hmorgan's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/18/comments http://seekingalpha.com/article/129911-why-i-m-bullish-on-homebuilders?source=feed#comment-454799 454799 I have to agree with you on this one. Nice post. Another beaten down inflation sensitive play is REITS (ICF). Obviously there is serious fundamental issues but those seem more than fully reflected in this ETF's price. What are your thoughts there?

Herb Morgan
Efficient Market Advisors, LLC]]> Tue, 07 Apr 2009 10:37:22 -0400 I have to agree with you on this one. Nice post. Another beaten down inflation sensitive play is REITS (ICF). Obviously there is serious fundamental issues but those seem more than fully reflected in this ETF's price. What are your thoughts there?

Herb Morgan
Efficient Market Advisors, LLC]]> http://seekingalpha.com/article/128311-how-to-end-the-credit-crisis?source=feed#comment-451318 451318

On Mar 30 11:45 AM Responsibility wrote:

> Don't forget the trade deficit. The challenges in re-building and
> reinforcing industries should be on high priorities. Incentives are
> needed for other industries on scales as high as, if not more than,
> those for the financial industry.]]> Fri, 03 Apr 2009 18:03:29 -0400

On Mar 30 11:45 AM Responsibility wrote:

> Don't forget the trade deficit. The challenges in re-building and
> reinforcing industries should be on high priorities. Incentives are
> needed for other industries on scales as high as, if not more than,
> those for the financial industry.]]> http://seekingalpha.com/article/127982-we-re-in-danger-of-being-blinded-by-market-bottom-predictions?source=feed#comment-441022 441022 Herb]]> Thu, 26 Mar 2009 11:12:24 -0400 Herb]]> http://seekingalpha.com/article/128045-today-s-data-are-economists-too-bearish?source=feed#comment-440993 440993 Herb ]]> Thu, 26 Mar 2009 11:03:39 -0400 Herb ]]> http://seekingalpha.com/article/128013-painting-the-tape-wednesday-s-suspicious-trading-pattern?source=feed#comment-440980 440980 Cordially,
Herb]]> Thu, 26 Mar 2009 10:57:44 -0400 Cordially,
Herb]]> http://seekingalpha.com/article/127771-time-to-buy-the-homebuilders?source=feed#comment-440931 440931 Thu, 26 Mar 2009 10:40:15 -0400 http://seekingalpha.com/article/127791-the-nar-s-latest-housing-numbers-cutting-through-the-bull?source=feed#comment-439520 439520
Interesting interpretation of the data. I'm happy to take the other side of that trade. You may want to look deeper at the inventory data. The inventory rose 5.1% from January to February, however inventory is down 17% from its high of 4.575mm units in July.

Herb W. Morgan
Efficient Market Advisors, LLC

]]> Wed, 25 Mar 2009 10:25:24 -0400
Interesting interpretation of the data. I'm happy to take the other side of that trade. You may want to look deeper at the inventory data. The inventory rose 5.1% from January to February, however inventory is down 17% from its high of 4.575mm units in July.

Herb W. Morgan
Efficient Market Advisors, LLC

]]> http://seekingalpha.com/article/127391-geithner-s-plan-may-not-be-so-bad?source=feed#comment-436988 436988 Mon, 23 Mar 2009 14:25:23 -0400 http://seekingalpha.com/article/127036-bowling-ball-bounce-for-markets?source=feed#comment-434094 434094
Herb


On Mar 20 01:01 PM THofler wrote:

> Mr. Morgan,
> Loved the article. But allowed me to be pedantic about one point.
>
>
> Any good physical scientist will tell you that "negative feedback"
> leads to stability, whereas "positive feedback" causes instability
> and oscillations. The serious economists use the terms "procyclical"
> and "countercyclical." The dumb procyclical effects we have built
> into our financial system will generate both the booms and the busts.
>
>
> The term you meant to use in the above piece is "procyclical feedback"
> or maybe "adverse feedback." Thanks again for providing some wheat
> to SA and not more chaff.]]> Fri, 20 Mar 2009 18:34:22 -0400
Herb


On Mar 20 01:01 PM THofler wrote:

> Mr. Morgan,
> Loved the article. But allowed me to be pedantic about one point.
>
>
> Any good physical scientist will tell you that "negative feedback"
> leads to stability, whereas "positive feedback" causes instability
> and oscillations. The serious economists use the terms "procyclical"
> and "countercyclical." The dumb procyclical effects we have built
> into our financial system will generate both the booms and the busts.
>
>
> The term you meant to use in the above piece is "procyclical feedback"
> or maybe "adverse feedback." Thanks again for providing some wheat
> to SA and not more chaff.]]> http://seekingalpha.com/article/127036-bowling-ball-bounce-for-markets?source=feed#comment-434092 434092
Herb


On Mar 20 06:17 PM betweenthenumbers wrote:

> I greatly appreciate the tone of this article, that of a humble commentator
> trying to present facts, regardless of the actual content. I'm not
> so keen myself on the Fed's actions - they are literally the most
> powerful organization in the world now, completely on tilt, trying
> to make drastic interventionism the solution to all problems, and
> growing their balance sheet to the size of France's GDP ($2.5T) in
> 6 weeks...but I digress. I can respect his points, and like the way
> they are presented (maybe some tables instead of data points in a
> list).
>
> I really liked the statement "...getting tired of the financial news
> media selecting guests based on their ability to spew extreme and
> absolute clairvoyance about the direction of markets." That shrill
> screaming does nothing but prevent the measured discussion that is
> necessary given the current circumstances. I would even end my months
> long MSNBC boycott to watch a show if they would bring Mr. Morgan
> on.]]> Fri, 20 Mar 2009 18:32:44 -0400
Herb


On Mar 20 06:17 PM betweenthenumbers wrote:

> I greatly appreciate the tone of this article, that of a humble commentator
> trying to present facts, regardless of the actual content. I'm not
> so keen myself on the Fed's actions - they are literally the most
> powerful organization in the world now, completely on tilt, trying
> to make drastic interventionism the solution to all problems, and
> growing their balance sheet to the size of France's GDP ($2.5T) in
> 6 weeks...but I digress. I can respect his points, and like the way
> they are presented (maybe some tables instead of data points in a
> list).
>
> I really liked the statement "...getting tired of the financial news
> media selecting guests based on their ability to spew extreme and
> absolute clairvoyance about the direction of markets." That shrill
> screaming does nothing but prevent the measured discussion that is
> necessary given the current circumstances. I would even end my months
> long MSNBC boycott to watch a show if they would bring Mr. Morgan
> on.]]> http://seekingalpha.com/article/124827-why-this-downturn-won-t-be-like-1929?source=feed#comment-419946 419946
"Because of that, even though we're seeing rising unemployment, foreclosures in these four states rose 46% over the past year while foreclosures in the remaining 46 states fell, in the aggregate, by 2%.

(These statistics reflect foreclosure filings, default notices, auction sale notices, and bank repossessions."


Herb Morgan

]]> Mon, 09 Mar 2009 21:30:42 -0400
"Because of that, even though we're seeing rising unemployment, foreclosures in these four states rose 46% over the past year while foreclosures in the remaining 46 states fell, in the aggregate, by 2%.

(These statistics reflect foreclosure filings, default notices, auction sale notices, and bank repossessions."


Herb Morgan

]]> http://seekingalpha.com/article/123750-shadow-banking-system-death-from-nowhere?source=feed#comment-410622 410622 ]]> Tue, 03 Mar 2009 06:26:20 -0500 ]]> http://seekingalpha.com/article/122330-john-hussman-lower-valuations-imply-higher-long-term-returns?source=feed#comment-401626 401626 Tue, 24 Feb 2009 12:41:31 -0500 http://seekingalpha.com/article/43535-five-opportunities-to-consider-amidst-this-selloff?source=feed#comment-93023 93023 Tue, 07 Aug 2007 00:11:15 -0400 http://seekingalpha.com/article/37690-i-believe-in-etfs-do-you?source=feed#comment-88087 88087 Thanks for making my day.

Herb Morgan
Efficient Market Advisors, LLC]]> Fri, 08 Jun 2007 10:53:54 -0400 Thanks for making my day.

Herb Morgan
Efficient Market Advisors, LLC]]> http://seekingalpha.com/article/4645-dow-15-000-etfs-ivv-iwv-iyy-spy-vti?source=feed#comment-87501 87501 I hope you had a change of heart somewhere along the way. From our perspective, the argument still holds. Wishing you the best.

Herb]]> Fri, 01 Jun 2007 14:11:01 -0400 I hope you had a change of heart somewhere along the way. From our perspective, the argument still holds. Wishing you the best.

Herb]]> http://seekingalpha.com/article/17331-private-equity-etf-sign-of-a-top?source=feed#comment-65814 65814
Herb Morgan]]> Sat, 23 Sep 2006 10:31:40 -0400
Herb Morgan]]> http://seekingalpha.com/article/16827-get-your-rally-shoes-on-because-this-rally-s-got-legs?source=feed#comment-64036 64036 Having spent a long time in the actively managed world I make this statement from more than just academic theory. I do believe that Asset Allocation determines 94+% of a portfolios total return. For this reason we put the lion's share of our effort into the strategic and tactical elements of Asset Allocation, and hence the interest in fundamental data.

I hope that clarifies things. Again, thank you for your question.

Herb]]> Fri, 15 Sep 2006 13:01:30 -0400 Having spent a long time in the actively managed world I make this statement from more than just academic theory. I do believe that Asset Allocation determines 94+% of a portfolios total return. For this reason we put the lion's share of our effort into the strategic and tactical elements of Asset Allocation, and hence the interest in fundamental data.

I hope that clarifies things. Again, thank you for your question.

Herb]]> http://seekingalpha.com/article/16707-john-hussman-don-t-bet-on-the-markets-until-they-outpace-t-bills?source=feed#comment-63743 63743 Well articulated commentary. You intimate throughout that the market collectively has it wrong. Have you don any work related to the markets ability to act as a leading indicator in these matters, or have any specific academic work you could site. Thanks in advance, and congrats on a nice article.]]> Thu, 14 Sep 2006 05:39:43 -0400 Well articulated commentary. You intimate throughout that the market collectively has it wrong. Have you don any work related to the markets ability to act as a leading indicator in these matters, or have any specific academic work you could site. Thanks in advance, and congrats on a nice article.]]> http://seekingalpha.com/article/4728-where-s-the-traditional-gold-inflation-link-etf-gld?source=feed#comment-2163 2163 Mon, 05 Dec 2005 11:54:07 -0500 http://seekingalpha.com/article/4535-etfs-an-approaching-paradigm-shift-for-wealth-management?source=feed#comment-2103 2103
Herb Morgan
Efficient Market Advisors, LLC
Chief Investment Officer
efficient-portfolios.c...]]> Tue, 29 Nov 2005 12:33:21 -0500
Herb Morgan
Efficient Market Advisors, LLC
Chief Investment Officer
efficient-portfolios.c...]]> http://seekingalpha.com/article/3679-how-etf-investing-has-changed-in-the-last-three-years?source=feed#comment-1792 1792 I normally caution investors against rebalancing at yearly intervals as you suggest above. For that matter I caution against rebalancing at quarterly or semi-annual intervals as well. The "optimal" frequency for rebalancing is not actually a frequency at all. Rather, one should periodically (at least quarterly) review their portfolio for statistically relevant deviation from their target asset allocation. If the deviation from the target is found to be statistically relevant, it can be assumed that the risk level of the portfolio has risen beyond its intended level and rebalancing should occur.

There is also one mistake in your comments about ETF Managed Accounts. Ameritrade's product "Amerivest" was second to market after my own firm's launch of the Efficient Market Portfolios accounts in August of 2004.

Amerivest is more a tool of convenience for the do it yourself investor rather than an actively managed ETF account. Investors can use Amerivest to create asset allocation models, invest, and rebalance. One should note the distinction between hiring a money management firm vs. employing a web based service.

Best Regards,

Herb Morgan
etfaccount.com



in August of 2004.]]> Mon, 24 Oct 2005 00:55:32 -0400 I normally caution investors against rebalancing at yearly intervals as you suggest above. For that matter I caution against rebalancing at quarterly or semi-annual intervals as well. The "optimal" frequency for rebalancing is not actually a frequency at all. Rather, one should periodically (at least quarterly) review their portfolio for statistically relevant deviation from their target asset allocation. If the deviation from the target is found to be statistically relevant, it can be assumed that the risk level of the portfolio has risen beyond its intended level and rebalancing should occur.

There is also one mistake in your comments about ETF Managed Accounts. Ameritrade's product "Amerivest" was second to market after my own firm's launch of the Efficient Market Portfolios accounts in August of 2004.

Amerivest is more a tool of convenience for the do it yourself investor rather than an actively managed ETF account. Investors can use Amerivest to create asset allocation models, invest, and rebalance. One should note the distinction between hiring a money management firm vs. employing a web based service.

Best Regards,

Herb Morgan
etfaccount.com



in August of 2004.]]> http://seekingalpha.com/article/2580-clear-and-present-danger-for-owners-of-leveraged-closed-end-muni-funds?source=feed#comment-1086 1086 Thank you for your questions. I don't think a reasonable short opportunity exists for a couple of reasons.
1. Limited share availability
2. High borrowing costs (You must pay the dividends on shorted shares)
3. The inversion of the yield curve is not highly likely in my opinion.

The liquidity issue I speak of is a combination of small market capitalization and the fact that most investors tend to buy and hold these vehicles. These bond products are mostly held by full service brokerage firms on behalf of retail customers. These retail brokers are transaction driven and are historically quick to respond to any event that could justify such transactions. My view is that in the event of a dividend cut or omission these owners will be pressured into a sale resulting in a supply shift scenario.

Herb Morgan
efficient-portfolios.c...]]> Mon, 12 Sep 2005 10:38:05 -0400 Thank you for your questions. I don't think a reasonable short opportunity exists for a couple of reasons.
1. Limited share availability
2. High borrowing costs (You must pay the dividends on shorted shares)
3. The inversion of the yield curve is not highly likely in my opinion.

The liquidity issue I speak of is a combination of small market capitalization and the fact that most investors tend to buy and hold these vehicles. These bond products are mostly held by full service brokerage firms on behalf of retail customers. These retail brokers are transaction driven and are historically quick to respond to any event that could justify such transactions. My view is that in the event of a dividend cut or omission these owners will be pressured into a sale resulting in a supply shift scenario.

Herb Morgan
efficient-portfolios.c...]]> http://seekingalpha.com/article/1609-designer-index-funds-for-the-wealthy?source=feed#comment-823 823
I see several problems with the deisigner index:

1. By selling a loser you are reducing correlation to an index. (Who knows how that name will perform after it has been sold)

2. 1% to 2% Seems outrageous for one index creation. I would seriously doubt even the most creative statisticians ability to justify the expense for the cap gain savings. After all, considering that they are holding winners what capital gains would be offset with the harvesting strategy? Are we talking about capital gains from another investment, art, or collectibles perhaps? It's not to get a $3,000 loss annually.
3. Index Funds and expecially ETFs are already tax efficient and have a history of not distributing much in the way of gains. (i.e. when ETFs redeem shares, they distribute their lowest basis shares first)
4. Almost all asset classes have more than one ETF today. Example if one had a position in large cap stocks represented by the SP Index, he/she could swap if for another large cap ETF of say Russell if they were in a loss on the position.

In conclusion these products seem like little more than a fee grab by their creators. Buyer beware.

Herb Morgan
Chief Investment Officer
Efficient Market Advisors, LLC
efficient-portfolios.c...]]> Sun, 28 Aug 2005 23:18:39 -0400
I see several problems with the deisigner index:

1. By selling a loser you are reducing correlation to an index. (Who knows how that name will perform after it has been sold)

2. 1% to 2% Seems outrageous for one index creation. I would seriously doubt even the most creative statisticians ability to justify the expense for the cap gain savings. After all, considering that they are holding winners what capital gains would be offset with the harvesting strategy? Are we talking about capital gains from another investment, art, or collectibles perhaps? It's not to get a $3,000 loss annually.
3. Index Funds and expecially ETFs are already tax efficient and have a history of not distributing much in the way of gains. (i.e. when ETFs redeem shares, they distribute their lowest basis shares first)
4. Almost all asset classes have more than one ETF today. Example if one had a position in large cap stocks represented by the SP Index, he/she could swap if for another large cap ETF of say Russell if they were in a loss on the position.

In conclusion these products seem like little more than a fee grab by their creators. Buyer beware.

Herb Morgan
Chief Investment Officer
Efficient Market Advisors, LLC
efficient-portfolios.c...]]> http://seekingalpha.com/article/786-alan-abelson-on-small-cap-etfs-iwm-ijr-iwc-pzi?source=feed#comment-792 792 Liqudity is essentially the main barrier to entry for money managers...we don't like to buy things we can't sell...quickly.
So now we are offered the liquidity of ETFs with the asset class characteristics of MicroCaps. But I see a problem.

The problem is that the sponsors (Barclays & Powershares) seem to recognize the illiquidity of the asset class too. Barclays for example has 1/2 of the portfolio in the bottom 1000 securities of their small cap portfolio (Russell 2000 IWM) causing serious overlap. On top of that, they go all the way down to companies with a $50mm market cap.....this could potentially cause extreme price movements in these smallest of companies should investors flock to create or redeem shares.
This may be a classic case of the fund business creating product where demand exists despite the challenges presented by the market place.

Herb Morgan]]> Tue, 23 Aug 2005 21:22:12 -0400 Liqudity is essentially the main barrier to entry for money managers...we don't like to buy things we can't sell...quickly.
So now we are offered the liquidity of ETFs with the asset class characteristics of MicroCaps. But I see a problem.

The problem is that the sponsors (Barclays & Powershares) seem to recognize the illiquidity of the asset class too. Barclays for example has 1/2 of the portfolio in the bottom 1000 securities of their small cap portfolio (Russell 2000 IWM) causing serious overlap. On top of that, they go all the way down to companies with a $50mm market cap.....this could potentially cause extreme price movements in these smallest of companies should investors flock to create or redeem shares.
This may be a classic case of the fund business creating product where demand exists despite the challenges presented by the market place.

Herb Morgan]]> http://seekingalpha.com/article/1595-more-on-all-etf-portfolios?source=feed#comment-791 791 While past performance is no guarantee of future results and investors may lose money, and our accounts ar not guaranteed or FDIC insured......here is what I have for actual net of fees and expenses performance for this year:

6-10 Year Portfolio Composite +2.78% through 7/31/2005
11-19 Year Portfolio composite +7.07% through 7/31/2005
20 + Year Portfolio Composite +7.19% through 7/31/2005

Thanks for asking.

Warmest Regards,

Herb Morgan
efficient-portfolios.c...]]> Tue, 23 Aug 2005 21:04:17 -0400 While past performance is no guarantee of future results and investors may lose money, and our accounts ar not guaranteed or FDIC insured......here is what I have for actual net of fees and expenses performance for this year:

6-10 Year Portfolio Composite +2.78% through 7/31/2005
11-19 Year Portfolio composite +7.07% through 7/31/2005
20 + Year Portfolio Composite +7.19% through 7/31/2005

Thanks for asking.

Warmest Regards,

Herb Morgan
efficient-portfolios.c...]]> http://seekingalpha.com/article/785-a-comment-on-all-etf-portfolios?source=feed#comment-790 790 Tue, 23 Aug 2005 20:57:33 -0400 http://seekingalpha.com/article/785-a-comment-on-all-etf-portfolios?source=feed#comment-788 788
I think that anyone could do OK on their own with basic asset allocation. They need to have the ambition to do it however, and I find most investors are too busy with their daily lives and business to have any interest. We provide robust online reporting capabilities for our clients with dozens of reports, such as drawdown and gain/loss……I find that these are rarely used. Clients tell me that the subject bores them!



However, I think a manager can earn his/her fees by adding value as follows:

Execution – Using limit orders (Maybe 20 bps to 60 bps per year)

Tax Loss Harvesting - Taxable Accounts, swapping one ETF for another in “similar]]> Mon, 22 Aug 2005 19:32:53 -0400
I think that anyone could do OK on their own with basic asset allocation. They need to have the ambition to do it however, and I find most investors are too busy with their daily lives and business to have any interest. We provide robust online reporting capabilities for our clients with dozens of reports, such as drawdown and gain/loss……I find that these are rarely used. Clients tell me that the subject bores them!



However, I think a manager can earn his/her fees by adding value as follows:

Execution – Using limit orders (Maybe 20 bps to 60 bps per year)

Tax Loss Harvesting - Taxable Accounts, swapping one ETF for another in “similar]]> http://seekingalpha.com/article/785-a-comment-on-all-etf-portfolios?source=feed#comment-171 171 I have been following the post and need to respectfully disagree with the statment "If you have a lot of money and you are paying for advice I think you should be getting more than just ETFs"

I agree that anyone paying for advice should be getting other services in addition to investment management. This could include advice on real estate transactions, insurance, financial and estate planning, and other areas.

However, if the author is suggesting that ETF's alone cannot make a complete and total portfolio solution, then he/she is off base. Further, a statment such as the one made did not quantify the amount being paid for the advice so it would be difficult to judge the value. I believe the author is suggesting that individual stocks should be included in a portfolio to justify an unnamed fee structure.

It is my opinion that individual stocks should be included if they are in an area where the manager has an extremely high level of conviction, and the client has a tolerance for the risk associated with individual stock ownership.

Regardless of the need, or the level of fees or the size of a portfolio; indexing can present a total solution and ETF's are now of sufficient quantity to cover every core asset class. Academic work in the area of portfolio returns has concluded that it is asset allocation rather than security selection which determines portfolio results.

All the best, thank you for allowing my post.

Regards,
Herb Morgan
Chief Investment Officer
Efficient Market Advisors, LLC
San Diego, CA]]> Mon, 22 Aug 2005 13:10:16 -0400 I have been following the post and need to respectfully disagree with the statment "If you have a lot of money and you are paying for advice I think you should be getting more than just ETFs"

I agree that anyone paying for advice should be getting other services in addition to investment management. This could include advice on real estate transactions, insurance, financial and estate planning, and other areas.

However, if the author is suggesting that ETF's alone cannot make a complete and total portfolio solution, then he/she is off base. Further, a statment such as the one made did not quantify the amount being paid for the advice so it would be difficult to judge the value. I believe the author is suggesting that individual stocks should be included in a portfolio to justify an unnamed fee structure.

It is my opinion that individual stocks should be included if they are in an area where the manager has an extremely high level of conviction, and the client has a tolerance for the risk associated with individual stock ownership.

Regardless of the need, or the level of fees or the size of a portfolio; indexing can present a total solution and ETF's are now of sufficient quantity to cover every core asset class. Academic work in the area of portfolio returns has concluded that it is asset allocation rather than security selection which determines portfolio results.

All the best, thank you for allowing my post.

Regards,
Herb Morgan
Chief Investment Officer
Efficient Market Advisors, LLC
San Diego, CA]]>