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Richard Shaw

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  • Matching Cash Flow Needs with a Bond Ladder [View article]
    Until the funds are liquid, the bid/ask spread is a problem. That needs watching.
    Mar 20 04:10 PM | Likes Like |Link to Comment
  • Matching Cash Flow Needs with a Bond Ladder [View article]
    The fund guarantees full return of maturity proceeds. The bonds, like any bonds, are subject to credit risk. The advantage is to those investors who want predictable maturities at specific times.
    Mar 20 04:09 PM | Likes Like |Link to Comment
  • Danger of Looking Through a Small Window [View article]
    I think those are quite legitimate points. My concern is using a short segment of price pattern to support their point, when in historical fact the ratio is not predictive. However, I share your concern about the ability of the largest companies to weather adversity in some ways better than small companies -- in particular low debt companies to weather better than high debt companies, and wide margin companies to weather better than narrow margin companies.
    Mar 19 10:48 PM | 2 Likes Like |Link to Comment
  • When Is a Contract a Contract? [View article]
    Rather than "whining", we are "warning" owners of capital to avoid investments that are exposed to governments not keeping explicit or implicit promises -- particularly with the current administration.
    Mar 19 02:03 PM | 5 Likes Like |Link to Comment
  • David Rosenberg on Buy and Hold [View article]
    Thank you Roger. I enjoyed your article. In particular, let me highlight these two statements from your article:

    ... our first rule is “Avoid Significant Loss.” The man known as the most successful investor of all time, Warren Buffett, agrees. He often reminds investors of his two primary rules: “Rule #1: Never lose money. Rule #2: Never forget rule #1.” ...

    The greatest threat to your retirement the uncertain future--it’s the next credit crisis, the next financial crisis, the next recession. If you accept buy-and-hold, you must expect that, at some point, your retirement savings will experience a devastating loss. I always tell investors, “Your investment process must include an exit strategy; otherwise, you shouldn’t be invested in the stock market.”

    Mar 12 01:20 PM | 4 Likes Like |Link to Comment
  • S&P View of Earnings and Valuation for U.S. Stocks [View article]
    Mar 11 08:38 AM | Likes Like |Link to Comment
  • Post-Crash Peak Price Recovery Time [View article]
    Even in the period between 2000 and 2007, there was a rapid rise, then a significant correction than a more gradual (but bumpy) rise for a few years, followed by a resumption of rapid rise to the top.
    Mar 4 12:54 PM | 1 Like Like |Link to Comment
  • Post-Crash Peak Price Recovery Time [View article]
    Thanks. I began all the lines from the peaks to measure the time it takes to get back to the peak. Perhaps "recovery" was the wrong label. Maybe some like "repair" or "restoration" -- not sure, but the issue was if we have a price of say 100 and it went to say 50, how many years after 100 did we see 100 again.

    I should probably do a follow-up measuring only from bottoms to tops, but I think the way we all view our assets it that we once had 100 and now we don't, as opposed to we once had 100 and then it was 50, but we feel good because we now have 75. We still know we are down 25 and that is what bothers us.

    Of course for those who got out at 90 or 85 and then re-entered at 60, things look great, but for the buy-and-hold crowd, they are still under water.

    The 1970's pattern saw a rapid rise after the bottom from 12/74 to 6/75, then a correction and recovery from the correction, then a more gradual rise, then a downward drift from 12/76 to 3/78, before a new gradual rise to full recovery to the 12/72-1/73 peak.
    Mar 4 12:51 PM | 2 Likes Like |Link to Comment
  • Post-Crash Peak Price Recovery Time [View article]
    Yes, we have read and listened to the same voices. I think our text clearly stated that we think the conditions today are worse than in the prior periods mentioned.

    The recovery time could well be more than 7 years. Our main point was to illustrate that the current rate of recovery seems too optimistic.

    Whether recovery time is 7 years or 25 years, the slope of the recovery we have experienced since March 2009 would be too steep, requiring a moderation (down, then up; sideways then up, or up at a much reduced slope).
    Mar 4 07:44 AM | 2 Likes Like |Link to Comment
  • Theme: Materials Demand Impact of Electric Cars [View article]
    I read the intro and would like to receive a copy of the balance. Not big on registering at sites, but would enjoy reading the article.
    Mar 1 06:47 PM | 1 Like Like |Link to Comment
  • Practical Use of VIX for S&P 500 Investors [View article]
    We have the Schwab, Fidelity and Think of Swim platforms in-house for reference purposes, but use Schwab by preference. For futures we use Lind-Waldock and for FX we use DBfx. We appreciate the way Think or Swim seeks to do it all, but we prefer using separate specialist sites. We also find the Java application for Think or Swim a great move to be Window, Mac and Linux compatible (which cannot be said for Schwab or Fiidelty), but Java is clunky and with high latency in our experience. Maybe later, but not yet for us.

    Anyway, we reviewed the Probability Analysis at Think or Swim and find it to be data rich and using the same methodology as the material we have been presenting.

    To be sure, we called the Tech Support area at Think or Swim and they assured us that they use implied volatility, not historical volatility in that feature, and that while they do not take volatility feeds from elsewhere, they develop the volatility using the same method as VIX.

    When I asked that they clarify that the time period is 30 days and that the analyze the same options as the CBOE and weight them in the same way, I got a "we think so" but that is beyond what the support staff know for certain.

    It is likely that the data is for 30 days and that the method is the CBOE method, but I cannot say for sure.

    They Think of Swim data is real-time and changes this way and that as you view it, and it is effortless for you. The method we portrayed is not real-time, takes effort to build the spreadsheets, and to enter data for each use. The big difference is that a spreadsheet-based system gives you the flexibility to customize the output and format, but that is probably not important to most people who just want the facts and who are willing to build their process around the data format available to them.

    Short answer to this long story, is that you are most likely all set and have no need or our article other than for curiosity sake. However, Schwab and Fidelity do not offer a similar charting feature to the best of our knowledge. We expect that certain specialized options services do offer a charting feature similar to the Think or Swim feature.

    You are probably in great shape as you are.
    Mar 1 02:06 PM | Likes Like |Link to Comment
  • Practical Use of VIX for S&P 500 Investors [View article]
    I'll look into the Think or Swim feature and get back to you on that.
    Mar 1 12:47 PM | Likes Like |Link to Comment
  • SPY Price Probability by Month to Dec. 31, ‘10 [View article]
    You may well be right. In our personal case and the case of our clients, we at at the financial stage of life where losses cannot be replaced with new funds. Therefore, we prefer to be more safe than sorry. We would rather miss a few points up the up side to avoid potentially many points on the down side. The situation in the markets is still dicey.
    Feb 25 09:01 PM | 3 Likes Like |Link to Comment
  • SPY Price Probability by Month to Dec. 31, ‘10 [View article]
    I would agree that any group dumb enough to give Obama the Nobel prize for being elected, and to Al Gore for his work my not be credible.
    Feb 25 06:46 PM | Likes Like |Link to Comment
  • SPY Price Probability by Month to Dec. 31, ‘10 [View article]
    Reckless use of a method by individuals is not the same thing as proving a theory. LTCM did all sorts of stupid things that had nothing whatsoever to do with the Black-Scholes model, including over concentrating in positions they could not liquidate.
    Feb 25 06:43 PM | 2 Likes Like |Link to Comment