I guess we invade Iran next?

I say send in a secret assassination squad and off the looney tunes that are in charge of Iran.  The population of Iran consists of basically normal people who would most likely be relieved. 

I have a client from Lebanon and one of the things he explained to me was the age of the societies in the middle east. His explanation was that since there has been society there for so long, they have had a lot of time to form sects, tribes, parties and different religions. These different groups have had lots of time to not like each other, especially in these artificially formed countries. People in the middle east dont get along with each other very well, so stands to reason their interests really wont go along with ours.

Having said all that we (the US) probably wouldnt care about that region if not for the oil. Why do we keep trying to force square pegs in round holes??? The oil must flow!

This country must have an energy policy! If we werent 90%+ reliant on foriegn energy we could adjust policy in a more defensive way and wouldnt have to invade anyone if not for humanitarian reasons. We could be like the Swiss, but bigger. You dont hear about the Swiss getting attacked very often and they dont do any attacking.

Just my thoughts.

You make a good point giff.



Petroleum Intelligence Weekly (PIW) reported it had seen internal Kuwaiti

records showing that Kuwait’s reserves are only half those officially stated.

I guess thats why we’re moving out of Kuwait. I’m gonna hold on to my oil/

energy and biotechs for the rest of the year.



just my 2 cents…

I had to come back to the computer. While I’m ranting, let me just say that

the reason bin Laden has’nt been captured is because this administration

would prefer to “release” recordings of him every time someone goofs in

Washington. Remember Wag the Dog?

I see China and India taking over.

In the information age the United States cannot keep their intellectual advantage for long.

India has been sending their greatest minds to medical school here for years. 

China finally picked up on what Japan did after WWII.  Decide to beat the US in economic warfare rather than on a physical battle field.  Japan is succeeding...so will China.

Based on population, China and India are the greatest countries in the world.  Combine that with rapidly expanding ecomonies and the shared knowledge found on the information superhighway and these countries are poised to explode.

Once China and India have 2.5 cars per household like the US... to whom do you think the Middle East is going to sell their oil?  The 40% of the world's population in these two countries or the US?  Keep in mind that the US is rapidly losing ANY KIND OF ADVANTAGE that they have over China and India...including standard of living and personal wealth.

The middle eastern countries aren't stupid either.  They realize what a valuable commodity they have and they will sell it to the highest bidder.  As jobs get outsourced to places like India and they personal wealth increases, not only will the country have a higher demand (based on population), but they will also have the financial ability to pay for it.

Face it.  You have about 10-20 years to milk all the money you can out of the US and move yourself to another country.

The US economy is too highly leveraged.  Both the individual population base and the government are overextended on credit.  Excessive leveraging will only take you so far.  Soon, relatively speaking, the US economy will implode.

THE END IS NEAR!!!

[quote=skeedaddy]I had to come back to the computer. While I'm ranting, let me just say that
the reason bin Laden has'nt been captured is because this administration
would prefer to "release" recordings of him every time someone goofs in
Washington. Remember Wag the Dog? [/quote]

Yeah, and I remember the Twlight Zone, too. You sound like an escapee 

[quote=menotellname]

China finally picked up on what Japan did after WWII.  Decide to beat the US in economic warfare rather than on a physical battle field.  Japan is succeeding...so will China.

[/quote]

Where have I heard this before? How, yeah, it was the 1980s when "We will be all working for Japan in 5 years" theory and the "We need to study Japan and adopt everything they do" theory were getting a good bit of air play. Now Korea is about to eat Japan's lunch in the two areas (electronics and cars) that seemed to be their strengths.

So, that 15 year long recession in Japan, how's that working out?

O K folks let's put our heads together for something productive.....If the US or Israel were to attach Iraq and hostilities broke out in the middle East, which 3-5 stocks would you want to own(say starting the day before) and why?

Let's see if we can come up with some useful thoughts here...

Off the top of my head.... LMT, General Dynamics and Haliburton.  Lockheed Martin is obvious - no?  General Dynamics because they are involved in all sorts of parts of military equipment from the NODs, aeronautics, mechanics in the abrams and more.  Haliburton is the only company capable of doing what they do for deployed US forces, especially if war of this magnitude breaks out. 

Again off the top of my head so sorry for the obvious.

I’d sell my stocks and buy gov’t bonds and gold.

I wouldn’t buy 3-5 stocks, I’d buy several thousand through a conveniently packaged mutual fund wrap program that would preserve my money by combining non coorellated asset classes .  Then I’d make sure to rebalance quarterly so that my porfolio wouldn’t stray too far from the allocation that I’m most comfortable with. 

Note:  Haliburton went up when the market tanked last week.  Hmmmmmmm.  How’s that for protecting value (I know the naysayers are gonna whip out their charts and start talking about the “long term” yawn)

You know someone once said that World War III would start in the Middle

East.   Hmmmmm?

I think that someone was Nostradamus?

Precisely, grasshopper. I want to know who’s buying all this gold ($557

today)? In a financial armageddon, gold will be the ultimate currency.

Forget about this paper money stuff and Treasury Notes too.

[quote=dude]I wouldn't buy 3-5 stocks, I'd buy several thousand through a conveniently packaged mutual fund wrap program that would preserve my money by combining non coorellated asset classes .  Then I'd make sure to rebalance quarterly so that my porfolio wouldn't stray too far from the allocation that I'm most comfortable with.  [/quote]

I'd do that long before I'd invest on an emotion, which in this case would be unbridled fear 

[quote=skeedaddy]Precisely, grasshopper. I want to know who's buying all this gold ($557
today)? In a financial armageddon, gold will be the ultimate currency.
Forget about this paper money stuff and Treasury Notes too. [/quote]

Please tell me you're joking....btw, shouldn't you be searching for the gys that bought it Friday, and may be regretting it now? 

[quote=joedabrkr]

O K folks let's put our heads together for something productive.....If the US or Israel were to attach Iraq and hostilities broke out in the middle East, which 3-5 stocks would you want to own(say starting the day before) and why?

Let's see if we can come up with some useful thoughts here...

[/quote]

Perhaps I'm missing something, but what's useful about guessing what stocks I'd want to own if I knew (and I alone) knew something was going to happen the next day? 

You guys are making light of this situation. When the arabs/muslims are

getting $200 a barrel and we’re paying $5.00 a gallon for gas and milk costs

$10 a gallon due to transportation costs, bullets won’t help, unless you’re

gonna rob a dairy farmer.



Doesn’t anyone see a correlation between the invasion of Iraq and the price

of oil? These guys know they can’t take us on in combat so they’ll bankrupt

us instead.

[quote=skeedaddy]You guys are making light of this situation. When the arabs/muslims are getting $200 a barrel and we're paying $5.00 a gallon for gas and milk costs $10 a gallon due to transportation costs, bullets won't help, unless you're gonna rob a dairy farmer.

[/quote]

Go join a survivalist group and dig yourself a bombshelter....

BTW, what percentage of  the oil we use do you think comes from the Middle East? Ever consider what other energy sources and conservation methods we'd be using long before oil reached $100, much less $200 a barrel? Did you happen to notice the demand destruction that happened when oil reached $74?

[quote=skeedaddy]
Doesn't anyone see a correlation between the invasion of Iraq and the price of oil?  [/quote]

Uh, no, and if you saw the chart, neither would you.

[quote=mikebutler222][quote=joedabrkr]

O K folks let's put our heads together for something productive.....If the US or Israel were to attach Iraq and hostilities broke out in the middle East, which 3-5 stocks would you want to own(say starting the day before) and why?

Let's see if we can come up with some useful thoughts here...

[/quote]

Perhaps I'm missing something, but what's useful about guessing what stocks I'd want to own if I knew (and I alone) knew something was going to happen the next day? 

[/quote] Mike-

I often take your side on many debates but not this one.  If you don't see the point in this intellectual exercise, well I'm not sure what much to say.  Then again, you give all your $$ to others to manage, right?

[quote=mikebutler222]

[quote=dude]I wouldn't buy 3-5 stocks, I'd buy several thousand through a conveniently packaged mutual fund wrap program that would preserve my money by combining non coorellated asset classes .  Then I'd make sure to rebalance quarterly so that my porfolio wouldn't stray too far from the allocation that I'm most comfortable with.  [/quote]

I'd do that long before I'd invest on an emotion, which in this case would be unbridled fear 

[/quote]

Not unbridled fear Michael....that would be why I posed the question and am trying to think ahead......

Unbridled fear would be what motivates the folks to whom I sell those stocks to for inflated prices.....

[quote=joedabrkr][quote=mikebutler222]

[quote=dude]I wouldn't buy 3-5 stocks, I'd buy several thousand through a conveniently packaged mutual fund wrap program that would preserve my money by combining non coorellated asset classes .  Then I'd make sure to rebalance quarterly so that my porfolio wouldn't stray too far from the allocation that I'm most comfortable with.  [/quote]

I'd do that long before I'd invest on an emotion, which in this case would be unbridled fear 

[/quote]

Not unbridled fear Michael....that would be why I posed the question and am trying to think ahead......

Unbridled fear would be what motivates the folks to whom I sell those stocks to for inflated prices.....

[/quote]

That emotion that the buyer is acting under would be greed. It's fear that causes people to sell, buy gold and dig holes in their backyard to live in.

[quote=joedabrkr][quote=mikebutler222][quote=joedabrkr]

O K folks let's put our heads together for something productive.....If the US or Israel were to attach Iraq and hostilities broke out in the middle East, which 3-5 stocks would you want to own(say starting the day before) and why?

Let's see if we can come up with some useful thoughts here...

[/quote]

Perhaps I'm missing something, but what's useful about guessing what stocks I'd want to own if I knew (and I alone) knew something was going to happen the next day? 

[/quote] Mike-

I often take your side on many debates but not this one.  If you don't see the point in this intellectual exercise, well I'm not sure what much to say.  Then again, you give all your $$ to others to manage, right?

[/quote]

Joe, it's just that I'm not sure what sort of exercise is involved in asking what you'd do now if you knew there was to be war tomorrow. If your asking what I'd do as a financial advisor  if a war occurred, when it happened, that's another question. I just wonder about the usefulness of a question that assumes I know something for certain before it happens.

Personally I'm telling clients this is a buying opportunity. If the balloon were to go up I'd contact clients and if they're in a panic I can't hold they hands well enough to get them through, I'd offer to increase the percentage of cash in their account, but I'd tell them I wish they wouldn't.

[quote=mikebutler222][quote=joedabrkr][quote=mikebutler222][quote=joedabrkr]

O K folks let's put our heads together for something productive.....If the US or Israel were to attach Iraq and hostilities broke out in the middle East, which 3-5 stocks would you want to own(say starting the day before) and why?

Let's see if we can come up with some useful thoughts here...

[/quote]

Perhaps I'm missing something, but what's useful about guessing what stocks I'd want to own if I knew (and I alone) knew something was going to happen the next day? 

[/quote] Mike-

I often take your side on many debates but not this one.  If you don't see the point in this intellectual exercise, well I'm not sure what much to say.  Then again, you give all your $$ to others to manage, right?

[/quote]

Joe, it's just that I'm not sure what sort of exercise is involved in asking what you'd do now if you knew there was to be war tomorrow. If your asking what I'd do as a financial advisor  if a war occurred, when it happened, that's another question. I just wonder about the usefulness of a question that assumes I know something for certain before it happens.

Personally I'm telling clients this is a buying opportunity. If the balloon were to go up I'd contact clients and if they're in a panic I can't hold they hands well enough to get them through, I'd offer to increase the percentage of cash in their account, but I'd tell them I wish they wouldn't.

[/quote]

Ok fair enough Mike perhaps I wasn't being clear in my line of questioning.....I'm seeking to stimulate discussion and thought(which might be useful to me as well) as to what one might do to tilt one's portfolio to respond favorably if the level of tension and hostility increased in the Middle East.

MikeB,

You think that someone trying to forecast a possible outcome is futile?  What the heck do you think those money manager's we hire do all day long?  What do you think actually drives stock prices, current EPS? .  No amigo, EXPECTATIONS are what drive stock prices, period. Whether you except it or not, when you put people into a MPT wrap product you are implicitly making a prediction, albeit that the future will resemble the past.   You may not want to play the role of maney manager, which is cool (I'm sure you take great care of your clients, which is what is most important here), but there are others who are astute in the art of direct asset management.  Not everyone is the sterotypical stockbroker building "positions" for their clients.

[quote=dude]

No amigo, EXPECTATIONS are what drive stock prices, period. [/quote]

Amen Brother, Amen.

<?:namespace prefix = o ns = “urn:schemas-microsoft-com:office:office” /><o:p>

[quote=dude]

MikeB,

You think that someone trying to forecast a possible outcome is futile?  What the heck do you think those money manager's we hire do all day long? 

[/quote]

If I hired them, they're the type that does bottom up stock picking, and not the sort that tries to guess whether or not we're going to war, and then guesses whether or not we should go to cash. In fact, the ones I hire are driven to be 100% invested and they leave asset allocation to me.

[quote=dude] Whether you except it or not, when you put people into a MPT wrap product you are implicitly making a prediction, albeit that the future will resemble the past.  

[/quote]

Hmmm, well, it's a bet, if you want to call it that, that the general relationships between asset categories will remain within historic norms. That has nothing to do with guessing whether or not there will be war, when it might happen, and what the financial effects might be.

[quote=dude]

 ..... but there are others who are astute in the art of direct asset management. 

[/quote]

If by "direct asset management" you mean they bring genuine value to their clients by not only picking stocks but timing the market based on their perceptions of world events, before they unfold, well, OK. That may be what they aim to do, but I've yet to see anyone with a timing sense so well calibrated that they actually benefit the client. Remember, people who do that not only have to be brilliant in their timing on the decision to get out of the market, they have to be equally brilliant in their timing as to when to get back in. The odds are stacked deeply against them.

[quote=skeedaddy2][quote=dude]

No amigo, EXPECTATIONS are what drive stock prices, period. [/quote]

Amen Brother, Amen.

[/quote]

In the short term, yes (fear and greed). In the longer term, profits determine stock prices.

"In the short-term, the market is a voting
machine, in the long-term it is a weighing machine."

Benjamin Graham

Market timing is tough. I don’t know of anyone or system that can do it

consistently and successfully. I’ve seen many whipsaws as a result. I also

don’t subscribe to a “fully invested” philosophy either. If I don’t see an

attractive opportunity I don’t deploy my cash. Right now I’m about 16% in

cash. (During the bear market, I had 45% in cash and Mom’s account went

100% government bonds.)



Having a plan in place for war in the middle east, isn’t a futile exercise.

There are many too many countries with interests in the region to take it

lightly. Meanwhile, there would be a flight to quality. I just wouldn’t add to

equities and wait for stop-losses to be triggered.

MikeB said:

BTW, what percentage of  the oil we use do you think comes from the Middle East? Ever consider what other energy sources and conservation methods we'd be using long before oil reached $100, much less $200 a barrel? Did you happen to notice the demand destruction that happened when oil reached $74?

Reply:

MikeB, a spike in Middle East oil would affect the prices of oil globally.  Why would Venezuela (Mr. Chavez) sell us oil @ $67 a barrell, if he could sell it on the open market for $100 plus?  Do you realize that a gallon of oil is about half the price of a gallon of bottled water?  Oil is cheap at current prices.  We enjoy extraordinarily cheap oil in this country relative to the rest of the world.

MikeB said:

In the short term, yes (fear and greed). In the longer term, profits determine stock prices.

Reply:

I disagree.  I believe that although current profits are one part of the equation, the primary driver of stock prices on any given day is the expected profits.  No one buys a stock for yesterdays profits.  Everyone buys stocks based on tomorrow's expected profits (not considering technical guys, this is from a fundamental basis), period.  The stock price will adjust based on how wrong or right the market is in estimating the profits and risks associated with the stock/sector etc....

Even Benjamin Graham was forecasting that "damaged" companies would restore to health and the market would eventually realize this.  People are buying expected cashflows.  It's that simple.  The market is a forward pricing and forward looking mechanism that reflects the attitudes of the underlying participants and their converging/diverging views about tomorrow.  I don't think this is a point that can be argued? 

You seem to imply that market timing is crowd following.  I would suggest that you can't make any invesment without making some decision about "when", even if "when" is allways "now".  Even Dollar cost averaging is a "timing" decision that makes a case for timing your entry points on a consistent periodic basis. 

I find it interesting that you quote Benjamin Graham to support an anti "timing" attitude, when his book "The Intelligent Investor" is all about measuring when to over or underweight stocks relative to bonds.  Maybe I'm dense but this appears to be one way of "timing" the market.  It, in essence is making a predictive judgement that when stocks are overvalued (yes, I know that's a subjective call) they will underperform.  Sometimes this works and sometimes it doesn't (depends on which rolling time periods you use).

You are making forecasts and timing decisions for your clients.  The key point is that you have a criteria that is different from those who are more actively trying to ascertain future trends etc....  In fact you have mentioned that you use "tactical allocation", which is undeniably driven by forecasts of relative under and out performance of different sectors and asset classes. 

It seems contradictory to me to say that it's futile to predict the effect of war or oil prices on the economy, but not which asset class or sector will perform better. 

If I had to place a bet I think that its much easier to predict tensions in the middle east v.s. semiconductors or international outperforming consumer discretionary or domestic large cap (sector/asset class)

[quote=SonnyClips]
Butler being as well read as you are on the subject of war don't you think in the long run adding Iran to the conflict might intensify it to the point of a full on war of attrition by both sides? A war that the US is uniquely positioned to win handily? Honest but maybe way too speculative question. 
[/quote]

I don't think there's a "war", as in occupation, in the cards here. Perhaps a tactical strike, like Israel did with Iraq's nuke program.

Hear Ye, Hear Ye!!  All who have ears please listen.

In one way or another we are all market timers.  There is no such thing as "I don't try to time the market".  Blindly putting your money in the market is a "timing" decision, albeit one that believes in the merits of the efficient market (generally speaking) and that the time is always NOW.  This is a timing philosophy that believes there is no value to be created by making decisions based on the markets ebbs and flows.  There are merits to this approach as well as to the approach of measuring market optimism and pessimism (sentiment)to gauge entry points (BENJAMIN GRAHAMS' Mr. Market, for those who use his quotes to support contradictory philosophies).  I would refer to the differing approaches as passive and active market timing philosophies (kinda like passive indexing and active managment). 

For the most part I don't try to measure the market's sentiment and usually invest my clients $$'s immediately (because of my incompetence in "active" market timing, although I'm trying to learn to apply a few guidelines based on over and underweighting stocks and bonds/cash).  Neither approach is better or worse and there is no conclusive evidence that proves otherwise (other than the fact that active timing is generally bad for retail investors to try on their own, since they are usually guided by media and don't know how to interpret it).  I have seen evidence from both sides of the fence that is equally persuasive and legit. 

One point though is that if you are trying to make serious $$ in the market (with commensurate risks of course) you most likely won't be able to do it through passive timing (which is fine for the vast majority of risk averse clients) or passive investing. 

I think our profession has become very systematized and brainwashed into thinking that no one makes exceptional returns in the markets.  This is simply not true.  Many (I know this is a relative term) individual investors are able to rack up 20% plus returns (certainly not me though), even in lukewarm markets fairly consistently.  Most of them are making forecasts about long term trends and engaging in more active timing decisions.  Most of them are not "day traders" (according to my subjective experiences of course, costs eat way too much return).

thoughts anyone?

SonnyClips wrote:

As far as gas a 200 dollars a barrel. At what point do distillers and ADM become energy players to rival the oil companies. Like Alcoa did in the 2000 power crunch when the aluminum plants started to pump energy into the electricity grid because it was more profitable than producing the metal. I would think before the price of oil gets to crazy immediate alternative fuels would become more cost efficient. Oh and the Canadian Oil Sands and Coal Oil are also out there.

Reply:

Currently grain alcohol operates at an energy loss (requires more energy to produce than it provides) and is not a viable option.  All energy prices will go up as a result of oil rising because it will cause a rapid increase in demand for alternative energy, which like oil has limited supply (although a potentially more sustainable supply). Oil sands is an expensive way to produce oil, but will also go up in price because of increased demand as stated before.

The main problem is that we've had our heads in the sand for too long and didn't prepare for an inevitable outcome: Peak Oil (I have yet to read Twilight in the Desert) and/or rapidly increasing global development (china/india emerging markets).  As such our alternative energy infrastructure is pathetic and is not even close to being ready to meet our supply needs.  In addition the energy policies of the Oilmen (make your own inferences) have been deluded and self dealing. 

We have the same types of problems with Social Security, where no one took it upon themselves to "forecast" and account for the future and left my generation to deal with the issue.  They took a "passive" approach and look where it's left us. 

From what I've read and heard about "Twilight in the Desert", it doesn't paint a pretty picture.

[quote=dude]

MikeB, a spike in Middle East oil would affect the prices of oil globally. [/quote]

Yeah, and? My point was that people don't know that the ME actually provides a much smaller percentage of our total imports than they'd guess.

[quote=dude]

"... the primary driver of stock prices on any given day is the expected profits."

[/quote]

I don't buy for a given day. I buy for the long haul. See the quote above. BTW, I'd say the primary driver, day to day, is fear and greed and it's just that emotion I want to avoid.

[quote=dude]You seem to imply that market timing is crowd following.

[/quote]

That's not what I said. What I said was I've yet to find a market timing who succeeds often enough to make it worth while. Guessing, if/when we'll have war and what that might mean to the economy is a speculation that is far from investing as I know it.

[quote=dude]

Even Dollar cost averaging is a "timing" decision that makes a case for timing your entry points on a consistent periodic basis.

[/quote]

LOL, it's "timing" that's mechanical and designed to avoid the guessing you're talking about. Get the irony in bringing that up to support your case?

[quote=dude]

I find it interesting that you quote Benjamin Graham to support an anti "timing" attitude, when his book "The Intelligent Investor" is all about measuring when to over or underweight stocks relative to bonds. Maybe I'm dense but this appears to be one way of "timing" the market.

[/quote]

Oh come on. There's nothing in relative value to support a timing process that hinges on the manager's speculation about global events.

[quote=dude]You are making forecasts and timing decisions for your clients. The key point is that you have a criteria that is different from those who are more actively trying to ascertain future trends etc....

[/quote]

I make “forecasting and timing decisions”? Hardly. Again, nothing that you've said in anyway supports the concept of a manager saying "I think we're going to war, I'm going to cash". In fact, using the historic correlations between asset classes is the virtual antithesis of a manger playing Ms Cleo about military/political events around the world, and running money based on it.

[quote=dude]

In fact you have mentioned that you use "tactical allocation", which is undeniably driven by forecasts of relative under and out performance of different sectors and asset classes.

[/quote]

Dude, again, tell me you’re kidding. Underweighting long term fixed income because returns there are at historic lows is nothing, I repeat, nothing like taking the top down view of global events.

[quote=dude]

If I had to place a bet I think that its much easier to predict tensions in the middle east v.s. semiconductors or international outperforming consumer discretionary or domestic large cap (sector/asset class)

[/quote]

Of course it’s easier to predict tensions in the ME. In fact, if you guessed in the last 50 years that, yes, there will be tensions in the M.E., you’d have been right. Now, would that have helped you make money for your clients? Doubtful.

[quote=dude]

Hear Ye, Hear Ye!!  All who have ears please listen.

In one way or another we are all market timers.  [/quote]

Simply and unequivocally, untrue.

[quote=dude]

Currently grain alcohol operates at an energy loss (requires more energy to produce than it provides) and is not a viable option.

[/quote]

"Energy loss" is not a reason to pursue a method. There's often a trade-off of "loss" here for "gain" there that's perfectly ratiuonal.

[quote=dude]

  All energy prices will go up as a result of oil rising because it will cause a rapid increase in demand for alternative energy, which like oil has limited supply (although a potentially more sustainable supply). Oil sands is an expensive way to produce oil, but will also go up in price because of increased demand as stated before.

[/quote]

There are so many alternative means available that aren't currently economically viable, but would be if oil moved to $100/brl that it's just wrong to say they're limited. Again, remember he demand destruction we saw when oil moved to just $74.

[quote=dude]

The main problem is that we've had our heads in the sand for too long and didn't prepare for an inevitable outcome: Peak Oil.."

[/quote]

Long before the doomsayer's "peak oil" comes about we will be well into alternative means. There's no reason to bring on line now available technologies that aren't economically viable with oil at current prices.

[quote=dude]  In addition the energy policies of the Oilmen (make your own inferences) have been deluded and self dealing.  [/quote]

Oh, brother, here we go again.....

[quote=dude]

From what I've read and heard about "Twilight in the Desert", it doesn't paint a pretty picture.

[/quote]

Alarmist screed never do paint pretty pcitures. BTW, fear not. The same "experts" told us we'd run out of food and oil in the 1970s....

[quote=dude]

 Blindly putting your money in the market is a "timing" decision, albeit one that believes in the merits of the efficient market (generally speaking) and that the time is always NOW.  This is a timing philosophy that believes there is no value to be created by making decisions based on the markets ebbs and flows.  [/quote]

So it's "timing" to put your money into the market w/o consideration to "timing" because you believe (very rationally) that there's no effective way to "time" the market?  It's not that the "time" is always now, it's that "timers" have yet to ever, I say again, ever provide convincing evidence that they add value.

You've spent too much time talking with timers that use any thin reed to try to support their agenda.

I'm not saying that your timing decisions are based on speculation about global events, but they are based on speculation about other charateristics like "asset classes maintaining relationships similar to the past" or "dollar cost averaging"  like I said MikeB

Passive timing

Active timing

both you and I fall into the "passive timing" camp, probably because of our convictions that we can't add value doing it. 

Mike B wrote:

So it's "timing" to put your money into the market w/o consideration to "timing" because you believe (very rationally) that there's no effective way to "time" the market?  It's not that the "time" is always now, it's that "timers" have yet to ever, I say again, ever provide convincing evidence that they add value.

You've spent too much time talking with timers that use any thin reed to try to support their agenda.

Reply:

Do you believe that the George Soros' and Warren Buffets of the world are just "lucky" guys.  Both used differing attitudes based on market timing:

Warren: Timing directed by waiting for extremely undervalued companies, selling when they become overvalued

George: Timing based on macro trends and a wierd "pain in his back"  (I know it sounds weird, but it made him a billionaire so who am I to criticize)

Wall Street proprietary trading desks (remember mike these are major profit centers) engage in heavy market timing.

I think this is a matter of interpretation of the meaning of "timing". 

Just because you haven't seen anyone successful at it doesn't mean it doesn't exist. 

MikeB wrote:

Alarmist screed never do paint pretty pcitures. BTW, fear not. The same "experts" told us we'd run out of food and oil in the 1970s....

Reply:

Funny thing MikeB is that the guy who wrote the book did acurately predict peak oil from the North sea wells when all the big Oil companies were blowing smoke up the "believers" (i.e. MikeB) a*sses in addition to Peak Natural Gas in the U.S. in 99 or 2000. 

Note*Peak Oil doesn't = running out of oil, it means when the growth rate of demand exceeds the growth rate of supply.  Learn a little about the subjects you choose to debate on eh?

And yes, Mike, it will have a serious impact on the world, a world that does not have a very robust alternative energy infrastructure. 

You sound like the guys who rejected the doom and gloomers talking out against the technology bubble. 

It's idiotic to think that we have an unlimited supply of oil or any natural resource (including clean air and water).  Whether it happens in 5, 10 or 20 years, oil production growth will slow. 

These times are different since we have so many new entrants into the "developing world"  China and India's appetite for resources alone are enough to put a huge strain on the worlds' resources and with growth rates in excess of 9% annually, populations that far exceed ours, well do the math. You can't compare today with the 70's; very different conditions.

BTW, I'm not an alarmist, just someone who believes that these issues will SOMEHOW affect the world and therefore investments.

MikeB said:

Currently grain alcohol operates at an energy loss (requires more energy to produce than it provides) and is not a viable option.

"Energy loss" is not a reason to pursue a method. There's often a trade-off of "loss" here for "gain" there that's perfectly ratiuonal.

Reply:

MikeB, you do not sound educated on this issue.  Energy loss means that it has what is termed a "negative energy gain"; ie. inefficient, unworthwhile, less sustainable than using oil at any price point.  It requires more energy to make than it produces for our use.  Using grain alcohol will only result in a more rapidly declining energy base.

Currently, even hydrogen is innefficient, it requires oil or coal to work.  (we can't produce enough energy from dams, solar, wind and waves yet to make it truly oil independent).

Oil is viable because it has a very positive energy gain, meaning that it produces far more energy than what is required to extract, package and ship it.  we're not talking economic costs here, but energy costs. 

In fact, oil is a miracle resource, it contains enormous embodied energy.  Nothing we take for granted today is possible without oil, our current way of life is not possible without oil. 

Guess what MikeB, there's almost 3 billion people in China and India who want to have a lifestyle like ours, in fact the average annual migration of people in China from villages to the city is over 200 million since 1999!!!  Do you think these people want a taste of our wealth mikeb?  Do you think it might have an impact on competition for world resources? 

Is it doom and gloom, I don't know.  Will it affect the world in dramatic ways, OBVIOUSLY. 

When Benjamin Graham was an active investor, the world was a different

place. MikeB is applying the equivalent of taking a doctor from the 1940’s

and sending him to a Mayo Clinic to practice medicine today.



Dude, you are incredibly astute. I really enjoy reading your posts. BTW, read

Twilight in the Desert, I highly recommend it. Also look at Petroleum

Intelligence Weekly for additional perspective. Isn’t it ironic that most of the

world’s oil reserves are in the most politically unstable countries?

I will reiterate that 200 MILLION chinese migrate to the city per year!!!      

Do you get the magnitude of that MikeB?

Oil and Water, that's what I'm keeping my eyes on over the next 10 years.  If the world doesn't end in 2012 like many ancient religions claim.

Skeedaddy wrote:

Isn't it ironic that most of the
world's oil reserves are in the most politically unstable countries?

Reply:

Well, what do you expect when those countries were split up after WorldWar 1 according to the colonial powers' desires?  In addition you have the most coveted and influential resource on earth in the hands of people who have fundamental (based on religious doctrines, which I admit that I'm a little ignorant of) beliefs that resist many of the trappings of "progress".

What about bio diesel? 

[quote=dude]

I'm not saying that your timing decisions are based on speculation about global events, but they are based on speculation about other charateristics like "asset classes maintaining relationships similar to the past" or "dollar cost averaging"  like I said MikeB [/quote]

You've now redefined "market timing" to include strategies specifically designed to avoid the speculation involved in genuine market timing .<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

It’s one thing to design a portfolio with various asset categories that are expected to maintain historic relationships over realistic timeframes and set it to work, knowing that exogenesis events will impact it, but not defeat it. It’s another completely to believe that a top down supposition about world possible events that guides decisions to move in and out of the market or even large swathes of it provides a positive effect to returns.

[quote=dude] <?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

Funny thing MikeB is that the guy who wrote the book did acurately predict peak oil from the North sea wells when all the big Oil companies were blowing smoke up the "believers" (i.e. MikeB) a*sses in addition to Peak Natural Gas in the U.S. in 99 or 2000. 

[/quote]

Says Jean Dixon, er, the guy who wrote the book. Who definitively says we've reached "peak oil" in those fields? What we've done is come close to what current methods can draw in an economically viable manner. That’s akin to saying the world reached “peak oil” in 1913 because at that time, with that technology, we could draw only a tiny fraction of what we can today. BTW, spare me the inferences of evvvillllll “big oil”, OK?

[quote=dude]

Note*Peak Oil doesn't = running out of oil, it means when the growth rate of demand exceeds the growth rate of supply.  Learn a little about the subjects you choose to debate on eh?

[/quote]

Gee, feel free to assume you can read minds and know what I’m aware of. I don’t do it to you, please don’t do it to me. While supporters of the theory like to draw the line at “we don’t mean we’ll run out of oil”, the logical extension of projected demand (and remember, they assume NO new field discoveries and NO advancement in technology, which is a complete non-starter in my book) exceeding supply IS massive shortages and eventually, depletion.

[quote=dude]

And yes, Mike, it will have a serious impact on the world, a world that does not have a very robust alternative energy infrastructure. 

[/quote]

Explain to me what “infrastructure” you’d expect to see just sitting around, collecting dust, waiting for the day it’s economically viable? It’s enough to have the ability, producing it long before it makes sense to use it is silly. Think of the gearing up of the American economy to meet the demands of war production. We didn’t have battleships just sitting around in the numbers needed once the war began, we produced them when needed.

[quote=dude]

You sound like the guys who rejected the doom and gloomers talking out against the technology bubble. 

[/quote]

And you sound like the gold hoarders and the “global freeze” and “we’re running out of food and energy” guys of the 1970s. 

[quote=dude]

It's idiotic to think that we have an unlimited supply of oil or any natural resource (including clean air and water).  Whether it happens in 5, 10 or 20 years, oil production growth will slow. 

[/quote]

No one says we have unlimited oil. What IS said is that the doom and gloomers refuse to accept that technological advances in; alternative energy, production methods of current energy, conservation methods of current energy uses, will keep the world from dipping into economic chaos and $200/brl oil. Witness the destruction of demand, in real terms, when oil reached $74. The doom/gloomers simply don’t think that rising prices will; change user behavior, make alternatives economically viable, shift usage patterns. It’s as if they don’t understand markets at all.

[quote=dude]

These times are different ..

[/quote]

The most dangerous and universally wrong term ever invented by man.

[quote=dude] …since we have so many new entrants into the "developing world"  China and India's appetite for resources alone…..You can't compare today with the 70's; very different conditions.

[/quote]

If you’d heard the panic contingent of the 1970s they made the very same “this time it’s different” claims and relied on <?:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />China and India as prime examples.

[quote=dude]

Oil and Water, that's what I'm keeping my eyes on over the next 10 years. 

[/quote]

Can you translate that into an actionable investment idea?

BTW, are you familar with Harry Dent?

[quote=mikebutler222][quote=dude]

Oil and Water, that's what I'm keeping my eyes on over the next 10 years. 

[/quote]

Can you translate that into an actionable investment idea?

BTW, are you familar with Harry Dent?

[/quote]

Yup, Dent, what a waste.....

[quote=joedabrkr][quote=mikebutler222][quote=dude]

Oil and Water, that's what I'm keeping my eyes on over the next 10 years. 

[/quote]

Can you translate that into an actionable investment idea?

BTW, are you familar with Harry Dent?

[/quote]

Yup, Dent, what a waste.....

[/quote]

Agreed. His investment results have been horrible. To me the only interesting part of the saga is that he based them on "can't fail" demographic trends.<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

 Here we are guessing what oil and water will do (and therefore the markets) based on pretty rational sounding supposition of future trends, but Harry showed what trying to turn even more solid demographic trends (“baby boomers, the pig in the python that drives the US economy”) will do to your investment returns.

To me he’s the perfect cautionary tale when the subject of investing based on top-down speculation comes up.

[quote=mikebutler222][quote=joedabrkr][quote=mikebutler222][quote=dude]

Oil and Water, that's what I'm keeping my eyes on over the next 10 years. 

[/quote]

Can you translate that into an actionable investment idea?

BTW, are you familar with Harry Dent?

[/quote]

Yup, Dent, what a waste.....

[/quote]

Agreed. His investment results have been horrible. To me the only interesting part of the saga is that he based them on "can't fail" demographic trends.<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

 Here we are guessing what oil and water will do (and therefore the markets) based on pretty rational sounding supposition of future trends, but Harry showed what trying to turn even more solid demographic trends (“baby boomers, the pig in the python that drives the US economy”) will do to your investment returns.

To me he’s the perfect cautionary tale when the subject of investing based on top-down speculation comes up.

[/quote]

Harry could well be right eventually, and earn his followers some nice returns.  Problem is that he's working off of macro "long cycle" trends, and clients aren't necessarily willing to wait that long.  Too...there are many other market phenomena that can happen in the back drop while those trends play out.  As I recall his adherents-especially those using AIM products-were really clocked by the growth and technology bear market....hurt so bad that it takes years of positive returns to recover.

The stuff we're talking about could logically play out in the next 12 months-especially the war, oil, and gold stuff.  A prudent bet made on the right stocks or sectors could pay off in a big way, yet if you manage your risk properly(position sizing and stop losses) and keep the rest of your assets well-diversified, it won't hurt too bad.

That's where my head is at.

<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /> 

[quote=joedabrkr][quote=mikebutler222][quote=joedabrkr][quote=mikebutler222][quote=dude]

Oil and Water, that's what I'm keeping my eyes on over the next 10 years. 

[/quote]

Can you translate that into an actionable investment idea?

BTW, are you familar with Harry Dent?

[/quote]

Yup, Dent, what a waste.....

[/quote]

Agreed. His investment results have been horrible. To me the only interesting part of the saga is that he based them on "can't fail" demographic trends.

 Here we are guessing what oil and water will do (and therefore the markets) based on pretty rational sounding supposition of future trends, but Harry showed what trying to turn even more solid demographic trends (“baby boomers, the pig in the python that drives the US economy”) will do to your investment returns.

To me he’s the perfect cautionary tale when the subject of investing based on top-down speculation comes up.

[/quote]

Harry could well be right eventually, and earn his followers some nice returns.  Problem is that he's working off of macro "long cycle" trends, and clients aren't necessarily willing to wait that long. 

[/quote]

I disagree. Harry says, for example, drug companies should benefit NOW,  greatly from the baby boomers that are, as we speak, using life saving and quality of life improving drugs at a  historically large  rate. The problem is while that’s absolutely true, it hasn’t translated into the investment returns he’d imagined because increased usage isn’t the only input to profitability. His top down direction missed that, a bottom up review of specific companies caught it.

 The same goes for housing. Harry says boomers are NOW selling larger homes and buying smaller. However, builders will tell you that their largest increases and largest profits are coming from their largest homes. Something has interceded to make Harry’s perfectly logical hypothesis an investment nothing.

My point is Harry has seen miserable results and he’s not guessing when this event or that event might occur, what political and/or military events might come to pass,  he’s basing it on far more solid, identifiable and verifiable work. Making similar top down investments based on even less solid grounds doesn’t sound like a winner to me.

[quote=joedabrkr]The stuff we're talking about could logically play out in the next 12 months-especially the war, oil, and gold stuff

[/quote]

I completely respect your opinion. Here’s how I see it.

Plenty of things could logically play out. There’s nothing there that I see as actionable enough, with enough reliability to make investment decisions on it. Look at what happened to the market during the Gulf War, or even since we went into <?:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Afghanistan. Just how sharp would your timing knife have to be to have to have profited from timing? How much could you have been hurt if you were wrong by only a tiny fraction? I don’t see the risk/reward benefit. I’d prefer to consider this one of the exogenous things I told the client would affect his account value that we’re better off ignoring, as we knew it would happen somewhere, sometime.

MikeB

Actionable investiment ideas:

Colonial style butter churns

Star Wars memorabilia

Stamps with the profiles of Las Vegas lounge singers

Maybe even porcelain doll heads?

I believe in asset allocation based on the concept of forward looking analysis.

I was not making a reference to Big Oil in the "evil" way, just pointing out that the interests of these companies is not to necessarily be forthcoming about the truths of their reserves, hense the Dutch Royal Shell misstep. 

[quote=dude] <?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

MikeB

Actionable investiment ideas:

Colonial style butter churns

Star Wars memorabilia

Stamps with the profiles of <?:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Las Vegas lounge singers

Maybe even porcelain doll heads?

[/quote]

You're losing it, Dude.

[quote=dude]

I believe in asset allocation based on the concept of forward looking analysis.

[/quote]

The issue isn't asset allocation or not. You keep repeating that as if it's the be only thing going on in a balance portfolio. Once those little slices of the pie are divide up, they have to be managed, whether you and I do it as brokers or some outside manager does it.

It’s that specific management I’m talking about (and I do have some accounts I manage in this way) and what our disagreement centers on isn’t whether to use asset allocation or SMAs or funds or anything of the sort. It has to do with a basic disagreement with the value of top-down versus bottom-up stock selection. I’m a bottom-up, show me the profit, show me the balance sheet, show me the company detail guy and you’re making the case for top-down here’s the way the world’s moving, what should I buy based on that guy. See?

Whether I'm doing it myself or hiring someone else to do it, I don't use a top-down method.

[quote=mikebutler222]

[quote=dude] <?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

MikeB

Actionable investiment ideas:

Colonial style butter churns

Star Wars memorabilia

Stamps with the profiles of <?:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Las Vegas lounge singers

Maybe even porcelain doll heads?

[/quote]

You're losing it, Dude.

[quote=dude]

I believe in asset allocation based on the concept of forward looking analysis.

[/quote]

The issue isn't asset allocation or not. You keep repeating that as if it's the be only thing going on in a balance portfolio. Once those little slices of the pie are divide up, they have to be managed, whether you and I do it as brokers or some outside manager does it.

It’s that specific management I’m talking about (and I do have some accounts I manage in this way) and what our disagreement centers on isn’t whether to use asset allocation or SMAs or funds or anything of the sort. It has to do with a basic disagreement with the value of top-down versus bottom-up stock selection. I’m a bottom-up, show me the profit, show me the balance sheet, show me the company detail guy and you’re making the case for top-down here’s the way the world’s moving, what should I buy based on that guy. See?

Whether I'm doing it myself or hiring someone else to do it, I don't use a top-down method.

[/quote]

I think we should try the topless method instead of the top-down method.

[quote=joedabrkr][quote=mikebutler222]

[quote=dude] <?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

MikeB

Actionable investiment ideas:

Colonial style butter churns

Star Wars memorabilia

Stamps with the profiles of <?:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Las Vegas lounge singers

Maybe even porcelain doll heads?

[/quote]

You're losing it, Dude.

[quote=dude]

I believe in asset allocation based on the concept of forward looking analysis.

[/quote]

The issue isn't asset allocation or not. You keep repeating that as if it's the be only thing going on in a balance portfolio. Once those little slices of the pie are divide up, they have to be managed, whether you and I do it as brokers or some outside manager does it.

It’s that specific management I’m talking about (and I do have some accounts I manage in this way) and what our disagreement centers on isn’t whether to use asset allocation or SMAs or funds or anything of the sort. It has to do with a basic disagreement with the value of top-down versus bottom-up stock selection. I’m a bottom-up, show me the profit, show me the balance sheet, show me the company detail guy and you’re making the case for top-down here’s the way the world’s moving, what should I buy based on that guy. See?

Whether I'm doing it myself or hiring someone else to do it, I don't use a top-down method.

[/quote]

I think we should try the topless method instead of the top-down method.

[/quote]

Sounds good, but don't take clienst with you. That'll get you fired  ;)

What, you don't like my actionable investment ideas?

[quote=dude]

What, you don't like my actionable investment ideas?

[/quote]

Either you're on full-tilt brain-drain, my friend, or you didn't understand the question  

Please tell me that isn't you!!!!.   Aggh  my eyes, my eyes.!!

This is a mental image I want to scrub from my mind

Which one?

I've lost a little weight the last couple years.  But what do you expect when you run 15 miles a day. 

Oh, and the meth also helps.

[quote=dude]Oh, and the meth also helps.[/quote]