Comments for Portfolio Investing Blog: Portfolioist

Comment on Are We Hard-Wired To Make Bad Financial Choices? by Geoff Considine

Geoff Considine — Mon, 21 May 2012 18:04:32 +0000

One of the most striking quotes by Benartzi is that the average American household spends $1000 per year on lottery tickets. This is absolutely stunning.

Comment on The Most Common Mistake Investors Make by finsovet

finsovet — Thu, 17 May 2012 04:44:33 +0000

Very true. Lazy investing (lazy portfolios) have done no harm to the patient and consistent proponents. It is when you switch between strategies in an unsystematic way that you leave money on the table.

Comment on Does “Low Risk” Outperform? by jack

jack — Wed, 16 May 2012 17:33:38 +0000

Bigger max drawdowns and longer periods of time in drawdown to new equity highs are the main reasons why most people jump ship and look for greener grass. Call those human measurements of risk, volatility , and reward. If that were not true, there would not be 10000 internet sites promoting some new way to beat the market. A The best thing one can do is find a plan……..for me that means giving up some gain for smaller and shorter times underwater, and then sticking with it. Easy to say you can handle a 20% drawdown, until you are in it with your real money. Let alone a 50% drawdown. Like a couple times in the past decade alone.
The best thing one can do when evaluating a plan someone is trying to sell you on is to simulate that plan in the drivers seat. Excel is good for that.
If they show you that from point A to point B your compounded returns over 15-20 years was 12%…….take a hard look at what happened between in getting from from A to B. For instance, was there a point where you were 20% in the hole for 2 years? That might be one scenario where you just could not stomach it any more and you are off to finding the next best plan. If this were not true, those 10000 internet sites trying to promote a new and better plan would be out of business.

And one more thing while I am on my soapbox. America loves bubbles. In the past decade we had the Internet bubble burst and then the housing bubble burst.
We got one going now in the bond market. Bonds have been in a bull market since 1982. Well before the big bond funds like Pimco’s were around.
When the bond bubble bursts, it is going to really hurt those that “think” they are living on fixed income. If you have bonds in your portfolio (which I do), better figure out what your escape plan will be. Or, get familiar with some of the hedging funds for rate hikes. The 10 year T Note is at 1.78%. Some say the floor is at 1.5. Whatever it is, it is not that far down to 0. It will be ugly one day for sure.

Comment on The Hidden Risk in Target Date Funds by Fred

Fred — Wed, 16 May 2012 16:12:33 +0000

Don’t Target Date Funds, in fact, fall into the Fallacy of Time Diversification? Although the portion committed to equities diminishes, slightly, with time it is still the same old “risk declines with length of holding period”. There may be different definitions of risk but basically it is not true no matter how long Siegel and Bogle say that it is. As k anyone who retired in 2000 for starters. Better yet consult Paul Samuelson, Zvi Bodie or http://www.johnduval.com/MythofTime1.pdf for a clear explanation. Fred

Comment on Bernstein, Bogleheads, and the Permanent Portfolio by Fred

Fred — Wed, 16 May 2012 16:02:55 +0000

The true Permanent Portfolio is not that clear. Browne used the CRSP to back-check his recommendations (for stocks) but until 1987 never specified what the stock portion was invested in. Then he chose 8 mutual funds, growth funds, to represent the stocks. He continued with the same funds in 1999, apparently never checking their performance in the interim. From what I can find most were real stinkers! PRPFX does NOT follow the master’s game plan anymore and hasn’t for several years so the buyers aren’t getting what they think at all. One wonders what Bernstein used for gold back before it was legal to own in the US.

A current allocation might be Vanguard’s VFINX, VUSTX, Treasury bills (money market closed) and the ETF GLD, Vanguard Precious Metals fund VGPMX doesn’t always track gold that well.

Comment on The Hidden Risk in Target Date Funds by Does “Low Risk” Outperform? « Portfolio Investing Blog: Portfolioist

Wed, 16 May 2012 15:57:26 +0000

[...] The Hidden Risk in Target Date Funds [...]

Comment on The Most Common Mistake Investors Make by Does “Low Risk” Outperform? « Portfolio Investing Blog: Portfolioist

Wed, 16 May 2012 15:57:16 +0000

[...] Comments « The Most Common Mistake Investors Make [...]

Comment on Why Low Beta Stocks Are Worth a Look by Does “Low Risk” Outperform? « Portfolio Investing Blog: Portfolioist

Wed, 16 May 2012 15:57:11 +0000

[...] Why Low Beta Stocks are Worth a Look Other low beta articles you may want to read, include: Benchmarks as Limits to Arbitrage: Understanding the Low-Volatility Anomaly, written by Malcolm Baker, Brendan Bradley and Jeffrey Wurgler (The Financial Analysts Journal, Jan/Feb 2011) as well as my own May 6th blog post from the CFA Conference focusing on James Montier (see: CFA Conference James Montier). [...]

Comment on Risk, Return and Low Beta Stocks by Does “Low Risk” Outperform? | Above the Market

Does “Low Risk” Outperform? | Above the Market — Tue, 15 May 2012 17:50:55 +0000

[...] volatility approach, I would focus more on a related category – low beta stocks (see here, here, here, here and here). Share this:TwitterFacebookLike this:LikeBe the first to like this [...]

Comment on The Most Common Mistake Investors Make by jadoube

jadoube — Mon, 14 May 2012 17:05:18 +0000

Takeaway is

Figure out what the public is doing, and do the opposite.