An Income-Generating Asset Class Underrepresented In The ETF World [View article]
IGF (per the sponsor's home page for the fund) is about 40% utilities, 39% industrials, and 20% energy.
And the companies look random in their prospects, and quite a few are rougly 4% of the fund.
Why not just either target the type of investment you want to hold (i.e. energy or industrials), and pick an appropriate fund or ETF?
To me, buying utilities now is not a good risk/reward proposition given their yields and growth prospects, coupled with the risky ZIRP environment we are in.
Warning: Bond Bears Might Be From The Twilight Zone [View article]
Michael:
So everything's bad, everything's going down, including treasuries. It's just that treasuries are "less bad".
OK. So how's that Aug 10th article from 2012 you wrote that predicted bad stock prices as they've trended upward since worked out so far?
I guess if you make a negative forecast periodically, you'll get it right at some point. The thing is, there are already LOTS of permabears out there, lacking credibility for a good while now.
This reminds me of the model for most hedge funds. Make outrageous bets and collect fees until it becomes obvious you don't know what you're doing. What can go wrong? After all, only the client gets hurt -- the "advisor" collects their fees regardless, and moves on.
Anything can happen of course, but the thing supporting this market the most seems to be that it is the most universally hated bull market in a long time (or maybe ever), by a huge vociferous crowd of bears and shorts.
The markets gradually returning to normal and dealing the shorts the maximum pain possible seems to be one likely scenario. The shorts can continue to scream at the Fed. It won't help their wallets.
Why I'm Betting Big On Implant Sciences [View article]
Ben: The key is whether one is investing or speculating.
1). I would call short term bets on pink sheet stocks speculation.
2). If the author's calls were consistently good, he would be rich on his stock trades, not writing articles for web hits on places like S.A. This obvious fact also makes this look like speculation.
Searching For Value And Finding It In Today's Market - Sector By Sector [View article]
As a former IBMer who watched the company go from a GREAT place to work in the early 90's to a TERRIBLE place to to work by 2005 (and continued the trend down-hill since, per my friends in the company), as tens of thousands of good employees get laid off over time -- it is easy to understand this viewpoint.
And yet:
a). One could argue this is the model for the entire first world economy as automation and low wages have powered profit growth for the stock market overall for a long time now.
b). This kind of trend/behavior has been common for white-collar workers for quite a while. "White Collar Sweatshop" laid this out quite nicely, and used IBM as a prime example. The number of workers cited in the U.S. was about 80 million. This was first published early in 2001.
c). So I hear you. Friends at IBM told me there was another big wave of layoffs announced last week at IBM.
And yet, I wonder if this is just part of the "creative destruction" process brought on by the current trends in technology? I can certainly imagine how unhappy buggy whip makers were when the car became mass produced and they could see their livelihood being eviscerated.
Disclosure: I finally quit IBM in disgust in mid-2007 after a mainframe I/T career of 26 years that generally got better for the first half, and went the other way the second half. I mainly felt bad for my peers who weren't in a financial position to quit if they wanted to. And yet, I still am net long some IBM stock (warily), as they manage to drive earnings significantly higher over time.
Searching For Value And Finding It In Today's Market - Sector By Sector [View article]
Psycho Analyst:
The social investing theory is interesting, but then you get into "where do you draw the line"?
Examples:
1). Drug stocks "hurt people"? Do you believe this is universally true. What about many fine drugs that help people quite a bit?
Assuming we know anything about medical technology, the blood pressure and heart related medicines I have been taking for almost 25 years now have done considerable good for me in terms of giving me a better shot at a longer life with better quality by avoiding heart, kidney, possible stroke, etc. damage.
2). One could argue that mining, oil, industrial, etc. companies hurt people, to the extent they pollute. And yet, where would people be if we lacked industrial companies with the global population?
I could go on but the point should be clear.
....
It reminds me of the "one should be a vegetarian" argument. The idea often is "it is immoral to eat anything with a face".
OK, but to survive, all of us must consume formerly living things. If eating a chicken or a rabbit is wrong, can we be sure eating lettuce or even pond scum is morally OK?
...
Each to their own, but once one does some digging and real thinking, where one draws the line for such morals becomes less than obvious -- at least it has for me as I've learned more over the course of my life.
The Scariest Real Estate Chart In All The Land [View article]
AllStreets: Sorry to hear about this person's elderly mother-in-law's predicament. However, in a "reasonable" world, this is the kind of risk people take who think short term and over-extend themselves -- and the consequences, painful as they may be, should be allowed to occur.
The unfortunate thing is that this elderly person will apparently suffer the consequences of their actions, while so many people who made even worse or less responsible (or outright fraudulent) decisions/actions (like liar loans, etc) -- are being REWARDED for it via the Obama housing rescue program of the month (for those who "need it most", of course).
What astounds me the most about the past 6 years is that the vast majority of people seem NOT TO HAVE LEARNED ANYTHING YET. We still see an incredible amount of stupid debt, risk, lack of planning, etc. This isn't just for consumers. Jamie Dimon says of the inexcusable "London Whale Trade" (I paraphrase) -- "Yeah, we were, really, really, stupid. So what?"
Well, I guess when you're a TBTF institution CEO and the idiot stockholders won't throw you out no matter what (nor will legal charges be brought upon such individuals, no matter what) -- not much to worry about in the way of consequences.
But apparently, all is well as long as Uncle Ben can throw enough $billions at the economy and the stock market goes up.
It's astounding how we seem to suddenly have entered a magical era where economic (and moral) principles no longer apply.
Call me an idiot, but I can't see how this ends up anything but very badly when the chickens finally manage to come home to roost.
Telecom At A Crossroads: What Investors Need To Know [View article]
I can't see going for a broad telecom ETF that only pays about 3% yield, given the risks.
There are many FINE dividend-growth companies out there with tremendous track records paying 3% or more. Long term, the growth potential provides a far better risk/reward scenario without the single sector risk.
There are various fine industries with good long term dividend growth potential like energy MLP's often paying 6% and more yield.
Or, one can make diversified plays in areas like food, tobacco, drugs, oil, mining, etc. and get growth and yield, if one is patient. (If one takes this approach, and wants to dabble in some T or VZ on meaningful dips, that would work -- without undue risk, and at least one is getting paid to wait).
Bill Gross's Dreadful Analysis Of The U.S. Economy's 'Wounded Heart' [View article]
Extremely well put varan! The main argument you can make on James' behalf is that he has LOTS of company, in similar other market "gurus" and market advisory services like newsletter writers. I point to the objective "Guru Grades" which can be easily Google searched to verify. (As a whole, the gurus appear to have a market predictive value of roughly zero, with results comprising a nice bell curve -- as one would expect in ANY reasonably large random sampling of a sufficiently sized group).
Disclosure: I have no relationship with Guru Grades aside from being an appreciative non-paying reader.
Bill Gross's Dreadful Analysis Of The U.S. Economy's 'Wounded Heart' [View article]
James, I find the article title's term "dreadful analysis" rather ironic after your (strong tendency toward) permabear status since August 2011 when you began publishing articles on S.A. with any regularity.
You can go ahead now and claim this is incorrect, but your articles speak for themselves - let the readers decide.
Why The Newest Short Thesis On Arena Is Dead Wrong And Should Be Ignored [View article]
Jacob: Though I generally agree with your overall thesis, I think some points on your article are worth mentioning, re the CNBC interview (which I watched):
1). Though popular, CNBC's "Fast Money" crowd is hardly one with a lot of credibility. First, for stocks I pay attention to such as FCX, their market and stock calls over time are pure noise. The "Guru Grades" site, which objectively evaluates market "gurus" on meaningful statistical evicence, has objectively verified this (this can be easily verified via Google search). After all, if these were "brilliant hedge fund managers" and their ilk, as they claim, why are they putting on a monkey suit and selling soap daily on CNBC instead of making many $millions on their hedge funds? It appears to me these are clowns who are overcharging their clients and hoping to get lucky -- and need a weekly check to be able to eat. So I do NOT want to make investments off their offhand "advice", any more than, say, Cramer's.
2). One key claim one of the reps on the CNBC piece you cite made (I believe it was the Elsai rep) in two parts was:
a). About 25% of health insurance policies were likely to initially cover Belviq due to its efficacy and safety metrics, and the huge medical costs of morbid obesity, over time. (I thought this was pretty significant -- a large potential audience without major cost issues to try the drug).
b). That he strongly expected "many more" such firms will begin insurance coverage, as positive results for Belviq accumulated. (I am paraphrasing here, as I can't remember the exact language used, nor the time-frame given, if any).
3). Although the fact that Belviq is a NEW compound was stressed, its relative safety vs. the well documented problems of Qysemia was not (that I noticed). I would have thought this would have been a good point to make, so perhaps fear of libel suits there (just a logical guess).
Disclosure: I am a cautious ARNA long from about $2.70, and have been selling some options (short term calls and puts) for income on part of my long position since it jumped on the initial positive recommendation for approval.
Dividend Growth Winners And Losers When Rates Rise [View article]
Larry, with respect, with things going on in 1999 like groups of tech stocks like the NASDAQ 100 roughly, doubling, this does NOT look like a good time to take a narrow slice of performance to base an article on.
How about some other context? Rates rose a lot around 1980, around 1994, etc. Several slices would give a much broader context to make a judgement on.
A Safe Cash Cow With A 5.25% Yield And Growth Potential [View article]
Mike, was this your title? (or did the editors change it?) If the title were something like "A highly speculative stock with..." instead, then that would be completely accurate.
SAFE?
For the long run, a portfolio of top quality dividend growth stocks is probably safe, as long as you can handle the volatility.
An index like the S&P 500 -- same deal.
A single stock like GRMN with a growing payout ratio and lots of new competition in a rapidly evolving industry -- safe is NOT the right word.
Trying to make detailed projections in these markets is fraught with risk. Is it really worth it?
Pairs trades? Really? In a world with all the geopolitical risk we face, much less plain old political risk, this seems like asking for trouble.
If you want the likely LONG TERM outperformance of emerging markets vs. first world markets over coming decades, then a steady investment, like a DCA program, into the likes of a VWO or an EEM would make some sense -- especially when people are proclaiming how risky and terrible they are (like recently).
To pick one country -- do we REALLY think we are likely to get the politics, the economics, the unknowns, etc. right to outperform by a large enough margin to outweigh the risks?
It might be easier to pick micro-caps, or just go to Vegas.
I agree. Sadly, IMO, if the government (or its constituents) were actually capable of long term thinking -- then LONG TERM highly skilled / employable people would be the smartest growth and infrastructure-by-proxy investment they could make.
This would take a REAL effort in providing MEANINGFUL educational opportunities for people of all ages who prove (by making good scores in courses for example) that they are willing to work to make themselves more employable.
Instead, we get lots of lip service, something like 54 largely dysfunctional and conflicting educational programs -- and a K-12 program that, despite all the politics, continues to graduate seniors who can't run a cash register, spell, or form a coherent paragraph -- much less handle a serious science/math college degree.
And I don't know ONE unemployed person from "the trades" who the government has offered to help get re-educated in any form (and I've asked a lot of them, as I was curious).
But its all about buying votes, and it takes many years to realize a major difference in better education (i.e. not one election cycle) -- so I guess we shouldn't expect anything other than each party blaming the other, and continued "less than wonderful" results.
Brad, nicely done. I had intuited your main idea here for the RSP vs. SPY, but hadn't done the research. I also hadn't even pondered QQEW vs QQQ, so thanks for the counter-example.
This would seem to dovetail with the Jack Bogle concept that in the very long run (multiple decades) of disciplined investing, expenses and your portfolio allocation are really what matters.
Since expenses do matter, I try to just be sure I understand my cheap cap weighted index funds I prefer as multi-decade holdings.
Example: Some people just buy the whole market (i.e. VTI), which is heavily weighted toward large cap due to the cap weighting -- I deliberately invest in roughly equal parts of VOO and VB -- as I want significant exposure to both the large and small cap blends.
(Disclosure: I used the Vanguard ETF's for the examples here, as I like the company and their low fees as a customer. One can use Vanguard or competing mutual funds, etc. To me, the fee structure is important. RSP's 0.4% expense ratio isn't terrible, but vs. a blended rate of .075% for half VOO and half VB, it's over five times as expensive).
An Income-Generating Asset Class Underrepresented In The ETF World [View article]
And the companies look random in their prospects, and quite a few are rougly 4% of the fund.
Why not just either target the type of investment you want to hold (i.e. energy or industrials), and pick an appropriate fund or ETF?
To me, buying utilities now is not a good risk/reward proposition given their yields and growth prospects, coupled with the risky ZIRP environment we are in.
Warning: Bond Bears Might Be From The Twilight Zone [View article]
So everything's bad, everything's going down, including treasuries. It's just that treasuries are "less bad".
OK. So how's that Aug 10th article from 2012 you wrote that predicted bad stock prices as they've trended upward since worked out so far?
I guess if you make a negative forecast periodically, you'll get it right at some point. The thing is, there are already LOTS of permabears out there, lacking credibility for a good while now.
This reminds me of the model for most hedge funds. Make outrageous bets and collect fees until it becomes obvious you don't know what you're doing. What can go wrong? After all, only the client gets hurt -- the "advisor" collects their fees regardless, and moves on.
Anything can happen of course, but the thing supporting this market the most seems to be that it is the most universally hated bull market in a long time (or maybe ever), by a huge vociferous crowd of bears and shorts.
The markets gradually returning to normal and dealing the shorts the maximum pain possible seems to be one likely scenario. The shorts can continue to scream at the Fed. It won't help their wallets.
Why I'm Betting Big On Implant Sciences [View article]
1). I would call short term bets on pink sheet stocks speculation.
2). If the author's calls were consistently good, he would be rich on his stock trades, not writing articles for web hits on places like S.A. This obvious fact also makes this look like speculation.
Searching For Value And Finding It In Today's Market - Sector By Sector [View article]
And yet:
a). One could argue this is the model for the entire first world economy as automation and low wages have powered profit growth for the stock market overall for a long time now.
b). This kind of trend/behavior has been common for white-collar workers for quite a while. "White Collar Sweatshop" laid this out quite nicely, and used IBM as a prime example. The number of workers cited in the U.S. was about 80 million. This was first published early in 2001.
c). So I hear you. Friends at IBM told me there was another big wave of layoffs announced last week at IBM.
And yet, I wonder if this is just part of the "creative destruction" process brought on by the current trends in technology? I can certainly imagine how unhappy buggy whip makers were when the car became mass produced and they could see their livelihood being eviscerated.
Disclosure: I finally quit IBM in disgust in mid-2007 after a mainframe I/T career of 26 years that generally got better for the first half, and went the other way the second half. I mainly felt bad for my peers who weren't in a financial position to quit if they wanted to. And yet, I still am net long some IBM stock (warily), as they manage to drive earnings significantly higher over time.
Searching For Value And Finding It In Today's Market - Sector By Sector [View article]
The social investing theory is interesting, but then you get into "where do you draw the line"?
Examples:
1). Drug stocks "hurt people"? Do you believe this is universally true. What about many fine drugs that help people quite a bit?
Assuming we know anything about medical technology, the blood pressure and heart related medicines I have been taking for almost 25 years now have done considerable good for me in terms of giving me a better shot at a longer life with better quality by avoiding heart, kidney, possible stroke, etc. damage.
2). One could argue that mining, oil, industrial, etc. companies hurt people, to the extent they pollute. And yet, where would people be if we lacked industrial companies with the global population?
I could go on but the point should be clear.
....
It reminds me of the "one should be a vegetarian" argument. The idea often is "it is immoral to eat anything with a face".
OK, but to survive, all of us must consume formerly living things. If eating a chicken or a rabbit is wrong, can we be sure eating lettuce or even pond scum is morally OK?
...
Each to their own, but once one does some digging and real thinking, where one draws the line for such morals becomes less than obvious -- at least it has for me as I've learned more over the course of my life.
The Scariest Real Estate Chart In All The Land [View article]
The unfortunate thing is that this elderly person will apparently suffer the consequences of their actions, while so many people who made even worse or less responsible (or outright fraudulent) decisions/actions (like liar loans, etc) -- are being REWARDED for it via the Obama housing rescue program of the month (for those who "need it most", of course).
What astounds me the most about the past 6 years is that the vast majority of people seem NOT TO HAVE LEARNED ANYTHING YET.
We still see an incredible amount of stupid debt, risk, lack of planning, etc. This isn't just for consumers. Jamie Dimon says of the inexcusable "London Whale Trade" (I paraphrase) -- "Yeah, we were, really, really, stupid. So what?"
Well, I guess when you're a TBTF institution CEO and the idiot stockholders won't throw you out no matter what (nor will legal charges be brought upon such individuals, no matter what) -- not much to worry about in the way of consequences.
But apparently, all is well as long as Uncle Ben can throw enough $billions at the economy and the stock market goes up.
It's astounding how we seem to suddenly have entered a magical era where economic (and moral) principles no longer apply.
Call me an idiot, but I can't see how this ends up anything but very badly when the chickens finally manage to come home to roost.
Telecom At A Crossroads: What Investors Need To Know [View article]
There are many FINE dividend-growth companies out there with tremendous track records paying 3% or more. Long term, the growth potential provides a far better risk/reward scenario without the single sector risk.
There are various fine industries with good long term dividend growth potential like energy MLP's often paying 6% and more yield.
Or, one can make diversified plays in areas like food, tobacco, drugs, oil, mining, etc. and get growth and yield, if one is patient. (If one takes this approach, and wants to dabble in some T or VZ on meaningful dips, that would work -- without undue risk, and at least one is getting paid to wait).
Bill Gross's Dreadful Analysis Of The U.S. Economy's 'Wounded Heart' [View article]
Disclosure: I have no relationship with Guru Grades aside from being an appreciative non-paying reader.
Bill Gross's Dreadful Analysis Of The U.S. Economy's 'Wounded Heart' [View article]
You can go ahead now and claim this is incorrect, but your articles speak for themselves - let the readers decide.
Why The Newest Short Thesis On Arena Is Dead Wrong And Should Be Ignored [View article]
1). Though popular, CNBC's "Fast Money" crowd is hardly one with a lot of credibility. First, for stocks I pay attention to such as FCX, their market and stock calls over time are pure noise. The "Guru Grades" site, which objectively evaluates market "gurus" on meaningful statistical evicence, has objectively verified this (this can be easily verified via Google search). After all, if these were "brilliant hedge fund managers" and their ilk, as they claim, why are they putting on a monkey suit and selling soap daily on CNBC instead of making many $millions on their hedge funds? It appears to me these are clowns who are overcharging their clients and hoping to get lucky -- and need a weekly check to be able to eat. So I do NOT want to make investments off their offhand "advice", any more than, say, Cramer's.
2). One key claim one of the reps on the CNBC piece you cite made (I believe it was the Elsai rep) in two parts was:
a). About 25% of health insurance policies were likely to initially cover Belviq due to its efficacy and safety metrics, and the huge medical costs of morbid obesity, over time. (I thought this was pretty significant -- a large potential audience without major cost issues to try the drug).
b). That he strongly expected "many more" such firms will begin insurance coverage, as positive results for Belviq accumulated. (I am paraphrasing here, as I can't remember the exact language used, nor the time-frame given, if any).
3). Although the fact that Belviq is a NEW compound was stressed, its relative safety vs. the well documented problems of Qysemia was not (that I noticed). I would have thought this would have been a good point to make, so perhaps fear of libel suits there (just a logical guess).
Disclosure: I am a cautious ARNA long from about $2.70, and have been selling some options (short term calls and puts) for income on part of my long position since it jumped on the initial positive recommendation for approval.
Dividend Growth Winners And Losers When Rates Rise [View article]
How about some other context? Rates rose a lot around 1980, around 1994, etc. Several slices would give a much broader context to make a judgement on.
A Safe Cash Cow With A 5.25% Yield And Growth Potential [View article]
SAFE?
For the long run, a portfolio of top quality dividend growth stocks is probably safe, as long as you can handle the volatility.
An index like the S&P 500 -- same deal.
A single stock like GRMN with a growing payout ratio and lots of new competition in a rapidly evolving industry -- safe is NOT the right word.
Which Emerging Markets Are Cheap? [View article]
Pairs trades? Really? In a world with all the geopolitical risk we face, much less plain old political risk, this seems like asking for trouble.
If you want the likely LONG TERM outperformance of emerging markets vs. first world markets over coming decades, then a steady investment, like a DCA program, into the likes of a VWO or an EEM would make some sense -- especially when people are proclaiming how risky and terrible they are (like recently).
To pick one country -- do we REALLY think we are likely to get the politics, the economics, the unknowns, etc. right to outperform by a large enough margin to outweigh the risks?
It might be easier to pick micro-caps, or just go to Vegas.
FED Analysts Get It Wrong Again [View article]
I agree. Sadly, IMO, if the government (or its constituents) were actually capable of long term thinking -- then LONG TERM highly skilled / employable people would be the smartest growth and infrastructure-by-proxy investment they could make.
This would take a REAL effort in providing MEANINGFUL educational opportunities for people of all ages who prove (by making good scores in courses for example) that they are willing to work to make themselves more employable.
Instead, we get lots of lip service, something like 54 largely dysfunctional and conflicting educational programs -- and a K-12 program that, despite all the politics, continues to graduate seniors who can't run a cash register, spell, or form a coherent paragraph -- much less handle a serious science/math college degree.
And I don't know ONE unemployed person from "the trades" who the government has offered to help get re-educated in any form (and I've asked a lot of them, as I was curious).
But its all about buying votes, and it takes many years to realize a major difference in better education (i.e. not one election cycle) -- so I guess we shouldn't expect anything other than each party blaming the other, and continued "less than wonderful" results.
When Equal Weight Makes Sense [View article]
This would seem to dovetail with the Jack Bogle concept that in the very long run (multiple decades) of disciplined investing, expenses and your portfolio allocation are really what matters.
Since expenses do matter, I try to just be sure I understand my cheap cap weighted index funds I prefer as multi-decade holdings.
Example: Some people just buy the whole market (i.e. VTI), which is heavily weighted toward large cap due to the cap weighting -- I deliberately invest in roughly equal parts of VOO and VB -- as I want significant exposure to both the large and small cap blends.
(Disclosure: I used the Vanguard ETF's for the examples here, as I like the company and their low fees as a customer. One can use Vanguard or competing mutual funds, etc. To me, the fee structure is important. RSP's 0.4% expense ratio isn't terrible, but vs. a blended rate of .075% for half VOO and half VB, it's over five times as expensive).