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Doug12

Doug12
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  • Yes, Me Worry [View article]
    I agree with you Bret, even though we cannot time we can manage the risk in our portfolios and I feel we are at a time when many indicators would indicate to be cautious and manage one's risk in their portfolio. One of the comments before said that this type of risk management under performs the market but I do not agree.

    I mentioned in another post that Prem Watsa with Fairfax financial does manage his risk when he feels valuations have gotten too pricey. He started hedging early before the subprime crisis and under performed the S&P in 2004-2006 but out performed the index in 2007-2008. His actions allowed him to out perform the index from 2004 to 2008 by approximately 55%.

    That to me is not under performing the market but the opposite. I have cash and EDV etf along with some gold to help hedge and prepare if equities go on sale.

    Managing risk does not mean all out but it does mean setting yourself up to prosper from a correction or crash. Thanks for this and all your articles.
    Aug 15 06:56 PM | Likes Like |Link to Comment
  • Tech Bubble 2.0 - Prem Watsa's List Of Social Media Stocks To Avoid Or Short [View article]
    I think many of the social media stocks are great businesses but that seems to be baked into their prices in a way that indicates extreme speculation that the businesses can grow into the prices.

    I do not think value needs a PE of 15 on stocks like Facebook but it would be nicer at 25 or 35 (closer to their expected EPS growth in the next five years) instead of 79.

    A few people are bashing Watsa as not knowing enough about these social media stocks but he sees risk. As I have posted before:

    "Prem Watsa who manages Fairfax financial in Canada takes action with hedges when he sees overvalued markets. He started hedging early and under performed the S&P in 2004-2006 but out performed the index in 2007-2008. His actions allowed him to out perform the index from 2004 to 2008 by approximately 55%. He is hedging again."

    Much of Watsa's success has been gaining during market crashes - up 11% in 2002, up 48% in 2007, and up 21% in 2008. I do think overpaying for assets can be risky and Watsa has shown most of the time he has succeeded in good returns in bad markets.

    Cheers
    Aug 6 12:47 AM | 3 Likes Like |Link to Comment
  • Is A Stock Market Correction Imminent? [View article]
    Thanks labradoodle, I am glad it has been doing well, it does smooth out the up and down days.

    I have LT treasuries fund also and it has been to hedge any correction but I have been pleasantly surprised that it has gone up when indexes are up.

    The only thing we need to watch for is interest rate hikes. If they happen I understand it will put big downward pressure on our funds. If there is a significant correction I will sell off the fund for cash to purchase good value equities.

    All the best.
    Jul 28 10:31 AM | Likes Like |Link to Comment
  • The Day I Sold Everything: Questions Answered [View article]
    I respect the author's decision even though it is not the same as what I am doing. We all look at the market differently with our own strategies.

    Buy and hold people ride it out, momentum people ride the wave and some people will take actions when they feel risk is high to limit it's impact on their portfolio. Each system can work if executed well.

    Prem Watsa who manages Fairfax financial in Canada takes action with hedges when he sees overvalued markets. He started hedging early and under performed the S&P in 2004-2006 but out performed the index in 2007-2008. His actions allowed him to out perform the index from 2004 to 2008 by approximately 55%. He is hedging again.

    I am sure other strategies may have done well also but this shows how taking an action even too early worked for Watsa. The Author is taking an action too that may save himself and his clients capital even if it risks missing out some gains.

    Preservation of capital has a role in a portfolio.
    Jul 28 01:07 AM | 4 Likes Like |Link to Comment
  • Is A Stock Market Correction Imminent? [View article]
    I find it interesting that currently the long term treasuries are running up since the end of last year while the S&P still goes up. Usually they run in different directions.

    To me this indicates there are some investors are nervous about valuations and are looking for safety. The long term treasuries are the only reasonable yield with low interest rates for shorter terms.

    One can never predict the herd actions of the market to predict it will fall. However they can manage their portfolio's risk when valuations get high. This can be done with some hedging like the long term treasuries and without exiting the market.
    Jul 28 12:33 AM | 1 Like Like |Link to Comment
  • Why I Bought Amazon.com After It Dropped 10% [View article]
    It all depends on an investor's style. People do make money on what I consider very risky investments because someone else will pay more for it.

    For a value investor it is impossible to believe that any company can perform well enough to make an over 500 PE and over 25 PEG ever be justified. It is only speculation.

    To invest at this valuation is more on trading price movements and hoping others will pay a premium rather than fundamental evaluation of the company. I have never been able to do that well at predicting others investments but wish I could, would make me rich.

    All the best with it.
    Jul 28 12:19 AM | Likes Like |Link to Comment
  • Amazon Is Not Worth Your Analytical Firepower [View article]
    So right, even though the service is good, as an investment I do not think any company could perform well enough to justify an over 500 PE and 24 PEG particularly if their vision is not on the bottom line.
    Jul 26 09:58 AM | 2 Likes Like |Link to Comment
  • Correction 2014: Are You Prepared? [View article]
    Does anyone worry about the US dollar if the FED keeps printing money?

    As long as the US dollar is the world currency they can get away with it but some countries have been looking at ways to deal in other currencies. This issue could increase particularly now that FATCA is in and the IRS want to get into other countries banking institutions.

    If the dollar loses its world currency standing as a result of the printing of money to not live up to a debt issues there may be significant currency devaluation.

    It may not happen but I do not think the FED pumping the economy is without risk. IMHO
    Jul 5 08:11 AM | Likes Like |Link to Comment
  • Correction 2014: Are You Prepared? [View article]
    Even though we cannot time the market there are many signs that say your risk is higher than it was in 2009. Market Cap to GDP, no volatility, lower volumes, ignoring bad news, high use of margin..... The party may go on but it does have more risk. As for the fed you can print money to try to cover up fundamental weakness but it seems to be artificial and not dealing with the issue.
    Jun 6 03:18 AM | 5 Likes Like |Link to Comment
  • What Does The Low Market Volatility Mean? [View article]
    Hi all, no one knows where the market is going and when. If they did they would have outstanding returns. I appreciate the article as I have been concerned about the Shiller PE, Market Cap to GDP ratio, length of this bull run and now low volatility. We do not know when a market may change directions but knowing there could be signs can help us not be caught off guard. Some hedges can be put into portfolios to soften a severe correction when signs of overvaluation are noticed. Thanks for the article John.
    May 4 12:18 PM | Likes Like |Link to Comment
  • The Effect Of Dividends On Stock Prices: Is There A Connection? [View article]
    Thanks for the article. I had always thought for some stocks there might be a temporary price adjustment when the dividend was paid as traders collect and then get out. For the long term though I have never felt the advancement of a dividend paying stock was held up by the dividend. For dividend growth companies it generally means the real return from the company increases, the value of the company increases and usually this is reflected in stock price increases. Never have understood the other view.
    May 4 11:34 AM | Likes Like |Link to Comment
  • Google's Out-Of-The-Box Stock Split, And More [View article]
    Let me see, I go to the stock market and have a choice of class A GOOGL or class C GOOG.

    Class A has voting rights and is not being used for compensation while Class C with no voting rights, is being diluted through stock options for staff and takeovers. I would think that Class A would be valued higher by investors.

    We will see. Volume after the split for each issue should be interesting to see where people feel the quality is.
    Mar 29 01:55 PM | Likes Like |Link to Comment
  • Microsoft Just Killed Itself, Apple Wins Again [View article]
    Microsoft has built it's business on creating software that goes on other companies hardware. This is the core business that made them a big company.

    Surface to me is never going to be competition for the other products like I pads and was just developed because of previous Microsoft management's refusal to make the software available to the I pad. I think they must have though if surface was successful it would be the distribution platform for Office.

    Google has android on the most phones now, in the past MS windows was on the most personal computers. To compete with Apple both companies built software for the larger market of hardware. Apple has focused on their hardware more than wide distribution of their software. Microsoft should not try to compete with Apple on hardware but rather have their software offered on as many other companies hardware as they can.

    Imagine if Apple had made their MAC desktop operating system available to all the PC hardware. Windows and Microsoft may never have grown so big.
    Mar 22 11:06 AM | 1 Like Like |Link to Comment
  • Strategies For When The Bull Market Finally Dies [View article]
    Great article. I know it is difficult to time markets but it is possible to recognize and manage risk. This market has enough risk to warrant some preparations like increasing exposure to long term treasuries or other assets the are contrary to the market direction or adjustments to one's asset allocations and exposure to equities. I like your point that it may be better to adjust too early than too late.


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    Jan 24 12:21 AM | 1 Like Like |Link to Comment
  • A Global Market Rotation Strategy With An Annual Performance Of 41.4% Since 2003 [View article]
    Hi vn88 you only took their performance for the previous month to select for the current month in your 113% CAGR ?

    Thanks
    Jan 7 08:21 PM | Likes Like |Link to Comment
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49 Comments
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