Too Much Cash???????????

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Incredible Hulk's picture
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Gaddock wrote: Incredible Hulk wrote:I'm not sure who this comment is directed to, but it is an incorrect statement. The "textbook" middle of the road American funds portfolio is up roughly 45% in the last 10 years. Are you suggesting that the "testbook" allocation is 100% S&P 500? I can't argue with your previously mentioned trades, but you are sorely misinformed on "textbook" allocation model returns.
 
Show me the textbook allocation you spoke of. You're the one that brought up America Funds not me.

I went to our standard, EDJ, balanced g&i american model. I used theirs, not mine as we were speaking about "textbook." I went back to the site and it states internal use only, thus I won't post it. The unbalanced 10 year return number matched your 45% ABALX return, so surely, you will believe that 45% is accurate, or at least believable.

Again, my point is that even an untouched "textbook" portfolio returned 45% and that is far from "flat". Exclusive of rebalancing.

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I didn't realize incredible was a jones guy.... nevermind forget this argument..

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Incredible Hulk wrote:Gaddock - You are also quick to point out the "layers of fees" on funds. But in your own example of your "market neutral" positions, you failed to include any trading fees or potential margin fees in your return. I guess you work for free and your broker/dealer is a non-profit.
 
Wrap account, the margin I use doesn't cost anything. Not to mention is doubles+ your examples' annual performance in a month with a tiny fraction of the risk.

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Ron 14 wrote:Gaddock wrote:Incredible Hulk wrote:I'm not sure who this comment is directed to, but it is an incorrect statement. The "textbook" middle of the road American funds portfolio is up roughly 45% in the last 10 years. Are you suggesting that the "testbook" allocation is 100% S&P 500? I can't argue with your previously mentioned trades, but you are sorely misinformed on "textbook" allocation model returns.
 
Show me the textbook allocation you spoke of. You're the one that brought up America Funds not me.
 
Yeah he brought up American Funds the family, YOU brought up American Funds American Balanced Fund.
 
It matched the 45% ... and your point is?

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You know what else is interesting. I'm at home with a fever feeling like something you hate to step in trying to amuse myself, no really you guys are amusing, and we've added four or five pages to this post.
 
I've never looked at this BBS one time from my office. Imagine if you used the time you spend here and read or prospect or GOD FORBID find a high return to risk position outside of a MF!
 
 

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B24
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Incredible Hulk wrote: B24 wrote:
My opinion is that asset allocation/MPT smooths out the returns during cyclical (bull and bear)markets, but does absolutely nothing to protect in a secular bear market.  The key is not having a crystal ball, but rather reacting to what is known. I shall humbly disagree with this paragrah. AA does a tremendous job protecting in just about any market, excluding the last 18 months. To discard a well worn strategy on a once in an investment lifetime event like last year is very short sighted. In a secular bear market you still have rallies up and down. If your asset allocation would suggest 35% fixed & 10% cash then regular rebalancing to that tune would have provided substantial protection in any given decade that doesn't include last year. Even including last year, you were protected to an extent against the 50%+ market decline. Anyone basing their advice for retirees, pre-retirees on market performance over the last 24 months is as narrow minded as the advisor in '99 basing their advice on the then previous 24 month period..
 
I think you're missing my point.  Secular markets are part of the investing cycle.  I am not talking about every cyclical bear and bull.  I am saying that MPT/AA works within a secular bull market.  Since the last secular bull was 18 years long, people were duped into thinking that that's how things always are.  What about the 20's?  What about the 40's? What about the 70's?  What about the 00's?  Four out of the last 10 decades have been wipeouts.  I know Jones likes to talk about buy-and-hold like it's the holy grail, but the truth is, there are a lot of advisor-led investors that have had their portfolios wiped out (twice) in the past 10 years.  But hanging your hat on AA and MPT because it works in some markets is short-sighted.  You can recover from a 4-month cyclical bear market, it's tough to recover from a 10-15 year secular bear market.

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Waiting for my new satellite service to be installed.. it's pure crap that they give you 4 hour time blocks then show up at the end of a time block and still it take them 45 minutes to hook it all up..

By the way Directv is a rip off, if you don't cancel within the first 24 hours(not sure I turned my tv on) then they try to make you pay a $400 cancellation fee...

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I guess we disagree on what buy and hold means. Buying and holding the S&P 500 over the last decade obviously doesn't make sense. But what advisor worth their salt doesn't also recommend bond exposure to some extent. Even in the context of this debacle of a decade an untouched/unrebalanced position of an average balanced fund - ABALX - the client still earned 45%. Is that what they expected to earn? Of course not. But tack on the 90s to 00s or the 50s to the 40s or the 80s to the 70s, and tell me how consistent AA hasn't performed well.

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Gaddock wrote: You know what else is interesting. I'm at home with a fever feeling like something you hate to step in trying to amuse myself, no really you guys are amusing, and we've added four or five pages to this post.
 
I've never looked at this BBS one time from my office. Imagine if you used the time you spend here and read or prospect or GOD FORBID find a high return to risk position outside of a MF!
 
 

Is that a challenge? If you want to compare gross revenue or appendages let me know.

Also, I believe it was you who made the "assumptions" comment earlier. Less than 20% of my revenue is generated from MFs.

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How many 65 year-old clients have a 20 year investment window?  Honestly.  You screw them up from age 60 to 70 (or longer), they're done.  Cooked.  Game over.  Yes, your 35 year-old DCA client will be fine.  So you take the 35 year olds, I'll take the 60's year-olds, and we'll call it a day.

Gaddock's picture
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I think an account that is properly diversified is pretty much the same thing.
What's the difference?

Incredible Hulk's picture
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You aren't planning for a 20 year life span for 60 year olds?

Gaddock's picture
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My plan is to continue making significant returns with low risk. How long they live is not relevant if I continually make more than they draw. I plan on doing it in such a way that where ever the market goes we win.
That's my financial plan.

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Incredible Hulk wrote:I guess we disagree on what buy and hold means. Buying and holding the S&P 500 over the last decade obviously doesn't make sense. But what advisor worth their salt doesn't also recommend bond exposure to some extent. Even in the context of this debacle of a decade an untouched/unrebalanced position of an average balanced fund - ABALX - the client still earned 45%. Is that what they expected to earn? Of course not. But tack on the 90s to 00s or the 50s to the 40s or the 80s to the 70s, and tell me how consistent AA hasn't performed well.
 
All boats float when the tide comes in.

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Incredible Hulk wrote: You aren't planning for a 20 year life span for 60 year olds?

Doesn't matter if you destroy their portfolio in their sixties.

Moraen's picture
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Maybe I should explain why I believe MPT advocates are like man-made global warming fanatics.

MPT is taking a snapshot of market analysis and saying that, "This is how things are". The global warming fanatics are taking a small time period and saying, "look, the earth is getting hotter and it's cause of you guys driving SUVs".

Don't believe everything. Question these theories.

I will go again once to the fact that MPT is predicated on a set of statistical analysis that is flawed.

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Incredible Hulk wrote: Gaddock wrote: You know what else is interesting. I'm at home with a fever feeling like something you hate to step in trying to amuse myself, no really you guys are amusing, and we've added four or five pages to this post.

I've never looked at this BBS one time from my office. Imagine if you used the time you spend here and read or prospect or GOD FORBID find a high return to risk position outside of a MF! Is that a challenge? If you want to compare gross revenue or appendages let me know. Also, I believe it was you who made the "assumptions" comment earlier. Less than 20% of my revenue is generated from MFs.
 
Challenge? funny how you interpret things. No it wasn't it was just an observation. But if you want to know;
 
August, 1 started year three. My gross was over $250k for year two. I'll do over $400 this year with 30 million AUM, that's my goal.
 
As for the appendage, sorry but I'm not gay not that there is anything wrong with it, I just have no desire to see your wee wee.

Ron 14's picture
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Gaddock is the best, just ask him.

Moraen's picture
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That's crap Ron. We all know guys who work at banks are the best!

Gaddock's picture
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Ron 14 wrote: Gaddock is the best, just ask him.
 
If Gaddock had a brain he would trade for himself and keep his great returns with no risk.
 
Ron,
Your traded options for 7 years on the floor you say. You say you understand the model I'm using and I believe you. Most people don't get it no matter how many times and ways I explain it, brokers that is.
 
You should know the model I use is not risk free.
 
I'll toss you a little challenge.
 
No matter how remote the black Swan is ... What is the risk? I did take one on the chin.
 
I already told you why I don't nor do I take any of the positions I make for my clients. Kind of puzzling that you wont accept the reason since it's an admission of quite a weakness.
 
 

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Moraen wrote:That's crap Ron. We all know guys who work at banks are the best!
 
No. Guys at banks are idiots.
 
I would love to know how you go from Eddie J to owning your own shop where you do nothing and employees do everything. You must have lit it up at Jones!

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Incredible Hulk wrote:You aren't planning for a 20 year life span for 60 year olds?
 

My plan doesn't require the client to live 20 years in order to realize good returns.  I plan on them living to 95 or longer.

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Gaddock wrote:Ron 14 wrote: Gaddock is the best, just ask him.
 
If Gaddock had a brain he would trade for himself and keep his great returns with no risk.
 
Ron,
Your traded options for 7 years on the floor you say. You say you understand the model I'm using and I believe you. Most people don't get it no matter how many times and ways I explain it, brokers that is.
 
You should know the model I use is not risk free.
 
I'll toss you a little challenge.
 
No matter how remote the black Swan is ... What is the risk? I did take one on the chin.
 
I already told you why I don't nor do I take any of the positions I make for my clients.
 
 
 
I know its not risk free I was just taking a shot because you changed your tag line.  Also because I think what you do is comparing apples to oranges with what most of us do.

Gaddock's picture
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It's all about the almighty dollar Ron. The style may be different but the desired effect are in fact one and the same.
 
Does the tag line bother you?

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Short sold ACME (as in Bugs Bunny's ACME) for $29.47
 
Bought the same amount of Calls for $2.45 35 strike.
 
Sold the same amount of Puts for $9.70, 35 strike.
 
When you smash them together your gain is $1.72 for a return of 4.9%. Trade ends on the third Friday of September I think the 15th.
 
NO MATTER WHERE THE STOCK GOES THE GAIN IS LOCKED IN AND PAID IN ADVANCE.
 
If you want to share.  do you do this for all your clients?   how many differnet names?
you just keep rolling?   does the math work for alot of stocks?
this is your presentation to people? 
what about getting premature assignment on puts?  or if they call in short loan? 
 

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Ron 14 wrote: Moraen wrote:That's crap Ron. We all know guys who work at banks are the best!
 
No. Guys at banks are idiots.
 
I would love to know how you go from Eddie J to owning your own shop where you do nothing and employees do everything. You must have lit it up at Jones!

It's called planning and ambition. And I never said I don't do anything. I just do MORE than you do. Bank brokers are lazy, that's why they are at banks.

It's also called thinking outside of the box, saving, investing correctly... etc. The ability to adapt, to think and overcome.

The same reason you are at a bank is the same reason you follow MPT - you need people to prop you up.

If you want to know how I did it. It's simple. Plan your exit for at least a year. Serve in the military and create lifelong bonds with people who will trust you with more than their money. Have a set of balls. Create a new solution to financial problems. Find people who agree with you, offer them a good deal and HIRE them. Plant seeds in your fellow brokers/advisors minds.

Basically, take a chance. Once again, more risk, more reward. Tell me how you went from being a Jones broker to a bank broker - weakness and the need for a financial safety net?

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A b
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BTW
 
cash waiting for pullback?
first 10% pullback in 1982 was in 998 days

Ron 14's picture
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Oh so you mean a natural market that you have built up overtime who you sell your non-repeatable strategies to. 
 
You should be trading these stocks for yourself also. You would make more money and keep it all. The reason you don't is because you rather charge someone to use their money to make your bets.
 
Create a "new" solution to financial problems ? Give me a f**king break. 

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Ron 14 wrote: Oh so you mean a natural market that you have built up overtime who you sell your non-repeatable strategies to. 
 
You should be trading these stocks for yourself also. You would make more money and keep it all. The reason you don't is because you rather charge someone to use their money to make your bets.
 
Create a "new" solution to financial problems ? Give me a f**king break. 

Deleted - it was a low blow.

Sorry that I have a natural market - that I did something worthwhile before coming to this business.

Talk to people about what they want and provide it. Just because you can't provide it at a bank, don't think you know anything about who I am or what I do. Or what I can do.

My strategies are incredibly repeatable. Once again, I'm not making people ridiculous returns, but I'm not losing them money either.

Somebody mentioned a black swan. MPT is the ultimate black swan. It's failed 12 times. That's way to much to be a simple outlier.

Go back to your scared bank and see how many referrals you can get from your tellers.

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A b wrote:
 
If you want to share. 1 do you do this for all your clients?  2 how many differnet names?
3 you just keep rolling?   4 does the math work for alot of stocks?
5 this is your presentation to people? 
6 what about getting premature assignment on puts?  7 or if they call in short loan? 
 
1 Pretty much. I'll have as many as I can find. I had a program developed buy some guys in india to search just for the setups I like.
 
2 I can find around 20 a week usually but quite a few I cant get the shares for the short. I don't use ADR's as they are the ones that can bite you the only real way you can get nailed. I tell you what it is if Ron the floor trader is stumped.
 
3 Yep
 
4 See answer 2
 
5 One of the better ones.
 
6 WOW got your thinking cap on don't you .... As soon as they are assigned the trade is done. I'll trade them deep in the money to have a better chance of assignment. Early assignment is desired
 
7 No biggy we just cover the shares with cash in the account or use a little margin until the trade is over usually just a month or two. The shares received on assignment auto cover the short.
 
Not bad eyy?
 
 
 

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Moraen wrote: Ron 14 wrote: Oh so you mean a natural market that you have built up overtime who you sell your non-repeatable strategies to. 
 
You should be trading these stocks for yourself also. You would make more money and keep it all. The reason you don't is because you rather charge someone to use their money to make your bets.
 
Create a "new" solution to financial problems ? Give me a f**king break.  Deleted - it was a low blow.
 
Sorry that I have a natural market - that I did something worthwhile before coming to this business. Talk to people about what they want and provide it. Just because you can't provide it at a bank, don't think you know anything about who I am or what I do. Or what I can do. My strategies are incredibly repeatable. Once again, I'm not making people ridiculous returns, but I'm not losing them money either. Somebody mentioned a black swan. MPT is the ultimate black swan. It's failed 12 times. That's way to much to be a simple outlier. Go back to your scared bank and see how many referrals you can get from your tellers.
 
I saw the low blow. Thats fine. I have been more honest about my story than anyone on this site. I even posted my Jones numbers. I had a natural market for being on the trading floor for 9 years. You know how many of those connections I used to build my clients base? 0. I wanted to start from zero, zip. I went to Jones and then saw the bank as a better opportunity to build a business than Jones for 5% less cut. Talk to people about what they want and provide it ? That is what Madoff did.

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Unanticipated dividend

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Ron 14 wrote: Moraen wrote: Ron 14 wrote: Oh so you mean a natural market that you have built up overtime who you sell your non-repeatable strategies to. 
 
You should be trading these stocks for yourself also. You would make more money and keep it all. The reason you don't is because you rather charge someone to use their money to make your bets.
 
Create a "new" solution to financial problems ? Give me a f**king break.  Deleted - it was a low blow.
 
Sorry that I have a natural market - that I did something worthwhile before coming to this business. Talk to people about what they want and provide it. Just because you can't provide it at a bank, don't think you know anything about who I am or what I do. Or what I can do. My strategies are incredibly repeatable. Once again, I'm not making people ridiculous returns, but I'm not losing them money either. Somebody mentioned a black swan. MPT is the ultimate black swan. It's failed 12 times. That's way to much to be a simple outlier. Go back to your scared bank and see how many referrals you can get from your tellers.
 
I saw the low blow. Thats fine. I have been more honest about my story than anyone on this site. I even posted my Jones numbers. I had a natural market for being on the trading floor for 9 years. You know how many of those connections I used to build my clients base? 0. I wanted to start from zero, zip. I went to Jones and then saw the bank as a better opportunity to build a business than Jones for 5% less cut. Talk to people about what they want and provide it ? That is what Madoff did.

Riiiight. Is that all you can do is invoke Madoff? My clients get two statements, one from me and one from the custodian. They don't have to rely on me.

You have no response to the statistical failure of MPT. I can't wait until Ice gets back - his arguments are intelligent and require thinking to respond.

I want to work with people I like. I like my market. I like my clients. And I can help them. I've been honest about my strategy. It's not market timing.

I am sure the bank is appreciative that you are helping them build their business. I'm sorry, I'd rather be an owner than an employee. To each his own.

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Moraen wrote: Ron 14 wrote: Moraen wrote: Ron 14 wrote: Oh so you mean a natural market that you have built up overtime who you sell your non-repeatable strategies to. 
 
You should be trading these stocks for yourself also. You would make more money and keep it all. The reason you don't is because you rather charge someone to use their money to make your bets.
 
Create a "new" solution to financial problems ? Give me a f**king break.  Deleted - it was a low blow.
 
Sorry that I have a natural market - that I did something worthwhile before coming to this business. Talk to people about what they want and provide it. Just because you can't provide it at a bank, don't think you know anything about who I am or what I do. Or what I can do. My strategies are incredibly repeatable. Once again, I'm not making people ridiculous returns, but I'm not losing them money either. Somebody mentioned a black swan. MPT is the ultimate black swan. It's failed 12 times. That's way to much to be a simple outlier. Go back to your scared bank and see how many referrals you can get from your tellers.
 
I saw the low blow. Thats fine. I have been more honest about my story than anyone on this site. I even posted my Jones numbers. I had a natural market for being on the trading floor for 9 years. You know how many of those connections I used to build my clients base? 0. I wanted to start from zero, zip. I went to Jones and then saw the bank as a better opportunity to build a business than Jones for 5% less cut. Talk to people about what they want and provide it ? That is what Madoff did.

Riiiight. Is that all you can do is invoke Madoff? My clients get two statements, one from me and one from the custodian. They don't have to rely on me.

You have no response to the statistical failure of MPT. I can't wait until Ice gets back - his arguments are intelligent and require thinking to respond.

I want to work with people I like. I like my market. I like my clients. And I can help them. I've been honest about my strategy. It's not market timing.

I am sure the bank is appreciative that you are helping them build their business. I'm sorry, I'd rather be an owner than an employee. To each his own.

Btw - I like yours and Gaddock's tag lines. Hilarious!

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Well if you are giving people what they want are you giving them guarantees ? That is why I used Madoff reference, he was making guarantees on returns. Im not saying what you do is shady. I am saying that investor psychology is such that what they want today will be different tomorrow.
Were you able to take your Jones clients with you ? Im sure you did and so will I.
 
 

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Ron 14 wrote:Unanticipated dividend
 
BINGO!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
 
Ronny Ron Ronny    Bravo  
 
That's it freaking special dividend.
 
 
Unanticipated dividend for Ron, I'll remove the tag line you were manipulated into making.
 
 

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I guarantee nothing. Not even annuities or government bonds. I never guarantee anything. I agree about investor psychology. If it ever gets to the point where they don't like my methods (which will expand as I hire more people - talked to a guy today with an interesting ETF strategy), they are free to leave. Everything we do is spelled out in the IPS and contract.

It's a little easier to leave Jones. At Jones, you can not EVER sell Jones. At a bank (and you can correct me if I'm wrong) everybody there has their hands on your clients. At least talking to the bank brokers I know. There are the planners and the trust guys. Just another way for them to get their hooks in your clients. I wish you the best if you decide to leave ever, and would even be willing to share my exit plan (how exactly I did it, how I followed the rules I was supposed to, but still managed to get things set up) - with anybody. I think it becomes harder the longer you stay though.

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I can take or leave MPT. MPT makes reference to risk free assets. There is no such thing. Ask my Great Uncle who has been rolling CD's since the early 80's if those are risk free. Now the poor guy has to sell his house to pay bills because inflation crushed him. Equities will return a greater real return over time than anything else and you will have to take on risk to get that.

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Gaddock wrote:Ron 14 wrote:Unanticipated dividend
 
BINGO!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
 
Ronny Ron Ronny    Bravo  
 
That's it freaking special dividend.
 
2004 I got kicked in groin when I was trading QQQ when Microsoft announced special dividend. Still Hurts !!

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Moraen wrote:I guarantee nothing. Not even annuities or government bonds. I never guarantee anything. I agree about investor psychology. If it ever gets to the point where they don't like my methods (which will expand as I hire more people - talked to a guy today with an interesting ETF strategy), they are free to leave. Everything we do is spelled out in the IPS and contract. It's a little easier to leave Jones. At Jones, you can not EVER sell Jones. At a bank (and you can correct me if I'm wrong) everybody there has their hands on your clients. At least talking to the bank brokers I know. There are the planners and the trust guys. Just another way for them to get their hooks in your clients. I wish you the best if you decide to leave ever, and would even be willing to share my exit plan (how exactly I did it, how I followed the rules I was supposed to, but still managed to get things set up) - with anybody. I think it becomes harder the longer you stay though.
 
Totally agree that the bank has their hands all over your clients. That is why I don't use any products or funds connected directly to the bank. I figure if I ever bolt I will say to the clients that the bank wants me to put my clients in bank products and I don't think that is in your best interest. (They dont demand it now, but it is hinted)

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Unanticipated dividend for Ron, I'll remove the tag line you were manipulated into making.

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Ron 14 wrote: Moraen wrote:I guarantee nothing. Not even annuities or government bonds. I never guarantee anything. I agree about investor psychology. If it ever gets to the point where they don't like my methods (which will expand as I hire more people - talked to a guy today with an interesting ETF strategy), they are free to leave. Everything we do is spelled out in the IPS and contract. It's a little easier to leave Jones. At Jones, you can not EVER sell Jones. At a bank (and you can correct me if I'm wrong) everybody there has their hands on your clients. At least talking to the bank brokers I know. There are the planners and the trust guys. Just another way for them to get their hooks in your clients. I wish you the best if you decide to leave ever, and would even be willing to share my exit plan (how exactly I did it, how I followed the rules I was supposed to, but still managed to get things set up) - with anybody. I think it becomes harder the longer you stay though.
 
Totally agree that the bank has their hands all over your clients. That is why I don't use any products or funds connected directly to the bank. I figure if I ever bolt I will say to the clients that the bank wants me to put my clients in bank products and I don't think that is in your best interest. (They dont demand it now, but it is hinted)

Would be a good reason to leave too.

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Ron 14 wrote:Squash1 wrote:"AA does a tremendous job protecting in just about any market".. WHAT? That goes along with "getting a little bit pregnant" and "I am always right sometimes" I agree w/B24 that there are indicators that saw the decline coming(simple ones too, like SMA) I also agree w/ Morean.. if you are just keeping them from making mistakes you aren't an advisor.. You are a the equivalent of the Vanguard help desk(not bad people, but not advisors). Incredible, for retirees that you help into the crash, you have to be narrow minded because 40% of their equity got wiped out last year, and now where is the income going to come from.
 
Seeing that a majority of investors underperform their own investments (DALBAR Study of investor behavior) I would say if you can keep them from making mistakes and that is all you do you are a great advisor.
 

 
 
This does not make you a great advisor, just as scoring a 95% on the 7 doesn't make you a great advisor.  This is why you will always want to work with the "average" investor, simply because this is the only level of expertise you have been able to master.
 

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AB
 
Now that we've established the only risk to this position is a surprise dividend read between the lines.
 
Who would ever imagine somebody like ahhh say AIG for example would pay a special dividend at this time? Can you imagine the moral outrage? 
 

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Ron 14 wrote:
I can take or leave MPT. MPT makes reference to risk free assets. There is no such thing. Ask my Great Uncle who has been rolling CD's since the early 80's if those are risk free. Now the poor guy has to sell his house to pay bills because inflation crushed him. Equities will return a greater real return over time than anything else and you will have to take on risk to get that.

 
 
You're proof being?????
 

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iceco1d wrote:
B24 wrote:Incredible Hulk wrote: B24 wrote:
My opinion is that asset allocation/MPT smooths out the returns during cyclical (bull and bear)markets, but does absolutely nothing to protect in a secular bear market.  The key is not having a crystal ball, but rather reacting to what is known. I shall humbly disagree with this paragrah. AA does a tremendous job protecting in just about any market, excluding the last 18 months. To discard a well worn strategy on a once in an investment lifetime event like last year is very short sighted. In a secular bear market you still have rallies up and down. If your asset allocation would suggest 35% fixed & 10% cash then regular rebalancing to that tune would have provided substantial protection in any given decade that doesn't include last year. Even including last year, you were protected to an extent against the 50%+ market decline. Anyone basing their advice for retirees, pre-retirees on market performance over the last 24 months is as narrow minded as the advisor in '99 basing their advice on the then previous 24 month period..
 
I think you're missing my point.  Secular markets are part of the investing cycle.  I am not talking about every cyclical bear and bull.  I am saying that MPT/AA works within a secular bull market.  Since the last secular bull was 18 years long, people were duped into thinking that that's how things always are.  What about the 20's?  What about the 40's? What about the 70's?  What about the 00's?  Four out of the last 10 decades have been wipeouts.  I know Jones likes to talk about buy-and-hold like it's the holy grail, but the truth is, there are a lot of advisor-led investors that have had their portfolios wiped out (twice) in the past 10 years.  But hanging your hat on AA and MPT because it works in some markets is short-sighted.  You can recover from a 4-month cyclical bear market, it's tough to recover from a 10-15 year secular bear market.Glad this thread didn't die (yes, I'm still away).  I haven't caught up yet, but I've seen this statement (or some variant of it) posted several times now. My new question is this...In a "SECULAR BEAR MARKET," do stocks discontinue the concept of paying dividends?  Do bonds take a hiatus from coupon payments?  Does cash stop paying interest?Going to go read the next 6 pages now, but if someone could enlighten me on this, I'd really appreciate it.  Thanks in advance!

I get your point, but my guess would be that some companies may stop paying dividends and some bonds may stop paying coupons (Ah ha! The argument for diversification).

Ice - you're in for a long read!

Ron 14's picture
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Joined: 2008-07-10

Ill change my tag too !

Moraen's picture
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Joined: 2009-01-22

iceco1d wrote: Haha, just finished.  I was in for a long read.  I'm glad the thread ended on a less "angry" note...then again, it isn't over yet I suppose!FWIW, I'd rather chat EMH than MPT.I think some of these POVs vary depending on what your definition of "buy and hold" is, and to what extent you considering MPT (conceptually, or literally).  Does time-frame rebalancing count as B&H?  How about tolerance-based rebalancing?What if you are selling using a buy-write strategy on your equity piece, does that still count as b&h (as long as you are doing the same thing, over and over, and not using any research to base your trades...like selling @ the money calls repeatedly on the same security(ies)).If you are talking retired people taking income from their portfolios, is it still considered b&h if you are "tactically" placing your withdrawals?  Comments welcomed.  Going to go catch up on some other threads now.

The real problem with MPT is that it is based in statistics. Conceptually, it's a great idea. The only problem is, things change. We have gone through way too many changes in the past 100 or so years to think that something will always work one way. Economics is the only social science where we assume people are rational. A big mistake, IMHO. It is the reason we have Marxist theories that we battle to this day. I think we must constantly evolve the way we do business, or we'll stagnate and eventually screw up.

As for your questions - I have to wonder that myself. Time-frame rebalancing seems to me to be both an offensive and defensive strategy (probably why people like it so much). Tolerance-based rebalancing seems a little strange simply because people's risk tolerance changes as often as the market does. And since you are selling every time you rebalance, it might not be literally buy and hold. But I think it falls in the same framework as buy and hold.

Retired people - I don't think you can call people taking withdrawals buy and hold investors. They are in a different phase of their life. They are in the only phase where they should be taking money out.

All very good questions though.

A b's picture
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Joined: 2009-06-04

Gaddock wrote:AB
 
Now that we've established the only risk to this position is a surprise dividend read between the lines.
 
Who would ever imagine somebody like ahhh say AIG for example would pay a special dividend at this time? Can you imagine the moral outrage? 
 
 
surprise div. worry is retarded.   
 
if u can net 4% with comm and snake pit option spreads etc its neat.
 
Like every thing else in our biz, you got to get people to do it.  
 
prospects would have to be real players to grasp it.  so many moving parts.
 
seems like it would take a hell of a lot of work to build up a good biz with it BUT sounds like u have a passion for it.    Its certainly unique
 

Don Draper's picture
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Joined: 2009-01-27

structured CDs. problem solved

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