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Mark Bern, CFA  

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  • The Time To Hedge Is Now! April 2015 Update [View article]
    sunnypt - Thanks for the comment and well-explained and very reasonable approach to investing for the long term. We have a great deal in common!

    I use the exact same strategies that you list for my portfolio. This strategy is the only exception that I deploy relative to yours. I am an advocate of all that you list and have written extensively about all of it in years past (and will again in the near future). I just like to avoid more than 15% market crashes and to have more cash (without selling out my treasured long-term dividend-paying positions in quality companies) to invest when the market gets hammered.
    Apr 27, 2015. 11:26 AM | 1 Like Like |Link to Comment
  • The Time To Hedge Is Now! April 2015 Update [View article]
    Dale - Good point! But switching out of equities and into bonds at this point, while it may be prudent, does not provide the added potential boost to income that eventually comes when this strategy works. My experience has been that I give up a little of my income each year that I hedge (once the bull starts getting old) and get a boost in new income from added dividends when I take the gains from my hedge positions near the bottom and reinvest them in my favorite dividend payers. Even if I miss the bottom (which I admittedly always do to some extent) the additional income stream going forward really helps me to keep holding and adding to my long positions in quality stocks. They always come back eventually and, if I have done my due diligence well, faster than the market averages.

    If you want more details about that one please click on the link to the series instablog (near the top of this article) and check out Parts I & II of the series.
    Apr 27, 2015. 11:20 AM | 1 Like Like |Link to Comment
  • The Time To Hedge Is Now! April 2015 Update [View article]
    giofis - Thanks for the comment!

    1) Please see my answer to rickevan above or for a more detailed answer please see Part V. That is not to say that I would recommend against using SPY, ETFs or any other hedging vehicle. I just find them to be less cost effective.
    2) You make a good point in terms of the globalization factor making this indicator perhaps less relevant today than in the past. However, the shift hasn't happened overnight and while the % of sales from outside the US by the global companies you list (and many others) has risen since 2008, it is not that much different from then. The indicator worked well in 2007-08; it worked in 2000-03; it's relevance may have diminished somewhat since 2007, but I don't think it has become irrelevant just yet.

    But this is just one of the many indicators and stress points that I have included in my articles (I try to give at least one new one in each article). There are many potential triggers around the world today, both economic and geopolitical, that could undermine confidence rapidly. I simply want to keep people aware that everything is not quite as rosy as many pundits would like us to believe.
    Apr 27, 2015. 11:12 AM | Likes Like |Link to Comment
  • The Time To Hedge Is Now! April 2015 Update [View article]
    rickevan - Thanks for the question and comment.

    I go into greater detail in Part V of the series but in a nut shell I'll try to explain here. I don't use puts on ETFs or an Index for two reasons:
    1. It is usually more expensive for the same amount of coverage.
    2. Both an ETF and an Index will always contain the best, the average and the worst performers in their respective universe. I find that it is more efficient to search out and use only the worst (expected) performers. More bang for the buck.

    BTW, I do not like to live with a 30% loss, ever. You will find that most, if not all, of these stocks will tumble much faster than the quality stocks I prefer to own. Thus, by the time the market has fallen 10-15% these stocks will have fallen much more (often double) and the premiums on the options chosen will begin to increase in value significantly before the stock prices hit the strike prices, especially if it happens with several months left before expiration. It is at this 10-15% level that the value of the hedge begins to kick in. By the time the overall market has fallen by 30% these stocks will be close to, if not already at, the listed target prices (down far more than the market average of 30%). In which case, we will have protected all, or most, of the lost value in our portfolio. If the market crashes by more than 30%, our candidate stocks will likely fall even further adding the necessary protection beyond that point.

    This brings me to the obvious next question: how do we determine when to remove the hedge? See Part X for my detailed exit strategy, if interested.
    Apr 27, 2015. 11:02 AM | Likes Like |Link to Comment
  • The Time To Hedge Is Now! April 2015 Update [View article]
    frogmaier - Thanks for commenting and providing readers an alternative hedge strategy. I have used leveraged inverse ETFs in the past but perhaps I did not go far enough out of the money to find the cheapness I prefer. I discuss why I no longer use ETFs to hedge in Part V of this series in greater detail.
    Apr 27, 2015. 10:51 AM | Likes Like |Link to Comment
  • The Time To Hedge Is Now! April 2015 Update [View article]
    alpine - True, it may seem like I'm just piling on here. But there is a reason that so many think MU will fall; it's history suggest it will. Am I too late? Not if there is still a buck to be made, and at the current price there is. Will the stock buck the trend and cause a short squeeze? Maybe. It would need some very good results to do so, but that is always possible if management is up to the task (or maybe the accountants). If the economy continues to plod ahead and somehow MU beats expectations in the short term, it will just provide a better opportunity to enter a hedge position in the future, imho.

    Thanks for the comment and link.
    Apr 27, 2015. 10:46 AM | Likes Like |Link to Comment
  • QuickChat #280, April 16, 2015 [View instapost]
    Good advice, SHB.
    Apr 26, 2015. 08:42 PM | 4 Likes Like |Link to Comment
  • QuickChat #280, April 16, 2015 [View instapost]
    Really enjoyed that, Maya! She really lived and has the proof to show it!
    Apr 25, 2015. 07:35 PM | 3 Likes Like |Link to Comment
  • QuickChat #280, April 16, 2015 [View instapost]
    Calif. Dream Home only $695,000!
    Apr 23, 2015. 12:02 PM | 3 Likes Like |Link to Comment
  • QuickChat #280, April 16, 2015 [View instapost]
    LT - I also use Yahoo as my portal and for email. I have become very adroit at using the spam filters on my email account and it has worked quite well. I now rarely get an unsolicited email offer. On the news front, I agree wholeheartedly. That is why I use it for my sports coverage mostly and am pleased by some of the articles they bring me that I would otherwise probably miss. Regarding politics and investing, I would agree that Yahoo is pretty worthless.
    Apr 23, 2015. 11:55 AM | 2 Likes Like |Link to Comment
  • QuickChat #280, April 16, 2015 [View instapost]
    HTL - Both are definitely must reads for perspective. No one knows the timing, but understanding the potential that "could" unfold is important.
    Apr 22, 2015. 01:09 PM | 2 Likes Like |Link to Comment
  • QuickChat #280, April 16, 2015 [View instapost]
    Maya - Good article. Thanks for the link.
    Apr 22, 2015. 01:08 PM | 1 Like Like |Link to Comment
  • QuickChat #280, April 16, 2015 [View instapost]
    Be careful in reading the headlines! These two short articles are both about KO and each tells a very different tale. The first, one of only two with this theme, compares KO's Q1 results with year ago; prognosis here is that the decline in earnings is less than in previous quarters but still down. The other one, of which there are a plethora of similar articles, fails to mention y/o/y results and focuses solely on KO beating expectations and sequential data to make things look rosy. The Wall Street media machine tends to push out tons of the later with the idea that it can make the former harder to notice.

    Beating expectation of earnings declines y/o/y does not give me a lot of confidence in the strength of this economy. I am not trying to predict anything bad; just saying to make sure you look at y/o/y results rather than just the simple "beat." This is only a cautionary post. Be careful out there and do your own dd, as always.
    Apr 22, 2015. 10:48 AM | 5 Likes Like |Link to Comment
  • QuickChat #280, April 16, 2015 [View instapost]
    DG - I doubt that we have a reciprocal agreement on patents with Iran, so unless this technology is patented elsewhere within a country with which we have such an agreement, there may be no problem with creating it here (legally, that is).

    I am sure that Iranian companies do not honor US patents either. Last time I checked the Chinese are pretty sketchy in this area, too. And the list goes on...
    Apr 21, 2015. 01:14 PM | 3 Likes Like |Link to Comment
  • QuickChat #280, April 16, 2015 [View instapost]
    SHB - Good point! My thinking also. My minimal understanding of physics tells me that this would have to break a law or two.

    As to the reports of disabled ships: can we really trust the source? Looks likely to be one that could make things up and report them as factual evidence to support their views, to me.

    OTOH, I don't trust our government to report events like that to the general public because of the panic it would create.

    OTOOH, If it were possible I suspect we'd have it in our arsenal very quickly. Our defense industry can spot a money maker when they see it and the scientists they employ are not idiots.
    Apr 21, 2015. 12:51 PM | 4 Likes Like |Link to Comment