points that you mentioned in your comment, others in the market are utilizing leverage and do not have the same expertise, and the examples that you have provided do a great job of showing how damaging it can be if implemented improperly.

    Thanks again for your comment. I genuinely appreciate it.
    May 25, 2015. 10:53 PM | 3 Likes Like |Link to Comment
  • Just Be Careful Out There [View article]
    Hello Nick,

    Thanks for your comment and you raise some good points worth discussing. First, I completely agree that a well constructed and disciplined momentum strategy can help manage some of the downside risk associated with the approach. But one of the problems that can present itself with the trailing stop methodology that you have mentioned is what Nick Gagnon raised in his comment earlier in the article when stops are blown out by a spike in downside volatility. For to your point that momentum works tremendously well in a trending market like the one that we have been in over the last six years, it can quickly become much more turbulent in a choppy sideways market or a downward moving market.

    And to your last point, I can say from first hand experience that I have seen some of the best momentum investors in the world suffer losses greater than what I have mentioned in my article. Unfortunately, this is a risk associated with this particular style of investing.

    Thanks again for your comment and for raising some very good points.
    May 25, 2015. 10:27 PM | Likes Like |Link to Comment
  • Just Be Careful Out There [View article]
    Hello Nick,

    Thanks for your comment and your great point. Given your extensive experience in trading, I can only imagine you have seen this happen many times over the years. Outstanding point that all investors should consider.

    Thanks again!
    May 25, 2015. 10:46 AM | 1 Like Like |Link to Comment
  • Just Be Careful Out There [View article]
    Hello Matthew,

    Thanks for your comment and I completely agree. The comments from the readers are the best part of the articles. The discussion is always tremendous.

    Thanks again!
    May 25, 2015. 10:30 AM | Likes Like |Link to Comment
  • Just Be Careful Out There [View article]
    Hello michaelheme,

    Thanks for your comment and for raising a very good point. The only challenge here is getting the timing right, particularly since momentum stocks are the one's that are often taken out first in a bear market and can be down -20% or more before most investors even begin considering whether a new bear market has started. And once the downside gets underway, these same momentum stocks are prone to violent snap back rallies that can brutalize the shorts. As a result, I would say such a strategy is only for the most nimble and experienced, as it is fraught with risk.

    Great point and thanks again.
    May 25, 2015. 10:29 AM | 3 Likes Like |Link to Comment
  • Just Be Careful Out There [View article]
    Hello David,

    Thanks for your comment and excellent points. Emphasizing quality, value and income growth when selecting stocks not only provides investors with some time to react if needed given the fact that historically they have been among the last to fall during a major bear market phase, but they also often fall less than the market over the course of the bear market.

    And building on the points from my previous "Cash" article, dollar cost average is one way where holding cash and working into the market over time versus all at once helps to mitigate downside risk.

    Excellent points and thanks again.
    May 25, 2015. 10:15 AM | Likes Like |Link to Comment
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