Efficient Markets vs. Innovation: No Such Thing as a Free Lunch [View article]
James,
First, if you want to know why reverse convertibles exist, and you must really want to know it since this is the second time you've publicly asked, might I suggest you check here:
Also, I notice from your bio that you're a law student. Cool. I used to be one. I also used to be a finance student.
Based on the latter, might I suggest that you "reserve judgment" (a phrase you'll come to love after you're out of law school!) on the efficient market hypothesis (EMH) until after you've put in more time and gained more experience in the market.
EMH often sounds flawless to students and the academicians with whom they necessarily interact. But when you've spent more time in the real world and seen more things (not all of which are cleanly expressible as mathematical functions), you see there's quite a bit more to it than the theoreticians suggest. (Heck, you'll find the same thing in law after you finish school -- wait till you see how different practice is!)
As to EMH, I might even toss the whole thing back . . . if all this stuff (active management, product innovation, etc.) really was worthless, then none of it would be around. But it is around, lots and lots and lots of it. Is it possible that the EMH crowd are the only ones who are smart while everyone else is dumb or deluded? Perhaps. Or perhaps the theoreticians are missing something and it's value is well above zero.
Efficient Markets vs. Innovation: No Such Thing as a Free Lunch [View article]
When it comes to Warren Buffett, you really have to separate the human being from the PR-machine. That latter talks about financial weapons of mass destruction. Te former actually uses derivatives.
On Jun 22 09:27 AM Living4Dividends wrote:
> Hi thanks for the insightful post. Warren Buffett put it best when > he said: > > "Derivatives are financial weapons of mass destruction. "
Book Review: The Guru Investor, by John P. Reese [View article]
"4) To be able to use this book effectively, you would need to have access to some reasonably sophisticated stock screening software. The cheapest one that I know of would come from AAII, but you would also have to be an AAII member to buy it. (If anyone knows a better one at a cheaper price, let me know.)"
Check portfolio123.com.
It's lowest-price tier is about even with the price of the AAII screener + membership costs. But Portfolio123 offers everything you'll find in AAII plus more (including technical analysis and financial statement line items that can be used to build earnings-quality tests) plus multifactor ranking and backtesting.
That does not suggest there's anything wrong with the quality of the non-GAAP data set. Instead, it suggests there's something wrong with the way the company has been performing and separating non-recurring from recurring would make this sort of noise more easily visible than it is now.
On Jun 15 10:21 AM SivBum wrote:
> I am all for digging into the details of balance sheets and discount > one time charges. However, when those expenses become recurring non-recurring > and quarterly one-time charges (such as stock options, layoff severances, > offshore plant closings, borrowing costs etc), time to question > the quality of those non-GAAP data sets. > > Case in point, csco has reported record earnings in the past few > years and its stock at less than $20 rtq is still a tiny fraction > of its Apr 2000 high of $76.
Why Isn't Microsoft's Strategy Working Anymore? [View article]
Sometimes, I wonder it there is a tendency to over-strategize. I'm not a tekkie, not even close, but I have noticed that over the years, my willingness to use or not use Microsoft has more to do with how good it is than with all the fancy strategies, business models, market positionings, and so forth.
Example: IE vs Netscape. About a decade or so ago, when I was doing a rock music web site for an ex girlfriend, I noticed that it was so much easier to code fancy effects on IE than Netscape. So I became a fan of IE. It had nothing to do with Bill Gates' behaviors or strategies. It was simply s mstter of IE being more workable. Period. Later, when my web design days had passed, I switched to Firefox because I like tabbed browsing. I had no political bone to pick with Microsoft. When IE 7 came out with tabs, I checked it out. But I hate it because it feels too heavy and takes much longer to load. Again, nothing fancy, I'm just picking the product I like better.
As to Excel vs 123 and now Open Office, I favor Excel becase it kicks you-know-what in terms of its ability to macro. 123 never made it our of the stone age. Open Office is pretty good, but still not quite there. So again, I'm just going with what works better for me.
I have an iPod and not a Zune. Do I even have to explain!
On my last laptop purchase, I had it set up with XP, not vista, because I wanted it to move at reasonable speed.
As to wintel vs mac, I still remember during the heyday of the battle being at Kinkos with a Mac and trying to figure out how to take a floppy disk out of the drive. After nearly half an hour, and when I was starting to slid a pen into the drive to pry it out, some Mac fan had mercy and came over to show me I had to drag the disk drive icon to the trash. Oh yeah, THAT was intuitive! (I assumed doing so would erase the contents.) And of course there was Conflict Catcher software to correct crashes that strategists tell us never occur with Macs; those obsolete one-button mouses; the absence of a delete or backspace hey (I can't recall which) on the Mac keyboard ... hey, Microsoft and pc didn't win only because of predatory practices. There are many who find Apple computers to be long on boasting (and long on pricing) but short on delivery.
Going forward, I think the prescription for Microsoft is really quite simple. Don't su**! If they put out good stuff, they'll do fine. Too few observers give them credit for this as they rose to prominence; yes they imitated and yes they marketed, but often in the glory years, they were a bit better, way more so than critics admit. If they put out junk, they'll flounder. It's really quite simple and more important now, with the industry mature, than it was in the days when they could make so many first-time sales.
Google Didn't Kill the Analytics Industry [View article]
What am I missing here? How does any of this refute the notion that Google killed paid web analytics.
The Forrester thing is just a prediction, nothing more. How do we know it won't be wrong?
If you want to maintain that "Google didn't kill the analytics industry," I think you need some objective facts and some persuasive arguments as to why we should give credence to the Forrester forecasts.
Yahoo CEO Carol Bartz: We're a Different Company than Google [View article]
Yahoo definitely has problems . . . mobile is terrible, the newest mail interface is slow and clunky, the pop-open menus in Finance are way too jumpy, and if you ever have to call customer service for something, brace yourself for a collection of the worst most heavily and annoyingly scripted drones you will ever encounter.
But I think BioBoy is overdoing it a bit.
Google has problems too . . . even in search. Nowadays, more often than not, the only reason I search Google is inertia; all too often, I just use it as a gateway to Wikipedia, and if Ineed more, the external links at the bottom of the Wikipedia articles often prove more productive than the rest of what I see on Google.
Regarding everything below Wikipedia, Google seems to be falling victim to its own advertising success. As advertisers pay more and more and exert more influence over what is displayed and how it's displayed, the usefulness to users is diminishing. Advertisers are playing way too fast and loose with keywords and therefore shoving themselves into places where they really aren't relevant and it's damaging the usefulness of Google's search results.
And heaven forbid I really do have a commercial need and try to use Google. It's dreadful! Memo to Google's search geeks; when I want to find a local service in Queens, NY, having a vendor in a place like Sommerset New Jersey and the like up at the top does not contribute in a positive way to Google's branding as the place to search! Usually, after encountering too much obviously irrelevant garbage on Google, I wind up switching to the old fashioned hard-copy Yellow Pages, and locating exactly what I need.
If Google wants to be as dominant in search ten years hence as it is today, it will need to find a way to prevent overzealous advertisers desperate to mindlessly shove themselves onto as many screens as possible from diminishing usefulness to users without causing them to reduce the revenues they give to Google. That will be a difficult and delicate balance, but if Google ignores it and simply leaves it's user experience to the mercy of increasingly pushy and crazed advertisers, it wind up as the AOL-Alta Vista-Excite-Lycos of the 2010s.
Putting all this together, I think the battle between Yahoo and Google is a lot more level than BioBoy and others like him realize. Both have substantial strengths but both face heavy challenges.
And as an investor, I might lean more toward Yahoo simply because its weaknesses are well known and probably priced into the stock, while Google's problems are still pretty much a silent topic, and, presumably, not at all reflected in the price of its stock.
How many investors (individuals or pros) construct a portflio with the sort of allocations you suggest: "18% Russell 1000 Growth, 29% Russell 1000 Value, and 53% Russell 2000 Growth."
Look, I'm not a Cramer groupie. But come on. I think you;re straining way way too hard to bash the guy. In fact, your point comes across more like a sucker punch.
Commodity Index Funds: The Good, The Bad and The Ugly [View article]
Right... backwardation is associated with positive roll yield 9a god thing) and contango is the reverse.
Neither has anything to do with whether commodities are good or bad as an investment. These are just facts of life in the commodity world and need to be understood in order to follow what's going on.
For example, I might be bullish notwithstanding contango if I were to expect the spot price to rise enough to make for worthwhile investment performance even after applying a contango-based haircut. Conversely, if I expect prices to plunge, backwardation might not be enough to cause me to get in. Less extreme prospects either way might make roll yield a more prominent aprt of the investment case.
The bottom line here is that there is a lot to commodities and one can never make a pat pronouncement that they must or must not be owned, or even that they're speculative (sometimes they are, sometimes they aren't, and often they are for some commodities but not others). Oversimplification, superficial assessment, etc.... that is what causes investor pain. That's so with stocks. that's so with fixed income. That's so with options. That's so with commodities, etc.
On May 11 02:05 PM Living4Dividends wrote:
> From my very limited knowledge of commodities > the investor gains positive roll returns (makes money) during backwardation > > I would assume that the investor does not get positive roll returns > during cotango. > > My question to Marc Gerstein is: how does that make commodities > a bad investment?
Commodity Index Funds: The Good, The Bad and The Ugly [View article]
Contango refers to a situation wherein a futures contract trades above fair value, which is computed based on the spot price,interest rates, and time to expiration. At expiration, the contract's value must necessarily equal the spot price.
Because commodities are futures contracts with expiration dates, no investor can buy and hold. The best they can do is rollover into a new contract as expiration approaches. when contango is present,they'll pay a premium to do this, and that can really cut into the returns one might expect to see based solely on examination of spot price trends. (Backwardation is the reverse, where the futures trade at a discount to fair value and rollover creates a bit of a windfall. But in rising markets, contango is more likely.)
That said, i stilll would not necessarily describe commodity ETFs as speculative (I'm not a fan of the ETN). Whether they are or not is as we see for stocks; it all depends on what's happening in the market. Sometimes, commodities attract huge amounts of hot money investing and reach prices that are, indeed, speculative. Other times, when the hot money goes elsewhere, commodities can look quite conservative. It's just like stocks. Instead of relying on a pat formula, one must look at what's going on.
My personal opinion is that right now, commodities look fairly reasonable. The next significant move in global demand for tangible goods is more likely than not to be upward, supply seems unlikely to keep pace, and the ot money that was all over commodities a few years ago seems to now be sitting in the spectator section. As to contango, look at how an ETF handles the last commodity rally. It'll provide a clue as to how effective their rollover strategy (how close to expiration they go before doing the rollover and how far out they go with the new contracts) has been. Chances are it won;t change since these rollover protocols are locked in via prospectus; ETFs don't have fund managers playing hunches. But that's my opinion. If I'm wrong, it will probably be because I'm too optimistic about economic prospects going forward.
As to blanket statements that one should have 5% in commodities, I reject all statements that suggest X% in such-and-such asset class. In all case, the appropriate % depends on the risk-return inclinations of each investor, and, of course, market conditions.
Commodities aren't magic. It's just another investment and like others, it should be subjected to basic fundamental analysis (and technical for those into that) and favored when the analysis says "yes" and avoided when the analysis uncovers too many red flags. (By the way, I think the importance,nowadays of tangible goods production is why we've seen commodities become much more correlated with stocks.)
Commodity Index Funds: The Good, The Bad and The Ugly [View article]
There are some valid points here, particularly regarding counterparty ETN risk and the increase in correlation between commodities and other asset classes. But in other ways the views here seem a bit dated.
Commodities is a fancy word for "stuff" and as such, prices will rise or fall in response to supply and demand for "stuff." The recent sure related to huge new sources of demand as economies in places like India and China started to seriously strut. The bust came in response to corrections there, as well as in some excesses here (i.e. investment demand that ran too far too fast). At this point, we really need to be seeing commodities more as a play on global economic growth. As to the inflation hedge, we;ll need to wait a while, let a full business cycle get underway, and see what happens; whether commodities still have appeal on this ground.
Interestingly, in making your harsh judgment against commodities you missed the main point that could have been raised to support your case; the impact of contango and negative roll yield, and how they imact ETF-ETNs (and ofcourse, you;d have to cover the flip side; backwardation and positive roll yield). That's a very odd omission.
Green Mountain Coffee Roasters: Objective vs. Subjective Trend Perceptions [View article]
I notice from your disclosure that you're long GMCR. I am too.
I wonder, though, if this is such a good case study for the price-study protocol you're in the process of presenting. This is a fairly straightforward company and the qualitative reasons for the price movements are quite easy to identify. And although we don't know what will happen going forward, it's very easy to articulate a couple of fundamental questions that will make or break the stock in the coming months.
This isn't so much an issue about GMCR as it is a philosophical consideration: when to use technicals and when to use fundamentals (and when we need them both). I would suggest that the need for any sort of technical analysis, trend analysis, etc. is inversely related to the clarity of the qualitative price drivers.
Disagreeing with Rob Arnott: Past 40 Years Not Lost for Equity [View article]
xxxx, I hear you and I hope other do as well. What you describe has, actually, stood for a very long time as a very sound, prudent way to approach the stock market: Do the best job you can selecting the best stocks you can find and be willing to ride out temporary setbacks given that over time, the superior traits of the stocks you hold will carry the day. This isn't just a line crafted by a fast-talking broker, but the philosophy of many of the most well respected investment minds of our age; Warren Buffett, etc, etc, etc. Unfortunately, though, we just came through a period that broke all the rules and caught pretty much everybody by surprise. We went beyond an ordinary bear market. We saw, instead, a massive liquidation of equities as an entire asset class with selling concentrate not on what should be sold but instead on what could be sold (to raise badly needed cash). And unfortunately, all too often, that which could most easiuly be sold consisted of some of the best stocks, the ones the most prudent investors rightly held. So even the best and brightest got slammed this time around.
Going forward, a big question for all of us to face is whether this was a one-shot thing, in which case, we could look forward to picking up the pieces and going back to what we had always done, or whether this is the start of a new era in investing, one that requires market timing to become a part of the regular investment discipline. It'll be years before we know the answer. Speaking for myself, I len toward the latter view and have been working on market timing, as can be seen from several other articles i poisted here on Seeking Alpha.
I know this is little consolation for what you experienced in your assets. But all we can do is learn from what happened before.
On May 07 03:19 PM xxxx wrote:
> lastly because of what they teach people tend to get in at the wrong > time and take money off the table way too late. maybe not getting > into the market, but for sure taking out withdrawls. don't forget > they often penalize you for removing money as well. so in effect > you are their hostage. the whole reward system in the finnacila world > is screwed up. the shareholder has the least say in anything. <br/>
Disagreeing with Rob Arnott: Past 40 Years Not Lost for Equity [View article]
This does not take reinvested dividends into account. You are right; they could add substantially to returns. But that would also be the case with treasuries, where one could reinvest interest payments. The short-hand answer would be to assume it's a wash between the two. If a more comprehensive study were to be made, we'd find pros and cons on both sides. In favor of treasuries, we have the fact that a larger portion of total retun comes from interest. Favoring stocks, we find four payments per year rather than two, and a likely rising income stream (from dividend growth) rather than static payments.
On May 07 12:59 PM user396040 wrote:
> Do these analyses take reinvested dividends into account? Over a > long period of time, this can make a big difference. Back in the > late 1970's and early 1980's, dividend yields on blue chip stocks > were very high.
Efficient Markets vs. Innovation: No Such Thing as a Free Lunch [View article]
First, if you want to know why reverse convertibles exist, and you must really want to know it since this is the second time you've publicly asked, might I suggest you check here:
seekingalpha.com/artic...
Also, I notice from your bio that you're a law student. Cool. I used to be one. I also used to be a finance student.
Based on the latter, might I suggest that you "reserve judgment" (a phrase you'll come to love after you're out of law school!) on the efficient market hypothesis (EMH) until after you've put in more time and gained more experience in the market.
EMH often sounds flawless to students and the academicians with whom they necessarily interact. But when you've spent more time in the real world and seen more things (not all of which are cleanly expressible as mathematical functions), you see there's quite a bit more to it than the theoreticians suggest. (Heck, you'll find the same thing in law after you finish school -- wait till you see how different practice is!)
As to EMH, I might even toss the whole thing back . . . if all this stuff (active management, product innovation, etc.) really was worthless, then none of it would be around. But it is around, lots and lots and lots of it. Is it possible that the EMH crowd are the only ones who are smart while everyone else is dumb or deluded? Perhaps. Or perhaps the theoreticians are missing something and it's value is well above zero.
Efficient Markets vs. Innovation: No Such Thing as a Free Lunch [View article]
On Jun 22 09:27 AM Living4Dividends wrote:
> Hi thanks for the insightful post. Warren Buffett put it best when
> he said:
>
> "Derivatives are financial weapons of mass destruction. "
Book Review: The Guru Investor, by John P. Reese [View article]
Check portfolio123.com.
It's lowest-price tier is about even with the price of the AAII screener + membership costs. But Portfolio123 offers everything you'll find in AAII plus more (including technical analysis and financial statement line items that can be used to build earnings-quality tests) plus multifactor ranking and backtesting.
Beware of GAAP [View article]
On Jun 15 10:21 AM SivBum wrote:
> I am all for digging into the details of balance sheets and discount
> one time charges. However, when those expenses become recurring non-recurring
> and quarterly one-time charges (such as stock options, layoff severances,
> offshore plant closings, borrowing costs etc), time to question
> the quality of those non-GAAP data sets.
>
> Case in point, csco has reported record earnings in the past few
> years and its stock at less than $20 rtq is still a tiny fraction
> of its Apr 2000 high of $76.
ETF Ideas from Mr. Market [View article]
Why Isn't Microsoft's Strategy Working Anymore? [View article]
Example: IE vs Netscape. About a decade or so ago, when I was doing a rock music web site for an ex girlfriend, I noticed that it was so much easier to code fancy effects on IE than Netscape. So I became a fan of IE. It had nothing to do with Bill Gates' behaviors or strategies. It was simply s mstter of IE being more workable. Period. Later, when my web design days had passed, I switched to Firefox because I like tabbed browsing. I had no political bone to pick with Microsoft. When IE 7 came out with tabs, I checked it out. But I hate it because it feels too heavy and takes much longer to load. Again, nothing fancy, I'm just picking the product I like better.
As to Excel vs 123 and now Open Office, I favor Excel becase it kicks you-know-what in terms of its ability to macro. 123 never made it our of the stone age. Open Office is pretty good, but still not quite there. So again, I'm just going with what works better for me.
I have an iPod and not a Zune. Do I even have to explain!
On my last laptop purchase, I had it set up with XP, not vista, because I wanted it to move at reasonable speed.
As to wintel vs mac, I still remember during the heyday of the battle being at Kinkos with a Mac and trying to figure out how to take a floppy disk out of the drive. After nearly half an hour, and when I was starting to slid a pen into the drive to pry it out, some Mac fan had mercy and came over to show me I had to drag the disk drive icon to the trash. Oh yeah, THAT was intuitive! (I assumed doing so would erase the contents.) And of course there was Conflict Catcher software to correct crashes that strategists tell us never occur with Macs; those obsolete one-button mouses; the absence of a delete or backspace hey (I can't recall which) on the Mac keyboard ... hey, Microsoft and pc didn't win only because of predatory practices. There are many who find Apple computers to be long on boasting (and long on pricing) but short on delivery.
Going forward, I think the prescription for Microsoft is really quite simple. Don't su**! If they put out good stuff, they'll do fine. Too few observers give them credit for this as they rose to prominence; yes they imitated and yes they marketed, but often in the glory years, they were a bit better, way more so than critics admit. If they put out junk, they'll flounder. It's really quite simple and more important now, with the industry mature, than it was in the days when they could make so many first-time sales.
Google Didn't Kill the Analytics Industry [View article]
The Forrester thing is just a prediction, nothing more. How do we know it won't be wrong?
If you want to maintain that "Google didn't kill the analytics industry," I think you need some objective facts and some persuasive arguments as to why we should give credence to the Forrester forecasts.
Yahoo CEO Carol Bartz: We're a Different Company than Google [View article]
But I think BioBoy is overdoing it a bit.
Google has problems too . . . even in search. Nowadays, more often than not, the only reason I search Google is inertia; all too often, I just use it as a gateway to Wikipedia, and if Ineed more, the external links at the bottom of the Wikipedia articles often prove more productive than the rest of what I see on Google.
Regarding everything below Wikipedia, Google seems to be falling victim to its own advertising success. As advertisers pay more and more and exert more influence over what is displayed and how it's displayed, the usefulness to users is diminishing. Advertisers are playing way too fast and loose with keywords and therefore shoving themselves into places where they really aren't relevant and it's damaging the usefulness of Google's search results.
And heaven forbid I really do have a commercial need and try to use Google. It's dreadful! Memo to Google's search geeks; when I want to find a local service in Queens, NY, having a vendor in a place like Sommerset New Jersey and the like up at the top does not contribute in a positive way to Google's branding as the place to search! Usually, after encountering too much obviously irrelevant garbage on Google, I wind up switching to the old fashioned hard-copy Yellow Pages, and locating exactly what I need.
If Google wants to be as dominant in search ten years hence as it is today, it will need to find a way to prevent overzealous advertisers desperate to mindlessly shove themselves onto as many screens as possible from diminishing usefulness to users without causing them to reduce the revenues they give to Google. That will be a difficult and delicate balance, but if Google ignores it and simply leaves it's user experience to the mercy of increasingly pushy and crazed advertisers, it wind up as the AOL-Alta Vista-Excite-Lycos of the 2010s.
Putting all this together, I think the battle between Yahoo and Google is a lot more level than BioBoy and others like him realize. Both have substantial strengths but both face heavy challenges.
And as an investor, I might lean more toward Yahoo simply because its weaknesses are well known and probably priced into the stock, while Google's problems are still pretty much a silent topic, and, presumably, not at all reflected in the price of its stock.
Jim Cramer Master Class [View article]
How many investors (individuals or pros) construct a portflio with the sort of allocations you suggest: "18% Russell 1000 Growth, 29% Russell 1000 Value, and 53% Russell 2000 Growth."
Look, I'm not a Cramer groupie. But come on. I think you;re straining way way too hard to bash the guy. In fact, your point comes across more like a sucker punch.
Commodity Index Funds: The Good, The Bad and The Ugly [View article]
Neither has anything to do with whether commodities are good or bad as an investment. These are just facts of life in the commodity world and need to be understood in order to follow what's going on.
For example, I might be bullish notwithstanding contango if I were to expect the spot price to rise enough to make for worthwhile investment performance even after applying a contango-based haircut. Conversely, if I expect prices to plunge, backwardation might not be enough to cause me to get in. Less extreme prospects either way might make roll yield a more prominent aprt of the investment case.
The bottom line here is that there is a lot to commodities and one can never make a pat pronouncement that they must or must not be owned, or even that they're speculative (sometimes they are, sometimes they aren't, and often they are for some commodities but not others). Oversimplification, superficial assessment, etc.... that is what causes investor pain. That's so with stocks. that's so with fixed income. That's so with options. That's so with commodities, etc.
On May 11 02:05 PM Living4Dividends wrote:
> From my very limited knowledge of commodities
> the investor gains positive roll returns (makes money) during backwardation
>
> I would assume that the investor does not get positive roll returns
> during cotango.
>
> My question to Marc Gerstein is: how does that make commodities
> a bad investment?
Commodity Index Funds: The Good, The Bad and The Ugly [View article]
Because commodities are futures contracts with expiration dates, no investor can buy and hold. The best they can do is rollover into a new contract as expiration approaches. when contango is present,they'll pay a premium to do this, and that can really cut into the returns one might expect to see based solely on examination of spot price trends. (Backwardation is the reverse, where the futures trade at a discount to fair value and rollover creates a bit of a windfall. But in rising markets, contango is more likely.)
That said, i stilll would not necessarily describe commodity ETFs as speculative (I'm not a fan of the ETN). Whether they are or not is as we see for stocks; it all depends on what's happening in the market. Sometimes, commodities attract huge amounts of hot money investing and reach prices that are, indeed, speculative. Other times, when the hot money goes elsewhere, commodities can look quite conservative. It's just like stocks. Instead of relying on a pat formula, one must look at what's going on.
My personal opinion is that right now, commodities look fairly reasonable. The next significant move in global demand for tangible goods is more likely than not to be upward, supply seems unlikely to keep pace, and the ot money that was all over commodities a few years ago seems to now be sitting in the spectator section. As to contango, look at how an ETF handles the last commodity rally. It'll provide a clue as to how effective their rollover strategy (how close to expiration they go before doing the rollover and how far out they go with the new contracts) has been. Chances are it won;t change since these rollover protocols are locked in via prospectus; ETFs don't have fund managers playing hunches. But that's my opinion. If I'm wrong, it will probably be because I'm too optimistic about economic prospects going forward.
As to blanket statements that one should have 5% in commodities, I reject all statements that suggest X% in such-and-such asset class. In all case, the appropriate % depends on the risk-return inclinations of each investor, and, of course, market conditions.
Commodities aren't magic. It's just another investment and like others, it should be subjected to basic fundamental analysis (and technical for those into that) and favored when the analysis says "yes" and avoided when the analysis uncovers too many red flags. (By the way, I think the importance,nowadays of tangible goods production is why we've seen commodities become much more correlated with stocks.)
Commodity Index Funds: The Good, The Bad and The Ugly [View article]
Commodities is a fancy word for "stuff" and as such, prices will rise or fall in response to supply and demand for "stuff." The recent sure related to huge new sources of demand as economies in places like India and China started to seriously strut. The bust came in response to corrections there, as well as in some excesses here (i.e. investment demand that ran too far too fast). At this point, we really need to be seeing commodities more as a play on global economic growth. As to the inflation hedge, we;ll need to wait a while, let a full business cycle get underway, and see what happens; whether commodities still have appeal on this ground.
Interestingly, in making your harsh judgment against commodities you missed the main point that could have been raised to support your case; the impact of contango and negative roll yield, and how they imact ETF-ETNs (and ofcourse, you;d have to cover the flip side; backwardation and positive roll yield). That's a very odd omission.
Green Mountain Coffee Roasters: Objective vs. Subjective Trend Perceptions [View article]
I wonder, though, if this is such a good case study for the price-study protocol you're in the process of presenting. This is a fairly straightforward company and the qualitative reasons for the price movements are quite easy to identify. And although we don't know what will happen going forward, it's very easy to articulate a couple of fundamental questions that will make or break the stock in the coming months.
This isn't so much an issue about GMCR as it is a philosophical consideration: when to use technicals and when to use fundamentals (and when we need them both). I would suggest that the need for any sort of technical analysis, trend analysis, etc. is inversely related to the clarity of the qualitative price drivers.
Just wondering . . .
Disagreeing with Rob Arnott: Past 40 Years Not Lost for Equity [View article]
Going forward, a big question for all of us to face is whether this was a one-shot thing, in which case, we could look forward to picking up the pieces and going back to what we had always done, or whether this is the start of a new era in investing, one that requires market timing to become a part of the regular investment discipline. It'll be years before we know the answer. Speaking for myself, I len toward the latter view and have been working on market timing, as can be seen from several other articles i poisted here on Seeking Alpha.
I know this is little consolation for what you experienced in your assets. But all we can do is learn from what happened before.
On May 07 03:19 PM xxxx wrote:
> lastly because of what they teach people tend to get in at the wrong
> time and take money off the table way too late. maybe not getting
> into the market, but for sure taking out withdrawls. don't forget
> they often penalize you for removing money as well. so in effect
> you are their hostage. the whole reward system in the finnacila world
> is screwed up. the shareholder has the least say in anything. <br/>
Disagreeing with Rob Arnott: Past 40 Years Not Lost for Equity [View article]
On May 07 12:59 PM user396040 wrote:
> Do these analyses take reinvested dividends into account? Over a
> long period of time, this can make a big difference. Back in the
> late 1970's and early 1980's, dividend yields on blue chip stocks
> were very high.