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Tom Madell  

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  • Strong Evidence That Fund Prices Can Get Too High
    Thu, Apr. 2 DDVAX, FDGRX, FSMVX 1 Comment

    Summary

    • This article provides data that when stock fund/ETF annualized performances get "excessive," their subsequent returns likely will be underperforming.
    • Prior to the current bull market, the last time some categories of funds had huge five-year annualized performances of 16% or more was back at the close of 2010.
    • Over each of the following four years, almost all these top-performing funds in their categories averaged significantly poorer performance than the average yearly performance of funds in general.
    • This suggests that funds with extremely high annualized performance over the prior five years frequently won't be the best places to put your money over the upcoming years.
    • But since so many funds/ETFs currently show 16%+ annualized performances now, investors should look for otherwise good funds which might now appear underperforming, but can likely excel going forward.
  • The Outlook For Bonds For The Remainder Of The Year
    Tue, Feb. 24 BOND, PFRAX, VWITX 2 Comments

    Summary

    • Bonds may not outperform cash, and have some risk of negative returns this year.
    • The Fed will raise short-term interest rates this year, and prices likely will fall in anticipation.
    • Some types of bond funds appear to have better prospects than others.
    • Three funds that I particularly recommend at this point are hedged foreign bonds (PFRAX), intermediate-term municipal bonds (VWITX), and the PIMCO Total Return Active ETF (BOND).
  • Can Quarterly Asset Allocations Predict Future Stock Performance? If So, What Action Should Many Investors Take Now?
    Wed, Feb. 4 VOO 3 Comments

    Summary

    • Most investors try to formulate appropriate allocations to stocks vs. bonds and cash.
    • But do these allocations predict future returns? And if so, how far ahead?
    • Ten years of quarterly allocation data were analyzed.
    • High allocations to stocks were associated with significantly higher returns over the following three years and vice versa.
    • Since research based allocation judgments currently suggest lower stock allocations, to avoid low returns, investors may want to have a lower than normal allocation now.
  • Crucial Facts When Evaluating Unmanaged Vs. Managed ETFs/Funds
    Dec. 1, 2014 DODGX, SPY, VOO 1 Comment

    Summary

    • In discussing why ETFs and index funds are doing better than managed funds, many fail to consider some primary but often unrecognized reasons why this may be true.
    • Most Large Cap managed funds attempt to provide a "smoother ride" than S&P 500-type ETFs and mutual funds, and thus, typically include foreign stocks as well as some cash.
    • But this diversification comes at a cost, especially recently, since these non-US-stock investments have badly trailed US stocks over the last 5 years.
    • S&P 500-type ETFs/funds are very heavily weighted to the largest capitalization stocks and will only outperform when these stocks are outperforming most other stocks as they are now.
    • Index ETFs/funds are excellent choices if you are willing to assume all risk management yourself, especially in an overvalued market; professional managers can help less hands-on investors avoid overvalued stocks.
  • What Lies Ahead For Stocks? See What Today's Bond Prices Suggest
    Aug. 29, 2014 VOO 6 Comments

    Summary

    • Over the last decades, there has been a very high relationship between the yearly performance of the S&P 500 index and long-term treasury bond performance.
    • During the last 15 years (1999-2013) that relationship has been highly negative with bond prices serving to essentially enable one to predict stock prices with much accuracy.
    • However, during the earlier 12 years (1987-1998), while there was still a very strong relationship, the direction was positive, meaning that stock and bond prices moved in sync.
    • Starting this year, however, the relationship reverted back to that found earlier - stock and long-term bond prices were again moving in the same direction.
    • The reasons for the strong correlations, but in opposite directions, are discussed and the implications for both future stock and bond prices were spelled out.
  • Researching And Managing Your ETFs/Funds Can Give You A Huge Advantage
    Aug. 1, 2014 VTI 4 Comments

    Summary

    • A more and more recurrent theme in fund investing is that broad index funds will be the best choice for investors.
    • Most managed funds tend to perform no better than the entire stock market but with higher fees.
    • Fund returns for the entire stock market as well as for non-core categories likely will vary significantly from each other over periods lasting 5, 10, or more years.
    • Knowledge of these discrepant returns, as well as careful specific fund selection, can point to investments that will outperform the core market averages by significant amounts.
    • Data is presented that shows that even nearly 15 years ago, funds could be identified that would increase an investor's annualized return on each 10K investment by about $5K.
  • Investors' Choices Of Funds/ETFs Tend To Underperform
    Apr. 1, 2014 AGG, BND, BSV 4 Comments

    Summary

    • Investors are apparently not very good at picking winning mutual funds or ETFs since their most popular choices tend to underperform.
    • ETF investors' choices when held for the longer term perform more poorly than mutual fund investors' choices.
    • ETF investors in particular may tend to pick sub-categories within the stock and bond markets that while perhaps appealing at the time turn out "not the best places to be".
    • Investors can seek out investment companies whose offerings show a majority of market-beating ETFs/funds as compared to those popular funds frequently selected by investors.
  • Planning For The Winding Down Of The Bull Market
    Editors' Pick • Feb. 4, 2014 VDC, SPY, DIA 18 Comments
  • Sector Funds: It May Be Best To Keep These To A Minimum
    Jan. 3, 2014 VB, VDC, VDE 3 Comments
  • The Stock Market Is Currently Overvalued And Irrational According To 2013 Nobelist
    Oct. 30, 2013 13 Comments
  • An Alert To Investors
    Oct. 15, 2013 JNK, VB, VBK 7 Comments
  • Many Types Of ETFs Could Be Facing Tougher Times Ahead
    Sep. 5, 2013 FYC, JKK, PXSG 1 Comment
  • Better Than Buy And Hold Over The Last 13 Years
    Jul. 31, 2013 SPY 22 Comments
  • Why Your International Allocation May Be Crucial
    Jul. 2, 2013 DXJ, VT, VOO Comment!
  • Simple Tests Of When To Add To Or Pull Back From Your ETFs
    May. 28, 2013 AGG, BND, HYG 9 Comments
  • Do Record Highs Tempt You To Change Your Asset Allocation?
    Apr. 2, 2013 2 Comments
  • Overweighting Value Stocks Should Pay Off
    Mar. 1, 2013 MGK, MGV, RWO 1 Comment
  • Investing In A Potentially Changing Tax Environment
    Nov. 30, 2012 MGK, MLN Comment!
  • Should The Fed's Words Influence Your Asset Allocations?
    Sep. 25, 2012 BOND, VMBS, VFH 1 Comment
  • ETFs Vs. Mutual Funds: A Surprising Analysis
    Editors' Pick • Aug. 3, 2012 BOND, SPY, VDE 34 Comments
  • What Happened To The U.S. Bull Market?
    Jun. 1, 2012 VCR, VNQ 3 Comments
  • Fund/ETF Selection In An Uncertain Environment
    May. 2, 2012 MGC, MGK, MGV Comment!
  • Empirical Buy Vs. Sell Signals Suggest Long-Term Gains Ahead
    Editors' Pick • Mar. 15, 2012 VB, VBK, VBR 21 Comments
  • Bull Markets And Investor Pessimism: Why The Huge Disconnect?
    Feb. 29, 2012 6 Comments
  • Was 2011 A Harbinger Or Merely A Pause?
    Jan. 5, 2012 VNQ, VFH, VPL 1 Comment
  • Stocks Vs. Alternatives: The Fund Investor's Asset Allocation Dilemma
    Oct. 31, 2011 AGG, SPY 9 Comments
  • A Friendly Trend Continues To Suggest More Gains Ahead
    Sep. 1, 2011 VTI, VOO, BND Comment!
  • Determining Buy Signals for Long-Term Investors
    Aug. 1, 2011 10 Comments
  • Why Plunging Investor Sentiment and Consumer Confidence Index Aren't Cause for Concern
    Jun. 14, 2011 9 Comments