Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
Reply to @CathyG: I do believe that the BRICS will have a slowdown at some point as well (although Wilbur Ross had a surprisingly - even to him, it seemed - positive report from China this morning on CNBC.) That said, these countries may be a good long-term story, but are not going to grow to the sky. At some point, they will face a slowdown, but it is a matter of how they manage that. As I've said before, I'm positive on Asia and I would like to think that they've learned from the recent mistakes of others, but they can screw things up like anyone else. Even in the best case scenario for Asia, there will be bumpy patches.
For the world at large, I don't think the problems that got us here are being addressed with anything but short-term fixes, and that will cause a break-down if we don't try to fix these structural problems in greater depth. Who knows when that will happen, but I think in the meantime it will cause greater volatility to continue because the market will remain very reactionary and rumor/news-driven. The core problems in the world keep coming back again and again and keep getting patched up again and again.
I do think the idea of "buy and hold" *as the only strategy* doesn't work well in this market and will not likely work well for the forseeable future. "Buy and Hold" as a "bucket" in the portfolio is fine - I think - but I do agree that one has to remain nimble. Additionally, I think some of the alternative strategies that are becoming available to the retail investor in this country - what I call "second and third generation" alternative funds - are getting really interesting. I remain a believer in alternatives and definitely think they have a place in every portfolio.
-------
As for the Goodhaven fund, they've done well and apparently remain largely in cash and value names (not sure if I'd describe them as "safety", but oh well.)
A bit of a subtle zinger in the article: Kevin McDevitt, editorial director for Morningstar and analyst for the Fairholme Fund, said the mutual fund rating agency has not yet ranked GoodHaven since it’s relatively new. Trauner and Pitkowsky worked at Fairholme ***“during the fund’s good years,”*** he said.
So, Fairholme has one pretty bad year and even Morningstar is like, "Remember the good years at Fairholme, like when we named Berkowitz Manager of the Decade?"
Reply to @scott: What I am completely perplexed about is why this market has gained so much in the last several weeks. As you said, there have been NO real fixes to anything. The machines must be tired of playing only with themselves and want to spike the market so the rest of us will think all is ok and get back in in fear of missing the great bull market coming. Of course, once/if that happens, the machines will grab all their gains before the bears shoot it all down.
Re Fairholme and "Managers of the Decade". Same thing happened with Gross and PTTRX. I wonder if there is a survey on how many Managers who got that award then proceeded within the next 1-2 years to drop to the bottom of their category returns.
Reply to @CathyG: Some short covering, some thought that Europe is magically fixed (as noted in another thread, there's magical realism and this is "magical mathematics", this is really feeling like both.) Also mix in the dollar taking a fairly decent move down and money moving out of fixed income. It all has happened on not great volume, especially yesterday. People getting long into an earnings season that will likely be paraded as "better-than-lowered expectations." (well, aside from JP Morgan and Alcoa so far....)
I've added a *little* bit over the last couple of days, primarily to things I have no intention of selling anytime soon (a tiny bit of Jardine Matheson, which has really become the primarily Asian investment for me, as well as Marketfield/MFLDX) and a little starting position in the fairly conservative ARVIX/Aston River Road Independent Value. A couple of other minor adds, as well.
However, I wouldn't add anything short-term/speculative into this, and those who feel they have too much equity risk/volatility may want to dial things down a little bit into this.
I think there's a fair amount of retail investors who continue to leave - there continues to be outflows from stock funds and the last couple of weeks saw net outflows (last week saw outflows from stocks and fixed income.) http://ici.org/research/stats/flows/flows_10_12_11
U.S. market's been range-bound between (in very round numbers) 1100 and 1200 on the S&P5c since the selloff in late July-early August; this (so far) top of the latest bounce is just a tad higher than the past 3 bounces. And this one has come on low volume. Breaking the range either way is supposed to be a signal, but IMHO that tech-chart stuff isn't foolproof enough to take it 100% seriously. I just don't see any huge reason (yet) to think this bounce has legs any more than the previous ones.
The range-trading might offer a shot at very short-term buys and sells, but you're better than me if you can pull that kind of thing off consistently. I figure I've lost at least as much as I've won in that arena, even with a close watch on the ranges of what I was trading, so why bother when there are so many good books to read and songs to sing and trails to hike with that "free" time?
I'd still go with mainstream economics on this, which is saying (see ECRI analysis, for instance) that there's a fairly high probability of a second leg of the Great Recession on the way. (That is, if you think the GR ever slowed down ...)
To relate this to another thread, it's too bad for Pimco they haven't gone with mainstream economics though this patch - there prob'ly wouldn't be quite so many people cussing Gross (and secondarily, Arnott) if they had.
P.S. To the subject: I think Goodhaven looks, well, good, & I tentatively have it near the top of the list for when stocks are a better buy.
Reply to @AndyJ: Thanks for your input, AndyJ. I'm with you that now is not the time to try and time the market... unless one has a lot more steely nerves than I do. So far, my small percentage in stock funds have been just enough to keep me in the black during up days when bonds are down... and enough of my bond funds have done well enough that I'm still managing mostly gains or close to break-even during down times. Though small ones, the balance is enough to have kept me sane during these crazy last few months. I just have no idea how far down each segment will go once the reality gets down and dirty. The "knowns" are so much easier for me to handle than the "unknowns" - but I guess that would be true of everyone.
If you take funds that have high volatility such as CGM, best time to buy them is when they are deep in red, totally out of favor. Same applies to sector funds, ETFs, there is usually reversion to the mean so if Energy sector has huge drop that would be time to buy best Energy fund. Easier said than done.
Reply to @equalizer: Thanks, Equalizer. I do find the Periodic tables fascinating.... usually not more than 3 years at bottom... and those frequently at the top in next couple years. But it seems to me that the U.S. and World Economies are too damaged for some sectors to take such a strong recovery. Still.... I have kept my EM bond funds, so nice to see a brief positive there the last couple of days.
Reply to @CathyG: I think my only concern with making "contrarian" bets on underperforming managers is that they could get cheaper: if CGM Focus is turning over its portfolio even more rapidly than usual, it could continue to have its timing be off. If a fund makes a large bet on a sector and that goes poorly, it could be forced to back out of some or all of the bet before the bet pays off (if it ever does.) I'm not entirely against making contrarian bets on underperforming managers, but I wouldn't make large bets. I'm sure many people bet on Bill Miller for a while after his winning streak came to an end, and they're still waiting.
Reply to @scott: Thanks, Scott. I think only the investors who really understood the manager's process well would be able to be comfortable buying in during long losing streak.
It is relatively easy for Goodhaven right now. The fund is new, when there is typically a lot of cash ready for investment. I am not ready to give it a green light, and would compare its numbers to something like Forester Value FVALX going forward. Forester has a very long track record and a very consistent style/philosophy. My guess is that in an extended period of high volatility, they may end up similarly, but that the ride could be smoother with Forester. On the other hand, Goodhaven could do better if things turn more positive and less bleak. Just a hunch, but based on FVALX and comparing it to the S&P 500 over the last 3 and 5 years, that's might not be a bad bet.
Reply to @Kaspa: Arivx and Arvix are different share classes; former = investor, latter = institutional. If you buy Arivx the investor shares from the fund company directly, minimums are $2,500 taxable and $500 IRA.
Which brings up a pet peeve: I wish M* would add another click on each fund's pages for "Share Classes," where they would sort out the multiple classes of each fund, with minimums and costs and availability. It does take some time and energy to dig that info out.
Comments
http://www.thestreet.com/_yahoo/video/11273810/hp-microsoft-cheap-despite-doubters-says-fund-manager.html?cm_ven=YAHOOV&cm_cat=FREE&cm_ite=NA&s=1#1215939967001
http://www.marketwatch.com/story/a-greater-depression-is-coming-2011-10-10?Link=obinsite
For the world at large, I don't think the problems that got us here are being addressed with anything but short-term fixes, and that will cause a break-down if we don't try to fix these structural problems in greater depth. Who knows when that will happen, but I think in the meantime it will cause greater volatility to continue because the market will remain very reactionary and rumor/news-driven. The core problems in the world keep coming back again and again and keep getting patched up again and again.
I do think the idea of "buy and hold" *as the only strategy* doesn't work well in this market and will not likely work well for the forseeable future. "Buy and Hold" as a "bucket" in the portfolio is fine - I think - but I do agree that one has to remain nimble. Additionally, I think some of the alternative strategies that are becoming available to the retail investor in this country - what I call "second and third generation" alternative funds - are getting really interesting. I remain a believer in alternatives and definitely think they have a place in every portfolio.
-------
As for the Goodhaven fund, they've done well and apparently remain largely in cash and value names (not sure if I'd describe them as "safety", but oh well.)
A bit of a subtle zinger in the article: Kevin McDevitt, editorial director for Morningstar and analyst for the Fairholme Fund, said the mutual fund rating agency has not yet ranked GoodHaven since it’s relatively new. Trauner and Pitkowsky worked at Fairholme ***“during the fund’s good years,”*** he said.
So, Fairholme has one pretty bad year and even Morningstar is like, "Remember the good years at Fairholme, like when we named Berkowitz Manager of the Decade?"
Oh wait, wasn't that last year? Ha.
Re Fairholme and "Managers of the Decade". Same thing happened with Gross and PTTRX. I wonder if there is a survey on how many Managers who got that award then proceeded within the next 1-2 years to drop to the bottom of their category returns.
I've added a *little* bit over the last couple of days, primarily to things I have no intention of selling anytime soon (a tiny bit of Jardine Matheson, which has really become the primarily Asian investment for me, as well as Marketfield/MFLDX) and a little starting position in the fairly conservative ARVIX/Aston River Road Independent Value. A couple of other minor adds, as well.
However, I wouldn't add anything short-term/speculative into this, and those who feel they have too much equity risk/volatility may want to dial things down a little bit into this.
I think there's a fair amount of retail investors who continue to leave - there continues to be outflows from stock funds and the last couple of weeks saw net outflows (last week saw outflows from stocks and fixed income.) http://ici.org/research/stats/flows/flows_10_12_11
U.S. market's been range-bound between (in very round numbers) 1100 and 1200 on the S&P5c since the selloff in late July-early August; this (so far) top of the latest bounce is just a tad higher than the past 3 bounces. And this one has come on low volume. Breaking the range either way is supposed to be a signal, but IMHO that tech-chart stuff isn't foolproof enough to take it 100% seriously. I just don't see any huge reason (yet) to think this bounce has legs any more than the previous ones.
The range-trading might offer a shot at very short-term buys and sells, but you're better than me if you can pull that kind of thing off consistently. I figure I've lost at least as much as I've won in that arena, even with a close watch on the ranges of what I was trading, so why bother when there are so many good books to read and songs to sing and trails to hike with that "free" time?
I'd still go with mainstream economics on this, which is saying (see ECRI analysis, for instance) that there's a fairly high probability of a second leg of the Great Recession on the way. (That is, if you think the GR ever slowed down ...)
To relate this to another thread, it's too bad for Pimco they haven't gone with mainstream economics though this patch - there prob'ly wouldn't be quite so many people cussing Gross (and secondarily, Arnott) if they had.
P.S. To the subject: I think Goodhaven looks, well, good, & I tentatively have it near the top of the list for when stocks are a better buy.
If you take funds that have high volatility such as CGM, best time to buy them is when they are deep in red, totally out of favor. Same applies to sector funds, ETFs, there is usually reversion to the mean so if Energy sector has huge drop that would be time to buy best Energy fund. Easier said than done.
I'm pretty lost so far. Thanks.
M* shows a minimum of $1 million. Is it available elsewhere with lower minimum?
Meant ARIVX. I see $1 million here
http://quote.morningstar.com/fund/f.aspx?t=ARVIX
It is possible they have a lower minimum for IRA.
Which brings up a pet peeve: I wish M* would add another click on each fund's pages for "Share Classes," where they would sort out the multiple classes of each fund, with minimums and costs and availability. It does take some time and energy to dig that info out.
Thanks AndyJ. ARIVX does look attractive.