[quote=joedabrkr]

[quote=FreeLunch]

Here’s why I don’t think we’ll go much lower.

P/Es for Financials and Energy are AROUND 10

- How much Lower can THOSE sectors go?

[quote=FreeLunch]

None of you have said what you think yet.  Managed Money - Do you really think that none of the managers of your SMA account aren’t looking AHEAD?  What do you think they are doing?  After all, equities do trade on FUTURE EARNINGS potential & if they didn’t, Forward P/Es would not be a valuable tool at all?

Don't you think that The Consumer Staple stocks trading at 2X Forward earnings gives ANY INSIGHT at all? 

Do you really think there is nothing to take from that?

[quote=AllREIT]

[quote=ManagedMoney]
Profitable trading strategies are not only
possible, they’re easy to construct, and you don’t have to know
anything about the future to trade profitably.

[/quote]

If this is so damn easy to do, why are slaving away as an FA?

Managed Money,

90% of my book is professionally managed too - if it wasn't, we'd both be pulling our hair out.

It's a tough market, and I can't find many "Value-looking technical charts" (if you know what I mean)

I've never been one Love buying into strength from a trader's perspective.  My thing is, that now, it looks like the "trendlines" of my favorite stocks are rolling over.

I surely don't want to overanalyze things, but I enjoy it & love it.  I just think the market needs to churn and consolidate for awhile...I guess.  It's a tough one

There are definitely some lessons to be taken from the late 90's and turn of the century, and it has to do with managing real money for real clients for the long run.

Just saying, " the only thing you can say for sure is that you can't predict the market " is what a lot of advisors were telling their clients in 2000, 2001, 2002 and so on.

I can assure you that if the market really gets hammered, even for a short period, and maybe due to geopolitical reasons, you will lose some points just sounding like a buy and hold parrot. Worse, you are in the business to try to help you clients not lose money, and there is an active allocation responsibility here -at least, experience suggests that a lot of the above comments may feel like intellectual  hooey if things really fall apart. Look, we all learned the basics in our CFP or finance classes, there is a behavioural aspect here.

Allreit, I question if you really manage money for clients, or have for long, because this question is as much about handling clients as it is about running money.

From a financial planning point of view, if you have a client who has enjoyed gains for the past six years or so, they have more money, are closer to being able to finance their goals, are closer to retirement, whatever. This fact alone can affect portfolio construction, versus the esoteric academic questions about market timing. I know from experience that a lot of advisors have not gone back and looked at portfolio construction from this point of view, along with a great economic recovery and the fact of life that economic cycles still exist, apparently.

The biggest thing I learned around 2000 is that in moving from 50% stocks and 50% bonds, or so, up to a higher percentage of stocks, there is an exponential increase in risk but not reward.

Has anyone here at all been trimming back to fixed positions a little, or am I crazy? My clients are plenty happy to capture two thirds of the S&P with half the risk (right now). We still have plenty of stocks to catch a rising market, but we can buy more if stocks take a plunge.

Some of this " tactical " allocation also happens inside some managed funds.

In handling client relationships, getting some input from clients helps to continuously define a clients risk profile - these are smaller adjustments, but the communication itself is educational and helps prepare us for all market conditions.

At least, it works for me.

Here's  a question: your client's money has nearly doubled since 9/11.

Your client is six years closer to retirement, closer to " being there " from a financial planning point of view.

In terms of the investment portfolio, is geopolitical risk more important, less important, or the same  in terms of portfolio construction ( after six years of a great economy ) - net of the portfolio withdrawal time frame consideration?

They said we were living in a new paradigm at the end of the 90s, but good old fundamentals along with things like style drift and portfolio concentration and terrorists who hate capitalism blew things up for a while. Is the world more or less complex now, and how important is thinking for yourself and your clients individual needs versus historical wisdom. 

Historical wisdom (Modern Portfolio Theory) is the core, and the " tactical" allocation is really alignment with client's finanical planning considerations, but there is definitely a market performance expectation. There is a danger of imparting too much of our own view, but with the client, the right amount is really another form of diversification.

Of course, each to his own, I'm not suggesting I have a monopoly on helping clients get there.

[quote=FreeLunch]

Managed Money,

90% of my book is professionally managed too - if it wasn't, we'd both be pulling our hair out.

It's a tough market, and I can't find many "Value-looking technical charts" (if you know what I mean)

I've never been one Love buying into strength from a trader's perspective.  My thing is, that now, it looks like the "trendlines" of my favorite stocks are rolling over.

I surely don't want to overanalyze things, but I enjoy it & love it.  I just think the market needs to churn and consolidate for awhile...I guess.  It's a tough one

[quote=AllREIT]

[quote=joedabrkr]

[quote=FreeLunch]

Here’s why I don’t think we’ll go much lower.

P/Es for Financials and Energy are AROUND 10

- How much Lower can THOSE sectors go?

[quote=FreeLunch]

Managed Money,

90% of my book is professionally managed too - if it wasn't, we'd both be pulling our hair out.

It's a tough market, and I can't find many "Value-looking technical charts" (if you know what I mean)

I've never been one Love buying into strength from a trader's perspective.  My thing is, that now, it looks like the "trendlines" of my favorite stocks are rolling over.

I surely don't want to overanalyze things, but I enjoy it & love it.  I just think the market needs to churn and consolidate for awhile...I guess.  It's a tough one

[/quote]

Wait a minute!!! You told me that YOU were a money manager. What's up with that?

FreeLunch - It sounds like you have this whole market thing figured out, so I’m not sure why you are even asking anything about it. With your experience and knowledge, we should be asking you what to do next. Thanks for all of YOUR insight.



OldP



PS - In all of your experience with market downturns, how many coworkers have you seen commit suicide? It isn’t a pretty thing to experience, but having seen it, you truly have seen bear markets. Good luck sharing your knowledge.

In all of your experience with market downturns, how many coworkers have you seen commit suicide? It isn't a pretty thing to experience, but having seen it, you truly have seen bear markets. Good luck sharing your knowledge.

Old, that's horrible. And there is plenty of mental suicide. How many of us could deal with waking up next week to having half a book to manage? Maybe it just becomes partly selfish self preservation at some point. We have had a great run.

[quote=GolFA]

Just saying, " the only thing you can say for sure is
that you can’t predict the market " is what a lot of advisors were
telling their clients in 2000, 2001, 2002 and so on.

I can assure you that if the market really gets hammered, even for a short period, and maybe due to geopolitical reasons, you will lose some points just sounding like a buy and hold parrot. Worse, you are in the business to try to help you clients not lose money, and there is an active allocation responsibility here -at least, experience suggests that a lot of the above comments may feel like intellectual  hooey if things really fall apart. Look, we all learned the basics in our CFP or finance classes, there is a behavioural aspect here.

Allreit, I question if you really manage money for clients, or have for long, because this question is as much about handling clients as it is about running money.

The only way to control the behavioral aspect is to educate and clients
yourself about it, and then like Jason chain yourself to the mast of
the ship.



But that is how passive investing works, and thats the right approach
for most clients. You focus on getting your fair share of the market’s
return, but do not worry about what that return is, because you have no
influence over it.

[quote=GolFA]

In all of your experience with market
downturns, how many coworkers have you seen commit suicide? It isn’t a
pretty thing to experience, but having seen it, you truly have seen
bear markets. Good luck sharing your knowledge.

Old, that's horrible. And there is plenty of mental suicide. How many of us could deal with waking up next week to having half a book to manage? Maybe it just becomes partly selfish self preservation at some point. We have had a great run.

Different strokes, my clients and I are in a different place now. No way are we risking a 50% portfolio reduction. The upside potential sounds nice, no way are we completely going for it.

I think you and I understand and agree on the basic concepts.

Some guys take all the money off the table and go to the beach for the summer, so they can enjoy their tuna boat. Others just fish off the back porch every day.  Instead of prospecting, I'll take the referrals from a smoother ride, serving mellow clients.

GOLFA

Those are some GREAT posts - VERY insightful and I think you made some fantastic points.

OldProducer - You remind me of "DEBBIE DOWNER" on Saturday Night Live.  Those chumps that shot themselves during the blowup shoulda known better.  They were doomed from the getgo.

To go along with what GOLFA said - experience has shown me that the best way to beat the S&P over the long term is Tactical Asset Allocation just like you say. 

I am not claiming to know it all - I'm here to learn more.  The second I close the door looking for new strategies and ideas is the second I quit enjoying what I do...

Ditto, constantly learning and being challenged in a meaningful way.

I would even say, it is not about beating the indexes, but capturing most of the upside of the S&P with a lot less risk - at all times - since no one can know the market timing.

And the minor tactical allocation, which is tailored to financial goals and tempered by market expectations a little, maybe half of the importance of it is to refresh the client relationship through a constant dialog about goals, risk tolerance, expectations.

Being very tight with your clients through lots of phone contact and personal interaction generates all the referrals you will need, and the idea of going out and prospecting when your own client portfolios are down 50% - come on, better to give them a little smoother ride with plenty of upside and take the referrals that come running from their friend during the next down market. Plenty come now, it is a function of contact and not performance. I realize their are different client target markets, but if you teach them not to chase performance, and then you can deliver a good return with less risk, you are underpromising and overdelivering.

Now, and I would say the past six months, would be a great time to tune in to how clients feel about what the market may do, and it may go up a couple of thousand points. Do you think it will ever be lower than it is right now? Since when do we just educate folks that equities get 10 or twelve percent over the long haul and that we need to just stay invested in them so we can beat inflation. For a lot of folks, reality lies somewhere in the middle.

I would even say, it is not about beating the indexes, but capturing most of the upside of the S&P with a lot less risk - at all times - since no one can know the market timing.

We must have a very different clientelle.  I've never had a client tell me, "I'd like to capture most of the upside of the S&P with a lot less risk."

My clients say things like, "I would love to retire in 7 years" or "How am I going to send my child to college and take care of my parents at the same time." 

I guess if I was a money manager the concern would be about rates of return.  Instead, as a financial advisor, we keep the focus on helping clients maximize their chance to reach their goals instead of focusing on maximizing the amount of money that they have.

[quote=FreeLunch]

GOLFA

Those are some GREAT posts - VERY insightful and I think you made some fantastic points.

OldProducer - You remind me of “DEBBIE DOWNER” on Saturday Night Live. Those chumps that shot themselves during the blowup shoulda known better. They were doomed from the getgo.

To go along with what GOLFA said - experience has shown me that the best way to beat the S&P over the long term is Tactical Asset Allocation just like you say.

I am not claiming to know it all - I’m here to learn more. The second I close the door looking for new strategies and ideas is the second I quit enjoying what I do…

[quote=anonymous]

I would even say, it is not about beating the indexes, but capturing most of the upside of the S&P with a lot less risk - at all times - since no one can know the market timing.

We must have a very different clientelle.  I've never had a client tell me, "I'd like to capture most of the upside of the S&P with a lot less risk."

My clients say things like, "I would love to retire in 7 years" or "How am I going to send my child to college and take care of my parents at the same time." 

I guess if I was a money manager the concern would be about rates of return.  Instead, as a financial advisor, we keep the focus on helping clients maximize their chance to reach their goals instead of focusing on maximizing the amount of money that they have.

[/quote]

I think we agree, the clients come up with the goals, but most everyone wants to make money and not lose it.

Maximizing your net worth and and maximizing the chance you have to reach your goals are pretty much the same thing, unless you are talking about risk transfer or spending less.

Intangibles, like not being able to sleep at night because you worry about the market, require a little education for clients, or at least a core philosophy. Not saying mine is the highway, but it seems to work okay.

[quote=GolFA]

There are definitely some lessons to be taken from the late 90’s and
turn of the century, and it has to do with managing real money for real
clients for the long run.

Has anyone here at all been trimming back to fixed positions a little, or am I crazy? My clients are plenty happy to capture two thirds of the S&P with half the risk (right now). We still have plenty of stocks to catch a rising market, but we can buy more if stocks take a plunge.

[/quote]