Frankj has done a review of the Moneytalk calls today! Enjoy!!!
Bob Brinker was not live today, June 11, 2017. If he doesn’t give out the phone number right off the bat, he’s not live. He gave the usual comments about what the show is all about. Achieving Critical Mass and “tell the sharks to swim someplace else….”
Then he launched into a summary of a “communique” he got from a follower. Way back when, she and her husband (an accountant) both took lump sum payouts from their jobs and rolled them over into self-directed retirement accounts. They sold their house and downsized to an apartment. They listened to MoneyTalk while relaxing by the pool with adult beverages, an image Bob liked.
They dodged the dot com meltdown by going 60% to cash in early 2000, per Bob’s call. (No mention of whether they followed his advice late in that year to go into the QQQQ’s in his now infamous countertrend rally trade. Regulars here on the website know how badly that episode ended.)
He said they went back into the equity market with his March 2003 buy recommendation. At some point they bought another house and her husband passed away. She’s now sitting on a $2 million plus portfolio.
Today’s show had a lot of similar calls it seemed, if the show had a title, it would be “The 50-50 Show.” There were questions about RMDs and a number of questions about asset allocations, some with the complexities of how to get there while minimizing taxes.
Generic calls for the most part. I think if you’re not going to announce it is a spliced-together show and pass it off as “current,” then yeah, you better just use generic calls. One slip up was when they came back from the break at 2:30 and Bob said “there are all kinds of things to do between now and the end of the year,” a comment we’re more likely to hear late in the calendar year.
I know this is a repeat show but not everybody who comes to the website hears every show, and they probably don’t read all the summaries, so there might be something useful here.
Jim from Atlanta has 7 grandchildren and he wants to give each of them $10,000 so they have “spending money “ when they get to college. Bob complimented him on his generosity and recommended he use a total stock market fund. Maybe because of the “spending money” phrase, Bob did not recommend a 529 plan. Such a plan would grow tax free which is a big deal. The 529 has to be used for certain college expenses though, so there are limits, but I believe the tax advantages outweigh the limitations. Also, if one of the grandkids decides NOT to go to college, that grandchild’s 529 can be allocated to the others.
Howard, listening on WLS asked “how does the RMD affect the 4% rule?” He was talking about the 4% withdrawal rule, not Bob’s general recommendation to not have any more than 4% of your portfolio in a single stock. OK, Bob said, whatever your RMD withdrawal amount is you have to take it out. If you don’t need to spend all of it on expenses, invest the surplus in a personal account.
Another caller from the WLS listening area called about RMDs. He seemed to want to know what to do with it. Bob told him to spend it, give it away or re-invest it (in a personal account).
Jerry from Lynchburg, VA is 67 and his wife is 57. He has money in a 2020 target retirement fund and in a Vanguard 500 Index Admiral fund. Jerry attended a dinner seminar where fixed index annuities were pitched. (BTW, sometime attendees to these lunch or dinner meetings are derogatorily referred to as “plate lickers” by the firms that host these seminars).
Jerry said this is a no lose annuity. You do not lose money in a year that the market is down. (This is because you don’t get all of the upside when the market is up, the insurance company keeps some.)
Bob armed Jerry with questions to ask the annuity salesman when he meets with him.
1. What is the cap on the return when the market is up?
2. Can the company lower this cap later on?
3. Do you get the total return including dividends, or just the return based on the price change of the securities held?
4. What about taxes?
5. Is return of principal included in the income?
6. What are the costs if he needs to withdraw some for an emergency?
Tammy from Albany, Oregon asked about spending from her Roth-IRA vs. spending from a Traditional IRA. I confess I could not follow what Bob recommended nor exactly what she was asking. Her second question was how do you know if you are at critical mass? Bob’s answer was the standard one: when you have sufficient income so you don’t have to work.
After the break at 2 pm, Andy from Tucson weighed in with a home purchase question. Bob told him to put down $100K on the $350K house he wants. Take out a $250K loan, sell the existing house for $200K, pay off the loan. Don’t invade your Traditional or Roth IRA. Problem solved.
Carl in San Francisco was overthinking the whole business about rebalancing to a 50-50 allocation. He has a bunch of equities in a personal account and wants to minimize the tax hit. My eyes glazed over. Good luck Carl.
George in Nevada wants to know what Bob thought about some local financial guy who can said he could guarantee someone an 8% return on an investment. I think the regulars here know what Bob’s answer was.
Robert in San Jose is at critical mass, will work an additional 4-5 years and like so many callers today, had an allocation question: stay at 60% stocks, or drop to 50%? He said his financial advisor said “why not go to 40-50% stocks, why take the risk?” After Robert mentioned this, Bob said he didn’t have any problem with this advice given the level of the market now.
Randy from Michigan asked about Dow futures. Bob said they trade when the market is closed.
Another 50-50 recommendation went out to Joy who is 62, plans to work for 4 more years owes $33K on her home and is about 60-40 in stocks and bonds.
Kim in Virginia threw Bob a hanging curve ball: what is the difference between Admiral and regular funds. The answer (not the same on Bob gave) is at Vanguard, many of their Investor class funds have a minimum investment of $3000. There are some that are lower. Admiral funds have a lower expense ratio but a higher minimum investment, some at $10K and some at $50K.
Mary in Davenport, IA wants to build a portfolio of individual bonds. Bob had no problem but strongly warned her against getting hosed by principal trades. Either buy new issues or do agency trades. He mentioned Vanguard.
Willie said he bought 5 shares of Standard Oil of California (now Chevron) when he was a teenager. With dividends reinvested over 40 years, those shares grew to 604 shares worth $80,000. His basis is $3200 he said. Bob said it was better than a kick in the teeth. Really stupid remark by Bob.
I called my friend, Jethro Clampett for some “ciphering” and he said that is about an 8.4% compounded return. Willie was an early adopter of the Dividend Growth Investment strategy, something not talked about much on MoneyTalk because it involves purchasing individual stocks. Here’s a suggestion for those interested: www.dripinvesting.org/tools/tools.asp. You’ll be amazed at the info contained therein.
Don in Chicago: You can’t take your wife’s Soc Security and invest it in an IRA because it is not EARNED INCOME.
Bill in Denver now knows that Bob would not recommend, nor would he own a bond fund with a duration of more than two years.
Tom in CA got a lesson in how the changes in the gold ETF fund GLD works, but that wasn’t what Tom was asking. He wanted to know how his shares in the fund would be distributed if the stock market crashes. Once he asked the question a second time, Bob ‘splained that he would not get actual gold, he would get a check.
Nick in Charleston, SC wanted to know about secured credit cards. Bob said the point of a card like this is to build credit. Credit is based on the ABILITY to pay and the WILLINGNESS to pay. The secured card proves the ability to pay, and you have to demonstrate the willingness to pay.
Bob told John in Houston he was OK if John took a lump sum pension buyout which is now in cash and lump summed it into short duration bond funds. This would move John closer to a retirement – type of allocation. John is 61 and plans to work for a while longer.
Dale from Oak Brook IL was offered a job by a new employer. He’s getting a 20% increase over his current job and has asked for an additional 10% over what they offered.
I didn’t listen real closely to what Bob told him, but good luck to Dale. Larger companies usually have a range of salary levels for a given job. Like “value” stock investors, they like to buy talent at a discount so their offer is probably less than what they’re willing to pay for a candidate they really want. It can’t hurt to ask for an additional 10%. They’re not going to withdraw the offer. They’ll either meet it, or meet it partway, or stick with their original offer. How badly do you want the job?
Bob Brinker told Bob in Albuquerque that it is interesting to look at company earnings on a GAAP basis and a pro-forma basis. GAAP stands for generally accepted accounting principles. See Investopedia for discussion on these terms.
John in Peoria IL has been buying individual municipal bonds. Bob ‘splained the advantage of well-chosen munis vs. a muni bond fund. I wonder if John’s bonds are state of Illinois issues? Illinois’ finances are in really bad shape. I hope John doesn’t end up with a haircut.
Clair in Missouri: I-bonds. Bob: “hold ‘em.” Sounded like he reinforced what she planned to do anyway.
Chuck in Homer Glen (IL ?) liquidated his nest egg to save his house from foreclosure some years ago. He owed taxes and got behind and is now paying off a $50,000 debt to the IRS. He has been paying $675 per month for 5 years and he still owes $30,000. He is sick of paying and wanted to know if he should take money from a retirement account and pay the balance. After a lot of to and fro, Bob advised him not to blow up his retirement fund. He’s still working and can make the payments.
The last caller was Pat who is 60 years old and wants to get his $2.25 million retirement account to a 60-40 allocation. Pat is aware that bond funds can take a hit when interest rates move up. Bob said take some of the equity money and put it in CDs. It will accomplish the goal of moving money into fixed income. He can then move it into bond funds at his own pace.
Honey here: Frankj:.....Thank you so much for taking over today!
BTW: Is that Jethro Clampett the same one who touts his diploma from gradeeating the sixth grade?
Radio Stations:
710KNUS Denver
WNTK KION 1460 Monterey
95 comments:
Bob does not sound live today.
Rerun Robert strikes again!
Bob mentioned today that he would not be in long term bonds. He said something about 2 year duration being the most to be in. What bond ETFs would match that? I am thinking BSV and VCSH.
Yes, re-run. Dead giveaway, after not really paying attention the first two hours except for some of the really clueless callers, was that there was no guest on the third hour -- just more callers.
A re-run!
Gabe
Alex: Being a re-run, we don't know when he gave that advice. But he's been preaching it for four years and he's been wrong for four years, so I would ignore it.
He (nor anyone else) can time interest rates any better than he can time the stock market. Which is to say, it's all guesswork (no better than 50/50) unless you have a functioning crystal ball.
Bluce,
But, but, but... what about Bob's proprietary timing indicators?
http://www.crystalinks.com/ouijabdlogo.jpg
JC
Not withstanding the fact that the show was a rerun, great job
on the summary. Thank you.
Bluce, that's right. He went to shorter durations in June of 2013 if I'm remembering correctly.
Thanks to Frankj for the summary. Though not a live show, I had not heard many of these calls and enjoy the blog conversations started by doing the summary. Amazing how many of these calls are "rinse and repeat" scenarios for the last few years.
Related to the opening “communique”......weren't these people already in portfolio #3 (50/50) when Bob made the call in 2000 to go 60% cash? Not much of leap for these folks to move another 10% to cash in order for them to reach the 60% level, then still lose half of their 40% equities portion between 2000 and 2003. I wouldn't be bragging too much about that call.
Related to past calls about using more than one brokerage houses for your total investments (Vanguard, Fidelity, etc.), there is a reason to use one company that is not often mentioned. That are the services provided once an investor reaches a certain monetary threshold at a brokerage house. For instance, at Vanguard, extra services are added once you hit the $500,000 mark (reduced fees, access to a CFP, etc.). I like being at one place vs. two or three.
Speaking for CFP, just curious how many regular contributors to this site do their own investing vs. have a paid planner they are working with. I recently met with a Financial Engines planner for a portfolio review and they are charging .35% for their services. I thought that was reasonable but curious what others think?
Thanks all.
Yes, awesome summary by Frankj, including the wit.
Advisory fees vary, as we all know. Vanguard charges 0.30%, per their web site. Edelman is between 1.0 and 2.0% annually, depending upon "assets under management."
That whole phrase makes me gag. They will recommend a balanced portfolio, in their favorite funds, with associated loads, as if they have a magic 8-ball with Svengali at the helm.
Bob's 50-50 is so much simpler and cheaper with similar results.
Hey, it's easy to look good in a perpetual bull market since 2009.
Frankj, thank you for your service.
-Mitch, Mount Prospect
JC: Haha, yes. Although I've always had a mental image of Bob's "Timing Model" looking more like this.
KC: My portfolio is self-directed (and I have no pension) and I reached critical mass a few years ago. I'm almost 67, self employed, still working because I don't mind what I do -- and because I realize that I'll turn into a total bum when I stop working. Go figure.
Regarding the "Admiral" call: I kept listening for the caller or Bob to ever mention the word "Vanguard," but I don't believe that word was ever said. And me shouting at the radio apparently didn't help.
People who didn't know that they were referring to the Vanguard fund family would have no idea what they were talking about.
da Brink's employer on da brink?
Cumulus Media is on the brink of a total collapse
http://nypost.com/2017/06/11/cumulus-media-is-on-the-brink-of-a-total-collapse/
JC
Thanks for the summary, Frank. You must be getting very wealthy from Honey's salary . . . no?
John from SF said:
Re: KC June 11, 2017 at 6:29 PM
If you are considering a financial planner you should consider the ease and cost-savings of a DIY approach. Check out the website bogleheads.org
KC,
When Brinker advised going to 60% cash in 2000 he meant selling 60% of a persons equity position. So for someone in Portfolio III they would have sold 60% of their 50% equities. That would mean they sold 30% and left only 20% of Portfolio III in the stock market. Regarding Financial Engines, I think Adam Bold's Mutual Fund Store teamed up with them. If they use a similar strategy as Adam Bold then they aren't going to put you in index funds. Their approach is probably to look into their crystal ball and try to put you in managed funds that they think can beat the indexes. Maybe they get lucky but maybe they don't. Either way the managed funds are going to have much higher fees, so when that is factored in you are actually paying more than .35% for their services.
BB type financial shows, financial advisors, and publications have a innate problem for the consumer. Just like a get rich quick real estate "no money down" salesmen whom do have advice, but mostly useless. Ask yourself why would anyone bother as if what they report is this good? They wouldn't bother to inform the public as they would be to busy utilizing their wisdom for extreme Warren Buffet type wealth generation.
Investments can be complicated or simple. You read the stats and find simple is often as good. Advisors appear to have one track mentality and in the end not much help at least with the crowd that does bother to read and comprehend financials. For example my neighbor is friends with their advisor and feel the need to pay for the service. The husband did say, their own action taken apart from the advice did better, even within the Great Recession.
So, where am I going? Personally, wealth generation is a whole host of lifetime decisions. You can make your own luck. Like I said before good education is the cornerstone. Example, if you understand statistics upon the gut level, will you entertain yourself with state lottery vs the office pool? Do you ensure yourself for every risk or take on risk yourself when knowing information. Do you purchase the time share vs owning rental property? Leasing a new car or driving a reliable used car. Invest in savings account or a stock pick? Seek out Realtor for your dream house or utilize investment strategy mentality?
How about a life plan where in one would ensure a stable retirement by double income for Social Security and financial security upon job loss. Understanding career opportunity is important given the 1/2 life of such career when getting older. Good to have one spouse employed within a employer offering retirement matching funds and health benefits if the other spouse is self employed. Better understand working for small business without such benefits may cost one dearly upon life time savings.
How to manage wealth for maximum tax liability within Social Security benefits and how to manage life style and costs to make it happen? A Lot of decisions in which one must consider the wealth generation by doing away with debt vs financial investments. More income or less expense?
Really, it looks like one should develop a spread sheet, for a life time of what if scenarios. I think this approach is extremely valuable. What is the life time cost for Starbucks coffee habit, smoking, gambling, new toys, or expensive vacations? Given the saving could be doing double duty to stabilise ones finances upon job loss, early retirement, paying debt, or financial gain per investments. I would suggest one's education activities should concentrate on such matters since the choices would probably be the most important to ones life.
What would the payback be for maximum savings during youth given the time value of capital? The opportunity costs? Compare eating lunch out vs packing a lunch with healthy food for a life time of health improvement and savings. Same for new car to impress. I had a female single Mom applying for rental. She got sold on the value of Toyota Hybrid. She knew all the salesman's talking points, but couldn't evaluate the time value of money of high priced vehicle vs fuel savings. This is basic stuff that no one walking the streets should go without. She thought it was a good investment. Yes, she filed for bankruptcy.
What does one want out of life and what to do with the money?
I've some relatives that make an interesting read on the subject. My older brother is in his early 70s. He was a well drilling contractor per taking over the family business. I would rate him poor within most measures of published knowledge upon running a business and gaining wealth. So, how did he do. Great! He was an early riser and hard worker. He had great sales talent and a people person. He thought out of the box and often time invented better equipment and ways to be more productive. He spent all his money as soon as earning it, but mostly on business fun stuff that sometimes made him more money. He tried to retire, but got bored with his run of aquaponic farming in Florida. He is back in business the last few years. That's the way he managed. He knows the business and needs only to run equipment to make money. If he is short, he will put more time in. Also, he is dealing in real estate lately purchasing nice homes in Orlando area that need a little work. Why is a guy in his 70s working so hard? He gets bored easily. He likes the ride and risk and always has a memorizing story to tell. He forgot to take SS and missed the Medicare signup for a few years. He is violating every know tennent of wealth and investment tenant. He did buy gold once and made money.
My BIL is amazing. He put himself through U-Minnesota with business degree. He married my sister during this, bought a good deal small farm with excellent location for appreciation. He worked with friends during summer putting hot roofs on commercial buildings. That activity paid for it all. Hot, hard work, but he knew what he was doing and bid directly with consumer for max gain. After graduation he quickly got a job with Blue Cross. He worked the corp job life for 18 month and quit. He liked to be his own boss. He leveraged the sale of farm with homestead in northern Minnesota. He partnered up and bought out a old guy that was making log homes with special equipment to turn raw trees into logs. He then established a lumber yard in town for the retail portion. Then a couple thousand acre parcels for logging business. If witnessed the guy's prowess one time when I bounced an idea off of him. He pulled out is BA Texas Instruments II for some calculations he knew so well to vet the proposition. He started to show interest, but I felt he wasn't interested within my interests, but his own. He was not shy upon seizing the deal for personal benefit at others cost. That's not the end of the story. He had a logging accident wherein a windowmakers limb fell on him. Paraplegic now, he had to reinvent his vehicles so he could operate all of them. He sold the business and invented a new business. He sold his talents to small logging companies that couldn't compete with large outfits. He bids logging contracts or purchases land and finances the operation with all paperwork filed. Loggers love it and get more work. My BIL knows each logger personally, their strengths and weakness and manages to coordinate multiple loggers with the business. He also coordinate sales and transport for best price by combing logs/loads. He is making more money than ever. Oh, he got drafted within Vietnam era fighting. Because of his Indian heritage and hunting skill level they let him travel the jungle setting booby traps along enemy pathways. They basically trained him and set his out on his way. I don't think he reported much, just they knew he would be good and stealthy and could live off the land. He enjoyed it and was very capable.
i agree i seem to enjoy these shows because they are not bogged down in small talk and delayed connects plus they cover the gambit . live is always good for the opening talk and heads up but these show seem to have value
No winners this weekend, but (2)two second place finishes.
Gabe
KC: Regarding the opening “communique," were you joking? People in portfolio #3 (50/50) moving 60% of their equity position to cash would then be 20% in equities, not 40%.
The Nasdaq is taking it in the shorts once again today! AAPL downgraded! Happy I sold a bit last week or so.
Of the 6 horses entered, we had no winners...2 horses came in third to pick up some dough. Overall, we did crappy.
Gabe
Frank did a god job with his summary.
Honeybee,
Frankj's summaries are always very informative and interesting!
I hope that you will consider him for a promotion to Executive BRT Member (with a commensurate increase in pay, of course).
If the Brinker Beehive Buzz budget won't currently support that, I offer to contribute my submissions on a non-paid basis. And, please feel free to cancel my first check which I have not yet received. ;-)
JC
Thanks to all for the nice comments.
Yeah, Executive BRT Member has a nice ring to it. As far as compensation goes, HB is a tough negotiator, but I'm expecting an envelope with payment soon ... a "buy one, get one free" coupon for Sizzler!
.
Attn: Frankj.....I will immediately promote you to top Executive BRT in exchange for that beautiful cat in your photo.
I promise to feed him all he wants.....
A bit of a comeback!
Gabe
File this report under the “Young Sprouts” category.
U.S. Teens Lack Financial Literacy Skills
A brief article from Schwab - may be of interest, particularly to folks who have fixed income components in their portfolio.
http://www.schwab.com/insights/fixed-income/will-fed-hike-rates-this-week?cmp=em-QYD
JC
What do you really get from Financial Engines for 0.35%?
Dave -- Regarding "Financial Engines": When Adam Bold was doing the show I loved it. Then a few years ago he had the father-son team doing it. It was okay, after I got used to it.
Since the new format? I hate it, it's BORING. I'd rather listen to "The Shouter." At least he has some passion, misplaced though it may be.
So true! When Adam Bold hosted the "Mutual Fund Store" show it was a laugh riot. His mangling of the phonetic alphabet (a=alpha, b=bravo, c=charlie) while attempting to give the mutual fund's ticker symbol was always entertaining, and his catty opinions of certain fund managers he disliked was high drama on a hung-over Saturday morning.
But I gotta salute him. He sounded like an unpolished, hard-working business owner who was leading from the front. I hope he cashed out big when Financial Engines bought his company.
It may have been published here before, but I will reprise for those who want to catch Bob on his phonetic alphabet slip-ups. It's always a laugh to those who must use it regularly, such as pilots, police, and all aspects of first responders using voice communications-
A-alpha B-bravo C-charlie D-delta E-echo F-foxtrot G-golf H-hotel
I-india J-Juliet K-kilo L-lima M-mike N-November O-Oscar P-papa
Q-Quebec R-romeo S-sierra T-tango U-uniform V-victor W-whiskey
X-xray Y-yankee Z-zebra
Goose, Miramar
Jim and Biker clarified Bob's call to move 60% cash in 2000. Appreciate the explanation and it makes more sense from an investors perspective.
I recall one of Bob's most recent market timer saying the S&P could trade into the mid 2400's. Is that still accurate? If so, aren't we there now and should be moving some to cash? Or does he raise it to upper 2400"s?
KC
.
KC and all....In the June Marketimer, Bob Brinker wrote: "In our view, the index has the poetntial to challenge the upper-2400s range going forward. We recommend a dollar-cost-average approach for new investing and all Marketimer model portfolios remain fully invested."
BB mainly talks of the economy per timing opportunity. Funny, the market have pessimist invested as they have no clue on when the bull market peaks out. Heck, financial experts can't even call a recession until well into the cycle. So, the experts can't do a decent job how are we novist going to fare? Buffet says it's useless to attempt to time the market. Also, to risky for common investor to buy individual stocks given the wealth of information and breath of assets devoted by the experts to the chore. They get it wrong almost all the time or within wrong timing of investment. That little bit of improvement in decision making per their vast resources makes them money. We're gonna out perform them?
It is a fun hobby for some. The accountant types like it. This web site is good for training at least within the quantitative approach which I've read is really the only possible way to beat the market for individuals. If you want to stay on top of recession cycle his mapping of the indicators is informative.
http://investingforaliving.us/top-6-economic-indicators/
The guy has much talent and spends a lot of time within the endeavor. I think it's good to read the struggle of his research. He posts theories and runs example investment portfolios to see how they perform and what the problems are.
Investors have minimal opportunity to beat the average, but since the risks are high and just a small improvement is so valuable it is important. Probably not good to overthink and go with best information for staying out of trouble. Funny how most financial advisors utilize low load index mutual funds. Boogle has good info. I trust that guy. He often states, investing needn't be complicated.
Trees: ...useless to attempt to time the market...risky for common investor to buy individual stocks given the wealth of information and breath of assets devoted by the experts...wrong almost all the time or within wrong timing of investment.
I understand this line of thinking, and even sort of agree with it. However, there is an exception.
1. Own only large, blue-chip, dividend paying A to B+ stocks. This is very safe.
2. Own only undervalued stocks based upon historic dividend yield.
3. Market time based on the % assets held in stocks (25%-90%).
4. Use the market dividend yield to choose the % (yield starts to rise, drop towards 25%, when dropping stay at 90%).
This method constantly outperforms the indexes since the 1960s at least.
their vast resources makes them money. We're gonna out perform them?
The reason why the "experts" don't do it is that the stock ownership cycle is 3-6 years and the big boys swing for the home runs or shorter quarterly results; they have to deliver now or lose their clients.
I have great fears about index funds over the next decade or so. Boogle and index funds are now so mainstream it's effecting the market and so stocks are going up for no good reason but size. It's a great time for investing in value stocks.
Did THAT Bob issue any bulletins regarding the "Tech Meltdown" of 6/9 and 6/12?
rasputin here. Gabe doll, how could the horsies finish second and third?
THAT Jerrod: You don't take Bobby's "bulletins" seriously, do you?
Did THAT Bob issue any bulletins regarding the "Tech Meltdown" of 6/9 and 6/12?
Are you asking if he posted a bulletin to buy QQQ shares? No, he didn't. I don't think he ever will. Even if the market would drop 50% I don't think he will ever put out a bulletin on QQQ shares. I'm sure he's still feeling the pain, even after all these years.
Bluce:
LOL! THAT Bob (Rube) Goldberg!
JC
Ras: I said that two horses came in third in 2 different races. Thanks for asking.
Gabe
Well, four (4) of the five (5) individual holdings in my portfolio came in with green arrows! Good Country, America!
Gabe
Jerrod: LOL @ our little buddy "Rube" and his market and interest rate timing contraptions. BUY! SELL!
Jim: Regarding QQQ, maybe we should ask our resident Bacon Boy about that. Speaking of Bacon Boy, where has he been lately?
MK- Your stock analysis is quantitative. A rule based system and yes this is extolled as the only way to beat the average. The web site I linked to is dedicated to the system. A reference book provides guiding principles. They have examples of waste when violating rules of investment. The system will enforce discipline and take emotions out of decision making. If ever one desired to invest that much time to the hobby and have some extra money produced this would be the way. He has a dozen or so quants invented being tracked for analysis. It looks like most are duds and some perform well during different periods of market activity. I understand that most investment companies run quants as they are proven and flexible tool. The biggest mistake is to temper the formula with human input. The magic is to put hard core stats, financials, and formula for time proven success given results. These often go against common sense investor logic in the day to day review. Investors will copy, purchase, or develop their own and maybe have a half dozen or so working with another dozen being tracked for evaluation. These systems must be updated as the markets change. A never ending hunt for the magic formula. It looks like investors would never trust just one and look to a fleet for better stability/low risk.
Interest rates falling like a rock early in the session!
Gabe
Trees: Good luck hunting "for the magic formula." Nobody yet has found some Rube gimmick (with constantly changing parameters as "surprises" show up) that will beat the broad market, consistently, over several market cycles. As "the model" becomes more complex it becomes even more useless.
If investing is just a hobby and you don't really need the money (like if you have a pension) then have at it, or maybe buy tons of lottery tickets, etc.
The ideology of hatred and violence (going back to its genesis in the French Revolution) using the Democrat Party as its base, has struck in Washington.
What next?
Bluce,
Check out this Fascinating and Hilarious video "HEYHEYHEY – Melvin the Magical Mixed Media Machine" A lot of thought, engineering, work and money behind that extravaganza!
I can't link the video, but here is the URL for the site:
https://www.digitaltrends.com/cool-tech/best-rube-goldberg-machines/
JC
Hopefully, the rate hike will show up in savers saving accounts!
Gabe
Trees: MK- Your stock analysis is quantitative. A rule based system and yes this is extolled as the only way to beat the average.
Not exactly. Fundamental analysis divides into quantitative (numbers) and the qualitative (intangibles). The two disciplines can co-exist (my approach is a fundamental use of technical analysis). Fundamental quality is my stock prerequisite, but historic repetitive patterns of dividend yield is used qualitatively for when to buy, sell, or hold. A good explanation of this is IQT https://www.iqtrends.com/value_identification_basics.php . Nothing magical. Very boring. Buffet would find it pathetically risk adverse, although he was great friends with IQT founder.
Personally, I'm risk-adverse so never try to "beat the market" just want to stay in the market during historically overvalued times (like now) which is crazy using index funds (as BB proves). So I just pick 20 or so blue-chips that are historically undervalued rather than risk the overpriced index. The big boys can't do this because undervalued stocks take years to recover and they would get fired that quarter. But the individual investors can and should rather than risk an index near a peak (like today). This payed off handsomely in 2008; it's the reason I don't work today.
Why don't the big boys do this? It's a 5-10 year process. They live and die on quarterly returns and would get fired. But guys like Buffet etc. do it. Like I said, this is old news. IQT has beat the market since before I was born doing this approach. But it's not "beating the market" that makes it so valuable to me, it's being positioned in real value stocks in case we enter into a Japan-style 20 year bear. The US is long overdue for it. And the BB's of the world won't look so good when that happens. Everyone loves Boggle & index funds today because we've been lucky. It's a crazy index-fund bull market. It's gonna crash eventually.
Fed to raise rates a second time this year. More rate raising from currently about 1% to the anticipated goal of around 3.25%.
"As financial markets had anticipated, the policymaking Federal Open Market Committee increased its benchmark target a quarter point. The new range will be 1 percent to 1.25 percent for a rate that currently is 0.91 percent."
AD
Bluce- I agree with your thoughts and I'm not into single stocks either. But, utilizing a rules based investing system is a good thing. You have some rules, already. Our emotional side or subjective side is the villain that will cause one to make bad decisions. We will suffer rough water and the "systems approach" will steer you to best decisions per time tested rules you have developed. Also, as you develop your prowess you can sharpen the focus. Maybe the rule is to only invest in total index fund with lowest fees. That's rule number one. You save 10% of your income, #2. Three percent of that goes to short term savings for emergency fund and 7% goes to investments per payroll deduction to the index fund. Utilizing composite indicators for inflation, recession, economic growth, and maybe corp earnings a rule base system can steer your investment decision making. A change up to cash savings instead of buying stock, converting a percentage of stock to cash or bonds. Avoiding the deep loss is very profitable. This is a time of high anxiety in which people react. Also, some freeze like a deer caught in the headlights. Always have a decision model per hard data before this happens.
Some investors have a line of credit on their home for investing opportunity. Some take profits and start building a war chest within high evaluation bull market periods. Some have ability to work overtime or take a second job to max income for investment purposes. Others will go to a spartan budget to max savings for cheap stocks. If you really wanted to play hardball, selling ones house in these over priced values and go back to renting for 1-3 years may be the best investment you could make. Some do keep their house in tip top shape for such thinking. Tax free capital. If you think like a millionaire why not? Paying off mortgage ASAP in present day will present you with a good ROI (given the alternatives) and the compound savings is tax free. Maybe this can be the war chest for investment instead of bonds. Your war chest can be utilized to downsized home purchase within a new location with better lower cost tax environment and higher growth potential and do so in buyers market. Maybe income diversification includes a rental instead of stocks. You need to think out your options now and position your money, education, and data before hand. Rule #1 could be think and plan ahead with a spread sheet for decision making.
I use various factors like 5 years sales/revenue, 5 year earnings, P/E to Growth, debt trends, competition factors, industry trends (i.e., millennials not buying cars and self-absorbed with Facebook lifestyle), etc.
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The last time Bob had a live show, several callers had a question about Vanguard. Vanguard has been extensively pushing its new account format called an "upgrade." Several callers asked Bob's opinion about the new "upgrade." The only answer Bob gave was it did not matter which account format you used, it was the same. Actually, there are alot of differences between the existing mutual fund format accounts at Vanguard and the new "upgrade." For starters, if you switch to the new "upgrade", you cannot go back to the old format accounts. Why? Because Vanguard is pushing the new "upgrade" to save itself expenses and Bob refuses to tell you this because Vanguard has been one of his biggest advertisers. More importantly, the new "upgrade" does not allow you to invest directly between various Vanguard mutual funds, because you are required to put all funds in a settlement account, which has only one option, a federal money market. Does Bob give impartial advice? Not if one of his advertisers might pull their advertising dollars from his show.
Mk-The quantitative qualitative analysis appears to be semantics and a marketing tool for the web site. Since the process is published and retail I'm sure the strategy has been captured and vetted by thousands. The starting point of most including Boogle is the market is efficient. All of the tangibles and intangibles factored into the selling price. The smartest people on the planet are continuously evaluating hidden value or emerging trends to make a percentage more return in the future. So, it turns into a guessing game for future worth. How, to increase luck? Buffet claims that the average investor shouldn't attempt to invest the way he does. It's a rigged game with the winners having tremendous influence and connections. Notice Buffet meeting with Obama then proceeded to purchase B&N because he knew the Canadian pipeline wouldn't be constructed. How about Buffet's influence to interview the CEO before stock strade. He claims this is the final and most important criteria for his investment success. The man has a keen eye from experience for BS detection. They're Harvard pretty boys out there with polished resume in hand with enough connections to get high paying jobs, but they don't have what it takes. They have political instincts such as good at taking credit and blaming others. They don't get their hands dirty. A successful manager once told me once that he had good luck with hirees. One criteria was their fingernails.
Buffet instructed his wife upon his death to just put the money in S&P 500 index. Your IQT system sound like a mutual fund I've been with for years. Dodge & Cox has long track record of value investing with good results. You have to be with them for a very long time as you point out it could take a decade for a value stock to turn. D&C always makes the claim that staying the course over the long run will have good results. Problem is they tanked in '08 about half, so the value investing didn't help. I had a Fidelity that is quite large now "Contra" during that same time period. The long term manager has a track record of preventing loss and riding the head wind within bull market. That fund only loss half as much in '08 due to active manager. Go figure. The fund bests D&C both up and down. Only if you go out decades does D&C catch up.
Who will be first in destroying the U.S?
1. The radical left
2. Janet Yellen
3. A tie: Yellen falls in with the radical left (if she isn't already there).
PS: Do NOT let that sweet, "grandmotherly" voice fool you!
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Anonymous...Your post contained valuable information, so I published it. Please set up an account or use a handle for your comments.
Anon:
I have not heard anything in regard to "upgrade" anywhere, to include, Vanguard. itself. Vanguard does not advertise on his radio program.
Gabe
Mad: There is the radical right.....also the alt right. I am not a fan of politics.
Gabe
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Gabe....If you are going to send comments one minute apart, please save me some work and put them on the same post. Thank you....
Tree: The quantitative qualitative analysis appears to be semantics and a marketing tool for the web site.
Chuckle. Quantitative and qualitative analysis are scientific terms. I can assure you they are not "semantics" nor a "marketing tool". Anyone remotely educated in finance knows them well. For a good explanation: http://basehitinvesting.com/quantitative-vs-qualitative-methods-for-stock-analysis/
The starting point of most including Boogle is the market is efficient.
The Efficient Market Hypothesis is both controversial and disputed. Several exceptions that prove it's false? 1) Many have consistently beaten the market over very long times which is impossible according to EMH. 2) the 1987 stock market crash of 20% shows that stock prices seriously deviate from their "fair values". But we don't need these to know EMH is wrong; humans are irrational. That's enough to disprove EMH.
20-30 years ago, in BB heyday, index funds made a lot of sense. I was a fan. But today everyone is using them and buying stocks based on size alone. It's a bubble. And bubbles always over-correct. Like anything else, once everyone is doing something the value goes away.
To be clear: IQT did not "invent" anything. They merely use Benjamin Graham's value investing methods (he's the guy who taught Buffett) to do stock analysis. They don't even build portfolios. It's basic common sense and long predates EMH and will still be around long after EMH and BB have been forgotten.
Sorry my above comment I mislabled the quote as Tree but it's Forrest.
Stock trades are highly efficient. Think of the easy to use electronic system, accounting regs for accurate info, size of the market, talent dedicated, etc, etc.. Millions of skillful professionals are pouring over data with sophisticated computer software. The historical price of a particular stock may be low, but that just means the market thinks it should be. It doesn't mean the market is foolish. The market can propel bubbles or froth, but that it is still efficient. Basically, the market is the true measure of value given all the decision making being made across the globe.
The stats for active managers are poor as compared to passive index fund returns in general for a whole host of reasons. I do know investor's whom have beat the market, but were they lucky more than anything else? Mostly, as they haven't the resources or ability such as the Wizard of Omaha. Over time the returns will probably regress to the average. The proof of higher than statistically possible returns are usually proven in court per insider trading reference BB guest on the subject. Investors will have a variety of returns depending on risk, market, timing, as we all know. One of the best, smartest, low cost, and reliable returns are the index funds. That's why financial advisors use them so much. Boogle did address the passive investment influence upon stock prices at the latest financial show. It's on youtube. The phenomenon couldn't possibly have an impact unless a very large majority of investors were included. It's something like 40% currently. Even at a large majority it would only take a few percentage points of active trades to make the passive element ineffective. He did say the concern is just the latest spin/pitch within financial selling. He has seen it all and believes the index fund is the common investors best friend. We have enough concern with balance and even timing. The deck is stacked against the lonely go alone stock picker, reference the after hour trading or the super computers set up on the trading floor. How about the brotherhood within the sector. The Jewish community is well represented as their religion shares the wealth accumulation and generational wealth ideals. Also, the community is well connected and trust is high. In other words some of them have an advantage that most don't. Wouldn't it be nice to obtain best in class up to date info from trusted friends. It's not illegal nor unethical, just an advantage if you have the opportunity.
An acquaintance at a party some years back claimed Exxon was the golden goose that always wins. He claimed they made even more money when screwing up. It was a good ride, but not so good now or maybe in the future. He could lose his life savings with such simplistic thinking. Nothing is certain other than change and chance.
Mad: You are spot on! The Market is far more interesting!
Gabe
I don't trade at Vanguard but came across this pamphlet (opens in a PDF) that seems to be a fairly good "explainer" regarding the differences between the current vs. "upgrade account" systems.
https://www.vanguard.com/pdf/vbafqm.pdf
JC
I've used VG's money market since 1990 (they used to pay a bit higher yield than others). The other day they sent me an email saying I would have to pay a $20 annual "account" fee if I didn't switch to electronic delivery of all statements, keep a larger amount in the money fund, or something else that I don't remember.
Aside from the money fund, I have about 30% of my portfolio invested in VG products -- although it is all held through Schwab, so VG may not even know about it. But if they do, and they want to nitpick me for $20, then it seems pretty stupid. I hate fees of any kind; if they were smart they'd just tack it onto the expense ratio of the MM or something so at least the fee is "hidden."
Bluce,
I agree that the $20 Vanguard fee is a crappy way to do business, particularly since they have enjoyed a very good reputation. And it is NOT a good way of doing business when they have a large base of legacy customers.
However, I am wondering why you might have an aversion to electronic statement delivery. I have switched to that with both Schwab and Fidelity and am thoroughly pleased. So much so that I have converted any/all A/P accounts (utilities, etc.) that offer the service.
The only downside I see is if we have a massive attack (courtesy of Kim, Putin, et al) on our grid (which happens to be extremely vulnerable) our data will be inaccessible. But if that happens they say most folks will pass on within one year (many will perish much sooner). So, accessing account data would probably be low on most folks priority list.
Oh, wait! I almost forgot - Have a Nice Day!
JC
PS: I am considering bailing out of some/all ETF's today. The daily downdraft is becoming quite worrisome.
JC: I don't have a big problem with electronic records, but being forced to do it grates on my being. All I've ever gotten from VG for years now is a paper year-end statement, and now they don't even want to do that?
Trees: The market can propel bubbles or froth, but that it is still efficient. Basically, the market is the true measure of value given all the decision making being made across the globe.
In a famous 1984 article by Buffett ‘The Superinvestors of Graham-and-Doddsville‘ he discussed a group of nine investors who had substantially outperformed the market in a 20 year period. He accepted that these could be "luck" as you claim...except that they all came from the exact same school of investing.
Sure they all had different strategies & different assets. But they all followed the same philosophy. As Buffett said: if there were 1,500 cases of rare cancer but 400 of them were in a small mining town scientists would probably go there and check the water.
This makes it plain that EMH is wrong, and most people have come around to this fact by now. Stock market crashes with no obvious info as to why show this; markets get out of balance all the time, life is messy, humans are emotional, history is wild. It's is exactly contrary to the EMH view of information being priced into markets at all times; the information itself must be interpreted by individuals and the average opinion will usually be wrong. Indeed, good investment strategy rests on the idea that market prices often diverge substantially and for long periods of time from the underlying value of the assets.
Of course institutional investors cannot be value investors if they cannot operate independently, and this is why the vast majority of managers mostly under perform the market. That and they take big fees that cut into the profit. The solo investor has no fees and in fact his stock ownership (buy/sell fees) are far cheaper than index funds, which charge a % of your holdings. He is also fully independent.
In summary, the casual investor can outperform the market while remaining far safer remaining in blue-chip undervalued stocks. Your Exxon example is just a straw man, because one should always have 20-30 stocks that are diversified in sectors. This is just common sense. Nobody recommends buying a single stock. BB says no more than 4%; I rarely go as high as 8%, and only on blue-chip stocks with over 25 years of dividend paying history.
I enjoy reading other folks' postings but when they are long like some lately, I don't read them. Could the guilty please shorten their remarks?
Thank you,
Mike
If I buy a blue chip stock I would like to buy it when it is temporarily undervalued. I do not buy it hoping it will remain undervalued.
MikeE said... I enjoy reading other folks' postings but when they are long like some lately, I don't read them. Could the guilty please shorten their remarks?
OK
I'm with MikeE.
Jeff Bezos: Alexa, buy me olives from Whole Foods.
Alexa: Sure, buying all of Whole Foods.
Bezos: [expletive!]
;-)
Anyone remember Moneytalk back in the days of the Amazon IPO? I seem to remember callers and/or Bob saying that its valuation did not make sense since it was just a mail order house.
Our Beloved Bacon Boy admits to being guilty!
I knew it!
Note to FAKE Mad as HELL, FAKE Gabe, FAKE JC and FAKE et al:
I know a C-Suite executive at Alphabet/Google, the company that owns and operates Blogger. So, if you continue your HARASSMENT CAMPAIGN against Honeybee and others on this blog, I will make it my personal mission to "See Something - Say Something."
Contacting Google will be just be for starters. Your ISP will be informed as well as the appropriate Federal, State and Local authorities. Oh, and there's also the matter of HARASSMENT litigation filings against you.
So, put another way: GO AWAY! LEAVE US THE HELL ALONE!
Chris in Atlanta,
Very funny
To (the REAL) MAD as hell: I'm getting the sense that you're MAD as HELL.
Yes, these "fake" posters are as bad as the "fake" news. I guess anyone who doesn't have a Google account is at risk of being hijacked. Yet I can totally understand why someone would NOT want a (hate) Google account.
There seems to be no good, simple solution.
Q: Who is the "blog administrator" who deletes these phony posts? I'm assuming it's Honey, but don't know for sure.
I dunno the Exxon guy was satisfied with his single stock pick and his ROI proved the method at least the last I talked to him. We have locals that have invested in Stryker for a lifetime. Some are rich upon the decision. Representative Fred Upton family always invested in Wrigley gum. It made them a ton of money. My Dad invested as a youth and most of his life with a local company Thorp Finance or bank?. The company is now some large financial company. He made him some good money. Problem was he thought the stock market was a magic money machine after that and he started to read and bone up on the latest guaranteed investing techniques. Ya, he lost most of it upon death, but my mother with no such education took my sister's guidance and invested in Exxon and made it all back. Go figure. I've heard to many of these stories to attempt single stock picks. Some are great stories, but you only hear the good stories.
Investing for a living blog has a incredible talented guy that is living off the markets. He has a full time job doing it and is incredible talented to do so. The results are at best a few notches above passive index funds. No thank you. There is no easy street investing with high guaranteed returns. You have to work hard and invest in an equivalent PHD to be up to the challenge. I would say at that point your are about on equal footing of a good active managed fund, but with no load.
The easy money made in real estate or financial markets reminds me of a trip once (a long time ago) to Atlantic City.The casino handed us all a $50 roll of chips and said to go have fun. The bus was a lot quieter on the way home. Some drunks reported what they won (they forgot what they lost). If one is trained upon statistics it's a fools errand to beat the house, but some do make money gambling. But, again they are incredibly talented and work very hard to gain at about a PHD equivalent. They could do better investing such talent within a profession. They have some fond memories of easy quick money, but if you know any of them it is far and few. They have no glamorous life style. A thief has a very alluring easy money method as well. No thanks. I would rather invest passive and minimize risk. Even at that the tenure to maintain passive investment to optimal is a challenge.
Take a chill pill Mad. When I see a fake post before deletion they seem silly and harmless.
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Well "phil" you may see them as "silly and harmless", but they are nothing but nasty harassment and time consuming for those who have to clean up the mess.
I agree with every word Mad as hell said and he has my blessing to proceed any way he sees fit.
Re Bluce question. This is my blog and I am the "blog administrator."
...results are at best a few notches above passive index funds. No thank you.
Trees, I agree with you. But the USA is a strange anomaly in world history. We could have been the Japanese in 1980 or Germans in 1940. In tough, long bear markets, one must pick individual stocks with value to survive. Index funds are thus frightening today. Why? We are at the end of a glorious run where even BB makes millions, so everyone is now using the index, convinced they always work. Value is now mixed in with complete trash that people buy by the billions just because it's "in the index". When this bubble goes, it's going to be a once-in-50 year thing catching everyone by surprise. But those few holding stocks of real value will come out well.
So what makes value investing so useful today is not that it makes more $ than an index. It's that it can match/beat the market with little work yet stay out of overvalued stocks. Because when this party ends, and stocks come down to earth it's gonna be a bloodbath where all the rules change and index funds will be scorned for 50 years. Guys like Boggle will be looked at as historical anomalies. It's been a wonderful 50 years. The next 50 might be terrifying.
WARNING: Long post, ignore if you wish.
MK: With all due respect, after reading your last post I have to ask: Do you know what an "index" is? Over the long run, value generally beats growth, small caps generally beat large. But there is a risk premium involved and each sector has their day in the sun. There is no free lunch. A regular "broad market index" covers all of these sectors, during all times.
Regarding the US market: We only have accurate data going back to 1926 when (according to what I've read) the S&P started keeping accurate records. So, 91 years of data; not nearly long enough to draw conclusions.
I've posted this numerous times here before, but: Going through the global history of investing, back at least to the times of the Roman Empire, stocks have returned around 5-6% annually, bonds a percent or two less -- all net of inflation. This is what investors have demanded for putting their money at risk (at the various levels) throughout history. None of that has really changed.
The US has been around 1-2% above the norm since 1926, returning around 10% annually since then (average inflation rate has been around 3% since that date). Should we expect 10% total return annually going forward? I don't, and I don't think people planning for the future should either. But that's just my opinion -- but it's based on the past 2,000 years of investing history. YMMV.
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Bluce....As MikeE said about long posts, he has the right not to read them.
And I certainly never requested that anyone limit the length of their posts.
MK: John Bogle. Only one G.
Adding to Bluce points, the mega trends of U.S. stability, accuracy, efficiency, and trust within financial market trading has much value. We should work hard to keep the excellent rating as it will attract more international corporate and personal investments. The same with talent, trade, and education, although we are getting lazy in this regard and to concerned with political power instead of excellence.
Baby boomer (among others) investments per the popular retirement accounts seem to have caught fire. This is a mega trend factor. The international turbulence per war and revolution may be higher currently or so it seems. Investors look to a safe haven.
The U.S. financial debt will ensure low interest rates. A retired military financial investor commented at a seminar I attended, "the government can't afford high interest per the national debt". They will never let interest rates soar, as we then couldn't afford our national debt.
BTW, the financial titans like Bogle talk of expecting low returns in future. I'm picking up that the dampening effect is per nation's high debt load. That the Fed's can't allow the interest to go up much per the cost to maintain the debt. The low interest or the actions taken to keep the interest rate low will have a dampening effect on the economy. So, were in a predicament wherein the juice to stimulate the economy is hogged by the fed. Since interest rates as historically low and will continue in the future, the equity market has benefited. Now that were reaching peak evaluations the bull market will sputter, but since no other game in town, the market will vacillate, but probably recover just as fast. As the corp earnings improve over time, so will the value of their stock. So, earnings is the key to better evaluations. No one has a crystal ball and national incidents will play into this, but the nations ability to improve economy like the days when politicians were more responsible are gone. If we truly were able to invigorated the economic environment per invention of efficient taxing system and efficient regulations that would go a long way. On top of that if ever we decided as a nation to once again maximized the ability of country to improve by competition such things as education, health care, and immigrant credentials we would flourish in short time. It would probably be to much to dream of smaller efficient government and term limits.
RE: FAKE POSTS
I'm sure if we wait another week or two the investigation of the fake posts will fall under the Special Counsel's purview.
Bruce: MK With all due respect, after reading your last post I have to ask: Do you know what an "index" is?
Yes. Retired at 45 using them often (oft still do). But they are now dangerous due to their unthinking popularity driving stocks so high. When they get unpopular in the next long bear, there will be a reverse effect.
Example: Nikkei 225 (Japan’s largest companies index) peaked in 1989. Three decades of nothing. Yet value investors holding individual companies often did well. Why? Many companies still made good money over this time. Yet index fund investors cannot not discriminate between the junk and the quality.
Yes, index funds have had a great run. Why? A rising tide lifts all boats. Superpower + WWII victory + peace = big returns for all. But even Bogle isn't so sanguine today using his formula: forward returns = dividend yield + earnings growth +/- changes in valuation (that is, if the index currently yields 2% with 6% earnings growth & with our crazy high P/E deflating 3% per year, then a 10 yr index ROR is 5%. This checks with 150 years of Shiller’s data too.
Summary: for many companies, their fair value calculation is far below the current price unless we a) assume ridiculous growth or b) assume a very low discount rate. The last 30 years have been the golden era of dummy investing. The next 30 will likely be the era of value investors, when everyone starts to pile out of index funds to focus on companies that do well.
frankj: sry my spellcheck don't like one g!
MK, O.k. I have a long experience with Dodge & Cox stock fund that aligns with your investment strategy. They have a very long running investment company that works the value stocks. It is currently rated gold per their under valued financial holdings. The fund does have low expense, and rated five star. The fund communicates the same stuff you post. They are not index. I'm not impressed with their 10 year ROI, but over the funds life it is good, fifty years or so. They really drop in value during recessions and rate a 4 star for risk. Why is that? Per your logic the blue chip value stocks keep value? I would think this investment firm has a ton of talent and history within stock picks. You think the IQT retail website is flying below their radar? That they never herd of such a tactic to pick stocks. D&C is not a quick ROI company. They claim to only make money in the very long run. Funny I have another active fund Contra that over the long run has steadily beat D&C and especially during a down turn. This fund has an historical risk of one star. Go figure and they are equally old fund with long term manager. I can't compare it to index funds as the history of most or all index funds is not that long as compared. Contra has a slightly higher load, worth the cost, but it only lately does better than S&P index. I have 50% cash position within D&C and 0% cash with Contra per the perceived risk upon a down turn. Under valued may just mean inferior value plain and simple. You may not be as protected as thought? How much did your stock tank durning '08 run down?
Forrest: Look, IQT is not a "fund". Just a newsletter detailing blue-chip stocks stats. Lots of investors and funds use it (Buffett reads it, may still). However, if you bought everything on the IQT "value" list and sold it when it left the list (3-5 years, typically) that portfolio beats every main market index since 1966. That's third-party auditing saying so, not me.
You think the IQT retail website is flying below their radar?
IQT is merely following Graham's principles, as does Buffett, etc. Pretty basic stuff. IQT is too conservative for big profits. As I said above, the reason they are "below the radar" is that it takes too long (3-5 years) to prove out to use it directly plus funds need more profit for fees so they have to swing for the fences. But thousands of funds use it to make their own fund decisions.
How much did your stock tank durning '08 run down?
Actually, I was mostly out of the market in the '08 crash (chickened out) and went 100% back in near the bottom (just got lucky) so happened to double my net worth in less than a year. But the IQT portfolio beat the market during '08 I think. It does better in a bear. Why? Blue chips go up and down less than the market. Their weakness is on the booms because they stay out of speculative stocks (like the FANGs).
Thanks, that explains at lot.
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