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.
As for college education, I think it's going to be a tremendous issue, although I don't think it will lead to a crisis, but a handful of considerable problems. I know at least a couple schools who thought the "tree" would grow to the sky and bought up a bunch of real estate and are now considerably underwater on the real estate that was bought towards the peak.
From the article: "It’s just a matter of time until we see the same meltdown in traditional college education. Like the real estate industry, prices will rise until the market revolts. Then it will be too late. Students will stop taking out the loans traditional Universities expect them to. And when they do tuition will come down. And when prices come down Universities will have to cut costs beyond what they are able to. They will have so many legacy costs, from tenured professors to construction projects to research they will be saddled with legacy costs and debt in much the same way the newspaper industry was. Which will all lead to a de-levering and a de-stabilization of the University system as we know it."
My favorite Gundlach quote is from his CNBC appearance a couple months back: Kaminsky: "Many people are worried about the Fed's eventual exit..." Gundlach: "There's no exit. There's no exit. I think it's more likely that the Fed buys all the treasury bonds that exist. I have no concept of what the Fed exit strategy would look like, nor does an investor or viewer need to have a concept, because it's WAY out in the future. The next move in the Fed chess game is not the Fed exiting, it's the Fed continuing."
Bee was talking about Japan on here the other day and while I don't like Japan fundamentally (demographics, etc etc), they probably will "do whatever it takes" to try to reinflate. I would not take a big position in Japan, but I'm pondering today whether or not to start a small position. However, I suppose my thought would not to own an actively managed fund, but an ETF. I would not want the "cream of the crop" in Japan - if they do QE to infinity x2, I'd think what would do best is what hasn't. Look at how well some of the Japan funds have done compared to the ETFs. I'd probably consider an ETF. That said, I think if they try to do QE to the second power, it's not a fundamental positive or any sort of long-term story - their economy might get a jump, but what happens when everything they have to import (energy, materials, etc) goes up significantly? It's a "beggar thy neighbor" tactic, and it's a question of whether anyone is an eventual winner in that scenario. I tend to think no.
On any given day it just seems to me that one can expect a niggling post from either Gundlach or Gross looking to score parishioners. I kind of wish they'd just stick to managing funds but I wonder if they even do that anymore. It probably wouldn't leave enough time to get in front of reporters.
Reply to @scott: MAPIX has a 25% weighting in Japan...might be one way to participate. If MJFOX (or any other Japan fund you follow) starts to outperform MAPIX then, maybe put a toe in that fund as a way of increasing incrementally.
On a one month basis (not a trend in my opinion) MJFOX seems to be tracking to slightly out performing MAPIX.
Oh Mark, you took my thoughts precisely. Face it, that's how these two firms have attracted the huge amount of inflows. Gross and Gundlach are sensational marketers, one being a sort of trancendental guru to whom everyone come for his fount of knowledge. The other offers a brash, take-no-prisoners commentary. I understand the press' attraction for these guys, since the media love people who can hype their views. And, after all, the media have helpe to create their aura of invincibility. Expecting either man to change his public personna is futile; it is who they are. And, the bottom line, they bring in billions of dollars from people who think they are more brilliant than everyone else.
Reply to @BobC: Au contraire, I think Bill G. comes off as totally loopy in his public persona, and think the monthly media starburst of "ooh! he trimmed mortgages from 43% to 42% last month!" is just nuts. The reason I have $ with him (in BOND) is that he has a habit, honed over a long period of time, of delivering topnotch returns with minimal risk. (And of course BOND gives him free rein to work on best ideas, as opposed to running with macro and piles of derivatives in the gazillion-$ PTTRX.) I don't particularly care what his IQ is (nor what his taste in art is, or Gundlach's for that matter).
Comments
"He continues to worry about the U.S. debt load, but he doesn't think interest rates will surge anytime soon."
"He also argued that student debt is a major and growing problem in America."
"And as for trades, he thinks now's the time to short the yen and long the Japanese stock market as Japan proceeds to debase the dollar."
I was impressed by the chart entitled "Corporate Profits Hit All-Time High As % of GDP," presented below:
I will try to tune-in to his next webcast on January 8 at 1:15 PDT: "2013 Market Outlook."
Mark Cuban wrote a terrific piece on this in his blog: http://blogmaverick.com/2012/05/13/the-coming-meltdown-in-college-education-why-the-economy-wont-get-better-any-time-soon/
From the article: "It’s just a matter of time until we see the same meltdown in traditional college education. Like the real estate industry, prices will rise until the market revolts. Then it will be too late. Students will stop taking out the loans traditional Universities expect them to. And when they do tuition will come down. And when prices come down Universities will have to cut costs beyond what they are able to. They will have so many legacy costs, from tenured professors to construction projects to research they will be saddled with legacy costs and debt in much the same way the newspaper industry was. Which will all lead to a de-levering and a de-stabilization of the University system as we know it."
My favorite Gundlach quote is from his CNBC appearance a couple months back:
Kaminsky: "Many people are worried about the Fed's eventual exit..."
Gundlach: "There's no exit. There's no exit. I think it's more likely that the Fed buys all the treasury bonds that exist. I have no concept of what the Fed exit strategy would look like, nor does an investor or viewer need to have a concept, because it's WAY out in the future. The next move in the Fed chess game is not the Fed exiting, it's the Fed continuing."
http://www.mutualfundobserver.com/discuss/index.php?p=/discussion/4044/more-gundlach-cnbc/p1
Bee was talking about Japan on here the other day and while I don't like Japan fundamentally (demographics, etc etc), they probably will "do whatever it takes" to try to reinflate. I would not take a big position in Japan, but I'm pondering today whether or not to start a small position. However, I suppose my thought would not to own an actively managed fund, but an ETF. I would not want the "cream of the crop" in Japan - if they do QE to infinity x2, I'd think what would do best is what hasn't. Look at how well some of the Japan funds have done compared to the ETFs. I'd probably consider an ETF. That said, I think if they try to do QE to the second power, it's not a fundamental positive or any sort of long-term story - their economy might get a jump, but what happens when everything they have to import (energy, materials, etc) goes up significantly? It's a "beggar thy neighbor" tactic, and it's a question of whether anyone is an eventual winner in that scenario. I tend to think no.
To Catch A Thief
MAPIX has a 25% weighting in Japan...might be one way to participate. If MJFOX (or any other Japan fund you follow) starts to outperform MAPIX then, maybe put a toe in that fund as a way of increasing incrementally.
On a one month basis (not a trend in my opinion) MJFOX seems to be tracking to slightly out performing MAPIX.