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  • Naive Graham: Passive Investing According To The Master [View instapost]
    When you say it was "slightly worse for monthly updates with 3 month look back....", do you just mean for CAGR? Seems like MAXDD would be greatly reduced, at the probable cost of more trading. Would be interesting to know how much more trading, and how much less MAXDD, if this is true.
    Mar 14, 2015. 02:52 AM | Likes Like |Link to Comment
  • Naive Graham: Passive Investing According To The Master [View instapost]
    A 50/50 stock/bond portfolio is not a bad one, but constant rebalancing is not such a great idea. Usually big downdrafts go on a long time (like most of 2000 and 2001). Even rebalancing monthly means you are buying into a falling knife. And often bull markets go on a long time, so monthly rebalancing means you are constantly selling your winner and buying your loser long before the bull is topped. This is why annual rebalancing is about as good as any other, because this long-term effect cancels out any good results from quick rebalancing to buy short-term values.
    Mar 14, 2015. 02:45 AM | Likes Like |Link to Comment
  • Gee Mom, It's A New Global Momentum And Trend-Following Fund Of Funds [View article]
    A lot of wrong stuff in this article and these comments, but perhaps understandable since they were printed so close to the opening of the fund. Hard to know where to start:
    1. All momentum and trend strategies are "backward looking". That's actually their strong point. Any other methods are "forecasting", which as we all know too well is equivalent to just pulling numbers out of your hat. (There's also "fundamentals" but projecting those into the future is also just forecasting.)
    2. The fund uses an average of various months for the momentum picture (1/3/6/12), not just 12 months. This is pretty reasonable. The problem with using one period is that there could have been a dip back on that begin-date which distorts the momentum since then.
    3. The white papers from Faber explain a lot of the research that went into this idea--including back testing--and a lot of it makes good sense. Doesn't mean it will always work, but it makes sense.
    4. Frankly the only thing I really dislike is the high fee. Personally, I think a management fee equal to the acquired fees (about .70% total) would be more than adequate for managing this, since it can be done on any PC--and is only recalculated and reconstituted once a month.
    Jan 20, 2015. 09:01 PM | 1 Like Like |Link to Comment
  • The Facts Are In - MLPs Work Great In IRAs [View article]
    What invalidates an IRA completely is stuff like buying real estate in the IRA and then not keeping it completely "at arm's length". For example, if you do anything to manage a rental property held in an IRA (even just fixing the toilet) you can invalidate the whole IRA and cause the tax catastrophe you mentioned. Owning REITs and MLPs cannot cause this problem, unless you are part of the company's management.
    Sep 10, 2014. 01:35 PM | Likes Like |Link to Comment
  • PHDG And VQT: Positive Returns In Bull And Bear Markets [View article]
    Did this comment accidentally get onto the wrong article? Because otherwise, it's fairly incomprehensible in the context of this article.
    Feb 27, 2014. 04:15 PM | 1 Like Like |Link to Comment
  • The Role Of VQT And PHDG In Diversified Portfolios [View article]
    VQT doesn't pay any dividend while PHDG pays a small one, which pretty well removes the approx. 1% difference between their performance. That said, it's pretty obvious that the lower fee on PHDG does not give any advantage after trading costs, since they do remain about the same. The only advantage I see is the credit risk on VQT that PHDG does not share. But if you plan to hold this as a hedge during scary times equivalent to 2008/2009, this may be an important advantage.
    Feb 27, 2014. 04:04 PM | Likes Like |Link to Comment
  • Why Dividends Are Irrelevant [View article]
    Barring unusual exceptions like Berkshire, dividends are a good discipline for a company, and are an element in locating good companies to invest in. If you want poster children for bad management who should have returned the cash as dividends instead of wasting it on bogus acquisitions, look at HP and MSFT.
    Feb 20, 2014. 03:31 PM | 1 Like Like |Link to Comment
  • Should you hold MLPs in IRAs or 401(k)s? [View instapost]
    Not sure if anyone mentioned another reason NOT to invest in MLPs within IRAs or 401Ks, especially not KMR and EEQ: namely, that you are converting tax-advantaged income into regular income when you withdraw. If you own KMR or EEQ in a taxable account, you not only get to defer income taxes until you sell, you also get long-term capital gains rates if held more than a year. If you hold them in a regular IRA, you already have tax deferral, and when you withdraw money you will pay regular income tax rates, regardless of the source of the gains. Of course, a ROTH IRA or 401K has no tax on withdrawals, but then again it wouldn't matter where you got the gains from either. Seems like there's no point, unless you just think that MLPs are the absolute best long-term investment. But diversification would seem to be a wiser policy.
    Jan 4, 2014. 01:28 PM | Likes Like |Link to Comment
  • 'Central Bank Risk': A Growing Concern [View article]
    Good to have fun here! However, there are some good shrinks and chiropractors who actually try to get you out of their offices for good. The other two are government programs (the Fed is at least quasi-gov), and it's almost impossible to wrench those away from special interests after they get going. It doesn't help when the governmental entity (the Fed in this case) takes on the theme song "I'm just a girl who can't say NO!".
    Nov 27, 2013. 07:14 PM | Likes Like |Link to Comment
  • What's The Point Of RBS's Trendpilot ETNs Anyway? [View article]
    When you compare portfolio strategies, as opposed to just comparing betting strategies, the appropriate comparison is "risk-adjusted return" and not just overall return. For example, it's not appropriate to compare the Trendpilot S&P500 strategy to just that index, but rather to a competing portfolio with similar risk. Perhaps the 60/40 stock/bond portfolio represented by VBINX would be a better comparison. You could also use some of the various gauges of risk-adjusted return like Sharpe or Sortino ratios.

    To me, the two biggest downsides to these ETNS are:
    (1) The exorbitant 1% fee, as you mentioned. If a complex-strategy ETF like PHDG can be run for less than .40%, this should be run for .25%.
    (2) These are ETNs, which expose you to credit risk. And they're run by Royal Bank of Scotland, which would have died in 2008/2009 without massive government support (85 billion pounds, which hasn't been repaid--unlike in the US). And it isn't nationalized, which might mean it was impervious given the central bank's money-printing proclivities.
    Nov 19, 2013. 01:30 PM | 1 Like Like |Link to Comment
  • The Role Of VQT And PHDG In Diversified Portfolios [View article]
    To get a real picture of how VQT/PHDG performs in a downturn, you need to look at charts back to mid-2011 when there was a significant scare (from the European crisis). Compare SPY to VQT, since PHDG wasn't running then. There you'll see a significant hedge happening. It isn't correlated directly day-to-day, but it definitely happens.

    One other note: a small difference in PHDG vs. VQT often shows up in some graphs because VQT doesn't throw off any dividends, where PHDG does. When you consider those, they are just about equal. In either case you need to use limit orders because there's too much bid/ask spread given the limited order volumes.

    (Note: I am long PHDG, VIG, and IVHIX mutual fund.)
    Nov 16, 2013. 04:56 PM | Likes Like |Link to Comment
  • GLD: When Will The Gold Bugs Give In? [View article]
    Gold bugs will not "give in" any more than Catholics, Protestants, or Muslims will "give in". Gold has become a religion to some people, and even losing badly will not undo an "investing religion". It's always "the devil" that causes a bad outcome, whether the devil is the Fed, bankers, speculators, whatever. It's sad, but having an emotional attachment to an investment always brings a bad outcome.

    Note that I'm only assailing having an "investing religion"--please don't think I'm insulting your real religious beliefs. And I do hold gold when it's right, but not because I think it's holy and unassailable.
    Nov 15, 2013. 02:05 PM | 6 Likes Like |Link to Comment
  • 'Central Bank Risk': A Growing Concern [View article]
    OK, it's a good talk, but I don't see any help here--like how does one hedge "central bank risk"? And which risk? For example, if the risk is that they will "taper", then gold is no good because it will go down with stocks and bonds. If the risk is that they'll "hyper" their QE program, then gold is good but so are stocks. If the risk is that everyone will realize that QE doesn't work--well, who knows.
    Nov 6, 2013. 02:58 PM | Likes Like |Link to Comment
  • Buyback ETFs All Hold These 8 Stocks. Are They Winners? [View article]
    You've made a good analysis, but the period involved is too short to prove any investing theme. In that period we had a mini-boom in dividend stocks and a subsequent blow-off, as you mentioned. So a comparison to SDY for this period is not really proving anything. I'd like to see a 10-year comparison (say of the composite of those stocks) to SPY. That would give at least a wider view.
    Nov 4, 2013. 12:30 PM | Likes Like |Link to Comment
  • Markets Should Expect 'More Cowbell' From Yellen Fed [View article]
    Though it won't matter to the Fed, there is absolutely no data to show that MILD deflation is any harm to an economy--quite the opposite. It's only severe deflation that causes the problem--like people putting off purchases to buy it cheaper later--but you'd never know it from Fed actions. It's like they insist on treating a common cold as if it were pneumonia. This behavior is very expensive in the long run.
    Oct 29, 2013. 04:25 PM | Likes Like |Link to Comment