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market commentary from Eric Cinnamond @ PVCMX - May 2024
As shipwrecked mentioned....If you actually look at Palm Valley's website, it refers to ABSOLUTE RETURN Investing...."Focused on Absolute Returns"....in large letters.
And I already commented that this IS NOT an absolute fund. Mr C. uses cash, how about communicating better every month the % of stocks, cash, and the rest?
Just for fun, I read Mr. C comments on 4/1/2023 (https://www.palmvalleycapital.com/_files/ugd/ef2f99_c0d0844318294a93b988e858fd3274da.pdf) Quote "Today, there are numerous signs of an impending recession and an incipient loss of confidence in the financial system, as the higher interest rates required to quash inflation are exposing deep cracks in the economy. " He is a typical downer and don't like tech...since 4/1 SPY is up about 30% and QQQ about 42%
Investopedia's definition of an absolute return fund apparently didn't mention cash as an asset, but I don't really care what investopedia says. Cash can earn 5% these days.
What do other absolute return funds use for benchmarks?
Since no one answered in 12 hours, I will venture - from memory I think it is 3 mo T-Bills index. Basically, cash.
The fund's own use of benchmark was in JD's post from yesterday. That is what any investor not engaging in discussion at MFO would use, and it is not the benchmark used by Absolute Return funds.
Investing in SC or anywhere else is your choice. When someone lags the most famous index in the world, the SP500, they pull out the DIVERSIFICATION card. Buffett said the following: "Diversification is a protection against ignorance". [snip] A fund manager is good as his last 6-12 months of performance. [snip]
There you go again - quoting Buffett out of context! Warren Buffett talking to MBA students:
"If you are not a professional investor; if your goal is not to manage in such a way that you get a significantly better return than the world, then I believe in extreme diversification. I believe that 98 or 99 percent —maybe more than 99 percent— of people who invest should extensively diversify and not trade. That leads them to an index fund with very low costs. All they’re going to do is own a part of America. They’ve made a decision that owning a part of America is worthwhile. I don’t quarrel with that at all. That is the way they should approach it." financinglife.org/learn-how-to-invest/warren-buffett-on-diversification/
S&P 500 index funds have proven to be good long-term investments. However, it's ridiculous to benchmark all funds against the S&P 500 regardless of investment styles and objectives. It's interesting when someone who invests in a way which is diametrically opposed to Mr. Buffett's approach periodically "quotes" Buffett nonetheless.
I strongly disagree that "A fund manager is good as his last 6-12 months of performance." Even the very best fund managers will underperform from time to time. Should investors move in/out of funds based on short-term performance? These actions often lead to excessive trading and inferior returns¹. Numerous studies have indicated frequent trading is hazardous to one's wealth.
¹ Skilled traders can generate excellent returns. They are few and far in between.
What do other absolute return funds use for benchmarks?
Since no one answered in 12 hours, I will venture - from memory I think it is 3 mo T-Bills index. Basically, cash.
The fund's own use of benchmark was in JD's post from yesterday. That is what any investor not engaging in discussion at MFO would use, and it is not the benchmark used by Absolute Return funds.
Investing in SC or anywhere else is your choice. When someone lags the most famous index in the world, the SP500, they pull out the DIVERSIFICATION card. Buffett said the following: "Diversification is a protection against ignorance". [snip] A fund manager is good as his last 6-12 months of performance. [snip]
There you go again - quoting Buffett out of context! Warren Buffett talking to MBA students:
"If you are not a professional investor; if your goal is not to manage in such a way that you get a significantly better return than the world, then I believe in extreme diversification. I believe that 98 or 99 percent —maybe more than 99 percent— of people who invest should extensively diversify and not trade. That leads them to an index fund with very low costs. All they’re going to do is own a part of America. They’ve made a decision that owning a part of America is worthwhile. I don’t quarrel with that at all. That is the way they should approach it." financinglife.org/learn-how-to-invest/warren-buffett-on-diversification/
S&P 500 index funds have proven to be good long-term investments. However, it's ridiculous to benchmark all funds against the S&P 500 regardless of investment styles and objectives. It's interesting when someone who invests in a way which is diametrically opposed to Mr. Buffett's approach periodically "quotes" Buffett nonetheless.
I strongly disagree that "A fund manager is good as his last 6-12 months of performance." Even the very best fund managers will underperform from time to time. Should investors move in/out of funds based on short-term performance? These actions often lead to excessive trading and inferior returns¹. Numerous studies have indicated frequent trading is hazardous to one's wealth.
¹ Skilled traders can generate excellent returns. They are few and far in between.
I don't need to mention the whole thing each time. I have said hundreds of times seen that that Buffet said "Diversification is a protection against ignorance" and his second choice is the SP500. It is not ridiculous to compare every stock fund to the SP500 or VTI which is the standard and most held. Your portfolio lags and why you don't agree. Since 2010, I have posted on several sites why LC tilting growth (SP500 is an easy choice) is where you want to be. Every year you hear from many experts and posters why not EM, SC, value? valuation is great...and almost every year their portfolio lags. And why a manager is as good as his/her last 6-12 months? this is how you avoid funds that lag for years and what I have done now since 2000.
"I don't need to mention the whole thing each time." I've never seen you "mention the whole thing." You stated "diversification is a protection against ignorance" omitting everything else.
"It is not ridiculous to compare every stock fund to the SP500 or VTI which is the standard and most held." Regardless of your thoughts on this subject, it doesn't make much sense to benchmark certain funds (e.g., small-cap value, EM equity, small-cap foreign, etc.) against the S&P 500.
"Your portfolio lags and why you don't agree." Your statement is presumptuous since you don't know how my portfolio is constructed. BTW, I agree that S&P 500 index funds are good investment vehicles.
"Since 2010, I have posted on several sites why LC tilting growth (SP500 is an easy choice) is where you want to be." I've witnessed the following over the past 5 years or so. You stipulated investors should have just owned an S&P 500 index fund or QQQ over the past xx years. Looking in the investment rear-view mirror, this "analysis" is not very insightful or beneficial. Past performance is no guarantee of future results... This pablum included in numerous corresponding posts, frankly, is rather tiresome.
"And why a manager is as good as his/her last 6-12 months? this is how you avoid funds that lag for years and what I have done now since 2000." As was mentioned previously, even the very best active fund managers will suffer bouts of underperformance. How did you determine 6 - 12 months is an appropriate evaluation period?
Ignorance is a lack of education on a topic. It can be fixed with learning. But not everyone has the time, or the inclination, to track individual securities the way Buffet and Munger do (did).
When we are done beating up on PVCMX, take a look at CRDBX. This too can test your patience. We are in a beta eats alpha time. So, if you want beta, go for it but you can not look for an alpha edge and then worry about lagging SPY. If we do not have regular market swoons, expect all those that show relative outperformance by losing less to underperform. PRWCX is no exception. The only potential cure I see is to look for active funds that do not under load momentum factor if you want to keep your toes in alpha.
P.S.: if I do not address a post to a specific poster means I am just talking to myself.
P.S.: if I do not address a post to a specific poster means I am just talking to myself.
Sure. But when you talk to yourself on the internet, anyone can butt in.
Sure, of course. When I open a window, I can not expect only fresh air will come in.
My statement is for a disclaimer so no one assumes the content in my posts when it is disagreeable to them is targeted at them and take offense. I have learned that people that assume I am offending them can and likely will retaliate at some point, which is OK except that it often disrupts productive discussions with others.
Observant, Let's just look at one thing "Looking in the investment rear-view mirror, this "analysis" is not very insightful or beneficial."
FD: there were many examples in the past, below is just one This is what I said on Nov 1 2023 (big-bang-investors.proboards.com/post/43353). Quote "Momo looks good in the last several days. All = a buy before closing." "You can just play it simple: no diversification, no predictions, no narrow range funds, looks like tilting LC growth is here to stay which = SPY/VOO or you can gamble and use some QQQ."
The quote above was included in a post you made approximately 2 hours ago on another board. This highlights just how repetitive your posts can be! A respondent replied: "Pretty easy to call that. When you are down 10% and pop 2%. It will work until it doesn't. You are only guessing." It appears the respondent didn't find this information to be very insightful or beneficial. That's my view as well. https://big-bang-investors.proboards.com/post/50337
The quote above was included in a post you made approximately 2 hours ago on another board. This highlights just how repetitive your posts can be! A respondent replied: "Pretty easy to call that. When you are down 10% and pop 2%. It will work until it doesn't. You are only guessing." It appears the respondent didn't find this information to be very insightful or beneficial. That's my view as well. https://big-bang-investors.proboards.com/post/50337
Observant, You are funny, you posted that I look in the rearview mirror. I proved you wrong. If you want more proof I can post more.
It seems that you think that the quote "you are down 10% and pop 2%" is a good response. If it is, how can you explain the fact that the SP500 is less than 0.5% from the all-time high?
Yes, it is repetitive, and I have said it in several sites many times since 2010.
BTW, 2 observations: 1) I never mentioned or attacked you in any way. You are the one who started it. 2) Why are you using different names on different sites?
1) I questioned information you provided and raised concerns about accuracy, relevance, and endless repetition. After all, isn't this a site to discuss investing information? I did not attack you personally.
2) I do have two different user names for investing sites. What's wrong with this? The relationship between these two accounts can be readily ascertained by people who are curious. Just because you have the same user name on a number of sites doesn't mean everyone should follow your lead!
You evaded many points brought to your attention earlier in this thread. Hopefully, you are receptive to constructive criticism and use this opportunity to meaningfully improve the quality of your content and become a valued contributor to this wonderful community.
This is my final post in the thread pertaining to this topic.
The fund commentaries report overall return, its cash percentage, the performance of its equities and the performance of the two small cap benchmarks it uses. In the five years since inception it has underperformed its benchmarks by less than its expense ratio, while providing a smoother ride. One might consider 20% of the fund as part of one's small cap apportionment and 80% as part of one's (attached, so not liquid) cash apportionment.
I like PVCMX. Lets look at the entire picture since 5/1/2019: M* 5 star fund. PVCMX CAGR 7.44% VIOO 7.86% PVMCX MDraw -6.45% VIOO -42.37% PVCMX SD 5.85% VIOO 26.92% PVCMX Sharpe .86 VIOO .20 PVCMX Ulcer 1.28 VIOO 13.87 PVCMX achieved comparable upside with substantially less volatility and downside. IJS metrics is similar to VIOO with less CAGR than PVCMX.
I am amazed adults cannot understand there is a different tool for different objectives. Every person has a right to their own objective with their own tool with their own money. There is no right or wrong.
1) I questioned information you provided and raised concerns about accuracy, relevance, and endless repetition. After all, isn't this a site to discuss investing information? I did not attack you personally.
2) I do have two different user names for investing sites. What's wrong with this? The relationship between these two accounts can be readily ascertained by people who are curious. Just because you have the same user name on a number of sites doesn't mean everyone should follow your lead!
You evaded many points brought to your attention earlier in this thread. Hopefully, you are receptive to constructive criticism and use this opportunity to meaningfully improve the quality of your content and become a valued contributor to this wonderful community.
This is my final post in the thread pertaining to this topic.
You question accuracy? mmm...did you prove it? Did I question your accuracy or the way you invest or even mention your name? When someone question accuracy it is usually about a fund, performance NOT someone else long-term. The only thing I did and what I usually do was analyze funds. I never base my investment on someone else unless I verify it myself. These posts are only ideas. I am very constructive, always was, but please analyze funds, style, and generic investment ideas. If you ever find I made a mistake please post it with the proof.
Why use 2 names? The best posters I know have the same name on several sites. There is nothing to hide.
Quote: "By highlighting the “full market cycle” as the right period for judgment, they’re reminding investors that over shorter spans within the cycle they’ll look," FD: is now the start of the market cycle? Is it a good choice to start in the middle? Full market cycle also means you must stay in the fund for many years to get the benefit of this fund....and now we get to the second problem
Quote: "Since most investors have limited patience, most absolute value investors have limited careers." FD: can you stay long term in this fund? probably not, Cinnamond never managed the same fund for 15-20 years. His record shows 5 and 6 years, he is already in his fifth year at PVCMX. Since the fund has so much cash, it's obvious Cinnamond can't find valuable stocks, he may quit soon. In 2016 he said "Mr. Cinnamond recommended return of capital to his investors, noting that the market was fundamentally hostile to his investment style and that he was unwilling to charge investors “equity fund prices” while sitting at 90% cash."
========== Do I think this fund can serve a goal? Absolutely, if you are a retiree who has enough and just needs 6-7% with lower SD, go for it. This is where I am, but I use bond funds for that and do my own timing going to cash. On the other hand, a fund like RSIIX may generate 6-7% with lower SD but you can own it for years. MM have been paying over 5% for months now. How strong are you going to be in years when the fund is lagging badly...2021 PVCMX made 3.2% per M* same category made over 31%.
Another idea...use it instead of VWIAX. The problem again is the fact I can own VWIAX for the next 30 years.
Another idea...it can be a good choice for someone EXPLORE portion.
Trade it? not a bad idea, but if you are a good trader you can do better or you know when to use it.
Lastly, another problem is when many investors like to mention funds that have done well in the last several years and start using them when markets start to take off or avoid stocks for years.
FD, regarding your numerous comments on fund longevity....I would do some research on Martin/Wiggins/Eric ownership in PVCMX. Wiggins/Cinnamond are co CEO's not CIO's as their previous PM roles.
Comments
Mr C. uses cash, how about communicating better every month the % of stocks, cash, and the rest?
Maybe I missed it, but can you find on the fund page (https://www.palmvalleycapital.com/) the portfolio breakdown?
Just for fun, I read Mr. C comments on 4/1/2023 (https://www.palmvalleycapital.com/_files/ugd/ef2f99_c0d0844318294a93b988e858fd3274da.pdf) Quote "Today, there are numerous signs of an impending recession and an incipient loss of confidence in the financial system, as the higher interest rates required to quash inflation are exposing deep cracks in the economy. "
He is a typical downer and don't like tech...since 4/1 SPY is up about 30% and QQQ about 42%
The fund's own use of benchmark was in JD's post from yesterday. That is what any investor not engaging in discussion at MFO would use, and it is not the benchmark used by Absolute Return funds.
There you go again - quoting Buffett out of context!
Warren Buffett talking to MBA students:
"If you are not a professional investor; if your goal is not to manage in such a way that you
get a significantly better return than the world, then I believe in extreme diversification.
I believe that 98 or 99 percent —maybe more than 99 percent—
of people who invest should extensively diversify and not trade.
That leads them to an index fund with very low costs.
All they’re going to do is own a part of America.
They’ve made a decision that owning a part of America is worthwhile.
I don’t quarrel with that at all. That is the way they should approach it."
financinglife.org/learn-how-to-invest/warren-buffett-on-diversification/
S&P 500 index funds have proven to be good long-term investments.
However, it's ridiculous to benchmark all funds against the S&P 500 regardless of investment styles
and objectives. It's interesting when someone who invests in a way which is diametrically opposed
to Mr. Buffett's approach periodically "quotes" Buffett nonetheless.
I strongly disagree that "A fund manager is good as his last 6-12 months of performance."
Even the very best fund managers will underperform from time to time.
Should investors move in/out of funds based on short-term performance?
These actions often lead to excessive trading and inferior returns¹.
Numerous studies have indicated frequent trading is hazardous to one's wealth.
¹ Skilled traders can generate excellent returns. They are few and far in between.
It is not ridiculous to compare every stock fund to the SP500 or VTI which is the standard and most held. Your portfolio lags and why you don't agree.
Since 2010, I have posted on several sites why LC tilting growth (SP500 is an easy choice) is where you want to be. Every year you hear from many experts and posters why not EM, SC, value? valuation is great...and almost every year their portfolio lags.
And why a manager is as good as his/her last 6-12 months? this is how you avoid funds that lag for years and what I have done now since 2000.
I've never seen you "mention the whole thing."
You stated "diversification is a protection against ignorance" omitting everything else.
"It is not ridiculous to compare every stock fund to the SP500 or VTI which is the standard and most held."
Regardless of your thoughts on this subject, it doesn't make much sense to benchmark certain funds
(e.g., small-cap value, EM equity, small-cap foreign, etc.) against the S&P 500.
"Your portfolio lags and why you don't agree."
Your statement is presumptuous since you don't know how my portfolio is constructed.
BTW, I agree that S&P 500 index funds are good investment vehicles.
"Since 2010, I have posted on several sites why LC tilting growth (SP500 is an easy choice) is where you want to be."
I've witnessed the following over the past 5 years or so.
You stipulated investors should have just owned an S&P 500 index fund or QQQ over the past xx years.
Looking in the investment rear-view mirror, this "analysis" is not very insightful or beneficial.
Past performance is no guarantee of future results...
This pablum included in numerous corresponding posts, frankly, is rather tiresome.
"And why a manager is as good as his/her last 6-12 months? this is how you avoid funds that lag for years and what I have done now since 2000."
As was mentioned previously, even the very best active fund managers will suffer bouts of underperformance. How did you determine 6 - 12 months is an appropriate evaluation period?
Ignorance is a lack of education on a topic. It can be fixed with learning. But not everyone has the time, or the inclination, to track individual securities the way Buffet and Munger do (did).
Stupid is a more difficult proposition to rebut.
P.S.: if I do not address a post to a specific poster means I am just talking to myself.
Oh-oh... not a good sign...
My statement is for a disclaimer so no one assumes the content in my posts when it is disagreeable to them is targeted at them and take offense. I have learned that people that assume I am offending them can and likely will retaliate at some point, which is OK except that it often disrupts productive discussions with others.
Let's just look at one thing "Looking in the investment rear-view mirror, this "analysis" is not very insightful or beneficial."
FD: there were many examples in the past, below is just one
This is what I said on Nov 1 2023 (big-bang-investors.proboards.com/post/43353).
Quote "Momo looks good in the last several days. All = a buy before closing."
"You can just play it simple: no diversification, no predictions, no narrow range funds, looks like tilting LC growth is here to stay which = SPY/VOO or you can gamble and use some QQQ."
Now, look at the chart (https://schrts.co/GBZPhZKw)
This highlights just how repetitive your posts can be!
A respondent replied: "Pretty easy to call that. When you are down 10% and pop 2%.
It will work until it doesn't. You are only guessing."
It appears the respondent didn't find this information to be very insightful or beneficial.
That's my view as well.
https://big-bang-investors.proboards.com/post/50337
Well, a different complex, anyways...
You are funny, you posted that I look in the rearview mirror. I proved you wrong. If you want more proof I can post more.
It seems that you think that the quote "you are down 10% and pop 2%" is a good response. If it is, how can you explain the fact that the SP500 is less than 0.5% from the all-time high?
Yes, it is repetitive, and I have said it in several sites many times since 2010.
BTW, 2 observations:
1) I never mentioned or attacked you in any way. You are the one who started it.
2) Why are you using different names on different sites?
1) I questioned information you provided and raised concerns about accuracy, relevance, and endless repetition.
After all, isn't this a site to discuss investing information?
I did not attack you personally.
2) I do have two different user names for investing sites. What's wrong with this?
The relationship between these two accounts can be readily ascertained by people who are curious.
Just because you have the same user name on a number of sites doesn't mean
everyone should follow your lead!
You evaded many points brought to your attention earlier in this thread.
Hopefully, you are receptive to constructive criticism and use this opportunity to meaningfully
improve the quality of your content and become a valued contributor to this wonderful community.
This is my final post in the thread pertaining to this topic.
https://www.palmvalleycapital.com/fundcommentary
and are separate from Cinnamond's occasional other comments
https://www.palmvalleycapital.com/commentary.
The fund commentaries report overall return, its cash percentage, the performance of its equities and the performance of the two small cap benchmarks it uses. In the five years since inception it has underperformed its benchmarks by less than its expense ratio, while providing a smoother ride. One might consider 20% of the fund as part of one's small cap apportionment and 80% as part of one's (attached, so not liquid) cash apportionment.
PVCMX CAGR 7.44% VIOO 7.86%
PVMCX MDraw -6.45% VIOO -42.37%
PVCMX SD 5.85% VIOO 26.92%
PVCMX Sharpe .86 VIOO .20
PVCMX Ulcer 1.28 VIOO 13.87
PVCMX achieved comparable upside with substantially less volatility and downside.
IJS metrics is similar to VIOO with less CAGR than PVCMX.
Read David's MFO review:
https://www.mutualfundobserver.com/2019/07/launch-alert-palm-valley-capital-fund-pvcmx/
Also see 9/2020 MFO update.
I am amazed adults cannot understand there is a different tool for different objectives.
Every person has a right to their own objective with their own tool with their own money.
There is no right or wrong.
When someone question accuracy it is usually about a fund, performance NOT someone else long-term.
The only thing I did and what I usually do was analyze funds. I never base my investment on someone else unless I verify it myself. These posts are only ideas.
I am very constructive, always was, but please analyze funds, style, and generic investment ideas.
If you ever find I made a mistake please post it with the proof.
Why use 2 names? The best posters I know have the same name on several sites. There is nothing to hide.
Quote: "By highlighting the “full market cycle” as the right period for judgment, they’re reminding investors that over shorter spans within the cycle they’ll look,"
FD: is now the start of the market cycle? Is it a good choice to start in the middle?
Full market cycle also means you must stay in the fund for many years to get the benefit of this fund....and now we get to the second problem
Quote: "Since most investors have limited patience, most absolute value investors have limited careers."
FD: can you stay long term in this fund? probably not, Cinnamond never managed the same fund for 15-20 years. His record shows 5 and 6 years, he is already in his fifth year at PVCMX. Since the fund has so much cash, it's obvious Cinnamond can't find valuable stocks, he may quit soon. In 2016 he said "Mr. Cinnamond recommended return of capital to his investors, noting that the market was fundamentally hostile to his investment style and that he was unwilling to charge investors “equity fund prices” while sitting at 90% cash."
==========
Do I think this fund can serve a goal?
Absolutely, if you are a retiree who has enough and just needs 6-7% with lower SD, go for it. This is where I am, but I use bond funds for that and do my own timing going to cash. On the other hand, a fund like RSIIX may generate 6-7% with lower SD but you can own it for years. MM have been paying over 5% for months now.
How strong are you going to be in years when the fund is lagging badly...2021 PVCMX made 3.2% per M* same category made over 31%.
Another idea...use it instead of VWIAX. The problem again is the fact I can own VWIAX for the next 30 years.
Another idea...it can be a good choice for someone EXPLORE portion.
Trade it? not a bad idea, but if you are a good trader you can do better or you know when to use it.
Lastly, another problem is when many investors like to mention funds that have done well in the last several years and start using them when markets start to take off or avoid stocks for years.