American in Paris

The Lost Decade? Not for Some Asset Classes

Ah, but the new millenium started Jan 1, 2001.

The year 2000 was the last year of the last millenium.

Sloppy, sloppy ...


On Dec 31 11:52 PM Windsun33 wrote:

> Jan 1 2000 until Dec 31 2009 is 10 years.

Seeking High-Alpha, Low-Beta Countries (Part I)

So to diversify my portfolio, I should add the low beta countries such as Egypt, Malaysia, Philippines, Japan, Morocco? The lower the beta, the more the diversification.

My portfolio is leveraged. So diversification is at the center of my concerns.

Is that correct?

Seeking High-Alpha, Low-Beta Countries (Part I)

Why such a short data period? Are the betas stable over longer periods?

Did you check the error terms to see if they were white noise?

Hint: I was a very good time series analyst in a previous life.

ETFs Make Case for Emerging Market Stocks over Emerging Market Bonds

I am skeptical of using past performance to guide future portfolio allocations. As long as the correlation is less than 1, emerging market bonds have a place ....

$59 Billion Dubai Debt Default Could Have Much Wider Implications

The Dubai real estate market has plunged and is probably still way over-valued.

Why would someone want to honor a debt obligation that is more than the value of the underlying property?

Also ask yourself the question, is the prosperity of Dubai real or artificial?

The city strikes me as artificial. It lives off the oil money, not its own services or products.


On Nov 26 09:10 PM Maha Lesch wrote:

> Over all Dubai GDP was 37 billion in 2005, at 15% growth this would
> be around 55 million by 2008. Now 16% of that number comes from real
> estate developments. that is around 9 billion. I am puzzled where
> the 50-80 billion numbers came from. Dubai income from its "little"
> oil alone is 2 billion/day. I see no fear of a default. What I see
> is probably a tactical move that was overblown out of proportions.
> Markets hate uncertainty, once more clarity is available into this
> situation, markets will surge on the same "bad" news it declined.

Why the Cheapest ETFs Aren't Necessarily the Best

AGG is veru popular because it has a liquid options market. BND does not.

It is very difficult to hedge or leverage BND.

Global Markets in Review: Risky Assets Disconnect from Fundamentals

Buy and hold works well when the portfolio is well defined. The applicable portfolio is the universe of financial assets, not just American stocks and bonds.

Those of us who have 20% to 30% in cheap emerging market index funds are quite happy.

It's takes 15 to 20 years of continuous stock picking to isolate true talent from noise.

Not encouraging for stock pickers ....


On Oct 19 12:29 PM Value Added wrote:

> Buy and hold has performed worse than that, my friend. You wrote:
>
> "The Dow first broke above 10,000 more than ten years ago in 1999
> and has since done so on 26 occasions. Yes, a ten-year buy-and-hold
> index investor has had no capital gain over the period!" This neglects
> inflation, so in fact buy and hold has *lost* you more than 25% (official
> CPI). In reality, because CPI tends to under-report, you've probably
> lost more than that.
>
> The only way to beat the market is to identify winning horses early
> in the stretch. Index investing is a losing proposition.

Diversifying Your ETF Portfolio with Low-Correlating Assets

I don't think anyone has shown that stop loss orders is a good strategy. If you have bought well diversified index funds and ETFs, then a stop loss merely locks in a loss. The best strategy is to buy and hold since broad indices will recover.

The only reason superficially compelling reason for using stop loss orders if it you have a need for cash in the near future. For example, retirement.

But if you need cash in the near future and use stop loss orders on your equity portfolio, what you are really saying is that you misallocated your portfolio - too much to volatile assets like equities and too little to cash and bonds.

To me stop loss is simply an admission that you didn't properly diversify and rebalance your portfolio.

Anyone who used stop loss last fall locked in immense losses. They look foolish now because market re-entry has largely proven to be a failure.