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  • #31
    In the article below, the pensioners essentially provided free float to the fund managers, where the managers essentially captured all the gains. So this is NY where supposedly the best of the best, the brightest, the most expensive talent is available on all fronts when it comes to managing money. Now if they can't do it very well, how can the average, "average person" investing for their own retirement expect to beat the markets?

    I suppose they could have made a lot more for the pensions than the market averages (and may have over some time spans) but they may also have assumed a lot more risk of negative returns as well (and may have suffered below market returns for some periods as well). This over/under-performance issue would be the same if one owned a subset of the respective benchmarks, so whether its worth the effort and expense and risk needs to be considered. Now, pensions have cash flow requirements that index investing may not align with, however, for a portion of pension assets very long time perspectives are available and so very different risks can be assumed in order to attain market beating returns. If fund fees load upfront costs against that opportunity, it can be drastically diminished. (Like paying annual property taxes on a house that you expect to eventually return a nice capital gain.)


    NYC pension fees are a $2.5B lesson for investors


    "An analysis conducted by the city’s comptroller found that over the last 10 years, New York’s five pension funds have paid $2.5 billion in management fees, almost completely canceling out any above-market gains the funds have earned. The pension funds’ investments in stocks and bonds generated returns that topped expectations by more than $2 billion, according to The New York Times. But the analysis found that fees paid to money managers, combined with the weak performance of other investments, left just $40 million for the pension fund."



    http://www.msn.com/en-us/money/retir...ors/ar-AAaGxge
    Last edited by KC; 10-04-2015, 08:21 AM.

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    • #32
      All part of the aging of a country. Seems that over time wealth and power flows to a few and the great masses subsist on what little is available to them.


      Here's the real reason people don't invest in stocks

      "The real problem here is not sloth or inertia but income stagnation — yet another casualty of the tectonic shifts in the economy that have produced a widening gap between the affluent, who can afford to save and invest for retirement, and everyone else, who just can’t."

      http://www.msn.com/en-us/money/topst...cks/ar-AAb2hEe

      Comment


      • #33
        Originally posted by grish View Post
        The point I am getting to is to what extent is this pure speculation game when people simply trend watch as lines go down–BUY!!! and lines go up–SELL!!!. With such gains on a whim do not produce anything of value in the time that the fluctuation has taken place. And, as they say, historically the markets are going up, all this is doing is creating a parallel form of inflation and not, as claimed by financial experts, staying ahead of it.

        My specific questions are:
        1. Should all investing be more individually measured and company, product, activity-specific?
        to that end
        2. Should all investing be done locally with companies and people you have a personal relationship with and in the market you actually know about?
        3. Has this become too much of a gambling addiction rather than an actual and legitimate business practice?
        On your speculative trend watching comment, I think it's very important for people to be highly suspicious of media assessments of companies and so investing in what you know and understand makes sense. On that, Back in the early 200s I got trading approval from my employer to buy McDonalds shares when they sank to $10 or $11 /sh on word that McDonalds had lost it - and the general market was doing poorly (the opposite of today). All the media was saying McDonalds was a has-been company. (As it is tending to do so again now.) However I could drive by any McDonalds here and see lineups at the drive-through. Looking at the company showed that it was still doing quite well, just not as great as in the past. (Note: I decided to pay off my home renovations instead of buying shares. Had I bought those shares, I could have paid my renos several times over. I'm a serial offender in paying off any debt and thus missing investment opportunities. No regrets there, just observations of my own failures. )

        Anyone watching Canadian Oil Sands over the past few months would have seen numerous Motley Fool articles tossing out all kinds of speculation. The article do provide some factual information but then add in worthless speculation. It's basically, extrapolating the current trend while posing as expert analysis. One of the other article may prove correct but only by luck and not by analytical insight.




        Another recent example I love is IMRIS because of the article below. I'd owned this one on and off for years. I'd bought back in late last year. (Subsequently sold to cover my costs and take some profits on the volatility).

        So when you say: "The point I am getting to is to what extent is this pure speculation game when people simply trend watch as lines go down–BUY!!! and lines go up–SELL!!!. I'd say that behaviour is actually less common compared to what I'd say is more typical of the investment world: People do trend watch and as lines go DOWN-SELL!!! and as lines go UP they-BUY!!!

        So skim this article published in the Globe and Mail and note that IMRIS then sank to new lows - from which it then went on to increase almost 6 fold. (It's now coming down again. Of course the author may eventually prove correct but again only by luck. The charts and trends just reflect lay attitudes much of the time. Investing in what you know and understand such as local companies can give people an edge. Otherwise just buying indexes, maybe adding extra amounts to them when things are looking there worst increases probability of higher longer term returns. Don't you wish you'd bought Edmonton big time in the 1990s when all looked so glum? )





        Imris a prime example of when to cut bait
        LOU SCHIZAS, Special to The Globe and Mail, Oct. 28 2014

        "The research conducted indicates that IM has been selling off for the better part of three years when it traded for just over $8.00. At some point you have to accept what the tape is telling you and stop the losses from consuming your hard-earned capital. A scout of the charts will help identify how best to proceed with this investment."

        "The three-year chart is a textbook example of a stock that makes grown men cry. ... downtrend line and the 50- and 200-day moving averages. ... a death cross that formed in April of 2013 ...."

        "Note the resistance ... the sell signals .... Trading volume ... For a stock trading below $1.00 it doesn’t represent a lot of value."

        "The best possible outcome would be to discuss the advantage of a tax loss sale with your accountant. The idea that a white knight ...What incentive would an acquirer have to be a hero and bail out your losses?"


        http://www.theglobeandmail.com/globe...ticle21351997/
        Last edited by KC; 07-05-2015, 09:45 AM.

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        • #34
          I've posted Hussman article links before and for years and years regularly sent friends links to various Hussman weekly articles. (c2e readers have got off easy with just my Buffett quotes ) I see Hussman commentaries as "must reads" but like all such academic research, not necessarily useful in application.


          This is one example, the latest, for a longer-term macro view of equity markets...

          Valuations Not Only Mean-Revert; They Mean-Invert
          John P. Hussman, Ph.D., September 28, 2015

          http://www.hussmanfunds.com/wmc/wmc150928.htm
          Last edited by KC; 28-09-2015, 11:36 AM.

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          • #35
            Originally posted by KC View Post
            I've posted Hussman article links before and for years and years regularly sent friends links to various Hussman weekly articles. (c2e readers have got off easy with just my Buffett quotes ) I see Hussman commentaries as "must reads" but like all such academic research, not necessarily useful in application.


            This is one example, the latest, for a longer-term macro view of equity markets...

            Valuations Not Only Mean-Revert; They Mean-Invert
            John P. Hussman, Ph.D., September 28, 2015

            http://www.hussmanfunds.com/wmc/wmc150928.htm
            his articles may be of interest but the returns he has managed to generate over the past 15 years based on his long term macro view of equity markets don't seem to fully support those views:

            Average Annual Total Returns
            for periods ended
            8/31/15
            1 Year: -5.99%
            3 Year: -6.11%
            5 Year: -7.14%
            10 Year: -2.90%
            Since Inception (07/24/00): 2.82%

            Average Annual Total Returns
            for periods ended
            6/30/15
            1 Year: - 9.99%
            3 Year: -7.85%
            5 Year: -7.61%
            10 Year: -2.93%
            Since Inception (07/24/00): 2.71%

            some of the younger funds report better results but short term results are never as good and most of them present similar results for similar "recent periods". http://www.hussmanfunds.com/theFunds.html

            a look at typical fund content doesn't seem to indicate acual portfolio selections that would be particularly trend setting or surprising or out of the norm per se (i.e. newmont mining, mead johnston, cisco, quest, pepsico, ch robinson, aetna, intel, kohls, medtronic, eli lilly, jack in the box...): http://quicktake.morningstar.com/Fun...bol=0C000023LH
            "If you did not want much, there was plenty." Harper Lee

            Comment


            • #36
              Originally posted by kcantor View Post
              Originally posted by KC View Post
              I've posted Hussman article links before and for years and years regularly sent friends links to various Hussman weekly articles. (c2e readers have got off easy with just my Buffett quotes ) I see Hussman commentaries as "must reads" but like all such academic research, not necessarily useful in application.


              This is one example, the latest, for a longer-term macro view of equity markets...

              Valuations Not Only Mean-Revert; They Mean-Invert
              John P. Hussman, Ph.D., September 28, 2015

              http://www.hussmanfunds.com/wmc/wmc150928.htm
              his articles may be of interest but the returns he has managed to generate over the past 15 years based on his long term macro view of equity markets don't seem to fully support those views:

              Average Annual Total Returns
              for periods ended
              8/31/15
              1 Year: -5.99%
              3 Year: -6.11%
              5 Year: -7.14%
              10 Year: -2.90%
              Since Inception (07/24/00): 2.82%

              Average Annual Total Returns
              for periods ended
              6/30/15
              1 Year: - 9.99%
              3 Year: -7.85%
              5 Year: -7.61%
              10 Year: -2.93%
              Since Inception (07/24/00): 2.71%

              some of the younger funds report better results but short term results are never as good and most of them present similar results for similar "recent periods". http://www.hussmanfunds.com/theFunds.html

              a look at typical fund content doesn't seem to indicate acual portfolio selections that would be particularly trend setting or surprising or out of the norm per se (i.e. newmont mining, mead johnston, cisco, quest, pepsico, ch robinson, aetna, intel, kohls, medtronic, eli lilly, jack in the box...): http://quicktake.morningstar.com/Fun...bol=0C000023LH
              Yeah - it's quite amazing. He was an all-star performer but fear of a depression (possibly reflecting a strong sense of fiduciary obligation) drove him to hedging to the point of failure.


              I'm not sure if Morningstar looks back at prior cycle / full cycle returns but here's a comment about one of his fund's earlier performance...


              From the fund inception in July 2000 to Oct. 31, 2008 , his Hussman Strategic Growth Fund averaged 9.9% a year, and has a cumulative gain of 118%, while the S&P500 lost more than 23%. For the 12 months ended Oct. 31, 2008 , his fund lost 0.3%, while the S&P500 lost more than 40%.

              http://www.gurufocus.com/StockBuy.ph...e=John+Hussman
              Like Bruce Berkowitz, Bill Miller a few years ago and Buffett on numerous occasions, sometimes good investors get called has-beens when their performance fails for a few years. It's impossible to judge the value they add without hindsight. Moreover, the cautionary positions are extremely difficult to assess. Somewhat like if you take out insurance on your house and it doesn't burn down, do the losses without payoff make one unintelligent.

              Anyway, the value I see in Hussman is in raising rational precautionary red flags in rising markets and rational green flags in falling markets. (Like someone pointing out a rational opposing position about the expected returns on oil companies when oil prices in say 2007/2008 were pushing 100 - 140/bbl. and some forecasters were doubling their predictions saying $200 was on its way. )
              Last edited by KC; 28-09-2015, 03:27 PM.

              Comment


              • #37
                Interesting...


                Are Buybacks an Oasis or a Mirage?

                Chris Brightman, CFA, Vitali Kalesnik, Ph.D., and Mark Clements, Ph.D

                Aggregating the equity of all publicly held U.S. corporations, we find [they] issued stock equal to $1.2 trillion in 2014

                http://www.researchaffiliates.com/Pr...Mirage_pdf.pdf

                Last edited by KC; 04-10-2015, 07:10 AM.

                Comment


                • #38
                  Their warnings have persisted for a few years now. This first article is from 2014. So these views are just red flags. People that buy and hold should see the possibility of a market correction as an opportunity. Hussman, Grantham, Icahn, etc. all tend to be big buyers when the markets tumble. They also tend to hedge or lighten up on some stocks to raise cash in anticipation of buying opportunities.



                  EVENTUALLY GRAVITY WINS « The Burning Platform

                  Keep ignoring John Hussman, Robert Shiller, Jeremy Grantham, and all the other data oriented people who honestly assess the stock market and are positive we are in for a big fall. The market is so overvalued at this point that it won’t even need an external event to trigger a crash. Gravity always wins in the end.

                  Opinion: Being a stock-market bull just got a lot harder
                  By Mark Hulbert
                  Published: Sept 9, 2014 6:00 a.m. ET


                  The CAPE isn’t a perfect indicator, as Shiller himself will tell you. There are legitimate reasons to question its approach to market valuation. In addition, the bulls have shamelessly come up with myriad other “reasons” not to pay attention to it.

                  "...But it is clear that the bulls have a lot more work cut out for them.

                  Furthermore, even if the bearish conclusions of these diverse indicators turn out to be right, you should know that they are long-term indicators, telling you very little about the market’s near-term direction. My favorite analogy to describe the situation comes from Ben Inker, co-head of the asset-allocation team at Boston-based money management firm GMO.

                  He likens the market to a leaf in a hurricane: “You have no idea where the leaf will be a minute or an hour from now,” he says. “But eventually gravity will win out and it will land on the ground.”


                  http://www.theburningplatform.com/20...-gravity-wins/

                  Carl Icahn Is Skeptical of the M&A Boom - MoneyBeat - WSJ
                  Sept 29, 2015
                  "It's financial engineering at its height,” Icahn says.
                  http://blogs.wsj.com/moneybeat/2015/.../?mod=newsreel


                  Jeremy Grantham Reduces More Than 250 Stakes in Second Quarter - NASDAQ.com
                  Aug, 2015
                  http://www.nasdaq.com/article/jeremy...arter-cm510879


                  Jeremy Grantham: The Man Who Loves Dogs - 1978 Barron's
                  http://www.valuewalk.com/2015/07/jer...ons-interview/
                  Last edited by KC; 04-10-2015, 07:57 AM.

                  Comment


                  • #39
                    Of course, a Canadian holding a non - currency hedged US equity fund would have done extremely well in Canadian dollar terms over the past year. I don't have my Quicken data handy, but VTI has been propping up my performance quite nicely over the past year. Will there be a correction or crash at some point? Absolutely. But either one might be years away. Or tomorrow. No one truly knows with any certainty, no matter how much fancy math they do.

                    Comment


                    • #40
                      Went and looked in Quicken at the performance of holdings of VTI (which is a broad market US index fund, not currency hedged) over the last year or so. In Canadian dollar terms, from September 9, 2014 (the date of the quoted article above) until August 14, 2015 VTI's IRR was approximately 32%. That's a pretty spectacular 11 months.

                      Unfortunately, it's a bit of a mess to go right up till today using my Quicken data. Up until August my US denominated/traded ETF's were still sitting on the Canadian denominated side of my account, as when I originally bought them 5-6 years ago there wasn't a USD side. I only realized this summer that I could have them journalled over to the USD side without fees, so that distributions aren't getting converted to CDN at a cost of 1.5-2%. Quicken is very touchy with different currencies, and I had to fudge things to get them to work properly. So the past month and a half of returns are a mess and not really comparable. With the recent decline in the US markets partially offset by the declined in the Loonie, it's likely that the actual IRR from Sept 9 2014 to late September 2015 is more like 20-25%, which is still pretty swell.

                      The point is, had I read your article when it was published, listened to the advice given, and sold my US index holdings I'd have missed out on what was actually an extremely good year.

                      Here's a chart, in USD terms, for VTI over the past year: http://quotes.morningstar.com/chart/...th%22%3A955%7D

                      Yes, it's down by 3-4% over the past year, but that's just the unit cost not including distributions. With distributions it would be close to flat. Couple that with the decline in the Loonie vs. USD, the annual return in Canadian dollar terms would be approximately 20% over that time frame, which more or less matches up with what I said above.
                      Last edited by Marcel Petrin; 05-10-2015, 11:01 AM.

                      Comment


                      • #41
                        I too hold a lot of value in US stocks and have done well as the Canadian currency tumbled, but that doesn't mean I believe that the market pricing reflects intrinsically right valuations nor that I believed the Canadian dollar at 95-110c was a long term sustainable exchange rate - hence my (and possibly your) diversification into holdings of non-Canadian positions.
                        Last edited by KC; 05-10-2015, 11:38 AM.

                        Comment


                        • #42
                          Originally posted by KC View Post
                          I too hold a lot of value in US stocks and have done well as the Canadian currency tumbled, but that doesn't mean I believe that the market pricing reflects intrinsically right valuations.
                          In other words you are happy to profit from what you consider wrong.

                          Don't get me wrong, I can only thank you for your harsh honesty with yourself.

                          Comment


                          • #43
                            Originally posted by AShetsen View Post
                            Originally posted by KC View Post
                            I too hold a lot of value in US stocks and have done well as the Canadian currency tumbled, but that doesn't mean I believe that the market pricing reflects intrinsically right valuations.
                            In other words you are happy to profit from what you consider wrong.

                            Don't get me wrong, I can only thank you for your harsh honesty with yourself.
                            Yes very happy to profit off mispricing, though sad that someone on the other side may be losing. Same for house prices. I don't like the hyping of the idea that young couples should blindly mortgage their futures to get into housing, especially when bubble-like conditions seem to be present, but I am happy to see my own house price go stratospheric, if it makes me - relatively - better off. However, benefitting with my eyes wide open is quite different than benefitting due purely to lucky timing and then suffering unexpected, or worse, inconceivable losses.

                            Following academic market valuation risks and then warning others of that such academic measure of risk could eventually materialize seems to be a morally superior position to just encouraging everyone to buy and hold irrespective of their personal situations, risks of job loss, short-term views, potential overallocation to one market sector or another (lack of diversification), etc.
                            Last edited by KC; 05-10-2015, 11:48 AM.

                            Comment


                            • #44
                              I'm curious what people are thinking about equity and bond market values right around now, at current market valuations.

                              Considering how domestic energy fortunes have changed in the last year, what have your Edmonton or Albertan friends, family, acquaintances, etc. been saying about their faith or lack if faith in other investment markets.

                              Are they buy and holders, can they withstand a significant change (ie a collapse) in their portfolio values, if they are feeling defensive or opportunistic or what these days???

                              Comment


                              • #45
                                The Wall Street Journal, Jan. 21, 2016
                                Activists Beware: Huge Investors Debut New Long-Term Index

                                Six large institutional investors said they would allocate $2 billion to track a newly created index of shares of companies that focus on long-term strategies.

                                The S&P Long-Term Value Creation Global Index comprises 246 companies that meet criteria for return-on-equity, leverage and other financial factors, as well as a score for corporate governance.

                                “We are trying to use the index to change corporate behavior,” said Mark Wiseman, chief executive of the Canada Pension Plan Investment Board, in an interview at the World Economic Forum here. Mr. Wiseman said financial markets are too focused on short-term results.

                                Mr. Wiseman said CPPIB would invest slightly under $1 billion in the companies in the index. The five other institutions participating in the index’s launch are Singapore fund GIC, Danish pension plan ATP, Dutch pension plan PGGM, the New Zealand Superannuation Fund and the Ontario Teachers’ Pension Plan.

                                He said he hoped retail products would also be developed so that individual investors can track the index. CPPIB, which manages C$273 billion ($188.23 billion), will move funds from its passive stock-market investments to the new index.

                                Mr. Wiseman also said CPPIB has been “extremely busy” amid the market turmoil of the past several weeks, saying battered asset prices are providing opportunities.

                                “Up until the last year, it was very hard to find value in the market,” he said.

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