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Gary Gordon

 
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  • Touring The Asset Classes Via Vanguard ETFs [View article]
    Randy,

    It's not that you haven't made some terrific points... it's the way that you make them. Every comment does not need to be filled with vitriol.

    When you write 1000s of articles, you are going to make mistakes. Your pointing them out can be a good thing... for everybody. Still, if you are always looking to prove others wrong, you may miss the ideas/thoughts/opinions that one has shared.

    For instance, Agribusiness (MOO) compounding at roughly 4.6% since inception with 20% more beta risk than the S&P 500... that might be described as "struggling." Most stock assets may have "struggled" in that time period. It is just a word that had been used in a sentence in an article that expressed an opinion about Infrastructure ETFs being overrated.

    Regardless of how you feel about me or my opinions, I wish you well in your investment pursuits.

    Gary
    Jul 5, 2013. 05:12 PM | 4 Likes Like |Link to Comment
  • That Wasn't a Bear Market, This Is a Bear Market! [View article]
    Your thesis reads well in theory. However, the "average Joe" DID NOT merely "buy a smattering of mutual funds, individual stocks, sector ETFs." That's not a true accounting of historical events.

    In the previous bear market, you had irrational greed for technology stocks and the so-called New Economy, resembling the irrational greed for real estate in the low interest rate environ that followed. People were heavily over-allocated to large-cap tech in the Nasdaq. Losses were 76% for the Nasdaq.

    The market based wealth of most average Joe investors is/was based inside the 401k. The overwhelming majority of 401ks didn't even have small-cap funds inside them. That puts a further dent in the idea that you can use an equal-weight analysis.

    Third, buy-n-hold investing was firmly entrenched in the minds of virtually all investors in 2000. The average Joe rode all of it down, mostly consisting of "get-rich-quick, tech fever" losses. This time, rational fear and irrational fear caused many more folks to sell earlier, rightly or wrongly, so many more people reduced the extent of their losses. Not so in the last bear.

    As a radio personality, writer and money manager, I witnessed losses in the previous bear that far exceeded 50% in most cases. In fact, many were looking at 75% losses thanks to the tech heavy allocation of the "average Joe." In this bear, there were more efforts to mitgate thoses losses, since people weren't willing to suffer as badly as they had in the 2000-2002 period.

    Obviously, from an emotional perspective, this bear is far, far worse. The last bear did not seem as bad due to home price appreciation. This bear feels worse because of a more severe recession and the epic real estate decline.

    Nevertheless, if numbers are going to be used as though people were invested in a smattering, equal-weighted fashion, both then and now, that's inaccurate. It is also a bigger asssumption to asusme that everyone bought and held and hoped the way that they did in 2000-2002... many gave in earlier.


    Mar 19, 2009. 12:42 PM | 4 Likes Like |Link to Comment
  • For Buy-And-Hold Investors, It's Really Hard To Lose Money In The Stock Market (Part I) [View article]
    Minutemen,

    Exactly how long should a buy-n-hold investor "hold?" For example, if you held the stocks in the Dow Jones Industrials from 1916 through 1981, would you have made money in those 65 years? Sadly, the answer is "No."

    At the link below, I provided a chart for the inflation-adjusted returns for the Dow from 1916 to 1981. It may be difficult to accept, yet holding-n-hoping for the 65-year period would have provided little more than heartache.
    http://bit.ly/1w77Yrr

    Naysayers might say that the dates have been "cherry-picked." That argument might hold water for dismissing a recent 14-year period (2000-2014) for the S&P 500 or the NASDAQ; both are still battling to break even on an inflation-adjusted basis. Yet the above-mentioned data represent 65 years of futility. Nor is it fair to dismiss 15-year periods with two bearish collapses as short periods in the lives of the turn-of-the-century retiree.

    If 15 years can produce nothing but anxiety and angst - if 65 years can create little more than depression and greater depression - is 30 years the magic hold-n-hope period for success? I guess that depends on the index. Let's just say that you wanted to use the NYSE as your broad measure of stocks. In the 30-year period from 1966-1995, you would barely have been able to maintain your purchasing power. That is a 30-year period of no financial growth.

    I could go on, of course. I could discuss the 2nd and 3rd largest economies. The Nikkei in Japan? 26 years and counting. Shanghai in China? 7 years gone and another 160% required to break even. Like the tech bubble, many will never recover from the Nikkei or the Shanghai bubbles. And those are the nominal percentages, not the inflation-adjusted ones.

    I have not even touched on the psychology. In truth, I have yet to meet the person who psychologically, and financially, felt fine with losing HALF to THREE-QUARTERS of his/her account value. Forgive those folks if they no longer embrace buy-n-hold enthusiastically.

    For those who wish to stick with a "buy-n-hold" approach, perhaps you will do okay. Just be aware that history has not been as kind as many would have you believe. Nor is past performance an indicator of future performance.

    Is there a better plan? In my opinion, yes... applying insurance principles to the investing process.

    Lastly, it seems that many talk about simply buying more when the market goes down. Does everyone have an endless store of cash on the sideline to dollar-cost average back in, regardless of how long or how deep a market falls? Not from my experience managing client assets. A great many retirees have Rollover IRAs and brokerage accounts where they are not able to put any more money to work; rather they need the money they have to secure their financial future. Buy-n-hold cannot do that.

    Respectfully,

    Gary Gordon
    Oct 14, 2014. 06:58 PM | 3 Likes Like |Link to Comment
  • Portfolio Greatness: Bill Miller's Advice On How To Make Money In This Market [View article]
    It is intriguing to see what Bill is up to these days. Yet is there "value" in Bill Miller's picks up-and-above sensible indexing?

    From June of 2007 to March of 2009, Bill Miller’s Legg Mason Value (LMVTX) plummeted 73%. Bear market math shows that while S&P 500 index funds fell roughly 55% in the same time period, requiring 122% to get back to even, the 73% decimation of LMVTX required 270% to recover. Naturally, the fund has changed managers/names so that the historical track record no longer applies.

    Bill Miller had an unprecedented run prior to 2007. That truth cannot be denied. Yet Bill's deep discount approach ignored insuring against disaster and, ultimately, ended in disaster. Unfortunately for Legg Mason Value believers, the fund underperformed its Large-Cap Value Lipper Average over 1, 3, 5, 10 and 15 years.
    Mar 28, 2014. 04:28 PM | 3 Likes Like |Link to Comment
  • Against The Herd: Lower Rates Rather Than Higher Rates In 2014 [View article]
    "The author is correct if he anticipates a cresting of rates until it causes enough economic slowdown that people flee towards relative safety of US Treasuries again."

    That is what I anticipate in 2014... yes.

    I am only talking about where rates will be in 2014, not 2024, nor am I addressing (in this article), the longer-term damage that the Fed may be inflicting on the viability of U.S. debt or the dollar. Much like the PIGS of the Eurozone, the U.S. will certainly have a period of reckoning. However, 2014 will not be the time when our 10-year rates resemble rates of the P.I.G.S.

    This article addressed the high probability that the Fed will not willingly let the economy or market-based securities work through any issues or struggles that occur; rather, there is a high likelihood that they will turn right back to more "cow bell" stimulus at least once in 2014. And there are reasons galore for believing so, including, but not limited to, the year-over-year 50% decline in mortgage applications. Expect Helicopter Janet to wind up piloting to the rescue when enough pressure mounts.

    For those who believe that the jig is already up, they should recall that Japan has been playing the QE game for 14 years. The effects of questionable and controversial policies may not be fully understood for many more years to come.
    Jan 17, 2014. 12:47 PM | 3 Likes Like |Link to Comment
  • Why The Rich ETFs Keep Getting Richer [View article]
    BST,

    >>...blame private interests but I am amazed at how the unions,
    >>government pensions always get a pass, as they are huge part
    >>of why our states and cities are broke and why our total debt is
    >>skyrocketing.

    Indeed! The public sector employee/director/higher level leader is in better shape than his/her private sector counterpart. In particular, some of that "better financial shape" is derived from no-risk redistribution of wealth.

    I manage the assets for wealthy people from all walks of life. I am not speaking ill of firefighters, teachers or those employed by a government entity. Nevertheless, the financial realities are astonishing. Public sector pensioners are, on average, twice as wealthy as the equivalent employee in the private sector, particularly when wealth is defined by one's future income stream.

    >>The poor have the left working hard to help them,
    >>the rich have the right (mostly- many liberal left
    >>are getting rich at fed policies) working for them but
    >>if you are middle class, you have no one working for you.

    The left genuinely have the interest of the poor in the forefront of their thinking, but it usually ends up being the tyranny of good intentions. Rather than expanding the size of the pie, which is wealth-generating, efforts tend to be aimed at providing an "equal" and "fair" slice from a pie that does not expand in the economic oven. In fact, redistributing the wealth eventually leads to less production by the producers of that wealth, effectively making the pie smaller.

    Yet the left are not merely thinking about the poor. They are also thinking about public service workers... those who do not have a profit motive. It is difficult for me to believe that leaders on the left are unaware of the fact that the public sector has been getting wealthier at the expense of the private sector employee. It appears as though many on the left favor "public service" over private work.

    The right-of-center conservative looks out for the wealthy, of course. And their solutions tend to reside in the notion that when the rich get richer, the rest of society benefits. Well, that doesn't always work either. The Federal Reserve has made the wealthiest even wealthier on the same idea of top-down wealth creation... which is why I wrote the article on income disparity.

    Theoretically, of course, the central bank of the United States is neither on the left or the right. Regardless of who currently supports the Fed's policies, the facts are undeniable... Fed policies are based on wealth being created in a top-down manner. And yet, the rich are getting richer with QE and zero-interest-rate, with only a small amount of that wealth-creating economic expansion benefiting the rest of society.

    Best,

    Gary
    Nov 14, 2013. 04:58 PM | 3 Likes Like |Link to Comment
  • Why The Rich ETFs Keep Getting Richer [View article]
    Morr,

    I did not write that most of the poor do not want to work. I wrote,

    "The assumption here is that everyone wants to work equally hard for a better life. Where is the evidence that each and every one of us pursues the best grades in our respective educational environments, or willingly logs 60-hour work weeks to climb a financial ladder? We're different."

    I find it difficult to believe that you genuinely think that all people, rich or poor, work equally hard. Some people work harder than others... at school, in their relationships, in the careers. That's just a simple reality of the unique nature of being human.

    On the other hand, you have made a generalization that Americans are "not collectivist." That's incorrect. Some lean toward collectivism, some lean toward capitalism, and some do not give a rat's arse one way or another. Again, we are different.

    Clearly, we do not agree on the primary cause of income disparity. You believe it is the "capitalist foxes" whereas I believe it is 13 years of low interest rate policy and dollar devaluation by the Federal Reserve.

    It follows that, since we do not concur on the primary cause of income disparity, why would we agree on a solution to solve income disparity. At least we can both agree that income disparity is a problem, and for that, there's a place to begin a healthy debate on how to solve it.

    Gary
    Nov 14, 2013. 11:25 AM | 3 Likes Like |Link to Comment
  • Defending Emerging Market ETFs [View article]
    >>We cover ETFs from all issuers, regardless of whether they
    >>advertise on our site or any other, and we stick to facts when
    >>doing so.

    It's possible that you are not required to disclose your financial relationship with Emerging Global... perhaps because your company, ETF Database, is not a Registered Investment Adviser. Yet I believe it is critical for influential writers/analysts to disclose such relationships. I know that I would.

    When you omit the facts about stated cost, hidden costs, tradeability, low volume and index longevity... when you omit key facts about your sponsor Emerging Global's product(s)... when you identify "dirty little secrets" of non-sponsors like Vanguard and Barclays/BlackRock... it seems to me that you're sticking to selective facts that serve an advertiser/sponsor arrangement.

    And you know what? I'm okay with biased opinions... regardless of their origin. Every one of us presents biased opinions. However, I'm NOT okay with the reality that you don't disclose to your readers the relationship that you have with your sponsors or advertisers.

    >>Gary: Generally love your stuff

    I am pleased to hear it
    Feb 18, 2010. 04:22 PM | 3 Likes Like |Link to Comment
  • China ETFs: Is Goldilocks in the House? [View article]
    >>did you really know anything about china? where do you live?

    Actually, yes... I know quite a bit about China. I speak a fair amount of Mandarin, worked and traveled in SE Asia for 5 years and married a mainland Chinese woman.

    You're entitled to your opinion, of course. But perhaps you should learn more about my background before casting stones. Incidentally, there are plenty of top analysts and professionals living and working in China today who share my opinion.
    Feb 18, 2010. 12:51 PM | 3 Likes Like |Link to Comment
  • 3 Critical ETF Trends That Require Monitoring [View article]
    User,

    The way that I see it, IWM can lag, but it cannot tank (as it did in July and September) without having an adverse effect on broader U.S. equities. Conversely, energy reallllllllllllllllllly needs to stabilize... or you may see the type of panicky conditions that occurred during the eurozone crisis.

    Foreign stocks and emergers have shown that they can lag, even "decouple" from U.S. benchmarks. But that only occurred during QE3 and the Draghi 'do-what it takes" period since the euro-zone crisis. Usually, what happens elsewhere matters quite a bit over here.

    My sense is that if the global economy continues to weaken, the dollar continues to strengthen, and foreign assets buckle, U.S. stocks would correct again. Then a Bullard-like hint or an actual "QE4's on the table" proposal would be introduced to backstop further deterioration.

    But a bear? Well, a bear market would more likely coincide with an unpopular policy move by the Fed (e.g., raising rates in spite of significant global uncertainty in the short term, never being bold enough to raise them in the longer term a la Japan, etc.). In other words, this has been a Fed-fueled asset inflating market since 2008. Whether Fed policies are beneficial to the U.S. economy is a whole different conversation.

    Best,

    Gary
    Nov 13, 2014. 01:35 PM | 2 Likes Like |Link to Comment
  • Sector ETFs In 2014 And 2007: The Inconvenient Comparison Feels Like A Bone In The Throat [View article]
    kydder,


    If they did hold the exact same stocks in the exact same amounts, then I would choose the investment with the lower expense ratio. However, there are a wide variety of differences between TDIV and XLK. Depending on the investing environment, I might prefer one over another.

    TDIV is weighted by a dividend value methodology. XLK is weighted by market cap. TDIV has a 2.7% SEC yield (expense ratio included), XLK has a div yield of roughly 1.7%. TDIV's trailing 12-month P/E is 15.8 whereas XLK is 12.5% more expensive with its P/E at 17.8. TDIV can be thought of as cash flow producing "old tech" whereas XLK is "all-tech." In just under two years, TDIV has garnered approx 45%. In the same time period, XLK has offered 37%... 800 basis points (8 percentage points) in two years is quite nice.

    In a late stage bull market, I prefer TDIV. In an early stage bull market, I would likely be inclined to go with VGT or XLK.

    Best,

    Gary
    Jul 22, 2014. 06:29 PM | 2 Likes Like |Link to Comment
  • 3 Reasons Top Earners Should Favor High-Yield Muni ETFs [View article]
    Kapusta Kid,

    I am not sure how you come to an across-the-board conclusion on what top earners invest in. I am a top earner. I represent retirees and those who are still working, and the latter are most definitely top earners. And with $125M in AUM coupled with a quarter century in financial services, I do not restrict myself to individual issues; rather, I readily purchase held-to-maturity bond ETFs and highly liquid bond ETFs on behalf of my clients.

    A diversified vehicle that is easily converted to cash is highly desirable to top earners. Trying to purchase 50 individual issues to achieve diversification is rarely as successful as indexing, not to mention the poor liquidity of some of those individual muni bonds.

    Individual, hybrid (ETF), fund -- each has advantages and disadvantages. You may want to check your assumptions.

    Regarding your desire to become a top earner, wishing won't make it so. Motivation, skill and hard work will.

    Gary
    Mar 26, 2014. 01:01 PM | 2 Likes Like |Link to Comment
  • Stock ETFs For The 2014 Battle Against Global Deflation [View article]
    Fred,

    >>Borrowing leverages up economic activity but deflation would
    >>discourage it because loans would be paid back with increasingly
    >>expensive dollars.
    >>The government itself has enormous debt that it would
    >>like to inflate away. Deflation would be a disaster.

    Precisely! That's why they continue the electronic printing presses; that's why they won't stop. And yet, in spite of trillions of dollars and yen created, very little inflation has occurred. The central banks of the world will continue battling deflation in their efforts to create some inflation.

    I'm not really not sure about your point about computers. Yes, we buy tech... always will... and could be a heck of solid sector investment in a mild deflationary environment. But delayed purchases do occur in most sectors, and even in tech, when corporations sit on cash rather than upgrade.
    Dec 27, 2013. 11:40 AM | 2 Likes Like |Link to Comment
  • What's Wrong With The Housing Market? These ETFs Are Telling You [View article]
    BlueSkyForever,

    It appears you are a Giants fan. I am a life-long fan as well, struggling to come to grips with a long shot to make the playoffs.

    >>I actually told people to wait, that the market was falling. Why?
    >>Because it was! When the number of homes for sale is high,
    >>and taking longer to sell, and prices are dropping, that is the
    >>truth.

    I did not just tell people to wait on the radio and in seminars. I sold two properties in late 2005. Real estate friends thought I was insane. I explained that if you can rent a 4-bedroom 4-bath for $2500, but it will cost you $4500 to own the same home with 20% down, there is no mortgage interest large enough to justify the insanity.

    I picked up 2 properties -- one during the market correction and one at the bottom in a short sale. I have no intention of buying, selling or flipping. That said, if real estate ever approaches the insanity that it did before, I will make the same moves. Right now, homes may be fairly valued or slightly overvalued, but the bargains are gone. And prices for real estate, much like the stock market, will depend entirely on the trajectory of interest rates.

    Best,

    G
    Dec 5, 2013. 03:05 PM | 2 Likes Like |Link to Comment
  • The Bears Are Deep In Their Caves [View article]
    We both know one perma-bear that never hibernates for more than thirty seconds. :)
    Nov 14, 2013. 11:37 AM | 2 Likes Like |Link to Comment
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