Sunday morning coffee break,
What's your trigger point(s)?
--- Are you using fundamental or techinical analyis, or a combination? Are the fundamentals without merit; at least at a company level, and that the global (central banks and debt) the real place to view what may be fundamental to your investments? A few have noted here, that their market trigger points came to view in the month of April; and a review of charts indicates a most correct call. Congratulations.
How are you guaging the markets?
--- Take no prisoners. While past sideways markets may have provided some shelter in domestic equity havens of broad healthcare, consumer staples and utility area investments; a take no prisoners equity market puke doesn't really care about these sectors, eh?
What's your breaking point?
--- How far does one ride a sector or broad market move? This question is not just inclinced to a sell function; but also to a buy function, any given sectors.
D-I-Y long/short fund house.
--- Without actually investing in an active long/short fund; many investors are operating their own long/short portfolio based upon their mix. Not unlike a long/short fund; the balance may tilt too far one way or the other. L/S funds do have the obvious advantage of using all of the tools (put/call options and the full tool box) to modify in a short time period to where they think a market sector(s) may be headed. For individuals, a most simple plan of a 50/50 split between VTI and BND (or one's favorites in these areas) could do the trick.
Our current portfolio has become ballasted more and more towards IG bonds; not that we have not had some of this ballast in place for the past 3 years. Whether or not anyone who reviews the Funds Boat is in agreement to our portfolio mix is not the point of the posting; only to the fact of another portfolio view for consideration, and that we place our monies where our mouth is.....
As is always noted (especially for new visitors to this site); is that our position is directed towards capital preservation first, and to hopefully trickle growth into the mix; regardless of how or where from, the growth arrives. However, captial preservation must also be a priority for the beginner, too; and regardless of the age for those who have been investing for any number of years and find retirement to be a few decades away. The value of capital preservation is the ability to compound the positive, regardless of how small the return; into continued growth going forward.
What is your plan with your portfolio during this twitchy investing period? Is this period just a re-do of 2010 and 2011, or otherwise? Or do you feel this is just a blip to ride out and the problems will be resolved in a timely manner to your satisfaction and have no long term impact upon your portfolio?
Okay, out of coffee.
A few simplified questions posted for this house and yours; but requiring more complex answers. Not really a totally fair mix between a simple question requiring a complex answer; but some of the questions we all attempt to answer for ourselves. I don't recall any quotes about investing being a simple task.
Be careful out there in investment land and take care of you and yours.
Catch
Comments
1. There are companies that I want to continue to hold and effectively have "put away" for the long-term. I continue to have sort of a "level 1", "level 2", "level 3" feel about things - "1" is effectively "put away, "2" are long-term holds as long as things hold together, while "3" are things that can be sold off if things turn sour. Profit was taken on a couple of "3"'s this week, but I can't really see anything else being sold off.
2. I have a great deal of alternative investments that have held up reasonably well. I also have some lower-key US and foreign stocks (Dairy Farm in Asia) and things like Brookfield Infrastructure, which has held up because I think it's unique and quality, but also because of the yield that everyone is desperate for. I have things that will do well if reflation at any cost is the desired end result by governments (and that wouldn't surprise me in the slightest, really), and I have some low-key things that are more defensive.
3. There are some good l/s funds and a lot that aren't great. People can short (the profunds and rydex short funds are NTF and no minimum holding at some brokerages, but it's a matter of having some sort of plan and being willing to sit through rumors and BS if one wants to make a short bet at this point.
" Is this period just a re-do of 2010 and 2011, or otherwise? Or do you feel this is just a blip to ride out and the problems will be resolved in a timely manner to your satisfaction and have no long term impact upon your portfolio? "
4. I think that the idea that this could be a "re-do" is upsetting as is; it really suggests that there is either no sustainable plan or no desire to try to figure something out. I think if this is a "re-do", the fact that this is year three is horrendous and there's a point where short-term fixes are simply not going to be acceptable by the market or populace. At some point, QE and LTRO and other interventions don't have the desired effect because the market and populace sees these tactics not working to solve anything.
You can't keep having "Groundhog Day" finance, where problems keep coming back year-after-year and being putting off year-after-year. We had one of the worst financial crises in the history of this country - it wasn't going to be solved with a wave of the magic monetary policy wand. This is (and was) going to take years, and all the interventions have only added time and to the bill. The country needed some fiscal rehab, but that's not fun and that's not popular - and money that could have really helped go towards projects that could have brought the country up and kept us competitive instead went towards propping crap up and special interests.
QE3 is probably coming, but it will help asset prices in the short-term (probably shorter than before) and none of the underlying problems, and we'll be having this conversation again next Summer, although I think if the can can be kicked that far again I'd be impressed. Again though, it should become apparent that there is absolutely no long-term fixes coming, just QE's and LTRO's and rumors. Eventually, it dawns on the market that something more substantial is needed than throwing money at the problems. Then things get really interesting.
5. I'm still not buying T-bonds. lol.
People have to be cautious and throw out the old playbook for the years to come. People can't rely on that it's an election year, etc.
And I referenced this is another thread regarding the very successful Winton Hedge Fund group: "NEED A WEATHER MAN
The scientists at Winton say one thing that sets them apart is the sheer amount of data they base their algorithms on. More historical information, they say, helps put price trends into context.
The company's London offices display charts tracking the prices of commodities going back hundreds of years, old maps and bank notes and even a dividend cheque from the 18th-century South Sea Company.
Winton sends researchers to libraries and archives across the world to find numbers held in books and on microfilms. It has found barley and sesame prices from ancient Babylon, and English wheat prices going back to 1209.
It now employs more than 90 researchers, including extragalactic astrophysicists, computer scientists and climatologists. The company hired a meteorologist who had researched the "El Nino" phenomenon. The physics graduate - Winton wants to keep his name secret for fear a rival might poach him - works in London correlating weather data to crops such as corn, wheat and soybeans. That data can be used to forecast how prices might fluctuate with the weather.
While traders in commodities have long looked at weather statistics and forecasts, the attempt to computerize the process creates the basis of an industry."
http://www.reuters.com/article/2012/05/21/us-trading-blackbox-idUSBRE84K07320120521
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Where have things gotten to in the markets when hedge funds have to send researchers to find prices of grain from Babylon in order to get that little bit of edge over the competition?
Ah, come out and play in Lake Treasury, the water is fine and crystal clear, the beach is clean; as all of the geese have been chased away...no temporary closed signs due to ecoli or any other contamination, as with some of the other Chain of Investments Lakes.
Hey, take care of you and yours,
Catch
I have some comments that I will make and in making them perhaps it will provide some insight into my thinking and my practice that will provide some answers to the questions you raise without a direct response to any of them.
First, I believe every investor needs to establish their tolerance for risk along with setting some goals they wish to achieve through investing. Their portfolio needs to be tailored along these lines. For me, I am willing to invest in assets of the moderate risk type that offer income generation stream and also provide for the opportunity of some capital appreciation over time knowing in some periods there may be some negative appreciation along the way (decline in price).
Second, I believe what one pays for securities has a great deal of bearing in making money. Indeed price is important. I follow the practice I learned from my late father. When equities are towards their 52 week low most likely they have become over sold from fear and good buying opportunities can be found. Dad had a strong will and would not buy unless he felt he was receiving good value and his portfolio was built over time … not over just over a few years. He would not chase an up trending market. If he had not already positioned for an anticipated rebound he sat it out. To him, this was investing spreading his activity out over years. In trading there is the desire and rush to get rich quickly. I read about too many folks trying to trade their way to success. I do not know of any of my friends that have found success through day trading. And, one of them was a very smart person, a nuclear engineer by profession that felt he was bigger than the market through way of his intelligence. Lost most of his 401k money and with that committed suicide. So, the bottom line, don’t over pay for what you buy and buy it with some conviction. I invest mostly for total return … Investments that offer some capital appreciation and pay dividends. An important feature I like to see in a company is that it has a history of raising these dividends to their investors as they grow profit. This is not to say that I don’t have some fixed income as I do and I believe there is a place for it in every portfolio.
Third, I believe a good investor can recognize a market top. A simplified way to do this is once equities are approaching their 52 week highs perhaps they have become over bought from investor enthusiasm. I have observed many of my family members only buy when they feel equities are on a good upward roll and become mystified when they discover they have over paid now that the market has begun its decent. Actually, I use to use my aunt as a sell indicator. When she started to buy, I started to sell because she usually committed her money after equities had had a good strong run and from my thoughts they had become overbought.
Forth, I believe all investors should keep some dry powder, cash, to seize upon opportunity.
Fifth, I believe one should not invest one’s cash reserves held for emergency. They should be held away from your portfolio and not comingled with other cash assets within it. Once you have built an emergency fund … and, only then, should one consider investing. After all, investing entails certain risk. It offers the opportunity for gain as well as the opportunity for loss. And, most of all, I believe one should govern and invest accordingly and within their abilities.
This is how we do it in this house hold. And, in stating the above, I am not saying this is by any means the right way for all.
I wish all … whatever your investing style and skill might be … “Good Investing.”
Skeeter
http://ibankcoin.com/chessnwine/2012/06/03/theyll-get-you-eventually/
For myself, in my charting, I'm trying to: not focus on each day's price, by plotting Heikin-Ashi* candlesticks; minimize the number of technical indicators so that they don't conflict with themselves; and avoid multicollinearity*.
* I found this on stockcharts.com
Tony
As for balanced funds, I'm letting AQR Risk Parity's portfolio-within-a-portfolio allocate to bonds and currencies.
I'm not selling anything else at this point, but not buying anything else, either. QE3 is most likely coming, and that may be an opportunity to sell a bit more, because if that's the answer, it's not a sustainable one. This is what, the third year in a row that largely feels like a repeat?
The market is looking like it's going to bounce today, but you have oil continuing to be a negative indicator of things and heading lower.
I think people shouldn't just sell everything, but people have to be exceedingly careful and circle around core positions. If Europe cracks, other nations aren't going to be "decoupled" and will not fare well, either. Countries want their piece of the "pie" and the "pie" is getting smaller and smaller.