Stephen Webb

Vanguard's Sauter: Avoid Irrational Exuberance with Alternatives

Here's a link to the S&P report from December reporting through mid year 2008.

www2.standardandpoors....

Vanguard's Sauter: Avoid Irrational Exuberance with Alternatives

Roger,

I believe investors deserve more "than a fighting chance" when it comes to their portfolio. They deserve to get what they pay for and over the long term, a majority of active managers don't offer anything in terms of results for their fees.

Take a look at the most recent S&P 500 scorecard on active managers vs. their respective benchmark. A few stats standout:

Over a 5 Year period:
-68.6% of all LCAP managers failed to beat the S&P 500
-75.9% of all MCAP managers failed to be the S&P Midcap 400
-77.8% of SCAP managers failed to be the S&P Small Cap 600

I think that's great if your firm is able to continue to offer those investment returns for your clients, while taking less risk to get there. But consider yourself in a miscropic minority compared to your peers.

The Penny-Pincher's All-ETF Portfolio

True that strategies providing low expense ratios are appealing in tough economic times. But given the current high levels of correlation between securities, both across the market and within asset classes, I'm not sure I'd be pouring money into a diversified basket of stocks that track an index at the moment.

Don't get me wrong, I'm an advocate for frugality minded investing, but is now the time to be trumpeting strategic allocations because of their expenses?

Five Missing Pieces to the Stimulus Plan

Wow, holding both our govt and private sector leaders accountable? What a concept.

You touch on it, but I have serious doubts if "the old political game of lowering expectations so it's easier to claim success" will ever be abandoned.

While our country yearns for this kind of leadership, where those in charge will go on record for making predictions and work transparently as they strive to achieve them, who would actually do this?

Call me a cynic, but I think your ideas, however admirable, are probably more of a pipedream.

Beware Potential New VIX Products

From different viewpoints, I think you both touch on the fact that a lot of unknowns exist with these new products and each investor should take precaution accordingly.

This includes being honest with their own level of sophistication and using products you firmly understand.

I'd also like to second ETF Expert's question and ask for other suggestions on alternative volatility plays.

Google Beats for Q4

The stock still holds volatility at 45%. If you can stomach it in your portfolio, by all means buy, buy, buy.

The Scariest Chart Ever

Some additional context that's been previously reported:

The cost of the bailout ($4.6165 trillion) exceeds the inflation adjusted cost of the Marshall Plan, New Deal, S&L Bailout, Nasa's Lifetime Budget, the Korean, Vietnam, and Iraq wars and also the Lousiana Purchase, combined ($3.92 trillion).

boingboing.net/2008/11...

Exclusive Interview with Jim Rogers: Inflation Is Coming

I would be (and am) very concerned of what consequences will result if China quits buying US Bonds.

Navigating the ETF Marketplace in 2009

I agree wholeheartedly with all of the thoughts and look forward to the day the "unsustainable fluff" ETFs are purged from the market and no longer available.

Don, in addition to financing their ETF ideas, what other methods of accountability should issuers be employing?