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Gary Gordon  

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  • 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
  • The 3 'Macro' Questions Investors Must Ask Heading Into 2015 [View article]
    Bherber,


    "but every single time it has tanked it has come back and has not taken long to do so."


    I am genuinely surprised that someone would say this, since even the most basic review of history refutes it entirely. My first thought is that you did not live through the 70s nor invest significant dollars during the late 90s. But then I thought, surely he can look at the financials index and see that the financial sector is still not back to break-even after an entire decade. In spite of "too big too fail" bailouts by the government, 40% more just to get whole. How long do you suspect it will really take for the segment to make money?

    And then I thought, does bherber not realize that the NASDAQ index is still not back to breaking even after 15 years? We are not talking about making money here... we are talking about breaking even. Anyone drawing income from a portfolio during this period is likely to have ONLY a small fraction of what he/she started with 15 years earlier.

    You want to separate the sectors out... you can try. However, nearly ALL investors got caught up in the tech trap by 2000 because the technology weighting of most mutual funds swelled to 40%. Janus was king of the road in 1999/2000. You are simply to young to have lived and have lost significant money at this time, where the average investor lost 50%, and so many lost closer to 75%, because of the so-called New Economy.

    Had you owned the NYSE Index form 1966-1995, you would have made next-to-nothing over those 30 years. True, that takes into account very high inflation, and not price alone, but I am still not sure how 30 years means "not taking too long to get back." I am not sure how owning the market on 1/1/2000 as a new retiree with $1,000,000 who needed $50k per year should feel about your perception when they have depleted the bulk of their nest egg and have roughly $400k left to work with by 12/31/2009.

    And then there is the "American" bias of ignoring things like the world's 2nd largest economy in Japan... the country most revered in the 80s for its TQM and JIT... and everyone wanted "in" on the Japanese stock market. Well, the Nikkei is still not back after 30 years. China? Same thing. World's 2nd largest economy today and the Shanghai Exchange will probably never recover from 7 years earlier.

    I can appreciate your youth and vigor. But insurance is something that you will need to pick up along the way. Losing less in bad times is more critical to wealth building than riding the bull... simple mathematics. And those figures are increasingly important when 30 years of lowering rates (and more a la QE) may make it more difficult to count on capital gains and dividend yield going forward.

    This is not doom-n-gloom. I am neither bullish nor bearish in the way that I invest, but relatively agnostic. But I do know that the only thin that matters in investing is avoiding the bulk of the big loss. One does not have to ride a collapse to the bottom, and one needs an insurance approach to protect some capital... which is the money that allows one to purchase during panicky times.

    It may be easy to dismiss "legends" like Bill Miller and Legg Mason Value today. In 2007, he was the largest mutual fund manager in the world. So the average Joe lost 70%-plus and did not make it back. This is no different than everyone's mutual fund choices getting whacked for those kind of losses in 2000-2002, when it was the "New Economy" and Dow 36,000 books and whoooopsss. No, they did not get back.

    You might be surprised to learn that you are chatting with one of the originals in ETF advocacy, use and innovation. I was the one of the very first ETF advocates in 1993-1995 when you could count them on your hand. My ETF Expert blog was one of a handful in 2005, and you only had Tom Lydon, Dave Fry and Gary Gordon who even discussed ETFs.

    I am not sure why you are investing in them. Jack Bogle absolutely hated them and wished they had never been created, but Vanguard recognized the changing landscape and spurned their former leader's campaign. After all, the principal difference between Vanguard index funds and Vanguard ETFs is tradeability. Since you only value the buy side, you have no compelling reason to own an ETF.

    Are you aware of the reason that ETFs swelled from 3 to 1603? Tradeability. It only became important after 2000-2002 and 2008-09. Index mutual funds serve the other benefits - low cost, transparency, tax-efficiency, etc, -- just fine.

    I cannot say that you will not be successful with your hope-n-hold strategy. But it is roughly the same as owning a house outright and deciding you should not pay for homeowners insurance or earthquake or flood. Stuff MAY Happen... and it is worth paying for insurance, whether it is through put options, stops, trends, hedges, or any mechanism that applies insurance principles to the investing process.

    Cheers,

    G
    Dec 23, 2014. 01:17 PM | Likes Like |Link to Comment
  • The 3 'Macro' Questions Investors Must Ask Heading Into 2015 [View article]
    For those who believe that Robert Shiller might know a little something about 'irrational exuberance,' his most recent definition of it:

    "What is irrational exuberance? I think it's often a sense that the market always goes up in the long run, and it's hard to predict when it might go down, but it will surely come back up."
    Dec 22, 2014. 12:38 PM | Likes Like |Link to Comment
  • The 3 'Macro' Questions Investors Must Ask Heading Into 2015 [View article]
    Bherber,

    Bherber,

    It is certainly okay to have an opinion that is different from others. You are certainly entitled to believe that the market always comes back, but the facts do not support that belief.

    1. 65 Years. Dow 1916-1981 -- 0% inflation-adjusted returns

    2a. 30 Years. NYSE 1966-1995 -- About the same with respect to purchasing power.

    2b. 30 Years. Japan Nikkei 225. 1984-2014 -- 0% inflation-adjusted.

    3. 15 years. Turn-of-the-century retirees have just barely gotten above an inflation-adjusted 0% with the S&P 500, while the NASDAQ still isn't even on price alone.

    4. 7 Years. Shanghai Stock Exchange (SSE)... investors still require 160% to break even on a price basis alone.

    I wrote about some of these examples in October.
    http://bit.ly/1zObBnd

    I wish you well in your dollar-cost averaging endeavors. Recognize that retirees (and many who are approaching that date in their 50s) do not have your cash sitting around to buy the dips and the downs, let alone the money from work to make it up or make it back. If you personally have a large amount of cash sitting around to buy back during a monstrous slump, you could not have earned as much as you would have if you were fully invested with all capital during the bull market. On the other hand, if you used principles of insurance to take profits occasionally, then you raised cash during an exuberant period and were able to take advantage of panics and disastrous downturns.

    Again, though, you may wish to look at recent history or not-so-recent history before erroneously stating that the "markets always come back." You may also wish to recognize that a whole lot of folks have fixed dollar amounts in their portfolios and they cannot just buy with cash thy do not have. The only way they will have cash is when I raise the cash levels in their existing portfolios.

    Last, but hardly least, even if one expresses that the "market always coming back," there's a tremendous difference between losing 20% or less in 10/07-3/09 and recovering 25% to be even again by the end of 2009 versus your prescription of waiting 4-5 years for the same recovery from a 57% disaster that required 132% and a whole lot of unprecedented central bank interest rate manipulation. Not to mention a whole lot of sleepless nights for those who may not be so comfortable watching $1,000,000 become $450,0000 or so... with the promise of "not worrying, it will come back... it always does."

    By the way, the largest mutual fund in the world in 2007 was Bill Miller of Legg Mason Value. You should know him as the only person ever to beat the S&P 500 for 15 yeas on a risk-adjusted basis. That was until the same deep discount value philosophy that you seem to support during bearish slumps caused him to lose 70%-plus. His deep discount approach that made him a hero ultimately resulted in the fund going under, Miller moving on to another company and his investors never able to get a 233% return to break even.

    All the Best,

    Gary
    Dec 22, 2014. 11:35 AM | 1 Like Like |Link to Comment
  • The 3 'Macro' Questions Investors Must Ask Heading Into 2015 [View article]
    Bherber,

    It is certainly okay to have an opinion that is different from others. You are certainly entitled to believe that the market always comes back, but the facts do not support that belief.

    1. 65 Years. Dow 1916-1981 -- 0% inflation-adjusted returns

    2a. 30 Years. NYSE 1966-1995 -- About the same with respect to purchasing power.

    2b. 30 Years. Japan Nikkei 225. 1984-2014 -- 0% inflation-adjusted.

    3. 15 years. Turn-of-the-century retirees have just barely gotten above an inflation-adjusted 0% with the S&P 500, while the NASDAQ still isn't even on price alone.

    4. 7 Years. Shanghai Stock Exchange (SSE)... investors still require 160% to break even on a price basis alone.

    I wrote about some of these examples in October.
    http://bit.ly/1zObBnd

    I wish you well in your dollar-cost averaging endeavors. Recognize that retirees (and many who are approaching that date in their 50s) do not have your cash sitting around to buy the dips and the downs, let alone the money from work to make it up or make it back. If you personally have a large amount of cash sitting around to buy back during a monstrous slump, you could not have earned as much as you would have if you were fully invested with all capital during the bull market. On the other hand, if you used principles of insurance to take profits occasionally, then you raised cash during an exuberant period and were able to take advantage of panics and disastrous downturns.

    Again, though, you may wish to look at recent history or not-so-recent history before erroneously stating that the "markets always come back." You may also wish to recognize that a whole lot of folks have fixed dollar amounts in their portfolios and they cannot just buy with cash thy do not have. The only way they will have cash is when I raise the cash levels in their existing portfolios.

    Last, but hardly least, even if one expresses that the "market always coming back," there's a tremendous difference between losing 20% or less in 10/07-3/09 and recovering 25% to be even again by the end of 2009 versus your prescription of waiting 4-5 years for the same recovery from a 57% disaster that required 132% and a whole lot of unprecedented central bank interest rate manipulation. Not to mention a whole lot of sleepless nights for those who may not be so comfortable watching $1,000,000 become $450,0000 or so... with the promise of "not worrying, it will come back... it always does."

    By the way, the largest mutual fund in the world in 2007 was Bill Miller of Legg Mason Value. You should know him as the only person ever to beat the S&P 500 for 15 yeas on a risk-adjusted basis. That was until the same deep discount value philosophy that you seem to support during bearish slumps caused him to lose 70%-plus. His deep discount approach that made him a hero ultimately resulted in the fund going under, Miller moving on to another company and his investors never able to get a 233% return to break even.

    All the Best,

    Gary
    Dec 22, 2014. 11:30 AM | 1 Like Like |Link to Comment
  • The 3 'Macro' Questions Investors Must Ask Heading Into 2015 [View article]
    RC.

    If your thinking mirrored the "group-think" of the overwhelming majority of investors today, then you would have more to worry about. The problem is not participating in stocks during periods of amplified exuberance and overlooked overvaluation - that's how money was made in the 90s and in the mid-2000s. The problem is failing to take action to minimize downside risks - that's how investors got creamed in 2000-2002 and 2008-2009.

    Best,

    GG
    Dec 19, 2014. 01:49 PM | 1 Like Like |Link to Comment
  • If Corporate America Is Investing In Sustainability, Then Why Aren't You? [View article]
    The value of any ETF/ETN to advisers as well as retail investors is its ability to track a desirable space at a "Vanguard-like" cost. It follows that, if an ESG/SRI vehicle does come to market, the vehicle would not be sustainable at an expense ratio north of 1.3%.

    Current "active" index products have been less desirable and less sustainable because of their high internal expenses. After all, the largest movement in the investment world has been the 40-plus year-long trend toward lower-cost indexing.

    SRI? ESG? TQM? JIT? Fad or fixture may depend more on the investing cost than on the concept.
    Dec 17, 2014. 05:30 PM | 1 Like Like |Link to Comment
  • The 1% Portfolio: Adding The Teucrium Corn ETF For Income [View article]
    ">>Also, U.S. bonds didn't rally yesterday in the face of a 20 point loss in the S&P."

    If we are talking about safer havens (you mentioned the dollar, for example), the perceived safety of U.S. treasuries rallied to 52-week highs. This is true whether you look at IEF, TLH, TLT, EDV, or ZROZ. Perhaps the date of the post is off?
    Dec 17, 2014. 01:49 PM | Likes Like |Link to Comment
  • Discussing The Role Of Volatility In Asset Allocation And Risk Management Strategies [View article]
    Theoretically.... yes.

    Unfortunately, they have no assets in them and they rarely trade. The bid-ask spread is likely to be wide - too wide to consider them liquid or viable. Tracking error may be an issue. And, they are highly likely to be closed down.

    In my opinion, BUNL and JGBL have a few too many drawbacks.
    Dec 10, 2014. 10:47 AM | Likes Like |Link to Comment
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