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.
David begins by noting it's -18 outside. (This represents 50 degrees below freezing on the Fahrenheit scale and provides a nice contrast to Ed's "la-la land" further down.)
By the way, no one was more surprised by that temperature than I was. I went out to fill the bird feeders - no great task - and came back in unavailable to feel my figures. (Oops. "unable to feel my fingers".)
-18F is getting down to that point where the moisture in your eyes starts to freeze due to exposure to the cold. You rub your eyes because they are itchy, then you have irritated eyes for a couple of days. A tour in Alaska on the Bering Sea exposed me to this affliction.
Hope that cold weather abates soon. It's 85F here.
Love Ed's writing, analytical skills and his wealth of experience. Still, I'm having trouble coming to grips with what seems a very bearish (dire?) forecast.
As a conservative retired investor who can't afford to loose a big chunk of the nest egg (exactly the type Ed refers to) I've spread it around as best I can. Total equity exposure probably less than 40%. Another 20% directly exposed to commodities, which I view as an equity alternative. 15% cash and about 25% in short and intermediate duration domestic/international bond funds - largely investment grade. So he may be preaching to the choir in this case.
I think one reason my view of equities is more sanguine than his is I think the central banks and indebted governments will to a large extent be bailed out by inflation. Without a hefty dose of inflation (as opposed to the headline deflation now front-stage) I'd agree equities are in for a long cold shower. This cheerier outlook, however, might be described by some as investing "on a wing and a prayer."
Thanks to everyone who contributed to this informative and entertaining publication. Interesting insights by David on the new bond funds from TRP. I bailed from PRHYX way too early (am locked out), but somehow don't feel I want to dive into their global version at this time.
Cold? Currently packing for the Keys. Nice week coming up.
In 2008, we had a period of over-valuation in the markets that was pretty clear in terms of equities. We also had what appears in retrospect to have been the deliberate misrepresentation and marketing of certain categories of fixed income investments to those who should have known better and did not. This resulted in a market meltdown that caused substantial drawdowns in value for many equity mutual funds, in a range of forty to sixty per cent.....
>>>So, would the summary be, that the big melt of 2007/2008 came from the liars and cheats who outfoxed the educated believers. That the greed factor by some, although aware of the liars/cheats hoped to be on the good side of trade and get out "just in time"? IMO, this is the likely broad answer; while most were left out in the cold.
The markets will always harbor some liars and cheats. The psychopaths who troll through investment land, always hoping in the "greater fool syndrome".
So, this time is different; in some aspects and remains the same in other aspects.
As to his note regarding capital preservation; this must always be a consideration within one's investments, no matter what form the investment. This has been discussed over the years, at both FundAlarm and MFO.
@hank Have fun, knowing you two will, in the warm south. As your blood chemistry has become tuned to the "cold" you are going to feel way too hot for your stay, eh? Knowing you will suffer through this bodily reaction, too.
Brilliant! "...What should this mean for readers of this publication? We at MFO have been looking for absolute value investors. I can tell you that they are in short supply. Charlie Munger had some good advice recently, which others have quoted and I will paraphrase. Focus on doing the easy things. Investment decisions or choices that are complex, and by that I mean things that include shorting stocks, futures, and the like – leave that to others. One of the more brilliant value investors and a contemporary of Benjamin Graham, Irving Kahn, passed away last week. He did very well with 50% of his assets in cash and 50% of his assets in equities. For most of us, the cash serves as a buffer and as a reserve for when the real, once in a lifetime, opportunities arise. I will close now, as is my wont, with a quote from a book, The Last Supper, by one of the great, under-appreciated American authors, Charles McCarry. “Do you know what makes a man a genius? The ability to see the obvious. Practically nobody can do that.”
I always compare PVFIX to ICMAX and ARIVX. But PVFIX has handily beat them both since 2012. ARIVX beat them both in 2011 by 6 and 10 percentage points respectively. ICMAX beat PVFIX in 2010.
Charles McCarry is indeed a great writer. If you like spy fiction, he's well worth exploring. I'll spare you all the 50-minute lecture on my other book recommendations.
Comments
That was sort of a "yikes" moment.
David
Hope that cold weather abates soon. It's 85F here.
I have *got* to remember this phrase !
As a conservative retired investor who can't afford to loose a big chunk of the nest egg (exactly the type Ed refers to) I've spread it around as best I can. Total equity exposure probably less than 40%. Another 20% directly exposed to commodities, which I view as an equity alternative. 15% cash and about 25% in short and intermediate duration domestic/international bond funds - largely investment grade. So he may be preaching to the choir in this case.
I think one reason my view of equities is more sanguine than his is I think the central banks and indebted governments will to a large extent be bailed out by inflation. Without a hefty dose of inflation (as opposed to the headline deflation now front-stage) I'd agree equities are in for a long cold shower. This cheerier outlook, however, might be described by some as investing "on a wing and a prayer."
Thanks to everyone who contributed to this informative and entertaining publication. Interesting insights by David on the new bond funds from TRP. I bailed from PRHYX way too early (am locked out), but somehow don't feel I want to dive into their global version at this time.
Cold? Currently packing for the Keys. Nice week coming up.
In 2008, we had a period of over-valuation in the markets that was pretty clear in terms of equities. We also had what appears in retrospect to have been the deliberate misrepresentation and marketing of certain categories of fixed income investments to those who should have known better and did not. This resulted in a market meltdown that caused substantial drawdowns in value for many equity mutual funds, in a range of forty to sixty per cent.....
>>>So, would the summary be, that the big melt of 2007/2008 came from the liars and cheats who outfoxed the educated believers. That the greed factor by some, although aware of the liars/cheats hoped to be on the good side of trade and get out "just in time"? IMO, this is the likely broad answer; while most were left out in the cold.
The markets will always harbor some liars and cheats. The psychopaths who troll through investment land, always hoping in the "greater fool syndrome".
So, this time is different; in some aspects and remains the same in other aspects.
As to his note regarding capital preservation; this must always be a consideration within one's investments, no matter what form the investment. This has been discussed over the years, at both FundAlarm and MFO.
What caused the market melt?
@hank Have fun, knowing you two will, in the warm south. As your blood chemistry has become tuned to the "cold" you are going to feel way too hot for your stay, eh?
Knowing you will suffer through this bodily reaction, too.
Regards,
Catch
Good observations from you re: Ed's comments. When guys like that talk ... I listen!
"...What should this mean for readers of this publication? We at MFO have been looking for absolute value investors. I can tell you that they are in short supply. Charlie Munger had some good advice recently, which others have quoted and I will paraphrase. Focus on doing the easy things. Investment decisions or choices that are complex, and by that I mean things that include shorting stocks, futures, and the like – leave that to others. One of the more brilliant value investors and a contemporary of Benjamin Graham, Irving Kahn, passed away last week. He did very well with 50% of his assets in cash and 50% of his assets in equities. For most of us, the cash serves as a buffer and as a reserve for when the real, once in a lifetime, opportunities arise. I will close now, as is my wont, with a quote from a book, The Last Supper, by one of the great, under-appreciated American authors, Charles McCarry. “Do you know what makes a man a genius? The ability to see the obvious. Practically nobody can do that.”