LBill

More Thoughts on Mohamed El-Erian's 'When Markets Collide'

Geoff- Valuable piece. I especially take note of your reflections on market-cap weighted index funds (backward looking) as well as the fundamental-weighting alternatives. I've often wondered whether the Fama-French value and small effects on increasing portfolio returns is simply due to the dilution of market-cap weighting that this introduces.

Foreign ETFs: Is Now the Best Time for International Exposure?

Gary- I've never really understood the concept of stop-loss. If int'l ETFs are down 25-30% now, why would I want to buy and put a stop-loss at another 10% loss? If they're a buy now, wouldn't they be an even better buy at 35-40% down? Why would I want to sell then rather than buy? If I'm stopped out then, when would I get back in?

Income Planning and Safe Withdrawal Rates

whoops, I meant biennially (every 2 years)- I always get those mixed up.

Income Planning and Safe Withdrawal Rates

This is another terrific article Geoff. It's important to consider portfolio risk and portfolio survival probability together. A high-risk port with an 80% survival target could result in lethal drawdowns over a 5-year period. IMO, it makes more sense to review and reset annually or at most bi-annually than it does to wait 5 years.

A Simple Momentum System for Beating the Market

There can be long periods when markets are not trending and price keeps crossing above and below the 10-month (or whatever) moving average one is using to buy or sell. For example, if I were using PCRIX as my commodity investment there were two buy-sell round trips in 2005 and four round trips in 2006 which ground out loss after loss. I wouldn't have been able to stay with it over that 2 year period - would you?

Is the Investment World Flat?

Since diversifying between domestic and foreign stocks presently doesn't offer much diversification "bang for the buck," not much in total portfolio risk-adjusted return is likely to be lost for awhile by being under-diversified globally so it seems of minor importance at least for a time. Why not look for better ways to diversify until global equity market correlations actually do become smaller? If you had diversified into foreign stocks 10-15 years ago, when they were not as highly correlated with the U.S. market and were not performing as well, that would have paid off handsomely. Might be OK to do now if it helps you sleep better, but I wouldn't count on as big a payoff as waiting until global markets de-synchronize a bit.