danno

Portfolio Outperformance Due to High Beta?

A caveat for reliance on Beta is that it's highly subjective. Naturally it's backwards looking, but what's important to note is how much it changes as the time period measured changes.

Next, why is the S&P the relevant benchmark here? There are more relevant indices to use, IMHO.

Green Stocks: A Better Way to Play?

Okay


On Sep 28 04:06 PM Tom Konrad wrote:

> Danno,
>
> 1) This is not cherry-picked data... this portfolio was designed
> to be a track the mutual funds at lower cost with more tax efficiency.
> It did not work that way; why I'm trying to do now is figure out
> why. The risk adjustment you suggest is what I'll be looking into
> in the second article in the series. Other adjustments will follow
> if that does not prove sufficient explanation.
>
> a,b, and c) Please read the original article where I constructed
> the portfolio (Click on the very first link in the article), and
> you will understand how all the stocks you object to got there: They
> were selected from the portfolios of the mutual funds I'm comparing
> them to.
>
> 2) I don't know how you can disagree with my analysis, since my analysis
> was "This portfolio outperformed and I'm not sure why, but I'm hoping
> I'm on to something." I have not shown anything yet, except that
> I've stumbled across something worth looking into.

Green Stocks: A Better Way to Play?

I am very skeptical of Dr. Konrad's analysis.

1) To compare returns without adjusting for risk (not to mention management fees, or taxes is foolhardy, at best. A CFA should know better than that.

- The mutual funds are tax-inefficient, have high management fees, and less liquid, and rarely beat the indexes.

- One could have bought a Russell 3000 ETF or other similar Indices and gotten similar returns at lower risk and cost, or it one wanted to stay consistent with the green theme, bought PZD and still taken less risk and earned about 60% ROI.

- Dr. Konrad's inclusion of non green or alternative energy companies certainly undermines his claims as well.

a) SJI - South Jersey is predominantly a regulated energy utility - nothing green about that rate hikes and demand are what drives its profits.

b) what on earth is Citrix doing here? Is this a typo?

c LXU: LSB Industries is still first a manufacturer of bulk chemicals, many of them very nasty. It has a hydronic and ground-source heat-pump business, but it's not a very "clean or green" company

3) Playing such short-term movements is not really investing, but rather trading or speculating. Dr. Konrad hasn't shown us any long-term outperformance, but rather cherry-picked data.