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  • How To Re-Balance Your Portfolio (NAAIM Maniac Edition) [View article]
    This also looks really odd to me so I checked their website (below). My guess is the largest factor in the wild swings is the small inconsistent sample size -- which basically renders the data useless IMO.


    NAAIM member firms who are active money managers are asked each week to provide a number which represents their overall equity exposure at the market close on a specific day of the week, currently Wednesdays. Responses can vary widely as indicated below. Responses are tallied and averaged to provide the average long (or short) position or all NAAIM managers, as a group.

    Range of Responses:

    200% Leveraged Short
    100% Fully Short
    0% (100% Cash or Hedged to Market Neutral)
    100% Fully Invested
    200% Leveraged Long

    Data collection issues that may affect the statistical significance of this data include:

    Use of a single, composite number for each adviser may not accurately represent the market view of a manager who has short term and long term strategies that are providing conflicting signals or a manager who uses both contra-trend and trend following strategies for different portfolios.

    Investment Styles very widely among managers participating in this survey. They may include managers that trade very frequently and can switch long and short positions daily. Other managers stay fully invested at all times and only change allocations among market segments or sectors. Still others trade around core positions and only a portion of their portfolios change, but that portion could potentially go from long to short very quickly.

    Sample size: Although the number of participating managers, known as NAAIM Trend Setters, is steadily growing the sample size is not large and therefore may be less reflective of actual market conditions.
    Nov 21, 2014. 10:45 AM | 1 Like Like |Link to Comment
  • How Dividends Don't Matter In Retirement; A Few Examples [View article]
    Catman - just a point of clarification for SA readers . . .

    Mutual funds are required (by tax law) to pay substantially all dividends and capital gains to shareholders. Internal / administrative fees generally reduce the distributed amounts. The term for this is "net investment income".
    Aug 7, 2014. 11:17 AM | 5 Likes Like |Link to Comment
  • Are Dividends A 'Bonus'? - Yet Another View [View article]
    Mike - I don't have the entire history on this discussion nor have I dissected each comment here but let me have a shot at answering your question/objection. Different market participants value companies using different metrics, IMO primarily using a company's income statement and balance sheet (at least from a fundamental perspective). Those that argue the "permanent impairment" caused by the payment of dividends are arguing that the value of the company vis-à-vis the balance sheet is now less -- and there is really no arguing that -- the money is gone -- and the balance sheet is weaker as a result. Further, from an income statement perspective, the company now has less capital to grow its business, pay down debt, invest in other businesses, etc. All else equal (and that is critical here) the company is immediately less valuable to an analyst focusing on the balance sheet. The impact to the income statement is a bit more complicated as it is dependent on the opportunity cost of that lost cash. Some have argued that cash can be mismanaged by corporations and actually lead to losses (bad decisions). While that may be happen in some cases, in the aggregate, companies use cash toward productive means. None of this means the stock price can’t go up or can’t be trading at an all-time high in the face of this. I’m referring to the “value” of a company (from an analysis perspective) versus the market price.

    Let me give you a real life example of how I have seen cash used in valuation. Several years ago, I (along with a few other firms) was bidding to purchase a broker-dealer (price is not important). At the last minute, the owner disclosed that the firm’s investment portfolio (about $500,000 of marketable securities) was not included with the purchase. What do you think happened to the bids? Of course, they were all immediately reduced by $500,000. This the “permanent impairment” concept, albeit less complicated, than a dividend payment. In this case, all else was equal (save for a day of operating income) and the analysis was easy. Large, publicly traded companies have an infinite number of moving parts and their stock prices are affected by an infinite number of variables making the impairment much harder (if not impossible) to isolate. Does not mean that it’s not there – and it also does not mean that it matters equally to all investors.
    Jun 11, 2014. 12:52 PM | 3 Likes Like |Link to Comment
  • Municipal Bond Mark-Ups: Measuring 'Reasonable' [View article]
    Excellent info for SA readers that might not be familiar with this area of the markets. IMO this is an area that is sorely lacking in disclosure -- especially on the retail side of the market.

    MSRB has made some progress here but until the SEC mandates better disclosure, retail investors will continue to overpay for munis in many cases. I agree that Schwab and other online firms do a great job with pricing.

    The author's advice regarding riskless (principal) vs. agency trades is great; though some firms may only do riskless trades on a principal basis. One can always use EMMA (trade info on MSRB's website) to determine the markup charged on a riskless trade.
    Apr 15, 2014. 10:29 AM | Likes Like |Link to Comment
  • The Richest Man In History Reveals His Simple Wealth Generating Secret [View article]
    Mathman - yes -- as my IQ drops precipitously when quoting Ricky Bobby :)
    Mar 27, 2014. 10:20 AM | Likes Like |Link to Comment
  • The Richest Man In History Reveals His Simple Wealth Generating Secret [View article]
    For those readers (and this author for that matter) inclined to do some research on John Rockefeller, his financial story is exceedingly interesting. He spent the first half of his life ruthlessly (the nicest word I could choose) creating and defending a monopoly -- and the second half giving away his money. With all due respect to the magic of dividends, attributing his financial "success" to dividend investing is quite a stretch.
    Mar 27, 2014. 10:05 AM | 20 Likes Like |Link to Comment
  • Debunking The 'Dividends Don't Add Shareholder Value' Myth [View article]
    I think Benjamin Graham just rolled over in his grave.
    Mar 13, 2014. 04:26 PM | 8 Likes Like |Link to Comment
  • Retirees: What Is The Best Choice For A Small Income Portfolio? [View article]
    PendragonY is correct -- you may distribute assets "in-kind". The assets then assume a cost basis per their value when distributed. It is fairly common when processing RMDs.
    Nov 15, 2013. 11:55 AM | 6 Likes Like |Link to Comment
  • Open Letter To Exxon's Board: It's Time To Sell Assets To Reward Long Suffering Shareholders [View article]
    Michael - you've simply cherry-picked your time frame to support your argument. You can do that with nearly any stock. Intelligent people don't fall for that nonsense; and, as a matter of fact, XOM was in the low 70s five years ago -- making the return (without divs) 25%-30%.
    Nov 5, 2013. 03:37 PM | 2 Likes Like |Link to Comment
  • Does It Make Sense To Implement The Taleb Portfolio? [View article]
    Back in the early 90s, UIT products that guaranteed principal were fairly popular. With 10-year US Treasury zeros at about 7%, you could fix the UIT term to match the maturity of the bonds. That would cost you about 50% of the principal. The manager would then take risk with the other 50% -- with its ultimate value being the profit for the investor. Other than the associated fees, it was a great concept.
    Nov 5, 2013. 01:38 PM | Likes Like |Link to Comment
  • Does It Make Sense To Implement The Taleb Portfolio? [View article]
    I am a long-only investor (except for the occasional selling of cash-secured puts). I'm also a strategic asset allocator -- meaning I maintain constant core exposure to specific asset classes (no market timing) with little variation. That said, I'm always looking for ways to maintain that core exposure while taking less risk. For example, if one has a core position in SPY, he could instead own the Dec 2015 at-the-money LEAPS. They would cost you about 9% of your allocation to that core holding. The remaining 91% could be allocated to a risk-free investment. Over the next 25 months, you maintain exposure to that asset class, while limiting your downside to 9% (less the earnings on the remaining 91%). When risk-free rates are 5-6% this is obviously much more appealing (albeit implied volatility of the option might also be higher). Note that you also forego the opportunity to collect dividends on the core position. The market is pretty efficient and there is no free lunch but this is a low cost way to limit your downside while maintaining core exposure and most of the associated upside.
    Nov 5, 2013. 01:28 PM | 1 Like Like |Link to Comment
  • Does It Make Sense To Implement The Taleb Portfolio? [View article]
    I have explored the possibilities of buying at-the-money leaps while holding 95% or so of a portfolio in cash -- thereby eliminating the chance of loss over the given period. The numbers look great when the risk-free rate is high and implied volatilities are low. At the moment we only enjoy half of that scenario.
    Nov 1, 2013. 03:18 PM | Likes Like |Link to Comment
  • A Right Time To Fix An Investment Wrong? [View article]
    Cranky - have a look at IEFA as an alternative to EFA -- broader market cap (mid/small cap) diversification, lower expenses -- but less liquid.
    Oct 18, 2013. 01:58 PM | Likes Like |Link to Comment
  • Better Than Buy And Hold Over The Last 13 Years [View article]
    "The way to make money in the stock market is to buy a stock. Then, when it goes up, sell it. If it's not going to go up, don't buy it!"

    -- Will Rogers
    Aug 1, 2013. 11:12 AM | 3 Likes Like |Link to Comment
  • Collectors Universe: Great Future [View article]
    dbtunr - PSA/DNA certification is a different process & holder than the typical trading card certification & standard PSA holder (and a much smaller percentage of PSA's business). It's the standard PSA holder that is being counterfeited. As I suggested earlier, simply search "fake PSA holder" and you will better understand the issue. Also try this link for some interesting info -
    Jul 9, 2013. 12:57 PM | 1 Like Like |Link to Comment