Richard Shaw

Richard Shaw
Contributor since: 2006
Company: QVM Group LLC
because i do not prefer to go 100% in and 100% of the market. the position is much reduced but not zero
all accts taken together, we have both, but more long than short, and long positions are much reduced from policy levels
One needs facts and data to make such a decision.
Importantly, we have been making this statement with supporting charts and data since July in our client letters, on our blog and at Seeking Alpha.
Simply saying hold extra cash without supporting documentation would be irresponsible.
not clear how this relates to article
absolutely. it is all about probabilities, but I would expand the approach to be
(prob positive x magnitude most likely gain) minus (prob negative X most likely loss)
for clarity, we have owned our disclosed positions for a while ... when we publish filtered lists they are not buy recommendations .. they are merely suggestions for further research and suitabilty consideration by DIY investors
good to wait for attractive entry price on a select list
I am sorry to sadden you. You probably have enough choices to do some tactical reallocation in different market condition. I wish you the very best, and understand completely your concern about preserving what you have worked so hard to accumulate
thanks. if not a stock pickers market, at least a sector or industry pickers market
yes it is an inverted figure
activity is opposite of stress
so to align them I used inversion
I don't believe there is a fixed time frame. Not aware of any precisely the same measurements, although a service called Lowry Research has its own measures of breadth along some of the same lines, and for a multi-decade period (it is a subscription service). I assume the degree and consistency of divergence (such as angle of ascent of one and the angle of descent of the other, would have a lot to do with the time frame -- but there are always other forces on securities that could moderate or counteract the implications of the divergence -- that is why I referred to the divergence as a warning (one I am taking seriously), but not a specific all ---- market tops are not singular events in time, but rather evolving conditions, as Corrections and Bears rolls through parts of the underlying sectors, industries and individual securities in an index
Sorry not able to be more specific. Just take the info onboard, combine with other information you have and relate it to your goals, limits, time frames, and need for or lack of need for cash from the portfolio to make your own decision
In our own case (not necessarily right for you), we take this, in combination with other data, to hold above average cash for those of our accounts for parties at or near retirement, and who do not have excess assets for their retirement neeeds
If your goal is long-term income and income growth, there are few times when it is not a good time to buy dividend stocks with long-term patterns of consistent dividend growth and currently attractive yields as well as reasonable valuation relative to its own history and certain absolute values you may establish such as payout ratio and PEG ratio, among others.
The less you need to sell stocks to generate income, and the more you intend to derive return from income, the less important market price cycles matter to you. However, the converse is also true.
No specific calendar on dividend stock articles, but probably something soon.
Thanks
your description of the market as "bipolar" in your bio is a good one
recently TRV, ACE, TROW, RTN, UTX
Thanks
I use the yield curve as a recession indicator.
Have included that data in other articles, but should probably reference it more often.
Recession almost always means Bear, but the Bear tends to arrive before the recession -- at least certainly before the "after the fact" official designation of a recession by the govt
To be clear, this is not a recommendation to own target date funds. we own none. The article makes the point that being aware of the models is useful, and may serve, in conjunction with pure risk allocation models, as a base from which to deviate to create a personally suitable portfolio.
The performance of the actual funds and of proxy simulation are clearly presented including return give up
(1) secular judgements are not made on the basis of several days
(2) if you read more closely you would see it talks of the weight of evidence not of certainty
Let's see how things play out of a longer period than a week.
Also, stocks have not "rocketed" - they merely reached the approximate mid-point of their decline from July
thanks i'll fix that
Well said.
Responsibility investing is a valid approach with essentially same overall profit potential as unrestricted investing
I understand, but in my personal case, having seen so many cancer deaths among friends and family, I just can't bring myself to put money in a product that causes cancer -- death by cancer is ugly -- and my doctor clients and a non-profit specifically instruct me not to invest in tobacco
That's a typo which I will have SA fix -- sorry & thanks
What is true of many of the wealthy as well as others is the tendency to spend in proportion to assets -- so sometimes some people you would think of as all set, because they have a lot of money, still have the risk of outliving assets due to their spend level -- and some people simply cannot cope emotionally with major drawdowns which has nothing to do with wealth or spend -- and some simply like the idea of changing allocation significantly around what are perceived to be major trend changes
We do not manage to model portfolios, but rather to investment policies established with each client based on their real life goals and circumstances
I lean toward dividend income and dividend growth personally, but also believe there are times to be light on equity and repurchase at better prices -- that is why we were only down 10% in 2008, and could repurchase stocks at prices well below 2007 levels
No not all, but some
And some would rather sell dividend stocks and repurchase at lower prices
No not to get by -- most have investments greater than $5 million and some with 10's of millions -- getting by is not even a topic for any of our clients
i agree. no suggestion that anyone buy here - just observing the few stocks that have held up
we have massively reduced equity over past several months.
i am personally 73% cash at this time waiting for re-entry.
read my prior two articles to see our negative technical view
I agree that we have a statistically small sample size for the yield curve (the "Term Spread"). Unfortunately, most investment indicators have the same sample size problem. Seeking confirmation from indicators based on non-overlapping factors is one way to partially overcome the reliability of single indicators.
As one reader pointed out, the Fed manipulation of interest rates may make the yield curve less reliable than otherwise. That is partly why we included the 5-yr/10-yr curve in the supporting charts -- those rates being less impacted by ZIRP than the 3-mo/10-yr
Yes, it's a really tough call. The multi-factor Stress Indexes are still good (and they have only two recession of backtest, but logical support), but then the high yield options adjusted yield spread (the "Quality Spread") has been flashing warnings for some time.
What is your opinion of the research papers from the New York Fed (1996)and the National Bureau of Economic Research through University of Wisconsin (2010) on the yield curve predictive powers?
http://tinyurl.com/e46ud
http://www.ssc.wisc.edu~mchinn/w16398.pdf
That is the challenge -- to rely of an indicator with a solid record (the yield curve) which has not predicted in Corrections, but has predicted Bears; or to rely on sever breadth deterioration with occurs in Corrections and continue during Bears (therefore preceding Bears).
If the yield curve (and also the Stress Indexes which have worked as predictors in their short history) are good, then you might say breadth deterioration are Necessary But Not Sufficient, whereas the yield curve flattening is Necessary.
That is the big question, and that is why we are 1/2 in and 1/2 our equity allocation in accounts of retired investors who do not have excess assets -- due to the uncertainty of the matter
It would be nonsense if we were discussing the Japanese stock market, but we are not. Research by the Federal Reserve and by the National Bureau of Economic Research have shown that the yield curve indicator works in the US pretty well, works adequately in Germany (but more as a coincident indicator) and not well in Japan
excellent point about risk tolerance assumption before and upon market declines.
Thank you for this excellent comparison of valuation approaches
This was not intended to provide an actionable idea. That is why it is titled "survey" and why the narrative talks about providing the broad perspective necessary to make your own suitability decision. Not every article is meant to tell you what to do. Some as this one are meant to gather and distill data that most people do not have or do not have the time or tools to assemble. There is a large wide choice of bond fund investments and this tries to put them categorically into perspective.
Nice analogy
"I may look just fine, but I'm not feeling all that well."