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Mark Bern, CFA  

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  • The Time To Hedge Is Now! November 2015 Update [View article]
    DAMSF and stratti - Thank you for your continued support.
    Nov 18, 2015. 03:15 PM | Likes Like |Link to Comment
  • Why Diversification Is An Important Tool Of Managing Risk [View article]
    Fernando - Thanks for the supportive comment. You do seem to get it!
    Nov 18, 2015. 03:08 PM | Likes Like |Link to Comment
  • Major Indices At A Crossroads... Again [View article]
    Tex - I am glad that you got that off your chest for me! I enjoyed the diatribe and could not be more completely aligned with your thought process. It us good to know that I am not alone in my concerns.

    Only one thing: I don't think our economy could handle 2% short-term rates just yet and any hint that we were moving in that direction could cause a lot of pain. But pain is what we need to get the worst behind, jolt our leaders into action and build a firm foundation from which to create a stronger economy. I could be wrong about the level that could be acceptable, but I do agree that the Fed should NOT be trying to manage the economy. Its sole purpose should be to maintain a stable currency, imho.

    Thanks again for sharing your thoughts!
    Nov 18, 2015. 02:07 PM | 1 Like Like |Link to Comment
  • Why Diversification Is An Important Tool Of Managing Risk [View article]
    Sven123 - Thank you! The article was not meant to be an analysis piece, of course. It was, as I suspect you understood, meant to use some data to make a point. I appreciate your point to seekingfoolishness.
    Nov 18, 2015. 02:19 AM | 3 Likes Like |Link to Comment
  • Why Diversification Is An Important Tool Of Managing Risk [View article]
    dpk - You are welcome. I hope you find something of interest and some helpful tidbits in my other articles.
    Nov 18, 2015. 02:16 AM | 1 Like Like |Link to Comment
  • Why Diversification Is An Important Tool Of Managing Risk [View article]
    Daniel - Perhaps you missed these words in my article:
    "Pershing Square is led by Bill Ackman and has recorded some excellent returns in the past."
    "Greenlight Capital is managed by David Einhorn, another admired billionaire hedge fund investor. He has also been right a lot, and made his investors a lot of money"
    "Carl Icahn has a net worth of over $20 billion the last time I checked. So, he must be doing something right."
    "IEP is down in value over 24 percent since the beginning of the year. It has made some good investments that partially offset the blunders. This is the case with all of the above investors/funds."
    "Diversification may have saved the respective bacon of these outstanding investors keeping them alive to fight/invest another day"
    Each of those statements makes the point that these investors have done well in the past and made smart decisions. I am not sure why you stated that "The author does not emphasize that the same investors made some spectacularly good decisions also."
    I am sorry if you missed the point that diversification has actually helped these investors to a certain degree and that small investors, like us, need to avoid making large, concentrated bets because it increases risk.
    I tried to make it clear that each of these guys has earned his reputation as a great investor, but even they make mistakes some time.
    Nov 17, 2015. 11:20 PM | 9 Likes Like |Link to Comment
  • Why Diversification Is An Important Tool Of Managing Risk [View article]
    Luv - I explained how I allocate between different asset categories and within each category in Parts III and III (A) of a recent series. Here is a link a blog where I list each part with a link for each article.

    You might find the first article in the series interesting also as it explains my philosophy on investing.

    Thanks for the questions.
    Nov 17, 2015. 11:09 PM | Likes Like |Link to Comment
  • Why Diversification Is An Important Tool Of Managing Risk [View article]
    Paper - Thanks for adding your thoughts. Everyone has different tolerances to risk and should follow a diversification strategy that gives them comfort while helping them achieve goals. Quality is always a must for my money.
    Nov 17, 2015. 11:05 PM | Likes Like |Link to Comment
  • Major Indices At A Crossroads... Again [View article]
    Texas John, I agree that the Fed is stuck between a rock and a hard place as it needs to reload the ammo belt for the next recession with higher interest rates. If we were to enter a recession now with ZIRP the options to help right the ship would be very limited. The Fed needs to raise, but the global economy is so weak and inflation is non-existent, so there is hardly any other reason to raise except as preparatory moves for the next recession.

    On the flip side of the argument, if the Fed decides (in its infinite wisdom) to hold rates steady again, it will be sending a message again that the world economy remains too weak to handle a measly 25 basis point hike from one country even as nearly all other central banks on the globe are continuing with easy money policies. That indicates that the world economy is extremely weak and could make investors stop to think about taking on risk at this juncture. There is no easy answer for the Fed. They should have started painting the floor from the corner opposite the exit; instead they have painted (printed) themselves into a corner with no escape. If they try the nearby window (raise rates a little) it could be a problem since they are on the 7th floor and there is no ladder or fire escape.

    What to do?!!

    I also agree that Black Friday result could be telling. However, the media has a way of spinning the event to often make it seem more successful than reality. Cyber Monday is closer and may give retailers a boost if it exceeds expectations. Again, though, I suspect expectations will be lowered at the last minute to make a positive surprise more likely. The reality probably won't begin to become clear until mid-December. By then, even if last minute shoppers come out of the closet it could already be too late and retailers will have to cut already reduced prices more than they originally intended. That would kill margins. So, if retail sales actually are running higher than last year by mid-December the bulls could find some footing again. If not, well that could be the last straw on this old bull camel.
    Nov 17, 2015. 02:26 PM | 2 Likes Like |Link to Comment
  • Quick Chat # 285 [View instapost]
    Maya and Guns - I think your're both right! Ha!

    Money may be pouring into our markets looking for a safe haven from foreign investors. At the same time, foreign central banks are supporting local markets either directly (China) or indirectly (through lcoal financial institutions that owe them dearly). So, all markets go up at once.

    I could be wrong and maybe there are investors all around the globe who are crazier than loon sh!t, but I have a hard time figuring out what everyone is so giddy about with the global economy continuing to weaken, resource gluts piling up forcing prices lower, debts skyrocketing, 3rd qtr profits falling y/y and terrorism on the rise. I guess there is so much to worry about that the wall just keeps getting climbed?

    Makes no sense to me.
    Nov 17, 2015. 12:00 PM | 4 Likes Like |Link to Comment
  • Major Indices At A Crossroads... Again [View article]
    Texas John - Thanks for sharing your thoughts! I am in total agreement with your technical analysis output. This week could tell us a lot about the direction of the markets through year-end. I would not be surprised to see the S&P hit a new record high during that time if the bull can support the market and avoid a breakdown here. However, the geopolitical environment has the potential to change everything on a dime.

    Revenue for the S&P 500 has been down year/year for more than a quarter and Earnings for the group fell from last year during the 3rd qtr. I thing, all the geopolitical factors and the Fed aside, that the key to whether this market goes higher into 2016 or lower, is going to be the health of the retail sector. Consumers account for roughly 2/3 of GDP. Thus, a poor showing over the holidays, when most retails achieve most of their respective annual profits, could damage confidence of investors. It would show that consumers are not as resilient as expected and that the lack of real wage gains does, in fact, reduce spending.

    Of course, as you say, we could get another large increase of oil in storage that takes the price of oil down into the 30s again (which I actually do expect to happen at some point but I just don't know when exactly). That could reek more havoc on oil majors and begin the next round of bankruptcies in the energy patch, especially for those smaller companies with too much debt. If the US$ strengthens more from here (a Fed rate hike should have that affect) then US$ denominated debt will become more costly to service in emerging market economies and could cause some turmoil there (I also expect that to happen). The US$ strength also adds more downward pressure to commodity prices and that will serve as a double whammy for emerging economies that rely on resource exports as well as Canada and Australia which are heavily tied to resources exports, as well. The list goes on and on. There are just so many things that could go wrong and the only thing that offsets that is the status quo of nothing bad happening.

    The incident in Paris had little affect on US equity markets, but if something similar happens in DC the result will be much different. It is important to note here that IS has pledged in a video to do just that: a coordinated terrorist attack on our nation's capital. IS has changed its communications methods so that our intelligence people did not see the Paris event(s) coming and that worries me that they could miss something else.

    Let me make it clear, though, that I am not a conspiracy theorists or a perennial doom and gloom guy. I just don't like the odds of another great year for stocks in 2016. I could be wrong. That is why I remain invested and hedge for downside protection. I also do not want to give up my dividend earnings. I can't time the market, but I can at least remain cautious. I know that there are much brighter days ahead at some point, but I believe we are in a precarious position at this time and the Fed cannot keep our economy out of recession forever. It will come (I don't know when) and I just don't want to lose too much. So the tenner of my articles is filled with caution until the recession hits and provides us with some great bargains again.
    Nov 17, 2015. 11:53 AM | 2 Likes Like |Link to Comment
  • Major Indices At A Crossroads... Again [View article]
    JFRogers - I couldn't agree more. However, many bulls would take issue with that point as they continue to believe that stocks are still going up. We are definitely building a base but there is no way to know which way it will break, up or down, from these levels. I remain hedged against a downside break just to be safe; have been since some time last year.

    Thanks for stating what many are unwilling to consider.
    Nov 16, 2015. 07:05 PM | 1 Like Like |Link to Comment
  • Major Indices At A Crossroads... Again [View article]
    jprizzuto - You are right, of course. I don't know what I was thinking when I wrote that.
    Nov 16, 2015. 07:01 PM | 1 Like Like |Link to Comment
  • Major Indices At A Crossroads... Again [View article]
    Maya - Yeah. I say that. I am so glad that I decided to move my family out of that metro area after 9/11. I can't help but suspect that IS militants have infiltrated the refugees flooding into Europe and that the Paris incidents could be just the beginning of increased acts of terrorism there and in the U.S.

    I hope I'm wrong.
    Nov 16, 2015. 07:00 PM | 2 Likes Like |Link to Comment
  • Major Indices At A Crossroads... Again [View article]

    That is why I believe there is more hope for the future of the U.S. economy. Germany has entered a bad demographic trend, as has Italy, too. I suspect that the refugee situation in Europe will hurt short term due to increased expense related to integration efforts (and possibly more terrorism) but could be helpful in the intermediate term if the integration efforts work out as it would increase the working age population. Long-term is anybody's guess, though. Lots of variables.

    But here in the U.S., the millennial generation is being saddled with huge student loan debt, flat wage growth and not enough good job prospects for the time being. That should all change for the better beginning sometime in the next five years. Then U.S. economic growth could get better and inflation will probably rise, too. At least, those are my expectations currently. But if things change I'll have to reassess.
    Nov 16, 2015. 06:57 PM | 3 Likes Like |Link to Comment