Milly, your investment strategy has failed. Putting client's assets into equities,and then leaving them on the tracks to get run over by down markets time and time again isn't a sound investment strategy. I've asked you to prove otherwise and instead you attack me with your political babble. Typical of those with nothing to say-attack the messenger, not the messege.

Prove your strategy works or sit down and shut up. Numbers please!

[quote=Milyunair]

That's funny, because my new clients are mostly burned-out market timers. What a great business.

I wonder how bonds will perform relative to stocks and inflation over the NEXT ten year period?

http://publications.fidelity.com/investorsWeekly/application/loadArticle?pagename=VP1003marestocks

https://advisors.vanguard.com/VGApp/iip/site/advisor/researchcommentary/research/article?File=IWE_InvResTwoSidedCoin

I'm sure you guys have nothing to prove, anyway. But that's how I know you're just a  blowhard, lefty. You pitch bonds to a bunch of old ladies, or whatever,  and have a little fun with the in and out on the equity side over the economic cycle. And then, like the  blowhard that you are, you attack other people for  implementing sound investment practices for different risk profile cases.

No way you're holding a CFP license, getting on here and spouting your BS to the public.

I'm sorry to say, you give me a better idea of the liberal mind. Maybe you're not as smart as you think. Or maybe you're brilliant, and you're just toying with us. But I doubt it.

[/quote]

Huh?  Mily, I have to say, selling muni's is not a "little old lady" investment.  They won't make you rich, but they will certainly KEEP you rich.  And since most good bond buyers aren't market timing their individual bonds, it doesn't really matter where interest rates go.  Right now, I am trying to convince one of my friends to stop wasting time, energy, and money with the stock market, and just start buying muni's.  He's 39, has liquid net worth of about $2.5mm, no debt at all (not even a mortgage), and makes about $500K-1mm per year (he sells a niche service to fortune 500 companies and large law firms, his income varies a lot).  He has another $1mm in private company stock (which will soon have a liquidity event), and owns some various real estate and a few small companies in partnership).  All-in, he is worth close to $5mm.  And all he wants is stock tips.  I tell him time after time after time....WTF would you want stocks??  Even if we just collect a 4% coupon, TAX FREE (Fed&State), that's close to 8% taxable, with a fraction of the risk.  He just can't let go of the "excitement" of stocks.   And he is not quite an "old lady".

B-24, Good point! That Milly pegs Munis as an "old lady" investment is quite telling. Anyone who thinks that way obviously doesn't understand the Muni market and definately hasn't had exposure to real money.

24, I think your client is obsessed with stocks in the way my client is obsessed with gold. All the while, comfortably sitting on a diversified portfolio of stocks, munis, corporates, governments, real estate, and more. Recreation comes to mind.

That Milly pegs Munis as an "old lady" investment is quite telling. Anyone who thinks that way obviously doesn't understand the Muni market and definately hasn't had exposure to real money.

To point out the obvious, saying I don't favor munis as a core investment holding for the wealthy is a huge leap. Go back and carefully read my post. Better yet, don't.

Lefty, your leap and rapid conclusion leads me to conject that that lefty's mind seeks first to be  understood.

Anyone who thinks that way obviously doesn't understand the Muni market and definately hasn't had exposure to real money.

Uh huh, Lefty.  

Milly, numbers please!

Instead of attacking me with you inane political comments how about backing up that big mouth?

You're a big believer in the magic of buy and hold as well as tactical assest allocation. You show a rather basic lack of understanding of Munis, as well as technical analysis. Hmm?

Ok, fair enough, show us why. Show us why we are wrong and you are right. It should be simple. You do this everyday. Show us what you're showing your clients and prospects. Why your way is better. Numbers please!

When you start thoughtfully reading and responding, okay. Until then, no straw men for Lefty. Let's see your marketing timing performance numbers. Oh, I forgot, not gonna happen.

That's what i thought, you're all talk!  You've got nothing!

Time for you sit down and shut up!

For any of the big dogs out there who believe as " Milly the pup" does, same challenge- show us why you are doing this?

( After a sound rolled-up newspaper whacking by the Irish progressive, puppy retreats to his corner and listens attentively.)

It's too bad that civil discourse is dead in our culture. It seems like we are all too willing(yes, me included) to jump on each other's case. We get some satisfaction out of insulting each other, for whatever reason. The real point in this thread is that there are good questions being asked about the "best" way to invest customers assets. The example of B24's wealthy client is a great talikng point. So far, what I have gleaned from this thread is that buy and hold isn't dead, but buy and forget was never a good idea. Bonds have their place. You can hedge without using options. And each client is unique, one size doesn't fit all. I've learned that calling out someone's political views doesn't enhance your argument, it just makes you look foolish. Insulting someone on an anonomous site is futile. In general, this thread is a shining example of what is good, and bad, with this blog.

[quote=navet]

It's too bad that civil discourse is dead in our culture. It seems like we are all too willing(yes, me included) to jump on each other's case. We get some satisfaction out of insulting each other, for whatever reason. The real point in this thread is that there are good questions being asked about the "best" way to invest customers assets. The example of B24's wealthy client is a great talikng point. So far, what I have gleaned from this thread is that buy and hold isn't dead, but buy and forget was never a good idea. Bonds have their place. You can hedge without using options. And each client is unique, one size doesn't fit all. I've learned that calling out someone's political views doesn't enhance your argument, it just makes you look foolish. Insulting someone on an anonomous site is futile. In general, this thread is a shining example of what is good, and bad, with this blog.

[/quote]

Well summarized.  Although I could sum it up a bit quicker.....Continuously chanting "I know you are but what am I?" sounds pretty childish. 

I just don't quite get Mily's argument(s).  The "Lefty" thing is sort of, well, sophomoric, and it has definitely run its course.  And to be quite honest, I have never met or heard of a any good advisor that would argue the merits of municipal bonds for the right clients.

Navet, you've gleaned that buy and hold isn't dead? Why do you believe buy and hold is still a valid investment strategy?

Mily, I have to say, selling muni's is not a "little old lady" investment. 

For the record, I never said that - here is my meaning: BG apparently market times equities in and out of mainly debt portfolios. That sounds like conservative portfolios, in which case, market timing may be a luxury, compared to moderate or aggressive portfolios.

He goes on to recommend that another advisor market time those less conservative portfolios. That's what I'm calling BS on, not the use of muni bonds or even apparently being righteous about mainly serving old ladies or young ladies with debt obligations.

He believes in market timing for others, but his timing risk is smaller because he deals mainly in bonds, so he doesn't even have a track record of failure or success.

BG, if you have bothered to earn your CFP license, and you still believe in the type of marketing timing, or whatever, that you recommend, go for it. If you don't have your CFP, or CFA, or some other formal education, consider making the investment.

The only reason I jumped in here was to point out that market timing can be dangerous, and to express annoyance at apparently didactic economic liberals, who if you follow the thread, jump in with righteous badgering. I just think that is what is wrong with America, and also why it is hard to check in a few ideas on this forum.

I'm sorry for calling you Lefty, I don't really know anything about you, but it does seem like there are a lot of economic progressives on this forum, which is interesting, but also annoying.

I can't quote you audited returns, but how about he fact that I'm still in business after nearly a decade with the major indices lower than when I started.  If I lost everyone money, wouldn't everyone leave me?  My overall book is better than 50% fixed with the better part of that in Muni's.  If only I had started in 1982....

For any "V" fans out there, I'm going to change their catch phrase from John May lives, to Buy & Hold lives.

Those early V episodes were a comic relief. A giant screen flashes buy and hold lives.

BG, I can't jst walk away from the buy and hold strategy. I don't claim to be the worlds greatest trader, it just makes too much sense to me to buy quality investments with the idea of holding on to them for as long as they are attractive. I don't know of an effective way to maximize profit by moving into and out of the market, aka market timing. I also believe that good dividend paying stocks look like great investments right now, and with a bond-like dividend I am happy to hold onto them for the long run. Now mutual funds can perform this function, but I am frustrated with American Funds and am moving clients away from them, I have the FSPENDS to prove it. And I am frustrated with the cost of trading stocks at Jones. Anyway, I have been interupted several times already(busy day) and this is becoming a bit of a ramble. Buy and hold isn't a panacea, nor is it a failed system. Like all financial products and strategies, it has its place.

1. I really cannot fathom why Milly continues to bring what he believes are BG's political persuasions into the investment discussion. What does one thing have to do one iota with the other

2. Righteous progressives may be annoying to you but may be gratifying to someone else. (I'm not saying they are or are not annoying to me, its irrelevant). I find your assumption arrogant, at the very least.

3. What makes you think that having a CFP would make BG or anyone else better at what they do, especially investing, for which in my opinion experience is the best teacher (assuming you have a mind) (disclosure: i have the CFP)

4. See the link: Looks to me like it can work, even if you are too lazy to put the work in on DWA:

http://dshort.com/charts/SP500-market-timing.html?SP500-monthly-10MA-since-1995

Buy and hold, show me the numbers! The numbers I see don't support the buy and hold argument.

Survey sez the average fund manager doesn't outperform the S&P 500 index. And the numbers over the past decade for the S&P 500 index are bleak. Maybe dismal would be a better word. Or, if you're an investor, depressing fits. And, actually, it's more than just the past decade.

Now if we take the decade apart the are times when that index was  absolutely flying. Remember how good we all felt around Christmas time 2003? The worst was behind us. Except the worst wasn't behind us. The worst was still about 4 and a half years ahead of us.

This point is this: If those invested in this index had a way to tell when things were going south, a way to get off the tracks before fate took them out, how much better would the performace be?  In all likelihood it would be better. It couldn't be much worse. The same goes for all indexes, including bond indexes.  

For core holdings I never advocated jumping in and out of the market. I do advocate simple moves. The market deteriorates after a five year run up, ah, time to head for the sidelines. The market starts to show a big fade after a one year 50% move up, again, time to head for the sideleines. OK, maybe you miss some of the top and some of the move off the bottom, but you also miss getting crushed.

Be proactive and take ownership of the performance in your client's accounts. After-all, it you invested the money, you own the returns or lack there of.

Wall Street has become a fee generating machine that fails to take responsibility for the lack of returns it delivers or the damage it does. Instead of owning up advisors are taught to refocus client's attention. "Take the long term view", "or one of my favorites "it's not about returns, it's about your personal strategy to reach your goals" To which i say "What an effin crock!"

And to top it off Wall Street delivers one hell of a crappy product! A mediocre off the rack investment wrap service for which it charges a premium price. And, it's built around MPT and buy and hold.

Let's talk individual stocks for a minute. Same thing goes. Hold forever? I don't think so!  I sold the 60,000 share position I held in XOM last fall at 74. Anyone here want to tell me I made a mistake? How much did i save my clients? How about BP? What's that saying "Never waste a good crisis?" Anyone here taking advantage of the price movement? Yes/no? No balls? Opinions? Will BP go bankrupt? 10% divivdend? tempting? On a personal note i shorted BP when i heard about the rig explosion. I covered late last week. Nice pick up for a month's hold. I should have sold the calls or bought the puts, i'm just not that smart. Woulda made Xtimes  the profit for the dollars at risk. Reminds me of my IBM short pitch days! Made money on that one too. Texaco bankrupt, same thing. Union Carbide kills a bunch of innocent people, cried all the way to the bank, Yeah, heartless! Cry me a river!

Anyone pick up Ford off the bottom? Chart said buy, we bought. What about poor old GE? Same thing. Sometimes ya gotta pick the low hanging fruit.  

Moving on anyone here do MBS? Show of hands? Yes/no? How about this; buy your client a B or C rated private label mortgage? Even with a 10% principal loss(unlikely), the combination of subordinated protection plus the discount would let your client walk away from the mortgage on payoff with a better than 12% capital gain plus the coupon payments. All-in a better than 35% gain for a four to six year hold with 75% of principal returned in three years or under. Cut the princ loss in half and the client walks with over 45%. And what an income machine for the clients! Whoo! Anyone?

Step-up notes? Barclays has a good rating and killer yields right now. yes/no?

Ah ,munis! Go back on this forum to September 08 to June 09. Look at my words. Words like pound the table buy. Remember those words? Anyone here do that? I know a few did.  There were a few others pounding the table as well. Did you help your clients take advantage of the disfunctional muni market? Or, was it "Gee what about when rates go up? Then you're screwed with those munis!" Except we no longer own them because we sold them for a 30 to 60% profit just outside a year.

BABs bonds were big last year. hell, they're still big! Anyone do that favor for their book?

California bonds? Anyone? Huge profits there. I mean BIG!!! Mostly coupons to big to let go of, but sometimes ya just gotta swap!

High yield paper? Yes/no anyone? Or just not part of the tactical allocation on the pie chart? What a shame.

It's about making money any way you can. That's what we get paid for. It's about seeing the wave before that wave gets rolling. Taking advantage of what the world gives us, on the up side or the down side. It's not about sitting there like a boob while your clients get massacred and then telling them it's going to be ok because you read it in some book!

Buy and hold does not work. It did for 20 years or so, but not now.

Get off your hands and do what your clients are paying you to do-make them money!

Because i promise you this: If i call your clients they will listen. And there is a legion of guys just like me out there. Market experts and even better salesman just looking for a way to eat your lunch. Don't help them by being a me-to advisor!

[quote=navet]

With respect to Buffett, he wasn't a billionaire to start with. He started small and became a billionaire through his investments. The difficulty with emulating Buffett is that he is smarter than we are(at least in regards to finance) and we may not be able to mimic his strategy. Nevertheless, buying quality investments and holding on to them as long as they are quality investments just sounds like common sense to me. Modeling strategy in response to the '08 meltdaon seems counterintuitive.

[/quote]

Ok Warren isn't a god..

Bio

Worked for Benjamin Graham(possibly a god) from 54-56(Graham closed it and Buffet had $174K)

Started Limited Partnerships, valued at $7MM in early 60s with $1MM being buffets eventhough he only invested .

He then started doing what he continues doing today(but on a larger scale).. He bought out smaller companies or enough to get on a board and change things(Sanborn Map Company, Berkshire)..

He eventually purchased Berkshire Hathaway in 1965 and closed his partnership and paid out to the partners, majority of his wealth being wrapped up in Berkshire..

Only took $50,000 salary..His wealth lies in the increase of Berkshire shares, started at  $14.86 and by end of 1979 was worth $1,300/share.

He is essentialy a nice corporate raider, he buys enough stock to have a controlling interest then moves the company the way he wants(not much different then Gekko)>.

[quote=navet]

We had a waterfall financial event in '08. Considering that such events happen maybe 1 year in 60 or so, is it viable to use those calculations in figuring financial strategies. Face it, some outlying event can screw up any strategy. Taking '08 out of the math, buy and hold may still be reasonable.

[/quote]

If it is the once in 60 year event, we have a few more bad years in front of us.  Go check out 1929-1934

[quote=BondGuy]

Buy and hold, show me the numbers! The numbers I see don't support the buy and hold argument.

Survey sez the average fund manager doesn't outperform the S&P 500 index. And the numbers over the past decade for the S&P 500 index are bleak. Maybe dismal would be a better word. Or, if you're an investor, depressing fits. And, actually, it's more than just the past decade.

Now if we take the decade apart the are times when that index was  absolutely flying. Remember how good we all felt around Christmas time 2003? The worst was behind us. Except the worst wasn't behind us. The worst was still about 4 and a half years ahead of us.

This point is this: If those invested in this index had a way to tell when things were going south, a way to get off the tracks before fate took them out, how much better would the performace be?  In all likelihood it would be better. It couldn't be much worse. The same goes for all indexes, including bond indexes.  

For core holdings I never advocated jumping in and out of the market. I do advocate simple moves. The market deteriorates after a five year run up, ah, time to head for the sidelines. The market starts to show a big fade after a one year 50% move up, again, time to head for the sideleines. OK, maybe you miss some of the top and some of the move off the bottom, but you also miss getting crushed.

Be proactive and take ownership of the performance in your client's accounts. After-all, it you invested the money, you own the returns or lack there of.

Wall Street has become a fee generating machine that fails to take responsibility for the lack of returns it delivers or the damage it does. Instead of owning up advisors are taught to refocus client's attention. "Take the long term view", "or one of my favorites "it's not about returns, it's about your personal strategy to reach your goals" To which i say "What an effin crock!"

And to top it off Wall Street delivers one hell of a crappy product! A mediocre off the rack investment wrap service for which it charges a premium price. And, it's built around MPT and buy and hold.

Let's talk individual stocks for a minute. Same thing goes. Hold forever? I don't think so!  I sold the 60,000 share position I held in XOM last fall at 74. Anyone here want to tell me I made a mistake? How much did i save my clients? How about BP? What's that saying "Never waste a good crisis?" Anyone here taking advantage of the price movement? Yes/no? No balls? Opinions? Will BP go bankrupt? 10% divivdend? tempting? On a personal note i shorted BP when i heard about the rig explosion. I covered late last week. Nice pick up for a month's hold. I should have sold the calls or bought the puts, i'm just not that smart. Woulda made Xtimes  the profit for the dollars at risk. Reminds me of my IBM short pitch days! Made money on that one too. Texaco bankrupt, same thing. Union Carbide kills a bunch of innocent people, cried all the way to the bank, Yeah, heartless! Cry me a river!

Anyone pick up Ford off the bottom? Chart said buy, we bought. What about poor old GE? Same thing. Sometimes ya gotta pick the low hanging fruit.  

I had clients buy F bonds off the bottom instead of the stock.  Collecting 33% yield.  Clients called wanting to buy F stock and I asked them did they think that the stock would go up 33% every year?  So buy F.A

Moving on anyone here do MBS? Show of hands? Yes/no? How about this; buy your client a B or C rated private label mortgage? Even with a 10% principal loss(unlikely), the combination of subordinated protection plus the discount would let your client walk away from the mortgage on payoff with a better than 12% capital gain plus the coupon payments. All-in a better than 35% gain for a four to six year hold with 75% of principal returned in three years or under. Cut the princ loss in half and the client walks with over 45%. And what an income machine for the clients! Whoo! Anyone?

Step-up notes? Barclays has a good rating and killer yields right now. yes/no?

Ah ,munis! Go back on this forum to September 08 to June 09. Look at my words. Words like pound the table buy. Remember those words? Anyone here do that? I know a few did.  There were a few others pounding the table as well. Did you help your clients take advantage of the disfunctional muni market? Or, was it "Gee what about when rates go up? Then you're screwed with those munis!" Except we no longer own them because we sold them for a 30 to 60% profit just outside a year.

Yes--backed up the truck and loaded up!!  Even had some clients buy HY muni funds in IRA's

BABs bonds were big last year. hell, they're still big! Anyone do that favor for their book?

Yes--Loaded up.  The Eaton Vance BAB open ended fund is up over 10% YTD

California bonds? Anyone? Huge profits there. I mean BIG!!! Mostly coupons to big to let go of, but sometimes ya just gotta swap!

High yield paper? Yes/no anyone? Or just not part of the tactical allocation on the pie chart? What a shame.

Loaded up, but backing off of this now

It's about making money any way you can. That's what we get paid for. It's about seeing the wave before that wave gets rolling. Taking advantage of what the world gives us, on the up side or the down side. It's not about sitting there like a boob while your clients get massacred and then telling them it's going to be ok because you read it in some book!

Buy and hold does not work. It did for 20 years or so, but not now.

Get off your hands and do what your clients are paying you to do-make them money!

Because i promise you this: If i call your clients they will listen. And there is a legion of guys just like me out there. Market experts and even better salesman just looking for a way to eat your lunch. Don't help them by being a me-to advisor!

[/quote]