Tom Dorsey has probably been in this business as long as I have (35 years). In all of that time I have never seen such a confluence of disturbing factors that have caused me to be as "cautious" as I am today. Even Mark Cuban is defensive right now and sees many of the same problems I have seen developing over the past few years.
There is a time to make money and a time to protect your portfolio. I believe this is the latter and regardless if I miss out on 10-12% or even 20% over the next 6-12 months, my weighting of 28% stocks and 72% cash is fine for me. I don't want to be fully invested when a series of HFT trades can make Oct 19, 1987 look like a slow day.
I know your X's and O's pretty well and your game plan for putting the offense on the field or instead, the defense. It won't take much, in my estimation, to see numerous columns of O's develop so quickly we can't react. P&F held validity in more normal markets prior to 2008. Not so much today, IMHO.
Vanguard Vs. Schwab: Who Has The Best Suite Of Commission Free ETFs For Portfolio Building [View article]
As Lowell mentioned above, TD Ameritrade offers 101 commission-free ETFs, from multiple providers (Barclays, iShares, iPath, SPDR, PowerShares, Van Eck, Vanguard and WisdomTree) with broader asset class coverage and the ability to avoid wash-sale rules on a commission-free basis.
A Real Time Experiment In Contrarian Market Timing [View article]
Robert:
Thank you for posting the links to both the late 2007/early 2008 data and the early 2009 data, as well as the spreadsheet with all of the data going back to 1987. I've been a Lifetime member of AAII since 1986 and never knew this historical data was available.
A Real Time Experiment In Contrarian Market Timing [View article]
I'd be curious, if you have the data, what the AAII bullish sentiment readings were around the market top 1/1/2008, and then again the market bottom on 3/1/2009. Thanks
Thank you for your excellent presentation. While I stopped using leverage a very long time ago I had never run the numbers as you did. Your simple, clear and concise explanation should be required reading for anyone prior to investing money in these issues. That includes day-traders.
Your response to reader "Uncle Floyd" was spot on: "That people continue to "invest" in these means that they haven't gotten the point yet." And unfortunately, will likely lose a large amount of capital before understanding and ending their destructive logic.
Your conclusion: "These are products made for traders. Investors, or in this case, anyone expecting to hold their investment for longer than a single day, would be well advised to steer clear of leveraged Daily ETFs" is excellent advice. Thank you.
This article was a real treat as FB has dominated the financial media for the past 10 days or so, with a multitude of opinions but little comparable analysis. I can think of no one better to provide a lucid valuation of FB than you Ploutos, and you have succeeded once again. Thank you for giving us "what we want" not only in this article, but in everything you publish.
Intrigued by your moniker, I have followed your articles from the beginning and have learned a great deal from you. The varied strategies you have written about have been most compelling and often cause me to research specific ideas on a much deeper level. Please continue sharing your knowledge with those of us on SA who always look forward to the fresh topics you introduce as well as the quality and depth behind your writing. Thank you for your contributions.
Would you expect this 3-month stock momentum strategy to work just as well with ETFs? As you referred to in the 1993 work of Jegadeesh and Titman, most of the momentum strategies I have encountered are likely based upon this stock research. Momentum strategies for ETFs also seem to be based on the previous 6-month performance period for predicting the following 6-month performance. But in your opinion, is there any reason a momentum strategy using the previous 3-month performance of ETFs should not be expected to provide similar expectations for the next 3-month period?
Thank you for the ideas you have been providing here.
Management And Measurement: Tracking Portfolio And Benchmark Performance [View article]
Thanks Lowell. I should have subscribed to your web site long ago. Funny, I also used Captools and then designed my own Excel version in the late 90s too. And, like you, I also use TDAM (having started with the initial iteration as Jack White & Co. before all of the mergers) and many of their commission-free ETfs.
Management And Measurement: Tracking Portfolio And Benchmark Performance [View article]
Lowell:
Another good article with excellent suggestions. I am curious, while there are numerous performance measurement software programs available, have you found one in particular that might be worth exploring? Thanks for sharing your experience and logical approach to investing.
Bond ETF Investing Warrants Caution [View article]
Lowell, I greatly enjoy your articles as we share similar philosophies as well as methodologies and even many of the same ETFs for managing portfolios. Your bond analysis is an item I have been concerned about for for some time.
I believe most of us use bonds for the very same reasons you mention - current income and reduction of portfolio volatility. Having lived through the bond disaster of the late 70s to the early 80s - the Volcker years, I believe the stars are aligned for a repeat performance. Only this time, if the country's debt level erodes the confidence of our current lenders, all bets are off.
So, after bringing many bond allocations down from 40% to 28% and now to 14%, I'm uncomfortable with the increased equity risk, and I do use both VNQ and RWX. The current 0.03% level of money markets and insured deposit accounts is not a viable bond alternative, except as a hopeful preserver of sheer principal value. I don't view BIL, SHV, SHY, MINT, MBB etc., etc. as very safe temporary holding buckets, especially since "temporary" may turn out to be a lot longer than we currently anticipate.
Ploutos (love the sobriquet) - You are a "wealth" of interesting investment information. Your articles are varied, well written and often cause me to dig deeper into topics I haven't considered before, or to revisit ideas I have long since forgotten. Thank you.
The Liu and Spiegel article reminded me of Harry Dent's work on booms and busts that he has been writing about since the mid 90's. Having lived through the ugliness of the markets from '73-74 through '82, US stocks could continue to grow increasingly more volatile over the next decade, with very little growth. That may make skilled traders a lot of money while providing longer term investors with miniscule returns.
Either US politicians are "regulated" over that same time frame or even the 2022 target could be premature. In the meantime, like so many jobs and profits that moved abroad over the past decade, the majority of US investment dollars could move to international markets as well.
Thank you Ploutos. Keep the "wealth" of ideas flowing.
Good post Chris. I like DeMark's work and think he has brought another interesting perspective of TA to the table. Thanks for the work you present on SA. I appreciate all of your efforts.
Investors' Biggest Mistake: Excessive Caution [View article]
There is a time to make money and a time to protect your portfolio. I believe this is the latter and regardless if I miss out on 10-12% or even 20% over the next 6-12 months, my weighting of 28% stocks and 72% cash is fine for me. I don't want to be fully invested when a series of HFT trades can make Oct 19, 1987 look like a slow day.
I know your X's and O's pretty well and your game plan for putting the offense on the field or instead, the defense. It won't take much, in my estimation, to see numerous columns of O's develop so quickly we can't react. P&F held validity in more normal markets prior to 2008. Not so much today, IMHO.
Vanguard Vs. Schwab: Who Has The Best Suite Of Commission Free ETFs For Portfolio Building [View article]
A Real Time Experiment In Contrarian Market Timing [View article]
Thank you for posting the links to both the late 2007/early 2008 data and the early 2009 data, as well as the spreadsheet with all of the data going back to 1987. I've been a Lifetime member of AAII since 1986 and never knew this historical data was available.
A Real Time Experiment In Contrarian Market Timing [View article]
Improving Your Return Profile With A Simple Momentum Strategy [View article]
Thanks for the update. I meant to begin tracking this idea after your article first came out. With this reminder, it is now done. Thank you.
Strategies To Position Your Bond Portfolio For Interest Rate Moves [View article]
Take A Pass On Leveraged ETFs [View article]
Thank you for your excellent presentation. While I stopped using leverage a very long time ago I had never run the numbers as you did. Your simple, clear and concise explanation should be required reading for anyone prior to investing money in these issues. That includes day-traders.
Your response to reader "Uncle Floyd" was spot on: "That people continue to "invest" in these means that they haven't gotten the point yet." And unfortunately, will likely lose a large amount of capital before understanding and ending their destructive logic.
Your conclusion: "These are products made for traders. Investors, or in this case, anyone expecting to hold their investment for longer than a single day, would be well advised to steer clear of leveraged Daily ETFs" is excellent advice. Thank you.
Facebook And Friends [View article]
This article was a real treat as FB has dominated the financial media for the past 10 days or so, with a multitude of opinions but little comparable analysis. I can think of no one better to provide a lucid valuation of FB than you Ploutos, and you have succeeded once again. Thank you for giving us "what we want" not only in this article, but in everything you publish.
Intrigued by your moniker, I have followed your articles from the beginning and have learned a great deal from you. The varied strategies you have written about have been most compelling and often cause me to research specific ideas on a much deeper level. Please continue sharing your knowledge with those of us on SA who always look forward to the fresh topics you introduce as well as the quality and depth behind your writing. Thank you for your contributions.
A Momentum Trade With 1Q12 Winners [View article]
Would you expect this 3-month stock momentum strategy to work just as well with ETFs? As you referred to in the 1993 work of Jegadeesh and Titman, most of the momentum strategies I have encountered are likely based upon this stock research. Momentum strategies for ETFs also seem to be based on the previous 6-month performance period for predicting the following 6-month performance. But in your opinion, is there any reason a momentum strategy using the previous 3-month performance of ETFs should not be expected to provide similar expectations for the next 3-month period?
Thank you for the ideas you have been providing here.
A Momentum Trade With 1Q12 Winners [View article]
Management And Measurement: Tracking Portfolio And Benchmark Performance [View article]
I'll be your newest member shortly.
Management And Measurement: Tracking Portfolio And Benchmark Performance [View article]
Another good article with excellent suggestions. I am curious, while there are numerous performance measurement software programs available, have you found one in particular that might be worth exploring? Thanks for sharing your experience and logical approach to investing.
Bond ETF Investing Warrants Caution [View article]
I believe most of us use bonds for the very same reasons you mention - current income and reduction of portfolio volatility. Having lived through the bond disaster of the late 70s to the early 80s - the Volcker years, I believe the stars are aligned for a repeat performance. Only this time, if the country's debt level erodes the confidence of our current lenders, all bets are off.
So, after bringing many bond allocations down from 40% to 28% and now to 14%, I'm uncomfortable with the increased equity risk, and I do use both VNQ and RWX. The current 0.03% level of money markets and insured deposit accounts is not a viable bond alternative, except as a hopeful preserver of sheer principal value. I don't view BIL, SHV, SHY, MINT, MBB etc., etc. as very safe temporary holding buckets, especially since "temporary" may turn out to be a lot longer than we currently anticipate.
Any thoughts?
Equity Multiples And Demographics [View article]
The Liu and Spiegel article reminded me of Harry Dent's work on booms and busts that he has been writing about since the mid 90's. Having lived through the ugliness of the markets from '73-74 through '82, US stocks could continue to grow increasingly more volatile over the next decade, with very little growth. That may make skilled traders a lot of money while providing longer term investors with miniscule returns.
Either US politicians are "regulated" over that same time frame or even the 2022 target could be premature. In the meantime, like so many jobs and profits that moved abroad over the past decade, the majority of US investment dollars could move to international markets as well.
Thank you Ploutos. Keep the "wealth" of ideas flowing.
Buying Opportunity Coming? [View article]