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Gary Gordon  

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  • 50% Recession Possibility Calls For A 'Higher-Than-Usual' Allocation To Non-Stock ETFs [View article]
    Exactly. It has been working for six-plus years, and it will probably continue to do the trick. Until one day, it just doesn't work anymore.
    Mar 30, 2015. 06:45 PM | 4 Likes Like |Link to Comment
  • 50% Recession Possibility Calls For A 'Higher-Than-Usual' Allocation To Non-Stock ETFs [View article]
    Harm,

    I am not so sure that assessing the probability of a recession is, as you say, "as useless as flipping a coin." For proof that your comment may be missing the mark, you can look at the same exercise that I conducted in December of 2007 right here at Seeking Alpha (70%), I did it again in January of 2008 for Investors' Business Daily (80%).

    The higher the odds, the more that I ratcheted down the risk for hundreds of client accounts. I don' think that I need to remind you that the less risk investors were taking in 2008, the better they performed and the less ground they needed to make up from 2009 forward.

    Granted, assigning any percentage probability may not be the best way to convey the efficacy of the predictive tools. Yet the five that I listed above - PMI, Consumer, S&P 500 Lower Lows, CCBR Versus 10-Year and 3-Month Treasury Spread With 10-Year Note - you better be watching them.

    Gary
    Mar 30, 2015. 06:42 PM | 1 Like Like |Link to Comment
  • Are Transportation Stocks Hinting At A New Recession? [View article]
    HA! And that guy nailed it, didn't he?

    More importantly, that guy had an approach for protecting his clients from the bulk of the bear mauling.

    Thanks for finding that!
    Mar 27, 2015. 10:50 AM | 1 Like Like |Link to Comment
  • Are Transportation Stocks Hinting At A New Recession? [View article]
    "Time alone does not end a bull market."

    It is accurate to say that time itself does not cause a bear in stock assets. Yet probability based on historical length and strength of all 35 bull markets since 1900 is as worthy as other indicators, including fundamental, contrarian, economic and technical price indicators. Price movement, for instance, is little more than the plotting of price over time... and only the uninformed fail to recognize the impact of a benchmark's price falling below and staying below a 200-day moving average.

    One can certainly say that time is irrelevant or that things are different this time (interest rates are super low and so forth). We heard the "it's different" argument with the New Economy in the late '90s, as well as "time does not end bull markets" in the late 90s. Yet those that paid attention to the bull market's duration and epic price gains in the late 90s -- alongside insane valuations -- were able ride the wave and safely get off of it thanks to historical probability.

    One might insist that only a recession causes a bear. Yet we heard NBER declare the 10/07 recession one full year after the bear had already mauled portfolios (10/08). So how has the statement that recessions cause bears been helpful to participants?

    Another might explain that bears respond to extreme overvaluation. Okay, but when exactly? Are we not presently staring at the highest median stock P/Es and highest median stock P/S ratios in recorded history? We are.

    It follows that time may not end bull markets, but time is a lot more powerful in discerning probable outcomes than you may be willing to acknowledge. 35 bull markets since 1900? It is certainly reasonable to consider average length, strength, and deviations from both. And when one witnesses an exceptionally long bullish period coupled with an exceptionally large percentage gain that deviates markedly from historical norms, it is instructive to be mindful of the 35 events that came before.
    Mar 26, 2015. 05:02 PM | 3 Likes Like |Link to Comment
  • Why A 'Rate Hike Tantrum' Will Not Kill Bond ETFs In 2015 [View article]
    Zenith,

    One jobs report? That certainly does not take into account debt servicing requirements of households and the U.S. government.

    Due to debt doubling from $9 trillion to $18 trillion in the recovery - as well as promises like Social Security, Medicare and universal healthcare - the 35-year bond rally will continue. Our debts require servicing which, in turn, require ultra-low rates. The U.S. government and its citizens would not be able to service debts without exceptionally low yields. Is it any surprise that the former Fed chair, Ben Bernanke, said that he will not see rates normalize in his lifetime?

    There was a monstrous plunge in bond yields out of the 2015 gate on a few bad pieces of economic data. The spike in yields after the jobs report simply returned things back to the 2015 gate, and now 10-year yields are back below 2% yet again. We started 2015 at 2.17%.

    For as long as I can remember, people have been talking about the inevitability of higher rates when the opposite has held true for 35 years. Does this trend really look as though it is ending? (See chart at link below.) Long-term maturities like the 30-year have set new record lows since the 2013 taper tantrum, since the economic "acceleration," since the terrific jobs report(s), since the Fed stopped buying bonds.

    In other words, the Fed could raise overnight lending rates, the jobs reports can keep on "keeping on," and it will not change certain likelihoods. Specifically, the country requires very low rates to survive. And, when a cyclical recession occurs, you'll see any Fed funds targets reverse course and head back down to zero (if not with more QE.) What's more, those longer-term treasury yields will keep trending lower. (See chart below.)

    http://bit.ly/1FHHfrZ

    Gary
    Mar 25, 2015. 05:19 PM | 1 Like Like |Link to Comment
  • Selling Winners In Your Portfolio Is Never Easy [View article]
    Fourteen months ago, I placed my convictions and my reputation as a money manager on the line. Truth was, you could not find a single long bond advocate east or west of the Mississippi, unless that person happened to be a bond fund manager. And, well, then there was one individual... me.

    At first, the gallery took shots at my investment selection of EDV and similar proxies because it was easy to parrot how rates had to go higher. Yet the comment writers and media speakers completely missed the direction of interest rates. As the year progressed, the gallery took shots at me because it was easy to say the move would be temporary. Again, they were wrong; some were even mean-spirited in the presentation of their position.

    How easy it is it for someone to comment anonymously? How easy is it for those without hundreds of clients or tens of thousands of readers to attack via a keyboard? Too easy. Nevertheless, my long bond conviction that countered mainstream gospel came out on top.

    Sometimes, it is not my conviction taking fire. It may be my discipline. I choose to apply insurance to the investing process. Stop-limit loss orders, trendlines, multi-asset stock hedging - none of these methods of reducing risk meet with approval six-plus years removed from the financial crisis.

    However, it was these very approaches that helped my clients sleep better at night during 2008-2009 and during 2000-2002. Clients maintained more of their dollars. And they recovered from the downturn far more quickly than had they been stuck in a hold-n-hope world.

    In sum, my discipline does not permit me to fall in love with my convictions. Rather, my convictions allow for a buy decision, whereas my discipline ultimately insures favorable outcomes (i.e., big gain, small gain, small loss). Indeed, 45% gains on EDV are fine for now... I can always revisit extended duration treasuries at another time.
    Mar 9, 2015. 04:54 PM | 6 Likes Like |Link to Comment
  • U.S. Stocks And U.S. Bonds: What The Heck? [View article]
    The last two weeks simply turned back the clock to the beginning of the year, providing a buy-the-treasury-dip opportunity. I am not particularly concerned about the last two weeks, and I feel pretty darn good about the last 14 months. As one of the few that began talking about a flattening of the yield curve, regularly since December 2013, the gains have more than made up for a few setbacks. If the treasury bond rally is truly over, we will see it in a breakdown at the 200-day... but I expect the U.S. 30-year yield to move down to around 1.75%-2% and the the 10-year to move down to the 1% region before it is all said and done.
    Feb 18, 2015. 04:04 PM | Likes Like |Link to Comment
  • Risk Aversion Gains Momentum And Risk Taking Loses It [View article]
    A,


    The ETFs that I talk about depend upon the commentary. Am I comparing maturity dates? I often use IEF. Am I discussing client holdings? I often discuss EDV. Am I talking about multi-asset stock hedging? TLH and ZROZ. Am I talking long maturity in general? TLT might get the nod.

    IEF, TLH, TLT, EDV, ZROZ... I talk about them all... depending on the article.

    Best,

    G
    Feb 4, 2015. 11:00 AM | Likes Like |Link to Comment
  • Risk Aversion Gains Momentum And Risk Taking Loses It [View article]
    Data on the index itself only goes back to 6/2011. The specific exchange-traded fund components have only been in existence for a brief period.

    Data on component asset types? The safest of safer haven assets during bearish periods are relatively well documented. We're talking about sovereign debt (e.g., TIPS, long maturity treasuries, zero coupon bonds, JGBs, German bunds), U.S. state debt (i.e., munis), currencies (e.g., Swiss franc, U.S. dollar, yen) and precious metals (i.e., gold).

    Individual components as safer havens going forward can be debated until the cows come home. Of course, that's the benefit of diversifying with multi-asset stock hedging. These are the types of the assets that, together, are extremely likely to produce positive returns in bearish stock periods without the use of leverage or shorting.
    Feb 4, 2015. 10:50 AM | Likes Like |Link to Comment
  • Risk Aversion Gains Momentum And Risk Taking Loses It [View article]
    manfac,

    I am not exactly sure what you are saying in your comment above, but the 30-year treasury bond yield does not hit an all-time record low when risk is "on." Nor do long-duration bonds significantly outperform stocks when risk is "on." Nor do small-caps, high yield bonds, foreign stocks and commodities all struggle when risk is "on."

    You might want to read the following, and take notice of the accompanying charts:
    http://seekingalpha.co...

    Either the rest of the world will get a jolt from various forms of stimulus efforts, helping global growth return to admirable expansion and propelling the equity bull market forward. Or those efforts will fail such that the lack of global growth drags on the U.S. economy, making folks even queasier about equity risk.

    Gary
    Feb 3, 2015. 03:57 PM | 1 Like Like |Link to Comment
  • Bears Growl At Bonds And Energy, So Buy Both [View article]
    gpw,


    Every article that I write is for mass consumption; the assets that I talk about are not specific recommendations. That said, there are a variety of alternatives on the long end of the curve, from TLH to TLT to VGLT to ZROZ. In my client portfolios, however, most own EDV and BLV.

    Best,

    G
    Jan 9, 2015. 10:51 AM | Likes Like |Link to Comment
  • Bears Growl At Bonds And Energy, So Buy Both [View article]
    See past articles
    Jan 9, 2015. 10:45 AM | 1 Like Like |Link to Comment
  • Proof Positive That U.S. Stock ETFs Are Not The Only Place To Be [View article]
    Equal weight across the components... we rebalance MASH on a semi-annual basis from the inception date.

    BTW, stockhedgeindex.com describes the index construction and components in greater detail. It should be "live" in a day or two.
    Jan 8, 2015. 05:14 PM | Likes Like |Link to Comment
  • Proof Positive That U.S. Stock ETFs Are Not The Only Place To Be [View article]
    bbro

    Absolutely! Which is why I wrote:

    "Granted, I may not be the only contrarian on middle-of-the-yield-curve rates, but I do not run a bond fund and I have plenty of stock exposure."

    Personally, I do not have a vested interest in any particular asset class. As a money manager, I use all of them.

    As a reader who comments regularly on Seeking Alpha, you know that I was one of a handful of individuals who said rates would fall in 2014. Others can review articles like the one I wrote in January of last year, "Against the Herd: Lower Rates, Not Higher Rates, In 2014."
    http://bit.ly/1iLuvUm

    Best,

    Gary
    Jan 6, 2015. 04:42 PM | 1 Like Like |Link to Comment
  • Are Rate-Sensitive ETFs Suggesting Economic Weakness Ahead? [View article]
    K,

    Perhaps you are confusing the Federal Reserve's intention to slowly raise/normalize overnight lending rates with the rest of the yield curve. "Taper talk" in 2013 caused a massive exodus from bonds in which rates rapidly rose across the yield curve. The 10-year catapulted from 1.5% to 3% in a matter of months, a 100% rise, and that does not even begin to tell you what happened to 15, 20 and 30 year rates.

    In 2014, the expectation on the yield curve was for a more modest uptick in rates, yet the economists polled were unanimous. And every last one of them missed, badly. The 10-year falling from 3% to 2.2% and the 30-year falling from 4% to 2.75% is a monumental shift in the opposite direction.

    As stated in the article above, the economist average for year-end 2015 for the 10-year is 3%, representing a 36% gain on a point on the curve regarded as "intermediate." The average forecast for rates to rise this much in a year's time, with longer-term rates rising alongside a "strengthening economy" is a forecast of rapidly rising rates on the yield curve, not entirely different than what transpired during the taper talk in 2013.

    Best,

    G
    Dec 30, 2014. 12:03 PM | Likes Like |Link to Comment
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