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Marc Gerstein  

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  • A More Granular Analysis Of REIT Performance During Rising Rate Periods [View article]
    Is there research or data addressing the 1970s?

    I'm uncomfortable with Anderson's study because it only address the 20 years. During that period, there were some penny-ante rate increases here and there. But the overwhelming characteristic of the period is substantially falling interest rates. If you blur your vision to look at a chart, or plot a trend line, you see straight down either way.

    I suspect there may be a big difference between rate declines that are brief zigs an a downward mega-trend, versus an upward mega-trends. And considering where rates are today, it seems we do have to consider the upward mega-trend scenario.

    We know the basic math with 100% certainty. Upward denominators in valuation models (cost of capital, discount rates, etc.), pushes REIT valuation down. Upward numerators (gross rentals, better FFO, better dividends presumably from a decent economy) pushes REIT valuation up. Does inflation push asset value up? Maybe. Maybe not.

    Those are the issues that need to be addressed: Potential inflation (which may or may not become troublesome going forward) and how FFO etc interact with discount rates etc. The 1995-2015 study gives us nothing on this. We need to go back to the 1970s, either with historic data or with some sort of credibly simulated modeling.
    Aug 6, 2015. 09:02 AM | 9 Likes Like |Link to Comment
  • Low Volatility Anomaly: Buffett's Alpha Example [View article]
    Yup, Betting Against Beta, that's the paper. Thank you!
    Jul 31, 2015. 12:18 AM | Likes Like |Link to Comment
  • Low Volatility Anomaly: Buffett's Alpha Example [View article]
    Nice article.

    As i recall, the theoretical explanation for the anomaly is that many money managers have to compete on return but can't generate return through use of leverage (due to the account constraints) so they chase high beta stocks, causing excess demand for those relative to supply, and a corresponding shortage in demand relative to supply in the low beta area. The result, low-beta stocks being underpriced due to low demand, and hence, better positioned to offer higher return (with the reverse true in the high beta world). I can't recall if that was in "Buffett's Alpha" paper or if I saw it in a different paper.
    Jul 29, 2015. 11:10 AM | 3 Likes Like |Link to Comment
  • Riddle Me This On Amazon Prime [View article]
    "Am I missing something here besides my brain?"

    goodness yes, you are missing a lot, a heck of a lot, and you won't get any of it on Seeking Alpha because the site can't generate traffic for anything except "actionable" articles on specific tickers. Contrary to what Santos has been pushing re: AMZN, there's much more to valuation than P divided by the latest E. To go beyond a Valuation-For-Dummies level:

    Check the book "The Dark side of Valuation" by Prof. Aswath Damodaran (NYU Stern School of Business), a high-regard valuation expert who once in a while contributes on Seeking Alpha, but to really learn from him, read his books.

    Also very highly recommended is Robert Shiller's 19845 Brookings Paper on Economic Activity that's titled "Stock Prices and Social Dynamics," one of the most brilliant and under-appreciated masterpieces describing the process of stock-market price setting. You can easily google it and download a pdf.

    If you want a more streamline quicker set of reads, check my valuation 4-part series on TalkMarkets.com (the sort of stuff i would love to have been able to offer on Seeking Alpha, but I've given up trying to do anything serious here -- it's not that the editors won't it, they probably will, but the site can't get traffic for it and I'm more interested in traffic than SA's article fees).
    Jul 29, 2015. 11:00 AM | 2 Likes Like |Link to Comment
  • Riddle Me This On Amazon Prime [View article]
    Have you contacted Sandvine or IBD or Amazon IR to pose this riddle?

    As other commenters have mentioned, there is a lot to AMZN Prime apart from video watching. And even within video, some here have criticized AMZN's offering. I disagree that it sucks or anything like that, but it id clearly aimed away from the mass audience; it's more geared toward the art-house film type crowd (such as me; I probably watch more AMZN video than many, but i can easily see why most people would run up the dominating majority other time on Netflix). But even so, as you write, the stats seem puzzling. So yes, it is a genuine riddle.

    But I also find it odd and dsappointing that the SA editors accepted the article. I was under the impression they had backgrounds in journalism. When I worked at Reuters, I didn't actually work in the news division, but I did know and collaborate with some high-placed editors and know there's no way in hell they'd have let this get into print without comments from the key parties, or at least an effort go get comments and reporting of their refusal to comment.

    And on the other side of the aisle, in investment research, the result would have been the same. There's no way any research department would allow anything like this to see the light of day without a serous effort to communicate with the parties involved in an effort to get some clarification.

    Paulo, I suggest you do the right thing: Get on the phone. Work to reach people in the know. Dig for a resolution. And then, share the findings with the SA audience.
    Jul 18, 2015. 12:35 AM | 4 Likes Like |Link to Comment
  • The Future Of Seeking Alpha, From One Contributor's Perspective [View article]
    "Can you explain to me how I could confidently choose someone who WILL do better?"

    Opening your mind would certainly be a critical step one. But it is obvious that you are deeply committed to your belief in mediocrity.

    I'm not going to keep pounding a dead horse here. I have my own experience; I have my own brokerage account. I know plenty of others in similar situations. Many such people can be found here on SA, although not easily given the company's traditional preference for crowd sourcing rather than quality advice. Hopefully, the new premium service will point SA in a new better direction and make it easier to find better sources. Whether you open your eyes and look here or elsewhere, however, is entirely up to you.

    And by the way, I absolutely positively do not make a simplistic "this time its different" argument. You read Chilton's book. Then if you want more from me, read one of mine. Whether you do or don't best of luck to you.
    Apr 1, 2015. 09:32 AM | 1 Like Like |Link to Comment
  • The Future Of Seeking Alpha, From One Contributor's Perspective [View article]
    "Marc, I'm sure we'll have to agree to disagree, but I'd like to make one point anyways.


    If there were such a strategy that kept beating the market long-term (20 years+), would it not get increasing attention, and eventually become the average because of the number of participants replicating it?"

    First things first. Forget 20+ year, at least for now. The quant-oriented approaches that can and do beat the market haven't been around that long. Modeling platforms have been in existence for decades, but it's only been since the late 90s that they have actually progressed beyond trade-show gimmicks to serious tools. Father Time will eventually make 20+ years possible, but we're not there yet.

    Secondly, who said anything about becoming the average. This isn't the world depicted by the old Kurt Vonnegut short story involving forced equality (where high I.Q. people had to wear earphones through which a pitched sound played at regular intervals to dumb them down by interfering with their concentration). We live in a world where talents vary. The average will remain the average. But don't place stock in articles that deny the possibility of the superior. Just because dumb professors and dumb reporters are too dumb too envision talent, don't assume talent doesn't exist.

    Beyond that, human behavior is an amazing phenomenon. You'd think that would be the case wouldn't you. And there is an element of partial truth. To stay ahead of the market, one would need to constantly evaluate and tweak what is being done; strategies that worked spectacularly in the early 2000s have been somewhat arbitraged down by more and more investors using them, but creativity and innovation still gets rewarded. That, actually, is one of the flaws in the studies relied upon directly or indirectly by the article you saw on nerd-something dot com. They assume strategies must be static. That's deadly not just in investing but in any endeavor. Being dogmatic, rigid, or brain-dead is not conducive to success.

    More interesting, though, is the issue of "increasing attention." I can't answer that. You'll have to ask Seeking Alpha to give you an answer. Several times I have directly pitched to Seeking Alpha to work more closely with my company to create more idea-generation content that would make available some of what I and others do in this regard. To date, they've shown zero interest. and they're not alone. Ad-supported web finance is, as I've mentioned, responsive to the needs of advertisers, not investors. Beyond that, they're generally staffed and managed by people with journalistic backgrounds, not finance backgrounds, and those people understand news-oriented articles, not systematic idea generation.

    But I suppose a bigger issue is you (the plural you). You have to demand better. If you don't, if you keep clicking on topical articles rather than other that offer market-beating ideas, that's on you. That may be why SA, sites like them, and the advertisers who pay the bills do as they do. Maybe I was wrong to expect too much of them. On reflection, who can blame them for giving you what the content on which you click.

    I guess the bottom line here is that if you want to lock in on the notion that mediocrity is all you can get, then that's your choice and mediocrity is exactly what you'll continue to get. I suppose the benefit of the subscription model is that it allows those who believe in better and want better to buy it and benefit from it.

    P.S. Don't assume David Chilton is a great genius. Just because he f***** up and wrote a book at it, don't assume everybody else has to. Maybe he'd do better if, instead of writing a book pointing fingers at others, he'd look to himself and reassess what he did and how he could do better.
    Mar 31, 2015. 09:43 AM | 3 Likes Like |Link to Comment
  • The Future Of Seeking Alpha, From One Contributor's Perspective [View article]
    "Marc, I would be surprised if you've never heard of studies that indicate active investing is unlikely to beat the market. I guess my "random guessing" comment was an exaggeration though. One study I googled just now:
    http://nerd.me/10YnsLZ"

    Yeah, that same rehashed stale pablum is what one should expect on a site that calls itself nerd something. It's not practical to rip it apart in the context of a comment board, but the short answer is that seat of the pants decision making doesn't beat the market. But sensible disciplined strategies can and do. The profession and academia has gone way beyond the fluff upon which that author relied.


    "I'll reiterate a comment I made elsewhere in this thread, that SA has become successful over time without this pay structure. Unless you feel that content in the past was poor, then you surely agree that a new pay structure is not needed to result in quality content. It was not needed before, and is not now. "

    Actually, SA has undergone a lot of evolution since its early days. There's always been and still is some terrific work done here. But the introduction of author fees attracted a lot of bad content. Every now and then, SA has tried to reassess who is getting published. But from what I can observe from looking at the site, I suspect it may be too much of a burden for the man hours that are available. Bear in mind that comment moderation can lead to a distorted view of where things stand, to the point where I'm not sure if company insiders realize how often in real world conversation among investors, simply saying the words "Seeking Alpha" can generate sneers, chuckles and eye-rolls.

    I do think a new pay structure will help. In a purely ad supported world, it does not hurt SA to publish bad content and it can certainly help. As people love to stare at a highway pileup, it can be fun to read and bash bad articles (not necessarily on SA because of moderation, but SA can't control what's said about authors off the site). Subscription changes the game. If readers have to pay, they are not likely to be so keen to laugh at bad authors but are instead more likely to focus on those who can really help them make money.

    Or, if they do want to pay for entertainment, at least they're likely to demand good entertainment -- i.e., authors who are self aware, up front and effective about the entertainment aspect of what they're doing -- which is also fine. (And actually, there's a part of me that might want to pursue that niche; in a recent newsletter, I actually introduced my dog Max and made a case for his being the world's number one oil-price forecaster!) But entertainment that fools itself and some readers by thinking it's serious content -- that's bad stuff and will not likely survive in a subscription environment.
    Mar 30, 2015. 10:14 AM | 3 Likes Like |Link to Comment
  • The Future Of Seeking Alpha, From One Contributor's Perspective [View article]
    "Marc, since there are multitudes of evidence that a single investor has essentially zero chance of beating indexes over the long term, how would you go about choosing which subscription(s) to buy and follow their advice since each individual one will fail? Evidence shows that advice from a particular individual is no more likely to be successful in the long run than your own random guessing. Personally I think exposing yourself to as much content as possible gives you a better chance to find collective wisdom, instead of using subscription advice and limiting your information input. "

    Great question!

    But I do have to take issue with the idea that advice from any one individual is no likely to do better than random guessing. I'm curious as to what sort of evidence you see. I really disagree with that -- unless you pick the individual randomly, in which case, that would be a problem.

    It's hard to answer the how-to-choose question until we see how SA markets this; what sort of info is given to prospective subscribers. And it will be up to the participating authors to effectively present themselves.

    Hopefully, there will be good-enough pitches that let prospective subscribers figure out where the author is coming from, how he/she goes about making investment decisions, and that looking at the authors articles can effectively complement it. I know SA asked for three different pitches of varying lengths; ignore the two shorter pitches and look only at the longest. This isn't like selling soft drinks. Hopefully, SA will figure out that at least 500-1000 words will be needed and that the quick pitches they're asking for are inadequate. If you find a combination (pitch/past articles) that appeals to you, that's good. If not, then don't do anything and wait for other authors to come along.

    It's tempting to say you should track returns on stocks the author recommended in free articles. That's relevant. But it would have to be tempered by realization that even the best ideas don't work every day. Try to get a sense of whether things that didn't work turned sour because of things the author could not reasonably have been expected to see ahead of time (example: pretty much everybody was caught by the plunge in oil prices), or because of the inevitable ebb and flow of market fashion (e.g., value is good over the long term, and so too are small caps; but sometimes, the market has a flight to size and/or a flight to junk).

    And i know a lot of folks on SA are going to hate hearing this, given it's crowd-social leanings, but experience counts. . . just like any other profession. Hopefully, SA will curate the novices out of the premium area, but if they don't, you should. Market history repeats more often than many imagine, so I'd be leery of paying for advice from anyone who hasn't lived through a good cross section of market situations.

    Ultimately, there is no silver bullet. Choosing advice is something that needs to be learned, just like choosing stocks, flying a plane, doing a hip replacement, cooking a five-star meal, auditing a set of financials, playing golf, playing piano, fixing a car, etc.. At the end of the day, investing is like anything else; no instant answers and a need for learning and practice.
    Mar 27, 2015. 06:36 PM | 3 Likes Like |Link to Comment
  • The Future Of Seeking Alpha, From One Contributor's Perspective [View article]
    "I have author's I disagree with on investing, they do not get my clicks."

    Actually, you should click on authors you disagree with. There's a buyer and seller in every trade so disagreement is the natural state of affairs here. You're at a huge disagreement if you don't know what the other guys are thinking. Yesterday, I spent most of the day on stocks of interest to me going back a few years to understand WHY the high short interest got to where it did. I can disagree, but I sure as heck need to know.

    You should, on the other hand, deny clicks to those who don't justify their views capably.
    Mar 27, 2015. 09:18 AM | 10 Likes Like |Link to Comment
  • The Future Of Seeking Alpha, From One Contributor's Perspective [View article]
    "Marc, what you say is true about the Ad buyers vs the readers but without content the readers find relevant, there would be no Ad buyers willing to buy. The content must find a happy medium to be successful. "

    I know that. You know that. I assume most or all readers here know that.

    Sadly, though, it doesn't mean ad buyers know that nor does it mean ad sales teams know that, or that they'd care and act on it even if they did figure it out. I'm amazed that business school "management" classes don't teach this, but I've found that the single most important driver of behavior in organizations is that which will make one's own role seem as important as possible (money and all else flows from that). Ad buyers and ad sales people cannot and will not define the organization in any way that allows anything to diminish the prominence of the ad transaction. The investor, who doesn't even get a seat at the conference table, doesn't stand a chance. That doesn't make it right. There's a reason why most rank and file people in a business are no less mediocre than low-level civil servants. Most people are not excellent. But it's the world we live in, and if investors don't pay for their content, it's what influences what they see.

    Sorry if this sounds cynical, but I've served enough time in the ad-supported dot-com world to have seen this play out with 100% consistency.

    The sadder thing is that within the ad world, the dot-com personnel tends to be less competent than most. Remember, this is the new hip area that every graduate is dying to get into. Recruiters are overwhelmed by numbers and there aren't enough track records to sort out who is good and who isn't. As the years pass, this will change. But for now, it is what it is. So what are the odds of you getting good investment content when it's brought to you this way?

    Ultimately, factoring in subscription fees and investment returns, subscription content is by far that best choice for the investor. Supposedly free content is just too darn expensive (after you factor in what it can do to your brokerage accounts).
    Mar 27, 2015. 09:14 AM | 2 Likes Like |Link to Comment
  • The Future Of Seeking Alpha, From One Contributor's Perspective [View article]
    Larry, I’m not sure if you’re addressing subscription content on Seeking Alpha or subscription content in general, or both. But for what it’s worth:

    While there is obviously much affection for anything offered for free, right from the start of the internet I have believed that free investment commentary is what’s dysfunctional at best. In truth, there is no such thing as free content. There’s plenty of labor and capital involved in putting content up on the net and the bills have to be paid. If the user isn’t paying, someone else is. In the case of seemingly-free investment, it’s being paid for by advertisers.

    As in any profession, the provider of a service must, should and does serve the interests of the person writing the checks. So in the case of free investment content, the interests being served are those of advertisers. The well-being of the users, the investors, is irrelevant except, perhaps, to the extent some 20-something former Marketing major and now ad-buyer who may or may not be able to spell PE can figure what investors need. And I’m not kidding. I used to work for ad-supported dot-com and I can assure you this is absolutely so, and that these ad buyers have no grasp at all of what it takes to satisfy the needs of investors. I even recall a big-time strategy meeting when the chairman started by asking “Who do we serve?” Me innocent dumb-ass that I was, naively said “Investors, of course.” And oh did I get my head handed to me as I spent the next half hour being harangued for not getting it; we didn’t care about the investors. It was all about the sponsors (i.e., advertisers), who’s entire attention was fixated on how boldly they can be displayed and on how many occasions.

    So Larry, if you feel you’ve been ill served by the content you’ve been getting for free, I hear you. Yes, you’ve been served horribly. And I think it’s been a problem even on Seeking Alpha. I used to write here a lot but have been pulled back out of frustration with the site’s setup that has, in effect, been most friendly toward content (some good, much bad) designed mainly to attract eyeballs. (It’s not what I really do.)

    I’m not participating in the pay platform on day one (because I don’t have time to refine an offering right now), but I hope it succeeds and believe it will. Subscription services turn the tables in a huge way. Writers now can ignore the ad buyers and focus on serving investors. If their content does that, it’s an obvious win-win. If their content fails to do that, then investors will cancel subscriptions and choose others that deliver.

    That’s a functional world investment commentary prepared with the sole aim of bettering the investor. That is absolutely positively not the world of free content. Based on the law of supply and demand, it necessarily is the basis of the subscription world.

    Again, Larry, I completely understand your hostility to the idea of paying for Seeking Alpha content. But this is a game changer. Nobody is going to give money to an author out of affection. It’s only going to happen if the author delivers good profitable ideas. (Ultimately, expect subscription prices to be negative in that you have every right to expect that you will make in the market far more than you pay for the content and cancel if that doesn’t happen.) SA has curated this and is choosing participants they think can deliver under this new and much-better criteria. And they have financial incentive to get it right and work to improve if they don’t on day one. So I suggest you check out some free trials and get a sense of what’s being delivered. Hopefully, you’ll be pleasantly surprised. And if not, keep your credit card in your pocket until you find other authors who succeed in satisfying you, among the first group and/or among later entrants.
    Mar 25, 2015. 02:19 PM | 15 Likes Like |Link to Comment
  • Does Shareholder Lawsuit's Failure Vindicate Herbalife? [View article]
    Watching the HLF longs and shorts continue to duke it out . . . cool . . . this may be the most entertaining spectacle since gladiators carved each other to pieces in the old roman forum. All that's missing now is for Caligula to signal thumbs up or down as to whether Ackman lives to fight on or gets executed.
    :-)
    Mar 19, 2015. 05:23 PM | 8 Likes Like |Link to Comment
  • Wal-Mart Looks To Step Up Competition With Amazon As It Considers Buying Nook [View article]
    "the publishers perspective they welcome any viable entrants into the E-Book business with open arms because it will diminish Amazon's leverage. "

    Any publisher that thinks they'd be better off with WMT having a meaningful role in e-books should be imprisoned for felonious stupidity. But then again, seeing how over the years traditional media has consistently bludgeoned itself, perhaps there are a good number of feloniously stupid publishers out there. Wonder if Bezos has stopped laughing yet . . . .
    Dec 19, 2014. 09:15 AM | 1 Like Like |Link to Comment
  • Wal-Mart Looks To Step Up Competition With Amazon As It Considers Buying Nook [View article]
    "A competitively viable Nook would damage Amazon's competitive moat in far more extensive ways and it would also weaken their position against publishers during the inevitable next round of pricing negotiations."

    What the #$^$%

    Amazon has been desperate to slash prices on e-books and has been largely unsuccessful due to publishing industry resistance. So you thin Wal Mart's entry into e-books might damage AMZN. Heck, I'll bet it was Bezops who whispered into the ears of some investment bankers to get them to pitch a Nook purchase by WMT. With those avaricious supplier-abusing maniacs (How do you think WMT became WMT?) in the e-book business, watch publishers run to Bezos to rescue their industry.

    And by the way, Amazon had a very viable competitor in Nook. The reason Nook became an unviable competitor is because AMZN beat the daylights out of it in the marketplace. AMZN knew something B&N never figured out -- nobody cares abou tech bloggers and PowerPoint jockeys cared about the hardware-feature bake-offs that obsessed B&N. It's always been about the on-line eco-system and customer service. If you think WMT is more likely to gear up in those areas . . . . ROFL!

    Oh, and by the way, you are aware, I presume, that the dedicated nook tablet doesn't really exist. It's a brand and widget added to a Samsung Galaxy tablet which, by the way, can install the Kindle app just like other droid apps in the app store. So it's entirely possible that Amazon could sell more books on the Nook than Nook will -- unless the B&N eco-system and customer service can be better -- uh, I think we were here before. :-)
    Dec 16, 2014. 08:07 PM | 2 Likes Like |Link to Comment
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