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Lowell Herr

 
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  • The Stock Market Is Rigged! The Stock Market Is Not Rigged! [View article]
    The shenanigans of high frequency traders has been known for some time. Michael Lewis brings it all together in an understandable form. Don't shoot the messenger.

    While most small traders who use limit orders are not likely to be impacted by the HFT folk, there are some solutions to this problem.

    1. Remember when trades were 1/2, 1/4, and 1/8 of a point? Move back to at least a nickel or better, dime limits rather than trades to the penny. This will reduce some of the skimming. Grasso, former chair of the NYSE, admitted after retirement that moving to the penny trades was a mistake.
    2. Set a tax per trade that will penalize the very high traders and use that money to pay down the national debt. After all, stock traders tend to be better off and can afford the additional cost. Of course this is not likely to happen.
    3. Establish a time delay of a minute or so. Something that will take away the "nanosecond advantage" the HFT now have over the average investor.

    There is a problem so come up with solutions for a fix.

    Lowell
    Apr 2 08:34 AM | 20 Likes Like |Link to Comment
  • Sense And Nonsense About Climate Change. What Do Investors Need To Know? [View article]
    After reading this fine article I was reminded of the following quote from Sam Harris.

    “If someone doesn’t value evidence, what evidence are you going to provide that proves they should value evidence.

    If someone doesn’t value logic, what logical argument would you invoke to prove they should value logic?”

    Lowell
    Jan 9 10:08 AM | 13 Likes Like |Link to Comment
  • The Stock Market Is Rigged! The Stock Market Is Not Rigged! [View article]
    Brian,

    Correct. It is akin to betting on the winning horse after the race is finished. Years ago there was a racket to do just this through wire tapping and delaying the transmission of the results.

    Lowell
    Apr 2 09:04 AM | 10 Likes Like |Link to Comment
  • The Truth About Asset Allocation And Active Management [View article]
    Having read most, if not all, the articles cited in the above article, what always bothered me is how asset allocation is define or used in the various studies. The asset classes are broken down into equities, bonds, and cash. While this limits the variables for the researcher, most investors do not construct their portfolios this way. Rather, portfolios are built by breaking up equities into value, growth, cap size and various markets. Developed international markets, emerging markets, commodities, domestic REITs, international REITs are also part of the portfolio mix.

    Portfolios are built around a wide array of asset classes, with percentages varying from portfolio to portfolio. I find it difficult to think any conclusions or connections can be drawn between asset allocation and portfolio variability of return. This does not mean asset allocation is not important. My point is that the variables are too numerous for anyone to draw solid conclusions.

    Lowell
    Feb 17 09:16 AM | 8 Likes Like |Link to Comment
  • Show Me The Money: The Perils Of REIT ETF Investing [View article]
    It does not take much of a literature search to find many of the anti-index arguments presented above are either mis-leading or just plain false. Yes, Kathy Kristof got it wrong on several counts.

    Granted, it is nearly impossible to find performance data generated by individual active investors. We are aware of professional active managers and it is a stretch to think amateurs are doing better. Sure there will always be profitable active managers, but how many turn in great records over a lifetime of investing - say 40 years?

    The challenge to individuals actively managing their portfolios through individual stock picking is to benchmark their portfolio using an appropriate benchmark, and keep at it for 30 to 40 years. Here are a few benchmark suggestions.

    http://bit.ly/1pcMDuG

    I suspect this active-index debate will never end. That is why each person must keep their own immaculate records as that seems to be the only way to resolve this debate.

    Lowell
    Aug 4 03:56 PM | 6 Likes Like |Link to Comment
  • Retirement: What Is Required Beyond Pension And Social Security? [View article]
    Bondo,

    And to think that a mere 12 years ago we were concerned about paying down our debt too fast. Amazing what tax cuts and unnecessary wars can do to a country.

    Your concern is merited. What are you suggesting as a safe haven for a potential currency collapse?

    Lowell
    May 11 08:54 AM | 4 Likes Like |Link to Comment
  • Retiring On The 'New Normal' Portfolio [View article]
    Larry,

    Exactly. That is one of the points the analysis demonstrates. This is the position many retirees find themselves in. To save an insufficient amount or expect to withdrawal too high a percentage from the portfolio will result in a disaster.

    Working longer before retiring is what many folks, caught in this bind, are doing.

    Lowell
    Mar 17 07:32 AM | 4 Likes Like |Link to Comment
  • Dividend Growth Investors: Do They Have A Point Or Is It Too Close To Call? [View article]
    Varan,

    The VTI - TLT portfolio is nearly identical to what Michael Edesess et. al. are recommending in their new book, "The 3 Simple Rules of Investing: Why Everything You've Heard About Investing Is Wrong -- And What To Do Instead." The four authors would substitute VT (Total Global Index) for VTI or at least add an ETF like VEA or VEU to supplement VTI by gaining exposure to international markets. The author's thesis is to keep it very simple, hold costs to a minimum, and strangle the 700 billion dollar investment industry.

    Lowell
    Jun 9 05:46 PM | 3 Likes Like |Link to Comment
  • Retirees Please Don't Index, You Deserve Better Than Average [View article]
    Robert,

    Exactly. This is why I asked the question (not answered) - Is this a real portfolio or a fictitious portfolio? The question hanging there is; Will this model work with out-of-sample data when transactions fees are involved? Also, unless one is limited to buying large-cap stocks, perhaps the S&P 500 is not the appropriate benchmark.

    This is not to imply buying dividend growers when under-priced is not a good approach.

    Lowell
    May 30 04:47 PM | 3 Likes Like |Link to Comment
  • Harry Browne's Permanent Portfolio And Market Stages [View article]
    In William Bernstein new e-book, "Skating Where The Puck Was," he is less than positive as to the future performance of the "Permanent Portfolio." Gold is not likely to repeat the past performance, bonds will decline when interest rates begin to rise, and cash contributes little to the portfolio except as a downdraft protector.

    Lowell
    Feb 8 03:03 PM | 3 Likes Like |Link to Comment
  • Harry Browne's Permanent Portfolio And Market Stages [View article]
    Hi Zach,

    I'm beginning the process of developing a portfolio built around the Harry Browne and David "Swensen Six" portfolio. Such a portfolio may circumvent the concerns you raise - and they are real.

    Have you considered opening up an account with TD Ameritrade as they have 101 commission free ETFs? Nearly all ETFs I use come under the commission free umbrella so my costs are very low.

    Lowell
    Dec 31 08:30 PM | 3 Likes Like |Link to Comment
  • Retirement: What Is Required Beyond Pension And Social Security? [View article]
    Silverbug,

    I don't if the "prepare for retirement" question was directed at me, but I will answer. 1) Save absolutely as much as possible month after month. My wife and I did this for years. 2) Max out pension programs. 3) Max out 401 or 403 programs. 4) Live well below income. 4) Invest conservatively. If I knew in 1960 what I know now, I could have made some improvements. But one cannot go back. 5) Build a well diversified portfolio and monitor it closely.

    We were very fortunate to be saving during the 1970s when the DOW was bouncing around 550 to 750. I doubt we will see another bull market like I witnessed from 1982 through early 2000.

    Lowell
    May 11 12:22 PM | 3 Likes Like |Link to Comment
  • Do You Believe In The Efficient Markets Hypothesis Cop-Out? [View article]
    It is common to reference Warren Buffett as an example of someone who consistently outperforms the market. Ted Williams also hit 0.406. The laws of probability will argue that there will be investors who will perform better than the broad market just as we will eventually see another hitter manage a 0.400 season. No argument there are astute investors active in today's market.

    If I am looking for a money manager, can I select the "Warren Buffet" of 2030? That is one problem. If I go the route of selecting my own stocks, will I be able to better the market over the next 50 years? Based on ample evidence, to answer that question with a yes is taking quite a risk. I don't want to discourage anyone from trying, and I still purchase some individual stocks. I just think the 20-year old needs to know the risks involved.

    Lowell
    Apr 18 05:58 PM | 3 Likes Like |Link to Comment
  • Developing A Passive Management Investment Strategy [View article]
    Moatfrog,

    Seeking Alpha picked up the article off my blog, for which they have my permission. I did not submit the article to Seeking Alpha. Apparently the SA editors found something of interest. I don't have control over what SA considers important or unimportant.

    Lowell
    Apr 1 12:13 PM | 3 Likes Like |Link to Comment
  • How To Avoid Running Out Of Money In Retirement [View article]
    This assumes dividends are sufficient to cover withdrawals. And that is tied to the size of the saved portfolio. This is why I recommend pulling out about 2% of the portfolio per year so one does not eat into the corpus. I'm agreeing with your basic concept.

    Lowell
    Mar 16 11:46 AM | 3 Likes Like |Link to Comment
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