STOCK MARKET...BB comments: Dollar-cost-average new money now.....greatest run in market of all time, and it is now at all-time-highs. Those in retirement should keep a balanced asset allocation.
==> Thanks to dRahme, clip of Brinker's stock market and Fed comments.
WHAT IF THERE IS A MAJOR MARKET CORRECTION.... Caller Bill from New York - age 80 - asked if he should liquidate all of his stock and bond investments because he is afraid that there will be a major correction.
Brinker replied: "If you have the proper asset allocation and you have a constructive view on the market, then you're where I'd like to be. If you do not have a proper asset allocation, then you should get it certainly in line with a proper allocation would be for you. And someone in your age group, I would be 50%, or maybe even less equities and more fixed income - maybe 40-60 - maybe even 30-70 at your age. But as far as the market is concerned, if I have that view that the market is in trouble, I of course express that in Marketimer.....This is Moneytalk.BROKERAGE HOUSE SIPC INSURANCE..... SIPC insurance covers $500,000 in case of a brokerage house failure.
Brinker commented that if you stick with the big companies (like Schwab, Vanguard or Fidelity), there is no reason to be concerned about failure, but he is still pro-SIPC insurance.ECONOMY.... BB: Q3 growth rate figures are soft...August numbers declined -0.2%....minus automobiles and gasoline, it's -0.1%. This may be partly attributable to Hurricane Harvey in Texas and Hurricane Irma in Florida.
==> Thanks to dRahme: Clip of economy and hurricane's effect and what's ahead.
FOMC/INTEREST RATES.... BB: Will not see an increase in Federal Funds rate at the meeting next week.....Expect rates to remain the same....Depending on what happens to economy, the next possible rate increase is the December meeting.
INFLATION...BB: Inflation is below 2%, which is below FOMC target.
BITCOIN = TULIPMANIA....Caller Burton pointed out that Jamie Dimon said that Bitcoin is "destined to fail" and is a "con game." Brinker agreed, and said it was like "Tulipmania."
BRINKER'S MARKETIMER INCOME PORTFOLIO....BB: Caller Mike in Glen Dora asked about yield. Brinker commented that the yield was now at 2.9% - as per page 7 of his investment letter.
Honey EC: Brinker touts using low-duration bond funds. The three funds (DLSNX; MWCRX; OSTIX) in Marketimer are about 1.5 year duration. But be aware that at least two of those funds contain very high yield (junk) bonds.
BOND FUNDS IN MARKETIMER.....BB: If moving from stock to bonds and using the 3 funds in the Marketimer income portfolio, no need to dollar-cost-average - just make the move.
MULTI-MILLIONAIRE CALLER WITH HUGE PROBLEMS.... Caller John, with $2 million net worth needed Brinker's help choosing whether to take an $84,000 yearly pension or a lump sum of $1.5 million.
Brinker said that since John has four kids and 6 grandkids, he might want to add the lump sump to his net worth so he'd have more to leave to them.==> Thanks to dRahme, clip of next week in the Canyons of Wall Street
FRANKJ'S MONEYTALK GUEST-AUTHOR SUMMARY
After a two week time out Bob was back on September 17, 2017 with John Pugliano author of The Robots Are Coming as his third hour guest. Bob sure likes these “futurists.”
Bob asked if someone has a job that a robot could take over, is that job worth aspiring to?
The guest answered, that no, the job is not worth having. But he quickly pointed out that it isn’t just the hamburger flipper jobs that are at risk: auto mechanics, doctors, attorneys and mid-level managers could be hit.
The knowledge gained through years of study, whether it is fixing cars or diagnosing illnesses can be loaded into databases and put in “the cloud.” He mentioned the computer diagnosis to sort out a check engine light signal. The implication was it won’t take a mechanic to do that. He also hypothesized that smart phones may someday have an app that allows you to lick the screen or something similar and an app will figure out whether you have a garden variety sore throat or a strep throat.
We shall see.
As far as college study goes, the guest recommended the classics. But he was not referring to art, literature and philosophy. He meant science and math.
The people most at risk are those in their late 40’s who are entering their high earning years. He says they better look into starting a business and be willing to move. The specific expert knowledge they’ll need to run a business will be available on the web. Bob pointed out that not everyone can start their own business and/or is willing to move.
As if on cue, Bob went to a caller, Tino from Connecticut, who said half the people out there have IQs below average. (Reminds me of Larry the Cable Guy pointing out that “half the people you meet are below average.”) The guest’s response was that “tech will help them.” Bob pointed out that what the guest just said was that native intelligence will be less important than it has been in the past.
Karen from Albuquerque wanted to know if robots will pay into Social Security. Somebody pointed out that Bill Gates wants to tax robots. This led the guest to say he wasn’t worried because “the FED will print enough money.” Bob jumped in quickly to correct him, saying that’s not in the current budget.
Rick from western Pennsylvania has two sons who are out of college working in the computer science and computer engineering fields. Not to worry said the guest their jobs are probably OK and cyber security is an area they might look at. (Yeah, Equifax might be hiring.)
Then Paul from Buffalo called, but my phone rang and I had to take the call so I missed his question and the answer.
At the end of the interview Bob went back to the topic of the guaranteed basic income and said the reality is, in a country with 29 million people not covered by healthcare the guaranteed basic income is not going to happen.
Ed. comment: I thought Obamacare fixed all that. (?) I think it would have made more sense to say:
1) In a country that is $20 trillion in debt, the guaranteed basic income is not going to happen.
2) In a country where Social Security and Medicare are two of the biggest entitlement programs and they’re both headed for insolvency … the guaranteed basic income is not going to happen.
3) In a country where the two major parties can barely agree on what day of the week it is … the guaranteed basic income is not going to happen.
Earth to Bob: Enough with the futurists already. How about a nice long break until the next one? Say one year.
Honey here: Thanks so much for that great summary of a rather boring guest. I think Brinker might want to have you as a guest - spice up that third hour. :)
Radio Station
KKOB770
57 comments:
Well Bob had 2 weeks of rest and showed what a "Prick" he is on the 1st call. Caller Mike asking about yeild in portfolio 3. Bob would not say the yeild on the show. Told Mike to look in newsletter. 7K a year from 250K sure is not a massive amount to keep a secret. I would not buy his marketimer with my worst enemy's money and surely not mine.
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LOL! I thought he had reached a new low on that call, too, Doc.
Then immediately after the call ended, he played a commercial.
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BTW Doc...the yield on Brinker's income portfolio is 2.9%....
All I ask for support is to visit the Google ads on the front page if they interest you.
I'm a bit surprised that Brinker has not mentioned anything about the Equifax data breach. Most people know by now what they need to do to try and protect themselves but I thought Brinker would have something to say about it.
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Right Jim...I expected him to say something about it too. Maybe he saw that we had the bases covered here on the blog and decided he didn't need to. LOL!
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Doc! ...I hope you heard Brinker just stated the amount of yield on his income portfolio.
Wonder why? LOL!
Of course, in the first call, the numbers were all there to do the math, maybe it took awhile - maybe he didn't have an actual copy of Marketimer handy. :)
I was disgusted and turned him off. Tks for the update. This blog is my goto source, Big Bob and I are officially seperated.
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Doc... Well you missed his next dirty trick. As he was talking about having a "favorable view" of the stock market, he made the statement that if his opinion changes, he will put it in Marketimer.
So one wonders why he thinks he should deserve a radio audience.
I will transcribe his exact words and put in the summary.
Doc and Honeybee, I just don't get it, you seemed to resent Bob so much! Just don't listen to him and your life will be stress free. But as I've said before, deep down you really respect him and you can't help yourself, you have to listen.
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Kashelle....Did either Doc or I ask for your advice?
I wonder what the heck your're doing here if you don't enjoy the banter?
If you have a different opinion just say it - I don't censor conversations about Brinker.
I stopped subscribing to his "Newsletter " a few years ago. But I do love and appreciate the banter on your blog. I don't have to agree with it all. People are too sensitive these days. I also don't have to waste my time listening. The summaries are great!
Pavlov's Cat
Bob actually meant to say "the ro-butts are coming."
Mr. Jetson
Honeybee...I am engaging in the banter, you just don't like it because I'm not bashing Bob. He offers valuable advice for free on the radio and and a small cost for those who want to pay for his newsletter and money-talk on demand. Hmmm, sounds like a successful formula to me and those who can't do that ridicule his success. Very sad...
House Doc,
Don't hold back on us - please tell us how you really feel. LOL!
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Kashelle....I totally agree that Bob Brinker has a GENIUS business and marketing plan.
Yep, you betcha. He's one of a kind in my book.
Now, shall we discuss the honesty, integrity and trustworthiness of it?
klashelle,
Have you noticed that when there is an accident on the freeway, people slow way down, lookie-loo, discuss it with others in the car, and maybe even record some video and commentary on their phone?
That IS THAT Bob's show and WE ARE those lookie-loos.
When THAT Bob shows up for work, he gets HIS 3 hours and we get OUR 3+ hours to comment and straighten matters out when necessary.
When THAT Bob doesn't show up for work, we gain HIS 3 hours by default and we also get OUR regular 3+ hours to reflect upon and straighten historical matters out when necessary.
So, whether he shows up (or doesn't), we always end up the winners.
klashelle, if you embrace our discussions here you will truly become a very wise master of the markets.
Personally I have no issues with any of those 3 subjects but if I did I would stop listening to him and not buy any of his products. You obviously have serious concerns so why don't you free yourself and stop listening. What is being accomplished by bashing him week after week?
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Klashelle...I have been keeping the truth, whole truth and nothing but the truth about Bob Brinker available to the public for about 16 years. I started on Suite 101 - which folded after Kirk Lindstrom left. That was when I began my blogs.
Here's your homework assignment:
Start back at the my very first Brinker blog that is archived here.
I then moved here to the second one here please read it all.
Then I left my "partnership" with Kirk and set up this very blog so I can have autonomy - please read it from the beginning.
Then you will be qualified to understand what my work is all about and maybe judge me. I've forgotten more about Brinker's shysterism than you will ever know!!!!
I have mellowed over the years - unfortunately. But occasionally, a spark of the old outrage comes through - and I believe I have hundreds, maybe thousands of fan who love it when that happens.
Honesty, integrity, trustworthiness.
Recommended the QQQ trade which turned out to be a disaster. Then never mentioned it again until many months later. OK, not every trade is a sure thing, but fess up to your mistakes.
Has not "timed" anything since 2003. Yet publishes a newsletter called MarketTimer.
Only recently stated that the Fixed Income newsletter is written by his son. Many callers complimented him on it in the past but he never said a word until recently.
MoneyTalk on demand: about one show a week is a repeat.
Does not have the integrity (or is it honesty) to announce when a repeat show is broadcast. The only way people know is via this website or if they realize it is a repeat when he does not give out the phone number.
Once advised a caller from Florida NOT to tell his bank he had the money to pay off a mortgage on a second home that had lost value during the housing meltdown.
Four horses ran this weekend....One winner and one horse ran third. Not great but good!
However, folks rate BB, I think he has been valuable to me. As the old saying goes....different strokes for different folks!
Gabe
It's not bashing if a product is purchased that turns out to be less than advertised. It's called customer feedback, which true entrepreneurs might desire if they are serious.
Shysterism- that's a good word.
Thanks Frankj for another succinct and witty guest summary. It's gonna be interesting for the young sprouts when everything is automated and fathead in NKorea sends a bomb to Seattle (closest good target) which fries the grid and the internet with electromagnetic emissions. Won't even be able to ask a robot doctor to check a skin rash.
We'll all become tree huggers because no more electricity. Claim your tree and chop down all the others for firewood.
Faraday, SeaTac
While I enjoy this blog every week and feel it has a lot of great content, Klashelle makes a good point: the continuous bashing is inherently hypocritical: why pay such close attention to someone whose comments have little or no value? Presumably, most of us pay attention to what Bob says because we think his comments have at least some value to us. That's why I listen to him, anyway. Over the last 30 years, I've found no other financial host or commentator to have had even close to the same impact on my financial literacy & solvency. He's not perfect, but I've yet to hear anyone better.
The robot revolution. My old career experience with robots. Back in late 80's it was the rage of future. We invested in education and equipment. Some intelligent pick and place and welding. I watched the technology improve, but it was slow growth other than automotive. Most of it very dedicated to 24x7 hard automation with no flexibility of motion. Great when Union workers burden rate sit at $100/hr.
Most companies decide better to just improved efficiency of labor force. People have brains and much effort to facilitate team work. I do think the cost and flexibility of robots are to the point of challenging human automation. The biggest value of robots is consistency. Process and manufacturing control and quality function require precise measurement, control, docs. Robots are insanely consistent, therefor max quality. Consumers suspect a greasy hamburger flipper, but a bright shiny robot all fear abated. Just last year a BK cook was caught spitting in police officer hamburger.
Really, the revolution is in sensor technology and computer control of entire operation. Past years we had to program robots with step by step pennant i.e. move left, twist. Also, ladder logic programming was required to automate. This was an off shoot of relay logic. It is still used today, but under layers of visual software.
I think artificial intelligence, improved sensor technology, and cheaper cost of equipment will allow shoots to venture into areas where humans unfit. Gently lifting 300# patients every few hours to avoid bed sores. It would be very effective, for example, if a robot could be easily be taught a work requirement without the present day level of cages, training, supervision, power, and communication hookups. Like a self taught lawn mower that would work 24x7. Or a lawn tender that work similar hours to level lawn and improve turf. In this example a futurist would fear monger that this equipment will make human labor obsolete. I don't think so. I heard that argument with desktop PC's. New equipment seems to improve our quality of life, but consumers quickly find 100x the jobs for this equipment. Meaning the job market just increased 100x as the new equipment goes to work within jobs that never existed, for good reason. Who would send a human into a hot nuclear reactor, terrorist camp, or pulling lawn weeds at 2am.
I think you preform a great service in "shadowing" Bob who books no alternative opinion on his show. I am also not against a few futurists so long as people use them for thought but not gospel....we all need our thinking tweeked every now and then.
Bob's 2.9% yield on fixed is not much as compared to recent equity but if it was looked at vs what many would use (money market) it is quite a bit better. Although now we are seeing offers of non govt cd's paying even more now if you go out a few years.
Keep Shadowing!
I caught most of the Kudlow's stock market segment. One guest was Bear the other Bull leanings. Kudlow connections and experience within politicians, economics, and Wall Street make him a valuable commentor as well. The basics: The hurricane season destroyed so much property, that GNP may increase per spending. Also, tax legislation will be a big thing if accomplished. Kudlow thinks odds are greater for a 10 week window of opportunity. Infrastructure is another investment that will spur economic growth if accomplished. Inflation is low and interest rates low. What more do you want?
Bear forces include the fear of long market that could turn given any unknown reason. Most investors are content (another bad omen) within current climate, but fear the soon to be future. Everyone has their finger on the sell button, just in case. Like BB said the economic climate is anemic. So, fragile conditions. Investors are ignoring all the bad news and this may be a sign of complacency? However, economic conditions all appear to hinge on successful legislation. North Korea concerns didn't appear to be much. Fed lowered economic growth several times during the year not a good sign either. May be a good time to move some equities to bonds. Good time to be cautious.
S&P sits at 2500, but could achieve 3000. It is within possibility. It may be a certainty if tax reform passes. Financials could receive a spurt. Good to be long on good quality companies, Industrials look good and for those interested in tax free investing Municipals attractive.
I was reading Lance Roberts column investing advice (bearish) that finalized his thinking to "if everything goes right we could enjoy an S&P 600 pt increase. If something goes wrong a 900 pt drop. The usual caution of recession impacting stocks to 30%-50%. Place your bets.
Thank you, Faraday.
Thank you HB and FrankJ for another great summary.
I wonder how badly Bob berated the call screener after the first call?
Bitcoin -- I do *NOT* invest/speculate in it, but want to point out that Jamie Dimon is full of [the S-word] according to this article:
https://news.bitcoin.com/after-the-boss-calls-bitcoin-a-fraud-jp-morgan-buys-the-dip/
That article claims that right after Dimon said Bitcoin was "a fraud", JP Morgan and Morgan Stanley bought XBTE, a bitcoin tracking exchange traded fund. They are also investing in blockchain technology and patents.
Again, I do *not* invest/speculate in Bitcoin.
Honeybee said...
"Klashelle...I have been keeping the truth, whole truth and nothing but the truth about Bob Brinker available to the public for about 16 years. I started on Suite 101 - which folded after Kirk Lindstrom left. That was when I began my blogs.
Here's your homework assignment:..........."
--------------------------
WOW Honeybee!
You have truly handed Klashelle the keys to a DUAL MBA in THAT Bob Investing and THAT Bob Economics.
You really ought to charge people for such services!
JC
Just my opinion, but it seems to me that the market is currently transitioning from "Overbought" to "Massively Overbought".
Apparently, absolutely "all is well in the world and in the market".
Huh?
I think we will begin seeing some correctly-valued equities soon. Possibly as soon as this week.
Also, let's consider that Q3 earnings (confession) season will begin shortly.
JC
Made a few bucks on this record setting day! Depending upon what The Fed does and says at the meeting, will dictate what the Markets' will do in the longer term.
Gabe
I have a question. What I typically do is sign up for a BB subscription and then let it lapse for 6-8 months because the overall recommendation is 'Buy on the Dips'.
Usually when I choose to renew I have no problem but this is the third time that I've sent in my money and the subscription does not renew. I send an email showing the bank statement which says MarketTimer has received payment and politely ask WTF - where is my newsletter. The last two times I received catty responses but did get it worked out.
This time, I've sent three polite emails with proof that I did remit payment and still no response - going on three months.
Any recommendations how to go forward with this? The company does not have a good customer relations department.
Thanks, Dan
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dRahme... I think that is horrible way for them to treat paying customers. Sheesh.
I think the headquarters for Marketimer is the same address as Jr's "newsletter."
Wish I knew of a way for you to contact Bob Brinker, but I don't - so sorry.
Maybe someone will have an idea for you....
Well, I would appreciate that. I guess the basic question is when someone re-ups for a subscription and you do not get that subscription.......what is the recourse???........the BBB? Kind of amusing, that.........
Going back to the announced data breach at Equifax last week I learned that there is actually a fourth credit bureau out there. It's called Innovis. It's not nearly as big as the other three but it does have personal information on people. If you've put a security freeze on your credit with the big three some experts advise to place a security freeze with Innovis as well. It's free. I learned about it through an e-mail I got from a local financial advisor that I know.
Dan: I have had similar issues. I got so disgruntled and decided to discontinue my subscription.
Gabe
I also let my Newsletter subscription lapse for several months. I continue to get his monthly emails stating that the new monthly issue has been released but of course when I click on the link it goes to inactive status.........what a tease - LOL.
Most recently I received a letter from the home office stating that if I renew my subscription I will get an extra month free (13 issues). The envelope it came in had a slight sent of desperation. Is the end of life for the Market Timer near?
Thanks for the comments.
I'll try a nice email one more time....
Record Markets!
Gabe
Where's Bluce? Hope your not p***ed over the cell signal thing?
dRahme,
I'm a bit confused. It sounds like you paid by check and it has been cashed. Am I correct about that? (It would make a difference as to what you should do now).
Any additional you could give us would be helpful.
KC said...
Is the end of life for the Market Timer near?
Possibly. I just heard on the radio that Saturday, 9/23/17 is the end of the world.
You may want to be prepared for reruns this weekend also.
As I stated, I will engage this forum but no longer worry or comment about BB. I made it to critical mass and retired at age 52 long before I ever heard a BB show. My neighbor told me about 2yrs ago about the show. To this day he doesnt realize the reruns exist. I initally got some confirmation on how I invest from the show. Lately it seems its the same questions asked by different folks. My local station quit the show so I have to stream via Iheart out of Monterey CA. BB fan club and the dollars supporting it are shrinking IMHO. Best to all and a special tks to Honey Bee who I also follow on twitter. She does not hold back! HA
I scooped ap a bit of cash in today's market!
Gabe
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I am very flattered House Doc. I'll see if I can find your Twitter feed and follow you back. LOL!
Re: Equifax - Class Action Lawsuits:
Interesting info from Consumer Reports:
Should You Participate in a Class Action Against Equifax?
https://goo.gl/uCJADt
JC
Scooped up a buck or two!
JC: Interestingly, there is resistance on the part of some folks not to place a freeze with Equifax and the other 2 or 3 because it is felt that they screwed so badly and not trustworthy. They just will monitor their "stuff" daily. As days go by, one learns of two other breaches in the recent past. Decision..decision...decision!
Gabe
Got a new phone and am trying to find my sports, talk, and other podcasts on the podkicker app to set it up like my old phone. For some reason when searching many are not coming up. So I bookmarked many from the radio stations feed. Now I have twenty separate bookmarked in my podcast folder. Too clunky.
Randomly checked out podcastaddict app and this has everything and you can see them in order as published together nicely.
I've never found bb ever on a podcast app but there it is from kabc in LA. All the shows lined up in order nice FF & rw controls and put on your master list when it's published.
gabe said...
"JC: Interestingly, there is resistance on the part of some folks not to place a freeze with Equifax and the other 2 or 3 because it is felt that they screwed so badly and not trustworthy."
Gabe,
To be honest with you I was originally hesitant to freeze. But this was a massive breach and is one that we will be with us for the rest of our lives. Actually it potentially can be with us for even our after-life. But I will trust that the person handling my affairs will continue to monitor my accounts until everything is settled.
I have been the victim of identity theft twice, and both incidents together added up to a bit less than $10,000. Both of these were resolved fairly quickly, nonetheless it is a real hassle to review everything with the credit card company, review and sign affidavits, get a new card, etc.
So after considering the previous incidents, I decided to "freeze" with all four credit report companies. I do not plan to open any new credit card accounts - EVER - and am now reviewing the ones I do have for possible LOC reductions, or closure.
Even though I have quite a few credit card alerts set up, for several years I have also been checking my accounts every day. I have now begun checking them at least twice a day. That is precisely how the most recent fraudulent charge was detected - via a "credit card not present" alert. The fraud clown attempted to charge exactly $5,0000.00 on my account (presumably online).
JC
JC; Very sorry to hear about your mishaps.
Gabe
Few questions about freezing credit on the 4 credit report companies.
Is it all done online?
Can all 4 be froze say in a short time, say in a couple cups of coffee time with single visits to each company's site.
Say you want to buy a car or house can it be unfroze immediately?
What if the next hack gets your unfreeze code numbers the company sent you?
Got a week off next week sounds like I need to get it done.
HB,
Has Bob mentioned the possibility of a "health restoring" correction recently? I don't listen to the show any longer, WLS preempt the show for baseball.
Pavlov's Cat
Do Stocks Outperform Treasury Bills ?
Most common stocks do not outperform Treasury Bills….
When stated in terms of lifetime dollar wealth creation, the entire gain in the U.S. stock market since 1926 is attributable to the best-performing four percent of listed stocks.
The results also help to explain why active strategies, which tend to be poorly diversified, most often underperform.
The striking implication is that less than four percent of the common stocks
contained in the CRSP database collectively account for all of the wealth creation in the U.S. stock market since 1926.
The remaining 96.19% of common stocks collectively generated dollar gains that matched those that would have been earned had the invested capital earned the same rates as one-month U.S. Treasury bills.
These results reaffirm the importance of portfolio diversification, particularly for those investors who view performance in terms of the mean and variance of portfolio returns. In addition to the points made in a typical textbook analysis, the results here focus attention on the fact that poorly diversified portfolios may underperform because they omit the relatively few stocks that generate large positive returns. The results also help to explain why active portfolio strategies, which tend to be poorly diversified, most often underperform their benchmarks.
Underperformance is typically attributed to transaction costs, fees, and/or behavioral biases that amount to a sort of negative skill. The results here show that underperformance can be anticipated more often than not for active managers with poorly diversified portfolios, even in the absence of costs, fees, or perverse skill.
Hendrik Bessembinder
Department of Finance
W.P. Carey School of Business
Arizona State University
At the very least, passive funds should be at the core of your portfolio.
Gabe
Jester, I'm not sure how many blogsters are going to read the 39 page academic paper you linked to here. Without reading it, (I'll say that up front) I wonder how important or applicable it is to know that this prof's data indicated T-bills outperformed stocks.
In any backward looking "test" like this, the time period under consideration is important. That is a polite way of saying it is possible to cherry pick the data. From 1926 to the beginning of 2017 is 90 years which is much longer than the typical investor might be involved in investing in the "market."
Reference to my April 25, 2017 post:
SPIVA U.S. Scorecard
Starting with this scorecard, we will report the relative outperformance or underperformance of actively managed funds against their respective benchmarks over a 15-year investment horizon. The longer time horizon provides a complete market cycle to measure the effectiveness of managers across all categories.
Given that active managers’ performance can vary based on market cycles, the newly available 15-year data tells a more stable narrative. Over the 15-year period ending Dec. 2016, 92.15% of large-cap, 95.4% of mid-cap, and 93.21% of small-cap managers trailed their respective benchmarks.
Across all time horizons, the majority of managers across all international equity categories underperformed their benchmarks.
Funds disappear at a significant rate. Over the 15-year period, more than 58% of domestic equity funds were either merged or liquidated. Similarly, almost 52% of global/international equity funds and 49% of fixed income funds were merged or liquidated. This finding highlights the importance of addressing survivorship bias in mutual fund analysis.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE PERFORMANCE
The evidence continues to aggregate that for the average investor, low-cost broadly diversified index/etf mutual funds offer the greatest chance of capturing the market performance over a lifetime investment horizon.
My previous post today, simply argued in favoring “owning the racetrack” as opposed to trying to identify the less than 4% future winners in particular individual stocks.
Yah, the stocks vs T bills analysis is just for academic interests. His assumptions would not provide any real world investor benefit other than a few stock market winners are responsible for the lion's share of stock wealth or that wealth is created in sudden spurts and lost in flash time as compared within a one hundred year window. CAPM measures that reduce returns based on risk may be a poor measure within the comparison. It would be akin to stating if you want to access risk penalty to stock market returns, T-bills look better.
I would think a real life investor would temper judgment as compared to hold forever. We move money according to risk and return within present reality. Also, the study assumes that active fund management has no stats or measures to achieve i.e. professor's analysis. We know even broad market index funds preform differently given the quality of algorithms utilized. Categorizing all active funds together may be a mistake. Like no intelligent thinking of investor.
I would like this professor to utilize his data set with other assumptions:
1. One would be to invest only in historically best in class active funds with low loads.
2. Invest only when earning ratio comparison is rated good deal & invest in T bill when not.
3. Invest only in dividend increasing companies.
4. Invest solely in S&P 500
5. Just about any other investment strategy such Dow earnings benchmark or the quantitative investment strategies that are currently ruling the day if attempting to beat a general index fund.
6. Adjusting investments per income tax strategy has proven 1% to 1-1/2% improvement.
7. I was listening to Scott Trade financial speal that claimed all was lost if not for their service to diversify funds by sector. I don't buy it. Every analysis I've read claims after the basics, not much value to safe guard investments. Better to focus on decreasing costs after that.
Been away from listening to Bob for a long time. Did OK until we all went off the cliff in 2008 in a disaster that Bob said, "how could anyone know that was coming?" Still I did ok following him, and I have to really thank his advice for buying Savings bonds, I type, at the right time.
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