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Kendall J. Anderson, CFA  

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  • Views Of The Insane On Diversification [View instapost]
    The latest Dalbar study adds credibility to both yours and Dr. Israelsen's thoughts. Dalbar states for the 30 years ending in 2013 the average annual return of equity fund investors was 3.69% compared to the S&P 500's 11.11%. I doubt if the results will change much unless people hire some help or as the two of you suggest, use a strategic allocation and stick with it.

    Thanks for your comment and blog.
    May 4, 2014. 08:21 AM | 1 Like Like |Link to Comment
  • Procter & Gamble Still a Strong Buy After All This Time [View article]
    Goldenretiree - Thanks for your comment. Yes the ROE has dropped from its long-term average. The decline actually began in 2006. If you recall, P&G purchased Gillette at the end of 2005. The purchase created a much higher hurdle as the price included a very high goodwill component (an asset) and a tripling of debt. However, the ROE has increased every year after the purchase as they integrated Gillette's business and paid down debt from 13.8% in 2006 to 17.8% last year with expectations (mine) of continuing to increase ROE in the coming years.

    Will the next 10 years produce a similar average to the trailing 10 years? Probably not, however, the management team is working diligently to increase ROE which I believe they will accomplish. A tough job with all the other problems that this economy has thrown at them. All in all, I think this management team is more effective today.

    Thanks again,

    Jun 13, 2011. 04:35 PM | 1 Like Like |Link to Comment
  • Procter & Gamble Still a Strong Buy After All This Time [View article]
    El Luchador - Just a note to let you know that PG's stock price in 2001 had a high of 40.90 and a low of 28.00. The earnings in 2001 were $1.56 which produces a P/E range of 17.95x to 26.21 - an average of 22.08x or slightly higher than the ten year average.

    The dividend yield ten years ago ranged from a low of 1.56% and a high of 2.29% - an average of 1.93% or slightly below the ten year average.

    Thanks again for your comments.

    Jun 13, 2011. 04:12 PM | 1 Like Like |Link to Comment
  • Procter & Gamble Still a Strong Buy After All This Time [View article]
    I just wanted all of you to recognize how great it is to hear your thoughts in a free and open forum. This is a privilege that very few professionals have.

    Thanks again,

    Kendall J. Anderson, CFA
    Jun 13, 2011. 04:02 PM | 2 Likes Like |Link to Comment
  • 2 Dividend-Payers for Tuesday: Abbott and Kellogg [View article]
    To all: Thanks for the comments! Dave I am happy that you picked up on the behavioral aspect of the article. That was my intent.

    We do, as a firm complete detailed analysis on all of our holdings as is expected by our clients and of course myself as I also own them. But I am sorry to say that our analysis is proprietary and not distributed to the public. The reason for that is a bit selfish as I would have a hard time earning a living if I freely distributed our research. You can be assured that our fair value price that we do release is backed up by a lot of work.

    Thanks again to all,

    May 5, 2011. 09:27 AM | 4 Likes Like |Link to Comment
  • 2 Stocks for Tuesday: Kohl's and TJX Companies [View article]
    macal7 - Funny thing about that. Our ladies are can find a place to spend a little money and make themselves look great. For your sake (if you help pay the bill) I am glad it's at TJMaxx.

    Mar 23, 2011. 08:03 AM | Likes Like |Link to Comment
  • A 10-Step Process of Improving Portfolio Return: Part II [View article]
    jferreiro - If I remember Harry Browne's Permanent Portfolio includes an allocation to gold for its inflation protection. I believe it also included stocks, cash and one other asset that escapes me at this time.

    Over the years I have seen many 'systems" that work statistically, but in almost every case it is impossible to maintain a commitment to the process. Take Mr. Browne's permanent portfolio. The best quality of his approach is the requirement to rebalance. However, this requires a pretty strong will to execute. Take his allocation to gold. In 1980 Gold prices reached $850.00 per ounce. It took almost three decades to reach $850.00 again. Maintaining Mr. Browne's system would have required an annual purchase of gold at declining prices. It would also require storage cost (even using coins) that would remind you year after year that you are loosing money. It would require you to buy common stocks when the market is down and to sell common stocks when the market was up. Both of these are good yet almost impossible to do.

    The best investors I know tend to have a stomach made of iron. If you do, then maybe Mr. Browne's portfolio could work for you. If you are like the majority of investors, adopting his approach will ultimately cost you money with an extreme amount of emotional pain.
    Aug 19, 2010. 09:04 AM | Likes Like |Link to Comment
  • A 10-Step Process of Improving Portfolio Return: Part II [View article]
    jferreiro - I am on a 10 day trip to through the midwest. I will give you my thoughts when I return.

    Aug 6, 2010. 01:12 PM | Likes Like |Link to Comment
  • Five-Year S&P 1500 and Sector Forecast [View article]
    Berno - Thank You!!

    Aug 2, 2010. 02:38 PM | Likes Like |Link to Comment
  • A 10-Step Process of Improving Portfolio Return: Part II [View article]
    MDmoney - I believe I will allow Dr. Woolley himself to defend his position. Here is what he said about commodities:

    "Commodity investments should be especially shunned. Commodities as a general asset class offer a long-run return no better than zero % after inflation and less after fees. The cost of holding commodity positions is bedevilled by the herding of portfolio investors all seeking to roll over their futures positions at quarterly expiry dates. Commodity indices that act as the benchmark for performance can also be gamed by the investment banks that maintain them. The flood of portfolio investments going into commodities in the past few years has turned their hitherto negative correlation with equities into a high and positive correlation.

    Before the middle of the last decade the prices of individual commodities could be explained by the supply and demand from producers and consumers. With the flood of passive and active investment funds going into commodities from 2005 onwards, prices have been increasingly driven by fund inflows rather than fundamental factors. Prices no longer provide a reliable signal to producers or consumers. More damaging, commodity prices have a direct impact on consumer price indices and the role of central banks in controlling inflation is made doubly difficult now that commodity prices are subject to volatile fund flows from investors." The Future of Finance, Chapter 3

    I am in full agreement with his statement.
    Jul 29, 2010. 09:15 AM | 1 Like Like |Link to Comment
  • Five-Year S&P 1500 and Sector Forecast [View article]
    First I want all to know that I have been out of town and unable to respond to your comments. I also wanted to thank each of you, even though our thoughts differ from many, for your comments. It is this difference of opinion that sets the market price of all investments.

    In Response

    To: nmelendez - The past does not predict the future

    To: dingding - Our forecast is provided as a supplement to our monthly letter - you can read it on our instablog titled "The Battle for Investment Survival" - I will quote our introduction to our forecast for you: "Many forecasts, including ours, may be quite useless and an exercise in futility. But we, like everyone else who has excess funds, must formulate some expectations of the future". - Please read it in its entirety. By the way - I really like your user name!

    Moon Kil Woong - Yes I am an optimist and yes there is no proof.

    granger - If weighted appropriately, a basket of stocks can be analyzed like an individual stock.

    chekurtab - All projections are based on assumptions.

    Thomas Smicklas - Thanks and please work towards keeping the American exceptionalism in tact.

    Paul Hanly - No we are not Japan. Most investors are momentum investors - the problem is that they make long term investments based on short term price changes.

    granger - Hello Again! - see above.

    Sunil Shah - Thanks - And yes I agree with you that financials will provide less of the total profits in the S&P500 than they have in the past. As far as our sector work, financials have the lowest expected return driven mostly by a low dividend yield.

    Archman Investor - I will remind you that you cannot buy the index directly - you can only buy a close substitute in the form of an ETF or an open end Mutual Fund. Yes I do manage money for someone and yes I am invested right along with my clients. As Warren Buffett I also "eat my own cooking". - Please see my response to dingding and please read our letter "Battle for Investment Survival" where I discuss the changes you mention.

    P.S. - I hope your eyes have healed.

    thkalinke - An extra big Thanks to you!

    Paul Hanly - Hello again - you are an active contributor - don't confuse unemployment with company profitability. Companies tend to do very well when unemployment is high.

    Hewitt Heiserman - Please see my response to dingding above.

    bigazul - Most of our clients do challenge us - please see my response to dingding above.

    User 451081 - I am not sure how to respond other than you have an opinion.

    Cartecay! - Our forecast would not work very well as a door stop - its not glossy enough - keep using the financial planning documents

    granger - Hello again - I hope you are wrong about 3 - 4 years.

    bigbab - Thanks - Yes and data can be very misleading - it can also be easily misinterpreted

    granger - Again!

    nmelendez - Hello Again - I hope you make a fortune!

    DuganS1 - If you were calling me a pundit I am honored. You need to add a fourth scenario that has a bit of optimism. You might start by thinking of companies as profit seeking enterprises that will find a way to increase wealth for their owners in spite of the current state of the economy.

    Colion - Every investor has a belief system - including you. Of course your belief system is right - isn't it?

    nmelendez - Hello again - You might check your statistical proof - see my response to bigbab above.

    swaps - Thanks - I will read the article - but do remember that the middle class is rising in other parts of the world. Most companies are not bound to a single location but can operate globally.

    snovak24 - I am not sure what calculations you are stating as incorrect. Please let me know and I will respond.

    Bigazul - Thanks - By the way I enjoyed "The Black Swan".

    Tom Armistead - Thanks - Thanks & Thanks

    DavidtheGrim - Thanks for your comments! You should try and smile once in awhile - its more fun than doom and gloom. Yes I do get paid.

    DavidtheGrim - Boy you really are down! I'm sorry.

    RSAAKKS - The change is calculated from the low of the bear market. The 97.3% gain is for the period Oct 2002 thru October 2007.
    Jul 20, 2010. 01:03 PM | 1 Like Like |Link to Comment
  • Just One Stock: A Balanced Conglomerate With Sturdy Growth and Dividends [View article]
    I just wanted to say thanks to all of you for your comments. One of South Carolina's famous sons, Bernard Baruch listed 10 items about his investment philosophy he thought would be worth sharing with us. When it comes to blue chip investing number 4 is worth sharing with you. He wrote, "Don't try to buy at the bottom and sell at the top. This can't be done -- except by liars".
    Jun 28, 2010. 02:03 PM | 1 Like Like |Link to Comment