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  • Not All Bonds Are Created Equal [View article]
    Using the bls.gov website's CPI Inflation Calculator, I show that $1 in 1941 is equivalent to $6.18 in 1981. (6.18/1)^(1/40)-1 = 4.66% so as long as my math is right, the real return on an instrument perfectly tracking the 10-year Treasury was indeed negative over the period by that methodology. This makes a case for using some less interest rate sensitive vehicles than the 10-year Treasury should you believe the environment we will face in the decades ahead will be similar to that period.
    Mar 13 08:54 AM | Likes Like |Link to Comment
  • The Entire World In One Trade [View article]
    For compliance reasons, please email us at discovery@teamefg.com with any questions, comments, or corrections.
    Sep 26 07:06 PM | Likes Like |Link to Comment
  • USCI, The 'Contango Killer' ETF: An Imperfect Solution [View article]
    Absolutely...the very structure of the futures marketplace is proving to be problematic for these products.
    Apr 8 04:03 PM | Likes Like |Link to Comment
  • Inverse/Leveraged ETFs: Inappropriate For Long-Term Investors [View article]
    Coincidentally, the February ETF Snapshot from SPDR came out this morning and indicated the Inverse/Leveraged category has seen a 4% increase by assets YTD. Link below.

    http://bit.ly/XFXgYz
    Mar 12 12:27 PM | Likes Like |Link to Comment
  • Inverse/Leveraged ETFs: Inappropriate For Long-Term Investors [View article]
    Agreed; these vehicles may certainly be more practical (than options or short positions) for the average investor to express short-term trends. Then of course it is a question of whether or not average investors can correctly identify such short-term trends. History suggests not!
    Mar 11 06:28 PM | 1 Like Like |Link to Comment
  • Inverse/Leveraged ETFs: Inappropriate For Long-Term Investors [View article]
    Thank you for your comment Chris. What prompts your decision to go short? Technical analysis? Fundamental analysis? Macro view? Interested to hear your feedback.
    Mar 11 02:48 PM | Likes Like |Link to Comment
  • Inverse/Leveraged ETFs: Inappropriate For Long-Term Investors [View article]
    Thank you for your feedback. To your point, the compounding problem is well established, but we have not seen nearly as much attention paid to the potential combination of an inverse ETF with its traditional counterpart in a portfolio as in the last chart.
    Mar 11 02:46 PM | Likes Like |Link to Comment
  • An Emerging Markets Investment That Could Double Over 10 Years [View article]
    In addition to the factors you outlined, there is always a degree of tracking error particularly when the underlying securities are a bit less liquid.
    Aug 28 11:29 PM | Likes Like |Link to Comment
  • An Emerging Markets Investment That Could Double Over 10 Years [View article]
    You'll notice I used a nominal value ($6,790) rather than a percentage...$6,790 will likely be far less than 6.79% in 10 years. I assume no distribution growth in nominal terms.
    Aug 28 11:24 PM | Likes Like |Link to Comment
  • An Emerging Markets Investment That Could Double Over 10 Years [View article]
    Thank you for sharing your very valid thoughts. The quarterly distributions are and have been erratic, but I would point out that my projection shows the distribution as being flat over the 10 year period in nominal terms. And while the data points may demonstrate variability, practically speaking, the general trend line will be up and to the right as the nominal value of distributions increases over time just like anything else due to inflation/debasement.

    I believe this projection is reasonably conservative as a proposition for satisfactory total return.
    Aug 25 11:19 AM | Likes Like |Link to Comment
  • A Basic Accounting Equation Applied to Financial Markets Today [View article]
    You're absolutely right. What you are essentially describing is an increase in productivity; which next to population growth is the driver of value creation.

    Certainly consumption is too high. However, when interest rates are at the floor people are not incentivized to save either!
    Aug 19 05:01 PM | Likes Like |Link to Comment
  • Most Mutual Funds May Be for Fish: DFA's Funds Aren't [View article]
    To echo the comment above, as a retail investor, you must use an intermediary to access DFA funds and the additional cost completely negates the value add of low portfolio turnover and the low book to market stock selection process.

    Also, when you own 20% of an asset class, your systematic risk will be unavoidably high. That being said, DFA's approach is certainly well researched and based on sound ideas.
    Aug 17 02:06 PM | 1 Like Like |Link to Comment
  • A Basic Accounting Equation Applied to Financial Markets Today [View article]
    I fully understand the velocity component of inflation; too many dollars chasing too few goods, which would be a happy problem for us. However, you should note that the word "inflation" appears only once in the article, and it is in reference to emerging markets, not the U.S. Rather it is currency debasement, the creation of too many currency units, that will destroy our standard of living here in the States. Eventually, we run the risk of the dollar's replacement in global trade.

    On interest rates; I encourage you to be more skeptical or even cynical in your analysis of U.S. policy. "To encourage investing" is a nice PR tool, but in reality it the government cannot afford an increase to its weighted average cost of capital. Remember, those interest rates dictate the rate at which our government borrows money. As Kyle Bass and his team at Hayman Capital estimate, a 1% increase to the government's WACC signifies an additional $150B interest expense!
    Aug 12 11:07 AM | Likes Like |Link to Comment
  • A Basic Accounting Equation Applied to Financial Markets Today [View article]
    I like your thinking in the expansion of the equation; it does present a clearer view. The problem is that liquidation values are lower, and perhaps far lower, than values on a balance sheet.

    Throughout this crisis we have seen bailouts not liquidations.
    Aug 12 10:34 AM | 1 Like Like |Link to Comment
  • EFSF: Too Small? Too Big? Or Just Wrong? [View article]
    Providing weak sovereigns with access to credit at rates not commensurate with the risks involved; isn't this what caused the Euro problem in the first place? Hard to see this ending w/o millions of very angry Germans when this all blows up...
    Aug 11 02:01 PM | 1 Like Like |Link to Comment
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