Hi Guys,
A few days ago I referenced a 2016 set of viewgraphs prepared by the J.P. Morgan organization. The viewgraphs summarized much disparate data that conceivably could factor into an investment decision. For those who missed my earlier post, here is the Link once again:
https://www.jpmorganfunds.com/blobcontentheader/202/900/1158474868049_jp-littlebook.pdfIt was a tough slog, but I finally made it through to the end of the presentation material. As luck would have it, I found several charts useful and informative, and the last graph especially interesting.
A nearby neighbor visited during the Holiday season. His son is a college freshman, and he rightly complained about the high costs. That surely is the downside, but Figure 24 addressed the bright side of that tradeoff. Unemployment rates for High School, for some college, and for college are 5.4%, 4.4%, and 2.5%, respectively. Average annual earnings for High School graduates, for those with Bachelor’s degrees, and for those with advanced degrees went from $34,100. to $62,500. to $88,100., respectively. There’s a payday in the future for education level.
For investing purposes, chart 52 shows correlation and volatility data for a host of investment categories. Not surprisingly, bonds, munis, and currency holdings offer strong diversification benefits for a portfolio under stressful conditions. What was surprising is that, despite their high costs, Hedge funds have a correlation coefficient of only 0.81 relative to US Large Caps. That’s not much bang for your buck. REITS do a little better in the diversification game.
Figure 63 presents 20-year annualized returns as a function of asset classes. During this period REITs outperformed the S&P 500 to top the listing at 11.5% annually. We private investors are a disaster zone falling near the bottom of the barrel at 2.5% annually. I’ll wager MFOers do better.
Investors, like sports fans, favor the home team. Figure 67 summarizes how investors allocate their resources by region. Geography comes into the decision process. Past studies demonstrated that professional investment organizations did favor local opportunities. When they did so, their investment returns were above their global average. They profited from a home court advantage.
I wonder if private investors also profit from the home court advantage? The J.P. Morgan data shows that North-East Coast investors excessively emphasize Financials, the West Coast overloads on Technology, the Mid-West favors Industrials, and the South supports Energy sectors. Is there a pony there?
Different strokes for different folks; tons of data to examine and all in one convenient place. Please visit the referenced report to pick your own poison. I tried to whet your appetite.
What are your thoughts on this matter. Is there a home court advantage that makes a difference? And remember an old saying that “ a difference is only a difference if it makes a difference”.
Your comments are welcomed regardless if they’re in the spirit of either Karl Marx or Groucho Marx.
Best Regards.
Comments
College is now the new high school anyway.
There's a fairly successful investing operation in Omaha also.
Best Wishes.
From this article:
“The people who are going to have the biggest problem are college graduates who aren't rocket scientists, if you will, not at the top of their class," Bloomberg said. "Compare a plumber to going to Harvard College – being a plumber, actually for the average person, probably would be a better deal."
“You don’t spend ... four years spending $40,000, $50,000 in tuition without earning income,” the mayor added.
Later, Bloomberg explained that some vocational jobs — like plumbing — won’t ever been outsourced overseas or replaced by machines.
“It’s hard to farm that out ... and it’s hard to automate that,” he said."
https://rt.com/usa/plumbers-college-bloomberg-mayor-551/
I think a college education has become the new housing bubble. A lot of people going to college and inuring debt they shouldn't be.
The only benefits are the colleges, lenders and the teachers.
Also there is the variable of job availability and competition.
But it's very hard for parents to know exactly what is wisest to do by way of encouragement and guidance when you have a kid who's not that bright.
http://www.theonion.com/video/company-immediately-calls-job-applicant-upon-seein-31670
I am sure Snowball has all sorts of experience in this area.