What to buy in this market?

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footsoldier's picture
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I may have misinterpreted your attack on Ice for being inexperienced, but it seemed that you were suggesting that because of the way the elders are responding to this situation, that things are different this time.  You know the story from there though...
 
GVF-
 
The context of his concern was there was no safe haven. Typically a flight to quality would occur and bonds, cash alternatives were a viable alternative. That hasn't been the case this time and with money markets in peril (before the govt bailout) and banks failing it has caused many who aren't brilliant asset allocators (like my good friend ice) to question where to go.
 
Even though the 44 year vet lost 600K of a 2.8M portfolio over the last year, he still remains invested so clearly he continues to believe the market will out peform like it has historically.
 
My attack as you put it on the little rich man ice is intended to get him to STFU. He knows very little and it shows in all of his 1500+ posts over the last year. He is very inexperienced and someday when he doesn't perform better than American Funds or the S&P or whatever benchmark he'll be eating crow, assuming he hasn't left for greener pastures by then. 
 
I might be inviting trouble....I wonder if we could get boy wonder to illustrate his asset allocation model, then the rest of us could compare his brillance to the rest of the world.

Anonymous's picture
Anonymous

Gordon Gekko wrote:
Ice, you profess to be all knowing in the investment arena so I won't advice you there.
For your golf game - take a lesson!
 
I don't profess to be all knowing, fyi.
 
I am going to take lessons next year - I live in a relatively rural area and can't find lessons this late in the season.  For now, I settle for going with clients that are pretty good - they give me "lessons," I buy them lunch and/or a round of golf, I stay in contact with clients and strengthen the relationship.  We all win.

Anonymous's picture
Anonymous

footsoldier wrote:this is the easiest money I've ever made in my life
 
Ice-
 
Congrats on making it this far. I'll lay odds you are out of here in less than 5 years. No way any clients with a brain would want you for an advisor.
 
Maybe you should consider running for politics. Since you know everything about portfolio management why don't you consider a position on Wall Street. The firms need more sanctimonius pricks like you. Or better yet just join their country club. Might improve your game...but it could damage what little matter is between your ears.
 
I have been on these forums for two years. My time here is dwindling....there is no substance any longer just ego gratification.
 
You name the wager, and you are on.  Put up or shut up on this one.
 
As far as clients not liking me - do you suppose that I interact with clients in the same manner that I interact with you? 
 
So little between my ears, eh?  If I recall correctly, you are usually the one calling me out for no reason, and name-calling...you are what? In your 40's?  You should be so proud of your maturity. 
 
You think I'm a "punk" and an "egomaniac" because I'm too opinionated for a 2nd year guy in your eyes.  That's your problem, maybe it's jealousy.  Get help.  Quickly.

Anonymous's picture
Anonymous

footsoldier wrote:
 
I might be inviting trouble....I wonder if we could get boy wonder to illustrate his asset allocation model, then the rest of us could compare his brillance to the rest of the world.
 
 
Are you really that brain dead?  I've never sold American and I never would.  I've shared several of my asset allocation models, in private, with several forum members  here- all of which, even YOU would consider a "vet." 
 
If you ever become a rational, non-dick, I will be happy to share them with you in private, as well as the strategy behind their implementation.  In the meantime, try and polish up your IQ so you're ready for some comprehension when and if that time ever comes. 

footsoldier's picture
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Ice-
 
Peace brother. Just show some value instead of puffing your chest. You aren't any better than most or you would be annointed by now. Get over yourself.
 
You don't have to PM me, just tell all of us how brilliant you are. Oh and by the way since you ask, I just turned 50.............AARP has been calling for awhile.

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footsoldier's picture
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I'll admit this past 6 weeks have been the toughest I can recall. Probably because I am not nearly as intelligent as Ice to be able to predict and time the market. Dorsey Wright and all those technical chartist types are much much smarter than little old me.
 
I have never seen a market timer stay in this business for very long. They make hay for awhile, or they claim they do (Hello... 108 holes of golf last week!). If that is not puffing your chest what the hell is? All I can surmise is if his precious few clients don't need him  then his options are either go play golf, surf the web, or prospect for new clients. Now which do you think he's ignoring?
 
 

footsoldier's picture
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You think I'm a "punk" and an "egomaniac" because I'm too opinionated for a 2nd year guy in your eyes. 
 
Ice-
 
Thanks again for getting the old boy's blood boiling and getting me to respond. I'll close with the thought that your comments above say it all.
 

Anonymous's picture
Anonymous

footsoldier wrote:I'll admit this past 6 weeks have been the toughest I can recall. Probably because I am not nearly as intelligent as Ice to be able to predict and time the market. Dorsey Wright and all those technical chartist types are much much smarter than little old me.
 
I have never seen a market timer stay in this business for very long. They make hay for awhile, or they claim they do (Hello... 108 holes of golf last week!). If that is not puffing your chest what the hell is? All I can surmise is if his precious few clients don't need him  then his options are either go play golf, surf the web, or prospect for new clients. Now which do you think he's ignoring?
 
 
 
Market timing is for morons.  I have absolutely zero ability to time the market - no one does.  Your allegations about me prove you just singled me out, and you haven't actually read any of my posts.  You know nothing about me.
 
I'm sorry you are so stressed out about the market.  Don't get pissed at me for being prepared.  There is no reason a 4 or 5 year long bear market should cause you, or your clients, to lose any sleep and/or not be able to reach their financial goals, MUCH LESS a year long bear market.  If you aren't capable of coming up with an investment strategy that will get your clients to meet their financial goals regardless when the market hiccups, then perhaps you need a new career. 
 
I think the only times I even get animated and long-winded about anything on this forum is in regards to portfolio management - if you think that's "puffing my chest out" then I'm not sure what to tell you.  Anyone that has PM'd me and asked more about my investment process, I have elaborated on, and helped, to whatever extent they've requested. 
 
Yea, I'm assertive about a subject I'm highly qualified to educate on...I'm such a dick. 

Sportsfreakbob's picture
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Just for the record, footsoldier...From the contacts i've had with Ice, both on the boards and via PM's , my impession is that he is way more knowledgeable about running money than his years in the business call for. (I am not saying you are not smart, so don't go ballistic on me too....i've got enough shit on my mind these days just like we all do)He is far from a market timer, and he brings a clear strategy to the people he works with. I dont even know why i'm jumping in, just a diversion i guess, but just thought i'd fill you in on my experience thru my contacts with him, you might have the wrong impression. (not saying he doesnt think highly of himself, if he didnt he shouldnt be doing what we do for a living).Just my two cents. P.S. - I'm older than both of youPeace!!!

footsoldier's picture
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I'm sorry you are so stressed out about the market.
 
If you aren't yet you will be especially if you have older clients who rely on their assets for income for the rest of their life. What percentage of your clients are in retirement now?
 
Don't get pissed at me for being prepared. 
I'll take Bob's response above at face value. I'll ask nicely this time, could you please identify for us what you are doing.
 
There is no reason a 4 or 5 year long bear market should cause you, or your clients, to lose any sleep and/or not be able to reach their financial goals, MUCH LESS a year long bear market. 
 
Have you been to arbitration yet? I have twice, both times it was not my fault, it was the market. Both times I was brought before three strangers who admitted I did nothing wrong. Even the best strategies aren't perfect. Please tell us what you do that is different during market downturns (are you into shorting the market?).
 
If you aren't capable of coming up with an investment strategy that will get your clients to meet their financial goals regardless when the market hiccups, then perhaps you need a new career. 
 
This is usually where I get a little testy in my responses. After all I have been in the biz since 94, actually started part-time in 92 and to have a 2 year rep tell me its time for a new career because I can't find a strategy that works well in bad markets irks the shit out of me.  Assuming I elect to stay in the industry after 14 years, please help me and others understand what exactly your strategies are? If the 44 year vet is all wet about there being no safe haven, help all of us understand where you are finding that comfort?
 
Where did you get your education about investing. Did you buy a system or did you create it on your own. What qualifications do you currently have besides being successful in your previous industry? Are you a CFA?
 
Bob indicates you have a clear strategy. Could you please help us understand how your strategy is so different?
 
I hope to learn something and become a NON-DICK as you put it. I am old enough to admit my mistakes, so please prove me wrong. It is far better to become more educated on any subject, especially in our industry.
 
I find it curious that you aren't compelled to share with the masses? Any particular reason why? Do you sell your strategies to other reps?

Anonymous's picture
Anonymous

footsoldier wrote:
I'm sorry you are so stressed out about the market.
 
If you aren't yet you will be especially if you have older clients who rely on their assets for income for the rest of their life. What percentage of your clients are in retirement now?
 
Roughly 20%.  I have been trying to get involved in the local 403B market (which is what my BD focuses on) because of the reg changes (I was concerned that if nobody in my branch was going to maintain the plans we had (actively), then we would get the boot when these schools/colleges moved to common remittance.  So, I do have a fair amount of these small, DCA, 403B accounts in my book, that may skew this number.).
 
I know 403Bs aren't a big money maker, but it's a pretty easy prospecting channel, and not a bad referral source either.
 
Don't get pissed at me for being prepared. 
I'll take Bob's response above at face value. I'll ask nicely this time, could you please identify for us what you are doing.
 
I'd be happy to.  In general, I use an asset dedication style strategy.  The assets in the portfolios I manage are generally static (unless of course there is a fundamental change in those assets) - I do not make tactical shifts or time the market in any way. 
 
I do split my portfolios into basically 2 pieces- a "plain vanilla" piece (standard asset allocation based on risk tolerance), and what I call a "bear" piece.  The bear piece of the portfolio basically consists of both a) ultra safe/low volatility assets, and b)  assets with negative correlation to the stock market. 
 
The only "tactical" move I make is where to draw income from.  In a worst case scenario, the portfolio I'm currently using could go a minimum of 4 to 5 years without touching a down equity or fixed income asset (even with a 4% withdrawal rate) - and that assumes the traditionally negatively correlated assets I'm using continue to underperform (as they have throughout the last 6 months).  In your historically "run of the mill" bear market (one that doesn't threaten the foundation of the world financial system), the "bear'' portion of the portfolio should be able to withstand a 7 - 10 year bear market.
 
I would be happy to share the specifics of such a portfolio (not right now, my football game is about to start) - but it certainly won't be worth it if you come from the camp that believes that passive investing has no merit. 
 
So if you are the type that feels that "wrapping index funds is a scam" then you have no need for my investment process.  (No, I do not use all index funds).
 
There is no reason a 4 or 5 year long bear market should cause you, or your clients, to lose any sleep and/or not be able to reach their financial goals, MUCH LESS a year long bear market. 
 
Have you been to arbitration yet? I have twice, both times it was not my fault, it was the market. Both times I was brought before three strangers who admitted I did nothing wrong. Even the best strategies aren't perfect. Please tell us what you do that is different during market downturns (are you into shorting the market?).
 
I'm sorry to hear that foot.  And no, I don't short the market. 
 
Statements like this are exactly what convinces me that you have me totally CONFUSED with someone else.  If you've read any of my posts in regards to portfolio management, you should know that these allegations are ridiculous. 
 
If you aren't capable of coming up with an investment strategy that will get your clients to meet their financial goals regardless when the market hiccups, then perhaps you need a new career. 
 
This is usually where I get a little testy in my responses. After all I have been in the biz since 94, actually started part-time in 92 and to have a 2 year rep tell me its time for a new career because I can't find a strategy that works well in bad markets irks the shit out of me.  Assuming I elect to stay in the industry after 14 years, please help me and others understand what exactly your strategies are? If the 44 year vet is all wet about there being no safe haven, help all of us understand where you are finding that comfort?
 
Where did you get your education about investing. Did you buy a system or did you create it on your own. What qualifications do you currently have besides being successful in your previous industry? Are you a CFA?
 
Once again, if you had actually read ANY of my other (serious) posts about portfolio management, you'd probably have these answers already.  Instead, you prefer to jump in head-first and attack me. 
 
I got my education about investing in college - I have a B.S. Finance and an M.B.A. with a concentration in finance (thesis in Efficient Markets Hypothesis).  In grad school, we (a small group of finance profs & finance grad students) also managed various funds throughout the university (and for some local non-profits). 
 
I created all of my portfolios completely on my own.  I created my investment strategy on my own. 
 
Bob indicates you have a clear strategy. Could you please help us understand how your strategy is so different?
 
Like I said, I can, but it will most certainly be necessary that you have an open mind regarding what you (may) believe about asset allocation, active & passive management, and withdrawal rates. 
 
I hope to learn something and become a NON-DICK as you put it. I am old enough to admit my mistakes, so please prove me wrong. It is far better to become more educated on any subject, especially in our industry.
 
I agree.
 
I find it curious that you aren't compelled to share with the masses? Any particular reason why? Do you sell your strategies to other reps?
 
I'm not compelled to share with the masses for a few reasons:
 
-Everytime we get into an in-depth portfolio management thread on this board, it gets to be 12 pages long, and I waste countless hours re-stating the same facts over & over again.  Then when it's all over with - I change no one's mind anyway. 
 
-That's fine with me though, another reason I don't feel compelled to share my strategy with the masses is because it's one of my competitive advantages.  how many times has it been said on here that there are brokers out there "cowering in fear" and it's easy to "cherry pick" their clients.  I like not being one of them.  I like having answers for my clients.  It's good for business. 
 
-I don't want everyone doing what I'm doing.  I'm happy to be different.  Actually, without all of the active managers out there, my strategy wouldn't work.  And if other brokers (not all of them) weren't fucking things up, I'd have a hard time getting new clients. 
 
-No, I don't sell my process.  My firm wouldn't allow it even if I wanted to.  Maybe someday.  Not right now. 
 

Getthere's picture
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You needed to have a plan in place for this BEFORE it happened - now is a little late for implementation. 
 
I'm buying.  And in 5 years, I, and my clients, will be happy that I'm buying (intelligently, of course) with the DOW @ 10K, rather than sit on some CDs and T-Bills for 3%, and then get back in @ 12,500. 
 
That's not to say you shouldn't have a healthy dose of CDs/Treasuries/Money Market/Savings/etc. for those clients that are in, or near, retirement.  But you should have that in place because of age/risk tolerance, not because the market scares you all of a sudden.
 
Sorry for the rant, but you don't get paid to get as scared as the clients.  You get paid to build an intelligently designed portfolio, and take emotion out of the investing process. 
 
I'm gonna meditate today on this earlier quote from Ice. These (free) words are worth - I don't know - more than the $1200 some guys charge for a "plan".

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If people wait to back in @ 12,500 they will be able to sit it out for awhile..Do not see getting back to that for 5-7 years.  Think unless there is some miraculous recovery for stocks we will be stuck a new trading levels for awhile, and if we do take out the lows sometime next year and take it down to 6000 or so, it is the end of stocks as a popular asset class for longer.  Nikkei was at 40000 in 1990 and never recovered at all, now down to 8000+.  Anyone who needs a history lesson pull up some long term charts from 1973 on..great stocks traded flat for many years with PE ratios around 5-6.
 
Hope I am wrong, but the perfect storm may have hit, complete confidence crisis on the system and financial markets, poor bank lending, new regulation on the brothels (brokerage houses), and people losing 25-50% of their money, even in safer instruments like corperates and munis. 
 
I think if there is a rally coming maybe Nov/Dec absence of news might be the window for it, can not imagine what earnings will look like in Jan and cant imagine too much great news coming then, realize that when it looks darkest too late to get bearish, but think this time its the kind of bad that will linger for awhile.

footsoldier's picture
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Ice-
 
My AF clients are from my Jones years. Since I became independent 2 years ago, the same time you joined our industry, I have implemented much of what you are doing. I too believe in alternative investments and I embrace some static funds like DFA.
 
It will be interesting to see 12-24 months out how well the static portfolios perform. I however am not convinced that efficent markets theories that were conceived in the 40's hold true today. It still comes down to trust. Currently the companies that make up our markets (efficient or otherwise) have to earn it back.
 
How do static portfolios reflect government intervention. Let's not forget that the US government now owns a piece of insurance companies and banks and soon Americas largest car companies. What happens if re-regulation occurs. What happens if we have run away inflation.
 
The market itself doesn't scare me. What scares me, just like the 44 year vet is where do you turn for safety without getting killed. A bond portfolio today probably has as much risk as an equity portfolio did a year ago. If we do have runaway inflation after this crisis won't that decimate the bond values? (Interest rates will have to rise just like they did in the 70's...I was in my teen years then when I made my first investment 14% money market rates and inflation was at 21%). History has taught us that the 70's may in fact be back. g
 
So Ice, a little fear is warranted and those that have lived through the tough times in this industry can teach us volumes more than most MBA's. My closest friend has his MBA in Finance. And I manage his portfolio and have for the last 10 years.
 
 

Anonymous's picture
Anonymous

footsoldier wrote:

 
So Ice, a little fear is warranted and those that have lived through the tough times in this industry can teach us volumes more than most MBA's. My closest friend has his MBA in Finance. And I manage his portfolio and have for the last 10 years.  
 
 
Foot-
 
I have no intention of getting involved, again, in an in-depth portfolio management and/or economics debate.  You asked me some questions.  I gave you some answers. 
 
Your quoted statement above is, I'm assuming, a passive-aggressive attempt to keep me engaged in this nonsense.  I'm not sure what your friend is thinking...maybe he just doesn't have the time/care to do it himself (I doubt that).  Maybe he is bs'ing you.  Maybe you are bs'ing me.  I don't really care either way. 
 
I have a 25 year vet in my office...I wouldn't let him touch my money.  I wouldn't let your 44 year old vet touch my money either (at least, not for the lone reason that he's a 44 year vet).  That's OK.  I'm sure you wouldn't let me touch yours either. 
 
Heck, none of the other FAs in my office want to hear about my strategy either (but then again, Vanguard never stops by to take them to lunch either).
 
I do know this though:  I'm not bitching and moaning about the market, or wondering when the "pain will stop."  I don't have clients calling me all day long in a panic.  Guys in my office do.  I bet there are some guys on here that do (not saying you do, or directing that at anyone specific). 
 
I know this also - Not a single income-taking client of mine has yet had to sell a depreciated asset yet for income during any of this "crisis."
 
Can we chalk this up to enough that, I won't bother you anymore, and you can take a chill on the "Ice is in his 2nd year, he has no idea wtf he is doing, he is just a punk/wonderboy/blow-hard/[insert you get the idea here]?"  I'm not worried about me - I wish you wouldn't either.
 
[3rd Quarter Starting, Gotta Go]

footsoldier's picture
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Your quoted statement above is, I'm assuming, a passive-aggressive attempt to keep me engaged in this nonsense.  I'm not sure what your friend is thinking...maybe he just doesn't have the time/care to do it himself (I doubt that).  Maybe he is bs'ing you.  Maybe you are bs'ing me.  I don't really care either way. 
 
Ice-
 
My friend has been an entrepeneur since college and chooses to spend his time doing other things where he excels. Finance stuff bores him. No BS. And no passive-agressive thoughts on my part at least. Too bad I hadn't taken the time to read your posts in the past.
 
I don't have time to read 1500 posts.
 
Not a single income-taking client of mine has yet had to sell a depreciated asset yet for income during any of this "crisis."
 
You deserve props for this. Reverse dollar cost averaging in down markets is a recipe for disaster. The next wave of arbitrations (people sue for anything today) are going to be from people who outlive their money.  
 
Since you are in the 403B market or your firm is, do you have an opinion about guaranteed income products such as annuities. I am noticing more and more fund companies coming up with guaranteed income riders on mutual funds. I think even Vanguard announced a product recently. Any thoughts?
 
 

Anonymous's picture
Anonymous

footsoldier wrote:
 
Since you are in the 403B market or your firm is, do you have an opinion about guaranteed income products such as annuities. I am noticing more and more fund companies coming up with guaranteed income riders on mutual funds. I think even Vanguard announced a product recently. Any thoughts?
 
 
Just so I understand the question, are you talking about managed payout funds?
 
As far as my opinion on annuities, I don't find them "good" or "bad" as a product.  I'm sure they are probably misused frequently, but then again, so are plenty of other products. 
 
I don't recommend annuities very frequently, and I don't currently use them at all for an accumulation vehicle in 403Bs. 
 
I find that my current strategy is pretty solid for income planning - and if it got sooo bad that what I'm using fails, then it's fairly likely that the guarantees in VAs would fail as well.  Now, there are certainly client situations where having that menu of guarantee options would be the best thing for a client. 

anabuhabkuss's picture
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iceco1d wrote:footsoldier wrote:this is the easiest money I've ever made in my life
 
Ice-
 
Congrats on making it this far. I'll lay odds you are out of here in less than 5 years. No way any clients with a brain would want you for an advisor.
 
Maybe you should consider running for politics. Since you know everything about portfolio management why don't you consider a position on Wall Street. The firms need more sanctimonius pricks like you. Or better yet just join their country club. Might improve your game...but it could damage what little matter is between your ears.
 
I have been on these forums for two years. My time here is dwindling....there is no substance any longer just ego gratification.
 
You name the wager, and you are on.  Put up or shut up on this one.
 
As far as clients not liking me - do you suppose that I interact with clients in the same manner that I interact with you? 
 
So little between my ears, eh?  If I recall correctly, you are usually the one calling me out for no reason, and name-calling...you are what? In your 40's?  You should be so proud of your maturity. 
 
You think I'm a "punk" and an "egomaniac" because I'm too opinionated for a 2nd year guy in your eyes.  That's your problem, maybe it's jealousy.  Get help.  Quickly.
 
This has probably been the nth time I've seen you accuse others of name calling amidts posts like
 
icecold wrote:If you ever become a rational, non-dick
 
icecold wrote:Market timing is for morons.
 
..plus many more. Dude, seriously, chill out. Why are you always getting defensive?

Anonymous's picture
Anonymous

Why don't you read the entire thread and you can see why I'm defensive.  Here's a hint, the sentence you might want to look for goes something like this, "Ice, you are a fool."
 
It's always the same 3 or 4 people that I end up getting into a shit-slinging match with.  How about that. 
 
In case you posted that prior to reading the whole thread, here's an update:  we're passed that. 

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I did read the entire thread and none of it clues us in to your upbringing, self esteem or past to reason out why you get defensive. People call you a name ON A FREAKING MESSAGE BOARD and you wig out instead of opting to ignore it. Nothing in this thread suggests why you go that route.
 
You don't always have to get roped into something you don't like ONA  FREAKING MESSAGE BOARD. I expect this kind of attitude in an xbox forum or something, not some guy who is a one of a kind genius adviser who takes his clients to golf and wins over "easy money" in one of the worst economical crisis in our history.
 
So what if he calls you a fool? Is your honor ON A FREAKING MESSAGE BOARD at stake or something? Don't complain about getting into a slug fest ith the same four people when you do your part to participate in the exchange. You think you're going to really change how people choose to think or treat you on here?You expect everyone on the planet to worship you after you name call them while criticizing them for their name calling abilities?

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ana - seriously, get over it man.  I know you love me.

footsoldier's picture
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Ana-
 
I am beginning to think Ice isn't a fool. He just makes some foolish statements from time to time. And that in my humble opinion is indicative of a younger more naive advisor who thinks they have all the answers and doesn't have the tenure (yet) to understand that you can't learn everything in our industry from a textbook or college. There are many MBA's at DFA and Wall Street that are shaking their heads in amazement at the magnitude of what has happened in the last 6 weeks.
 
Ice will learn over time....I hope.
 
 
 

Anonymous's picture
Anonymous

footsoldier wrote:Ana-
 
I am beginning to think Ice isn't a fool. He just makes some foolish statements from time to time.
 
 
Aww thanks foot!  I think that's the closest to friendly you & I have ever been!   

Getthere's picture
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Ice is a cool dude.

anabuhabkuss's picture
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iceco1d wrote:ana - seriously, get over it man.  I know you love me.
 
I will neither confirm nor deny this...
 
...but yes it's true  
 
Foot, it's background really. I'm 28, also inexperienced (3 yrs in) but differ in how I would express myself than Ice does. Attitude does not discriminate against age or experience, imo.

Anonymous's picture
Anonymous

anabuhabkuss wrote:iceco1d wrote:ana - seriously, get over it man.  I know you love me.
 
I will neither confirm nor deny this...
 
...but yes it's true  
 
Foot, it's background really. I'm 28, also inexperienced (3 yrs in) but differ in how I would express myself than Ice does. Attitude does not discriminate against age or experience, imo.
 
I knew it! 

Gordon Gekko's picture
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Joined: 2007-07-08

Sorry to digress, but has anyone looked at Franklin Income lately? The buy signal on that used to be when NAV got below $2. It's 15% below that yielding 8-ish%. HY, Utilities, Pharma, beaten down bonds...what's not to love.?
I used to have a ton of this back in the day, relooking at it but not jumping in head first.

Bud  Fox's picture
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Joined: 2008-07-20

I have always loved this fund, nice steady divs as well as a nice y/e cap gain. As it fell under 2 bucks a share, I have been loading up on it for nearly each household.  I can only hope we dont see a div cut anytime soon.  This fund fits nearly every objective except tax free income...

footsoldier's picture
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Joined: 2006-04-30

Since we are talking fund issues now (isn't that a relief Ice!)anyone concerned yet about the upcoming slap in the face to our clients....
 
Embedded capital gains that funds will be throwing our way in a month or so. Correct me anyone please, but won't all the redemptions that have occured create more tax headaches than ususal?
 
I can see the conversation now with clients....Mr. and Mrs. Jones, I know your account is down 30% this year , please get ready to write a check to Uncle. Your loss is their gain....
 
I am on a campaign to head that off at the pass. Even DFA has capital gains (static strategies) so you can imagine the pain that AF and all the others are going to have. Never again will I add mutual funds (unless they are tax efficient) in a taxable account. FKINX has been killed this year, historically a stable fund.
 
Ideas anyone....

Anonymous's picture
Anonymous

Good point Foot.  Although, I haven't gotten any capital gains estimates yet on any of the tax-managed funds I use, so I really can't comment yet...

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Joined: 2007-07-13

footsoldier wrote:Since we are talking fund issues now (isn't that a relief Ice!)anyone concerned yet about the upcoming slap in the face to our clients....
 
Embedded capital gains that funds will be throwing our way in a month or so. Correct me anyone please, but won't all the redemptions that have occured create more tax headaches than ususal?
 
I can see the conversation now with clients....Mr. and Mrs. Jones, I know your account is down 30% this year , please get ready to write a check to Uncle. Your loss is their gain....
 
I am on a campaign to head that off at the pass. Even DFA has capital gains (static strategies) so you can imagine the pain that AF and all the others are going to have. Never again will I add mutual funds (unless they are tax efficient) in a taxable account. FKINX has been killed this year, historically a stable fund.
 
Ideas anyone....
 
Tell your clients not to pay the taxes (But only if the rest of the country goes along with it too).  If a few people evade, they may go to jail.  If millions do it, they can't go after everyone.  That's how revolutions start.
 
 

BondGuy's picture
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Joined: 2006-09-21

Another worry - as if you needed more to worry about.
 
In severe downdrafts many income managers sacrifice income at the alter of total return. They are very focused on near term perfermance. It it seems counter intuitive to slash dividends when rates bond prices are down and yields are up, it is. Yet mangers justify such cuts, bringing their yields back to historic trading levels, by pointing to the total return column. That this screws long term shareholders in these funds falls on deaf ears. Not only do these moves cut income they also destroy any possibility of those investors being made whole as bond prices cycle back the other way.
 
Talk with the reps from funds you own. Get on conference calls with managers and ask them point blank if they're plan is to cut the divs.
 
Unfortunately, history shows us that funds who take this route greatly out number those who stick with the original game plan.
 

newnew's picture
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Joined: 2007-02-23

indexes just keep making more and more sense....

Anonymous's picture
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SHHH!  newnew, you are't allow to say that!  You should know that by now!

Gordon Gekko's picture
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Joined: 2007-07-08

Don't look now but munis are tearing it up! My Eaton Vance National was up 5% today! I won't mention the multiple dollars in NAV it's pissed away in the last year or so.  I was reading an article talking about bond etf's (not cef) trading at a discount to NAV. I guess you have to be careful how you index.

Gordon Gekko's picture
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Joined: 2007-07-08

Because I like rubbing salt in my wounds I did the calculation on SDS (S&P Ultrashort) since I mentioned it on October 5th. Yeah, it's up 40%. I jokingly said a year ago that I should short Wachovia with the money they gave me for sticking.
 
I need to pull a Costanza and do the opposite of whatever I initially think I should buy. It's too easy a trade to just be a Roubini bear at this point. That seems like a crowded trade but it keeps working, day after day. I bought CDs, Munis, corporate bonds, and dividend paying funds today so whatever the opposite of that it, go nuts!

Gaddock's picture
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Joined: 2007-02-23

I've been selling puts on quality dividend paying blue chips. Hope to get them but if not we get paid for being wrong. When I get them I'll wrap them. My method for building a decent portfolio with a bit of octane. Grinds out current income to boot.

Gordon Gekko's picture
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Joined: 2007-07-08

I am a little slow on the uptake- so you sell a put on say GE (if that is still considered quality) and if the stock moves down you buy it minus the premium you got? Probably TMI but what stocks, how far out, that sort of thing. I've only been selling some calls on BAC but they are about worthless at this point.

wired's picture
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Joined: 2007-09-16

It's difficult to know with any conviction what to do currently. One strategy I have been implementing with new money and in tax loss harvesting situations is buying closed end funds. I am using closed end funds, that don't use leverage, and that are trading at least a 15% discount to their NAV. The spread between the nav and the trading price is at a historic high. I figure I am getting a discount on a discount. Anyone else looking at these?

Gordon Gekko's picture
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Joined: 2007-07-08

I've heard some guys looking at some muni cef yielding over 6% at a discount but they use leverage. ETJ has hung in there better than some as it sells calls and puts. I wouldn't go too heavy into CEF as they can get wildly irrational and can freak clients out who aren't risk tolerant. The Eaton Vance fund I bought (open ended, no leverage) yielded right at 10% and the Gabelli Utilities fund is over 14%.

Gordon Gekko's picture
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Joined: 2007-07-08

The Rydex Managed Futures fund has gone ballistic lately. When I make those observations, the fund is usually set to dramatically underperform. That being said, I am glad I own it and plan on dca'ing into it down the road.
 
Speaking of underperforming, anyone plan on listening to the Ivy Asset Strategy conference call tomorrow? Last quarter, everyone on the call was like "Great Job guys!". I am guessing it might be a little nasty tomorrow.

gregoron's picture
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Joined: 2008-09-18

Anyone here using or heard of Hussman Strategic Growth / Total Return funds?  Both look good from S&P's September 2008 reports in terms of not having any negative return years since 2001 / 2005, respectively.

dizzy's picture
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Joined: 2008-11-05

. I am using closed end funds, that don't use leverage, and that are trading at least a 15% discount to their NAV.
 
 
How 'bout some names? I noticed NCZ and PFN have stopped paying out for now so I'm concerned about others I've got. I may consider swapping from lvg to non lvg. if I can

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