Richard Shaw

U.S. Healthcare Legislation Investment Impact

RECON65:

NO. You are the idiot. As the article said, the BILL brings us "one step closer" to law, and that the law would have certain effects, and that the market might react now and would react if enacted.

Try reading more carefully next time.

Healthcare Profits: Assessing Company Sensitivity to Obamacare

c smith: if you have that private pay data readily available for the other companies, that would be good data to share

Healthcare Profits: Assessing Company Sensitivity to Obamacare

c smith: nice point

Healthcare Profits: Assessing Company Sensitivity to Obamacare

grandad: we aren't suggesting what ought to be, just the way it has been and the consequence of the way it would become -- there is no political or social agenda in the article, just a statement about the investment implications of a change in the way things work.

The Problem with Being Wealthy

Moon Kil Woong:

The rich are as diverse as any group, with as many differing preferences and approaches.

The fact is that most of the very wealthy do not manage their own money, so most incur some costs from funds or advisors.

The ideal world of near costless investing you mention only comes true if you manage your own money (which most of the very wealth do not do), and only if the investor confines himself or herself to those assets which are accessible, with adequate public information flow, and in some cases available in minimum sizes that are within their "bite size" (which is not universally the case).

While direct ownership of individual US stocks (including ADRs) is quite feasible for US persons, it is not practical or in some cases feasible for individual investors to purchase stocks or bonds in some of the attractive non-US markets. A fund of some kind is the only realistic way to access stocks or bonds in many countries. In addition to limited access in many countries is basic limited information flow and understanding of local accounting rules, local economies, and the businesses themselves.

In today's global investing world, far more than 50% of all investment opportunities are not available within the US or through a US broker, or with sufficient public information to make rational risk taking by the individual possible – and in some cases only specially anointed institutions are permitted to make purchases. On derivatives front, the knowledge and skills required are very specialized. The fact is that the wide range of asset types investors of all sorts, including the wealthy, is so great that it exceeds the reasonable research and skills level of any individual, professional investor or not. Funds are a practical necessity for many investment purposes, regardless of ones level of wealth, intelligence or time available to manage assets.

There are circumstances where owning individual stocks and bonds make the most sense and circumstances that don't make sense from both the investor's personal perspective and the practical aspects of the markets.

The Problem with Being Wealthy

Holden:

We have multiple investors with sufficient assets to take $10 million positions, and the majority of them have no interest in individual stocks. The world is full of all kinds of people with all sorts of profiles. It's just a matter of preferences.

ETFs have become popular and investors ask for them often times, but mutual funds with billions of assets are better suited for very large positions, EXCEPT for the loss of automatic trailing stop loss order capability.

The ultimate question is not is an ETF big enough, but IF funds are the preferred route, what funds are big enough. Mutual funds have more offerings of adequate size than ETFs at this time.

The Problem with Being Wealthy

Founder:

If it takes an hour to get out in a normal market with 10% of average daily volume, it may take a much longer time or a big reduction in price to get out in a plunging market. That is not a risk we are inclined to take. A stop loss becomes a market order when triggered. 10% of a normal day's volume in a market order would be disastrous.

The Problem with Being Wealthy

Jade Queen:

The history of ETFs is in great part about blending the intra-day trading capability with Closed-End funds, while approximating the price equals NAV of Open-End funds, as well as the various commercial incentives that go with innovation.

Index mutual funds have given the same "look inside" advantage as ETFs.

The high net worth market did not spur the ETF market, but high net worth investors have been attracted to ETFs for the same reasons as other investors. The problem is that most ETFs are still not of the size that they can absorb large single transactions without moving the price around a lot.

The Problem with Being Wealthy

Carousel:
The block trades of cash for securities or securities for cash is part of the arbitrage function that keeps the price near the NAV, but that only occurs between the ETF and a list of approved large institutions. That is not an option for investors other than the approved institutions.

The manual arrangement is to call your broker and say that you need to to a large trade and then they enter a "not held" order. Most likely they send the order to a large bank, or maybe do it themselves, but the effect is to tell market markers and dealers that there is a block available and then they chip away at it as they can. While the executed orders flow across the tap, the available block does not show up on the Ask and Ask Volume quotes on the computer screen that you or the world can see. It is a quiet, behind the scenes method of feeding stock into the market.

S&P 500: 60 Years of Monthly and Daily Percentage Price Changes

Old Trader:

Well said! ["buy and hold" does NOT mean the same as "buy and forget"]

S&P 500: 60 Years of Monthly and Daily Percentage Price Changes

USER411091: Yes there are other useful displays and ordering of the data. Here is one alternate approach that will be more familiar to those interested in statistics and volatility expressed as standard deviations:
www.qvmgroup.com/inves...

What Do CBOE Volatility Indexes Say?

Baboon:
The normal distribution is only an approximation to get approximate boundaries for probable behavior. In no way do we believe that the market is random. In fact, the market is demonstrated by observation to be skewed in an upward direction.

The normal distribution is imperfect as is any conceptualization. The trends lend ideas as to direction within the probability range.

By stopping losses and not stopping gains the skew to the upside is increased.

It is not correct to say that using stops is an admission of having made a wrong decision. At the very least trailing stops prevent negative outliers from devastating a portfolio while allowing the long investor to benefit from positive outliers.

But then we all place our bets and take our chances based on how we view the world. That's how we view it and so far we make money and sleep better at night knowing outliers will not sink us.

Thanks for commenting.

What Do CBOE Volatility Indexes Say?

Baboon: Please elaborate.

How the Copenhagen Climate Treaty Will Affect Equity Markets

Steve in Greensboro:

Your suggestion that a subsequent president simply withdraw from an international climate treaty may run up against a Constitutional provision that could prevent that. There was an important attempt in Congress in 1953 to deal with the question. It was covered by Time Magazine -- you can read the article at:
www.time.com/time/maga...

How the Copenhagen Climate Treaty Will Affect Equity Markets

The Green Investor:

I did include alternative and green companies indirectly by this comment "or that will increase sales directly due to carbon or energy limits".

I chose not to specifically say "alternative" or "green" because so many are immature companies.

Technology history shows that most new technologies leave many dead companies along the path of development (check back on dot.com phase, or railroad phase in a prior century).

Large companies tend to be the winners. They buy up or start entities that carry the new tech forward after the first movers and pioneers take the biggest risks to find out what works.

Clearly, there will be winners among alternative fuel and green companies, but also many duds or failures.

For those who are willing and able to do the difficult research and buy sufficiently diversified holdings, alternative and green may prove rewarding -- I just don't want to be seen as promoting that route. We are conservative investors and new technology is generally not a place for conservative investors.