Paul Meisel

Black Swans, Real Estate and Financial Stocks

There are several good points on both sides of this argument, overstated a little perhaps. Modern portfolio theory and its academic supporters imply a precision that is not warranted --- but some data is better than none. The statistical assumptions and methods behind QPP have some validity, but are not perfect either -- nothing in forecasting ever is!

Ken Lewis' Savvy Countrywide Investment

And a potential blocking position against a competing acquirer, and a leg up on a future acquisition.....

Bank of America: Countrywide’s White Knight

BAC was rumored to be looking at a takeover, now they get a better deal on a smaller piece, less risk, still lots of upside, and a potential blocking position against another suitor should CFC turnaround.

Meanwhile CFC may have had to sell the whole company, they only have to sell a piece (although at a big discount), protecting their investors.

Smart.

Safe Portfolio Withdrawal Rates: Beyond The 4% Solution

Thanks for calling the article to our attention. The thought process is valuable -- most retirees I know have higher income wants and desires in their 60s and 70s than their 80s and 90s. Experimenting with this concept of "two stages", or some other kind of "declining draw" could have value for a lot of people.

The same concept applies to portfolio construction (trading growth potential for declining risk as one ages) and has been discussed before. Most models don't look at the flip side -- choosing to moderate income requirements and life style as one ages, or to fit within the income available due to portfolio performance. But they could easily be modified to do so.......

Jim Cramer's Mad Money Lightning Round Picks, Dec. 6

BAC -- deMolina said why he was leaving. He is tired of being a CFO and wants to be a CEO or run a hedge fund so he can be "the man" instead of "the wingman"....

Safe Portfolio Withdrawal Rates: Beyond The 4% Solution

I certainly have no quarrel with the quality of work or the conclusions in this article. However, not wanting to do extensive simulations, I am reduced to looking for a heuristic approach.

Being a simple person, I would summarize this as "think more carefully about diversification." Cross-correlation between individual stocks is time consuming to measure precisely, but not too difficult to understand directionally. The tested portfolio seems to indicate that overweighting financials, utilities, and healthcare would accomplish the goal of reducing the standard deviation of return more significantly than the average return.

Another question is, will the future mirror history. Who knows? But the deeper principal of choosing good performing companies that are not strongly cross-correlated will be sound -- choosing those companies will be the key.