What to buy in this market?
I gotta say, the traditional stuff (mutual funds, VAs) aint cutting it. Have you seen what the insurer stocks (Met, HIG,etc.) are doing lately? Clients want FDIC coverage and that pays us nothing. I am sure this post will attract some smart ass responses but I am curious to hear.
Bond Guy was right when he said T-Bills a few weeks ago. Now it may be too late for that trade. Or maybe not.
What do you thinnk we should buy? Blue Chip Stocks? Emerging Markets?
Municipal Bonds? Maybe we should be conservative right now and buy high
grade corporates, only those rated AA or better! Like Hartford
Insurance Group. AA- rated and you cant even get a bid if you want to
sell it.
Right now, i dont think how much we make should be the driver of our
decisions. Unless we dont care if we have a book in six months.
I know some will say thats wrong, that its time to load up the truck,
while everyone is panicking. I would sort of like to wait, until at
least the first two or three stocks get at least close to their 200 day
moving averages!. I dont mean that literally, but i think my point is
made.
Be safe and keep your clients safe, till there is some sense of normalcy.
If you compaire yields on munis to treasuries, its a no-brainer. Get some high quality munis - don’t load the boat, but some nibbiling is certainly in order.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aUi1pU8IdPn0&refer=home
I took grief from some fc on the board when I said the biggest purchase I made lately was the Wachovia bank CD special that paid me zippo. The VIX doesn't lie, this is what it feels like to buy low. Problem is I am not buying anything. Ultrashort etfs make sense given my pessimism but what retiree would warm up to them (or maybe they would!).they were a no brainer a year ago and they still got their teeth kicked in. I am with you coceptually, just frustrated.
The problem is, the market is not operating on fundamentals right now, it’s in a period of deleveraging. This does not happen that often, and nobody knows what the fuc! is going on. So making any bold moves is probably not a wise move in the short term, unless it is to something very safe and liquid. Who knows how long this will take to work out, but everyone trying to jockey into bargains, shorts, safe plays, etc. is just adding fuel to the volatility fire.
IMHO, if you have long-term money, and you are in quality, you are best to sit tight for a while. If your time horizon is 5 years or less, something safer is probably in order.
I completely agree with ice. Most of my clients are in mutual funds and my primary concern is to make sure they’re balanced and not panicking and bailing.
For their long-term money, I'm trying to convince them to add to their funds. I do not believe in loading up on what looks safe today and then trying to get back into the market at some "ideal" time in the future. Where do these guys work where they're being taught to move in and out of asset classes based on what they feel the market will do next? I've been taught to buy quality, diversify and be patient. With the exception of ice and maybe a few others, the majority of us in the FA position have zero business playing Russian Roulette with our clients' portfolios. If you were selling cars, computers, office equipment, teaching history or writing speeding tickets at your job prior to this one, do the right thing and build balanced mutual fund portfolios for your clients and then leave the rest up to the money managers. You are not more capable or talented than the brainiacs at American, OppenheimerFunds, etc. Get over yourselves.[quote=Sportsfreakbob]Bond Guy was right when he said T-Bills a few weeks ago. Now it may be too late for that trade. Or maybe not.
What do you thinnk we should buy? Blue Chip Stocks? Emerging Markets?
Municipal Bonds? Maybe we should be conservative right now and buy high
grade corporates, only those rated AA or better! Like Hartford
Insurance Group. AA- rated and you cant even get a bid if you want to
sell it.
Right now, i dont think how much we make should be the driver of our
decisions. Unless we dont care if we have a book in six months.
I know some will say thats wrong, that its time to load up the truck,
while everyone is panicking. I would sort of like to wait, until at
least the first two or three stocks get at least close to their 200 day
moving averages!. I dont mean that literally, but i think my point is
made.
Be safe and keep your clients safe, till there is some sense of normalcy.
[/quote]
I admit it is scary to leap in, but IMHO waiting for a sense of normalcy will cost you 10% to the upside by the time you get in…
Scary thought is last down market took the DOW down to 7500. I know seems far fetched seeing how bad it is now, but If you asked me if the news was worse then or now? I would say hands down now. People are afraid to keep their money in a bank, can’t get a loan, there was virtually nobody who was underwater on their house in 2002, Hope i am wrong, but think this could get ugly.
[quote=fritz]Scary thought is last down market took the DOW down to 7500. I know seems far fetched seeing how bad it is now, but If you asked me if the news was worse then or now? I would say hands down now. People are afraid to keep their money in a bank, can’t get a loan, there was virtually nobody who was underwater on their house in 2002, Hope i am wrong, but think this could get ugly.[/quote]
This isn’t ugly already?
Perhaps few were underwater on their houses, but plenty more were WAY underwater on their tech stocks.
Last week I put 2 million to work. This week will be no different. Even if I don't catch the bottom for clients, eventually we will be in the black significantly. I'm going to be buying the double short long treasury (TBT) and the dollar long fund (UUP). I'll be adding to quality stocks like MMM, INTC, and EMR. I'll be backing the truck up on muni's across the board. I'm going to be continuing to add to our advisory platform in a balanced approach, buying when the market is over 30% on sale. I'm going to be taking small percentages over the next several months, as I sit down with clients, and see if they can handle moving money out of bond funds and ETF's and into equities. My average client is down around 15% over the last year, and may decline even more.....but to waste an opportunity that only comes around every 4 years....no way....
[quote=rankstocks]
Last week I put 2 million to work. This week will be no different. Even if I don’t catch the bottom for clients, eventually we will be in the black significantly. I’m going to be buying the double short long treasury (TBT) and the dollar long fund (UUP). I’ll be adding to quality stocks like MMM, INTC, and EMR. I’ll be backing the truck up on muni’s across the board. I’m going to be continuing to add to our advisory platform in a balanced approach, buying when the market is over 30% on sale. I’m going to be taking small percentages over the next several months, as I sit down with clients, and see if they can handle moving money out of bond funds and ETF’s and into equities. My average client is down around 15% over the last year, and may decline even more…but to waste an opportunity that only comes around every 4 years…no way…
[/quote]Appreciate the input Rank. Funny that despite my earlier posts, with the latest dose of morning news I am(at the moment) finding it a little harder than usual to stay calm and objective.
What about T or GE? True GE has finance exposure, but they also have a lot of new capital, and a mighty nice divy.
Liquor, tobacco and porn…WALMART
JKD. Capitulation: in crisis there is opportunitiy.
Today is no different than any other day in my career…I don’t have a clue as to what tomorrow will bring. Therefore, nothing has changed in any of my recommendations.
the longer I do this job, the more what you say rings true (it is always true, it’s just in down times that we brokers remember it).
i love munis at these levels, preferreds, high quality corporates, and convertable bond funds.
there is some $ to be made in these markets...Buy munis!
The price decline of the last month (preceded by the price decline of the past year) is not a function of credit quality. It is a function of the market. I should say what market? Which aptly describes the problem. With the stampede to the 30 day treasuries the further you get in time and qualty from those treasuries the more adverse the pricing move to the downside. This has cut new issue issuance by 90% over the past couple weeks and secondary trading to a drip. There is no volume. Yet in absence of volume and in a market absent of buyers, bonds continue to be marked to the non market on a daily basis. Muni funds have been especially hard hit. Points to factor in: 1. The move of major ratings companies toward Global-Scale ratings on munis will boost muni ratings across the board. 2. Muni bond holders have first call on real property- ahead of 1st mortgage holders in a tax default. Realistically, if a homeowner/developer doesn't pay their taxes a tax lien is sold. The lien buyer, usually the 1st mortgage holder buys the lien at a tax sale. OR, the property goes to a lien buyer at a tax sale. Either way, the taxes get paid. It may take two years for the property to go thru this process, but ultimately the taxes get paid. Even in a forclosure, the bank can't move forward if a tax lien is attached to the property. The Lien has to be cleared before the bank can remarket the property. Outside of Treasuries, what other security has this kind of security? 3. Reassessment unlikely. Reassessments are unlikely anyway, but with property values down it unlikely that any taxing entity that isn't required by law to do so will reassess. Reassessment would reduce income to the towns, counties etc. That ain't gonna happen. 4. Price of a muni can be calculated as the present value of future cash flows plus maturity value with a discount rate set by the market. Right now that discount rate is ridiculously high. 5. Biggest default in recent history, Orange county CA ,paid off Principal and interest 100%. 6. Every day that goes by bonds move one day closer to maturity. 7. As this is written, Obama leads in the pols by a wide margin. Highly possible that taxes will be going up for upper tax bracket tax payers. This is good news for tax free bonds. 8. Bear Sterns was the number 4 muni market maker, JP morgan number 7. This is contributing to the illiquidity/pricing problems within the market. The market makers are in disarry. But not for long or at least not forever. 9. The muni market default rate has not changed. This is a market event, not a credit quality event within the muni market. 10. The stock market has been crushed before and the sky has fallen before. 21 years ago this month the market had it's worst one day performance. Today, we stand five times higher than at that point. That's a five hundred percent return when every expert said it was all over. Is it Buffet who is saying the time to buy is when things look scariest? It's plenty scary right now. But it's also time to buy. For those who need to buy income, it's time to buy tax free bonds.Bravo, dude! Well written!
Guys you are missing the bonanza of a lifetime. Dont but unless it’s a ‘buy back to close’. I’ve been selling in and out of options contracts like they are going out of style!
i love munis, and preferreds. but man i’m i getting my ass kicked buying munis for clients. i mean teeth kicked in!!
C’mon, time to be a man and buy stocks. The yield on GE is over 6%. What are you waiting for? Little old ladies is fine, for your active cliets, buy INTC.
intc sucks
I loooove me some GMAB’s from mutual insurance companies for my accumulators. Keeps 'em in the game (which we all should be doing, NOT selling in a panic)
Retirees? We've had to be creative. If you really know what you're doing and not just throwing shit at a wall to see what sticks, clients aren't feeling the pinch too much.see you at 8000. wasn’t short term money. the question we should all be asking is why didn’t the brains in reasearch see this coming instead of putting out the all so optimistic forecast. i’m very disappointed in them.
ole' lincoln anderson told us in the early spring '07 that the housing market wouldn't hurt and that the sub prime mess was such a small piece of the pie that we shouldn't worry about it. he should be fired for not giving us better advice. hell i could of given that half assedadvise! he's pitiful. LPl should get better![quote=ezmoney]see you at 8000. wasn’t short term money. the question we should all be asking is why didn’t the brains in reasearch see this coming instead of putting out the all so optimistic forecast. i’m very disappointed in them.
ole' lincoln anderson told us in the early spring '07 that the housing market wouldn't hurt and that the sub prime mess was such a small piece of the pie that we shouldn't worry about it. he should be fired for not giving us better advice. hell i could of given that half assedadvise! he's pitiful. LPl should get better![/quote] Really, wasn't short term? Missed the 100k breakpoint? And if it wasn't short term, why are you letting short term market action dictate long term investment advice? Hmmmm.what are you compliance dept. i get paid for my service. 1% to be exact. see you at 8000.
Your clients are overpaying.
Wisdom.
I get 5% in and out of a position … I don’t get why nobody else seems to get it. You want to buy in … sell a cash covered put. If you get your price you get to reduce your basis on the per the premium recieved, It doesnt get there you get paid for being wrong. Never mind writting covered calls.
VIX over 40, delta under .20 or -.20 you have a 80% chance of success with 5 differant ways to worm out of a loss. Not to mention FREE margin $$.
http://finance.yahoo.com/q/bc?s=RYMZX
Is anyone else using this fund? I realize that it will lag if the market takes off and/or they are on the wrong side of a trade. However, I have been pleasantly (underlined) surprised. Plus if I want to sell it I don't have to deal with anything approaching the TARP getting passed through the House to sell. Selling Campbell or its ilk is a pain in the arse.I spoke with our Met wholesaler today, he attempted to sooth my nerves via the cash they raised and are sitting on (20 billion) and the hope that other insurers will bail out other insurers to keep them all propped up. Apparently Smith Barney has an analyst who put out a report saying Met is the one to own. Don’t plan on owning the stock, just want the darn GMIB+ to be there when my clients need it.
GG-
The realization that these companies can tell you one thing one day and reverse course the next is challenging my faith in the system. I was with a 44 year veteran last night at an MFS meeting (are you listening ICE?) and I have NEVER seen him so discouraged and I have known him almost 20 years. This is a crisis in confidence. LEH, BAC, MER, WAMU etc..... While I agree with the premise that we should somehow stay positive and back the truck up to buy quality.... I hope what we learn from this experience is to trust no one and regulate the shit out the banks and insurance companies. They deserve it. Bring back the harshest version of Glass-Steagall and make these CEO's earn their friggin pay and restore confidence. GMIB's are at risk aren't they. If capitalization is an issue for firms like MET and Hartford (who just accepted 2.5B from Allianz!) what the hell are they doing? I have heard and read all the corporate responses about how solvent they are, blah,blah,blah....and at this point I can't trust that when the ink is dry or the umpteenth conference call is finished, they aren't thinking about the spin that's coming next to protect themselves for the next capital crisis. And these guys in control are supposed to be so brilliant. They can take their MBA's and shove it where the sun don't shine. Be very careful newbies. Although I have heard time and time again from clients, this crisis is different and I try my best to illustrate it isn't, I think back to my 66 year old veteran in this business who told me he lost on paper 600K of a 2.8M retirement portfolio i the last 12 months. He still is in the market, but he and I both shake our heads in amazement at the stupidity of our business leaders. So you folks who think you know it all or have the best investment ideas, prepare your clients for the worst and be pleasantly suprised when the markets recover. Yesterday I met with JPMorgan and their take is it will be 12-24 months before we see a sustainable recovery. I hope their wrong and its earlier. Their message was wait for a little while and then buy financials (I mean governmnet sponsored banks!) and large cap value stocks whick will lead us out of this mess not small caps (I found that interesting)this time.Footsolider, I went to an American Funds event today and was less than inspired after hearing a bond analyst talk about how bad things are. The only inspiration was a reference to 1974 and the same stuff being said about the market. This time is probably not that different but it still sucks.
Go to a Lazard meeting. Those guys are real downers. The charts that they show regarding the subprime issue, CDO’s, CDS’s, leverage, is enough to make you throw up your $40 steak.
GMO takes the cake for wanting to throw in the towel. The ironic thing about them is, as negative as they always are, they are still getting throttled (at least in their Evergreen fund). It’s ironic that now we are way down, the “downers” are coming out of the woodwork. I at least give David Tice (Prudent Bear) credit, he is always an a-hole 100% of the time.
I am glad you guys are so negative…it’s giving me and my clients the opportunity to accumulate some exceptional bargains. We’ll gladly sell them back to you 20-30% more when you are feeling better about the world.
Op-Ed Contributor
Buy American. I Am.
By WARREN E. BUFFETT
Published: October 16, 2008
THE financial world is a mess, both in the United States and abroad. Its problems, moreover, have been leaking into the general economy, and the leaks are now turning into a gusher. In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary.
So … I’ve been buying American stocks. This is my personal account I’m talking about, in which I previously owned nothing but United States government bonds. (This description leaves aside my Berkshire Hathaway holdings, which are all committed to philanthropy.) If prices keep looking attractive, my non-Berkshire net worth will soon be 100 percent in United States equities.
Why?
A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nation’s many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now.
Let me be clear on one point: I can’t predict the short-term movements of the stock market. I haven’t the faintest idea as to whether stocks will be higher or lower a month — or a year — from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over.
A little history here: During the Depression, the Dow hit its low, 41, on July 8, 1932. Economic conditions, though, kept deteriorating until Franklin D. Roosevelt took office in March 1933. By that time, the market had already advanced 30 percent. Or think back to the early days of World War II, when things were going badly for the United States in Europe and the Pacific. The market hit bottom in April 1942, well before Allied fortunes turned. Again, in the early 1980s, the time to buy stocks was when inflation raged and the economy was in the tank. In short, bad news is an investor’s best friend. It lets you buy a slice of America’s future at a marked-down price.
Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.
You might think it would have been impossible for an investor to lose money during a century marked by such an extraordinary gain. But some investors did. The hapless ones bought stocks only when they felt comfort in doing so and then proceeded to sell when the headlines made them queasy.
Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts.
Equities will almost certainly outperform cash over the next decade, probably by a substantial degree. Those investors who cling now to cash are betting they can efficiently time their move away from it later. In waiting for the comfort of good news, they are ignoring Wayne Gretzky’s advice: “I skate to where the puck is going to be, not to where it has been.”
I don’t like to opine on the stock market, and again I emphasize that I have no idea what the market will do in the short term. Nevertheless, I’ll follow the lead of a restaurant that opened in an empty bank building and then advertised: “Put your mouth where your money was.” Today my money and my mouth both say equities.
I read that this morning, right after I read American Funds brochure on its new fund. Buffett 100% US Stocks and Americans new fund is 90% International. Hmmmm...
Great
Let me finish. Great story…I had a member of a family who has owned a foundry for 100+ years, stop by my office Tuesday afternoon to comment on an article I wrote. He and I talk a few times a year about different stocks. I knew he had mucho money in the market…but didn’t know exactly how much. His assets are with a small regional b/d for 30+ years.
He started the convesation by saying, "You know you've been invited to a wonderful party and it starts at 6pm." I said...OOOOkaaaYYY. He said the reason, and I've never told anyone outside my family, I have 4 mil invested is because in 1973 I made a decision to do something that seemed just fundamentally wrong. I asked what that was. He said he took his and his wife's savings, all of it..51k, and bought stocks in the middle of one of the worst markets in history. His wife cried. He'd never invested before, other than cd's at the bank. The reason he did was because a old timer told him to, and explained to him why. He gave me these stocks that he is in...DOW, D, VZ, PG, MMM, GE, JNJ, SO etc (or companies that eventually turned into these). I never took a dividend and I never sold. I never sold, but man there's times in which I needed to, but I didn't. He has 1/3 of his money in 30 year treasuries that he purchased in the early 90's in the 8-12% range. He said.."your invited to a party and its 6pm, you need to go. Its 2:30am for me and the party is about over...but for you, its a time when the real money can be made. I had about 24k in a jt acct in cash and I bought DOW, VZ, GE, SO and ACAS. Man I'm excited, I hope the market goes down further.Come on now, foot, that’s the beauty of a fee-based business.
Stick the $$ into a model portfolio of mutual funds with auto-rebalancing and then hit your favorite forums all day and all night. Ice has it figured out. My dumb a$$, however, has to start every month looking for new cash to shovel into A shares.[quote=footsoldier]
You are a fool. Or at least your responses are one of a very young inexperienced adviser. Maybe even you could learn from a 44 year vet in our biz. You would have to get out of the way and I doubt your ego would let you. Why don't you spend a little more time in the biz, and maybe a little less time on these forums. Who knows you might actually be humbled and learn something. [/quote]Foot, I know a lot of guys with 30+ years. I know a lot of them with 10+ years. Any way you shake it, people are depressed. I had never seen my OSJ so visibly shaken as he was last week (31 years in the advising business). But you know what? I'm willing to bet that the world economy doesn't grind to a halt.
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...
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!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.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.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.Look, I know everyone’s shit is a little emotional right now, but listen up, I have a 3 point plan on how we can all be friends again.
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?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.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 you
Peace!!!
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".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.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.[quote=iceco1d][quote=footsoldier]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. [/quote] 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.[/quote] This has probably been the nth time I've seen you accuse others of name calling amidts posts like [quote=icecold]If you ever become a rational, non-dick[/quote] [quote=icecold]Market timing is for morons.[/quote] ..plus many more. Dude, seriously, chill out. Why are you always getting defensive?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.Ice is a cool dude.
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.ana - seriously, get over it man. I know you love me.
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.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…
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....[quote=footsoldier]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....[/quote] 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.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.indexes just keep making more and more sense…
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.
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!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.
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?
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%.
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.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.
. 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 canSource URL:https://www.wealthmanagement.com/forums/whats-firms/what-buy-market