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.
@Old_Skeet My earlier comment may have (unintentionally) come off as being critical and I apologize for that. What I meant to say is that I appreciate all comments made in this forum and incorporate them into my decision making process.
One of my regrets in my investing career is that I spent too much time (and money) trying to uncover star fund managers and time the market. Moving more and more into ETF indexing, particularly in the domestic, REIT and emerging market areas. Bonds are still actively managed with many of the managers mentioned here (PIMCO, Gundlach, Fuss, Gaffney). International holdings are about 50/50 index ETFs/actively managed.
Have a small percentage allocated to commodities...probably spent too much time listening to those that Paul Krugman of the NYT would call "inflation scolds". Have some PAUDX, but think Arnott is a better academic than investment manager. Use Target Date funds...relatively easy to pick out the better long term performers there. Have an allocation to alternatives, which I call my fun money.
Would like to find some "defensive" mutual funds, but not convinced there is such a thing. Yacktman funds come to mind. Yes, he did do well in the 2007-2009 downturn, but does that mean he will do well in the next downturn? Has done just average in the last 5 years.
Ten years ago I would have laughed if someone said I couldn't uncover managers who would "beat the market" and do better than average. Now, I'm not so sure.
By the way, I did not take your comments as being critical. Please get some thick skin and continue to express your thinking. Nothing wrong in doing that. I just wanted to know if those asking questions of me had a game plan or were they just floundering. When you stated it was not your style of investing ... I got to thinking and thought I'd ask about your style.
I guess hank missed the nail with the hammer on this one.
I enjoyed your thread >>> What are you buying, selling or pondering? >>> which I enjoyed reading and finding out what others were doing and thinking. It is probally the best all time thread here at MFO. I sincerely hope you will continue opening the thread from time-to-time.
And, I did not mean to high jack Junkster thread ... So this will be my last comment that I make under it. But, I felt it in good tast to answer those that made comments or ask questions of me.
Scott- for heaven's sake, don't let a casual throw-away remark govern your discretion. No harm was meant- none should be taken.
Regards- OJ
I agree; though there's a point there in Hank's post, it shouldn't be thought of as directed at Scott, but more towards us guys who post there. To put a buy or sell in context so it might be meaningful to someone else, it'd be good if we said (say for example) why the trade, where the $ came from or is going to, and how the transaction affects our asset allocation, if it does. I don't think we always do that.
I like those threads; it's good to read what other people are doing, and it's a prod to think objectively about recent and near-term decisions.
@Old_Skeet, thank you for sharing your insights and your approach, not just on a regular basis but also in specific responses to questions I've asked you previously. I very much appreciate your insights and wisdom as well as several others who post and discuss here, even when our investment styles differ. FWIW and based on your comment earlier in this thread, here's my approach for everyone's information and critique.
In your terms I have 4 sleeves: stocks, mutual funds, futures and private equity.
For stocks, I follow the Sound Advice newsletter and I invest based on M* screens I created focused mostly on wide or narrow moats and low price/fair value. I won't buy a stock unless its 5* and I don't hold most stocks above 90% of fair value. Both are value oriented approaches and following the newsletter is highly mechanical, although I exercise some discretion in an attempt to improve on his returns.
For mutual funds, which is the largest portion of my portfolio, I take a top down view and together with stocks I want my M* X-ray to achieve certain objectives based on the global market capitalization. Right now those objectives are significantly overweight frontier markets and small/mid-caps, overweight healthcare and emerging markets, equal weight US and significantly underweight developed international markets and large-cap stocks. At this point I have no fixed income investments as I'm far more concerned about eventually rising interest rates than I am about geo-political risks or a global slowdown. In picking funds, I'm looking for managers with outstanding records (sometimes with different funds or companies) and/or investment approaches that make very good sense to me. I have a preference for low AUM, focused portfolios, turnover that's not too high and reasonable expenses, but there are very few rules, just guidelines and preferences.
My targeted year-end collection of funds, from largest investment to smallest, includes POAGX, GPIOX, GPEOX, WAFMX, WAAEX, FSCRX, PRNHX, KGGAX, IWIRX, MEASX, OAKWX, PTSGX, OBIOX, MAPIX, DGS, GEGCX and PRHSX. I say targeted because I have a couple funds I'm rotating out of to build investments in some of these I've listed, specifically MEASX and IWIRX which I became aware of here on MFO and KGGAX which I read an article about on M*. I tend to start with smaller positions in new investments and build bigger positions as I get more comfortable with the manager, although Grandeur Peak was a big exception because of the hard closes. I tend to be a long-term investor but I will rotate when I find opportunities that better achieve my objectives. As an example, I'm funding part of my investment in MEASX by reducing GEGCX because I like the smaller-cap nature of the fund as well as greater frontier market exposure.
Futures are a very small portion of my portfolio and its my play money. Most of the time I make bets based on a combination of fundamental and technical aspects of whatever I trade. Right now I'm long Canadian $ and short Euro and keeping my eyes open for opportunities to short Yen and 30 Year Treasury Bonds.
Finally, I have a few investments in private equity that have become a much larger percentage of my portfolio than they should be but it shouldn't be too much longer before I find out whether my thought process was right or not.
I greatly enjoy Scott's threads - and don't think they were ever intended to represent "actionable advice." I sincerely hope he continues to put them up. If you read my comment closely you will see that it's this question of "actionable advice" that led me to say I'd refrain from commenting further about my investment decisions in those threads.
Frankly - If you require "actionable advice" on where to invest your money, hire a fee-based financial planner. Get one with known credentials, excellent references, a proven track record, his or her name on a shingle out front and having a phone number you can call when you need help.
Sorry if I've mis-nailed this one. ---
*(FYI: I chopped a few rhetorical questions out of this post to keep it brief and to the point. Scott addressed some of those (and quoted from one) in his exceptionally clear and pointed response further down. Thanks Scott.)
Has been discussed numerous times over the years.................that folks should likely regard what is put in place on these pages; "as suggestions or for your further review".
This includes the well known names among the Wall St. crowd, Phd'd. economist folks and other related studies/theories; who/that continue to have bouts of "cranial-rectal inversion", regarding the world of investments.
Personally, I've noticed some comments about the threads I occasionally do before this thread and it kind of gets to a point where it's certainly not upsetting but a little surprising and kinda "well, fine, that's not something that has to be done". The threads were intended to encourage discussion (because I do like this forum and I guess I'm of the thought process that I'd like to see it be more inclusive and less a little club for the same group of 10-20 people) and were open threads on a discussion forum. I'm glad that people enjoy them and I'll continue to do them or anyone else is welcome to start them whenever they see fit.
The other thing that I think may be a little bit of an issue is, what are you (and I direct this to everyone) looking to get out of this forum? What do you expect it/want it to be? Maybe that's a discussion to have.
Personally, feel that when I make a decision to invest in something, I'm responsible for that decision. For me, nothing here is going to be an "actionable idea" in and of itself, ever - I may find someone's idea interesting and if I do, I'll do the research and then I'll make that decision. That should be for any investment idea from someone on the internet, whether here or on seekingalpha or a morningstar article or whereever - you have to do the research and decide whether or not that investment is something that is right for you and understand it yourself rather than go on what an article says.
To me the whole idea of the threads wasn't about actionable advice as much as it was some manner of "small talk", where people could just kind of throw out what they like. Rather than multiple threads of people talking about what they currently like/are looking at, there could be something of a chat (once every week or perhaps two) within the larger chat forum.
"Is there a reasonable time period for our ideas to pan-out? Or will we be held up to scorn if the investment doesn't make money next week?"
Well, then it becomes something else, where we're writing articles with detailed recommendations and specific time periods. This, combined with the fact that many of us are very different, different risk tolerance, different time horizons, etc. I buy with the intent of holding for possibly years. Others may trade by the day. I don't disagree with the various methods that people use on this board (I'm of the mindset that hey, if that's working for you, great) and, if anything, am fascinated by the diversity of ideas and approaches.
Futures are a very small portion of my portfolio and its my play money. Most of the time I make bets based on a combination of fundamental and technical aspects of whatever I trade. Right now I'm long Canadian $ and short Euro and keeping my eyes open for opportunities to short Yen and 30 Year Treasury Bonds.
Finally, I have a few investments in private equity that have become a much larger percentage of my portfolio than they should be but it shouldn't be too much longer before I find out whether my thought process was right or not.
What you're doing sounds very cool. I own a fair amount of private equity and I view it more as the desire to have continual exposure to that asset class with the understanding that it is volatile and does go through cycles. Despite the variable nature of the dividend from the private equity companies, I'm largely paid to wait with it.
I'm with Scott. I enjoy his threads for exactly this: "the whole idea of the threads wasn't about actionable advice as much as it was some manner of "small talk", where people could just kind of throw out what they like."
I like the threads casual. Brainstorming, back and forth. Investing for many of us is solitary, so it's fun to see what others are doing or thinking. Often there are ideas worth researching, but I enjoy those threads (and perhaps this forum) mostly for the sense of community they give. Small talk (and good manners!) are part of what makes a community.
If on the other hand one is looking for free actionable investing advice on the Internet, well, that's pretty dangerous, even if the "advisor" does put up details about his or her investments.
The great exception to the above is David's monthly commentary, which is huge source of wisdom, but there too, of course, one should do additional research before investing.
Three further comments on my "actionable advice" posting
1. Didn't mean to suggest that people should limit their comments to "actionable advice". That's simply what I'm looking for and is easier to distill than "I like this, or don't like that (without explanation)" comments. Again, just what I'm looking for.
2. I don't take anyone's advice, especially from an unknown source on the Internet, without determining if it's suitable for my situation first; and
3. haven't yet concluded that the advice rendered here is of less quality that than I would receive from a paid financial advisor.
I was taught by my father a very long time ago that I shouldn't even take his advice without doing my own research, considering my own style and objectives and making my own decisions. After all, I wasn't making decisions with his money and he wasn't paying me back if I lost money. The value for me here is the open exchange of ideas, resources and experiences and the very nice idea that if you are thinking about buying a car, lots of people are willing to share their thoughts. Although I've seen it discussed any number of times, I just don't see a lot of reason to place limits on the type or style of discussions, preferring only to take responsibility for my own actions regardless of where the ideas come from.
I was not going to make continued comment ... about my investmet style.
What you wrote about your father was much in of the same as to how my father raised me. I believe they both were wise gentlemen. I lost my father about ten years ago but his teaching and lessons I learned form him about life still remain a big part of my life today. One of them was to learn from others but think on your own. I take great pride in being able to write this as you probally did about what you wrote.
@scott, thanks for your comment. My private equity investments are direct investments in a few start-up companies whereas it sounds like you've invested in a vehicle/fund that invests in private companies. Although I think you're completely right about value in exposure to the asset class, it wasn't really my motivation. I knew one of the members of the Board indirectly and I was impressed by what they were doing and the answers they gave to the long list of questions I asked. There's no question that its not a smooth ride and I've learned quite a few lessons along the way but so far I haven't made anything nor have I lost anything (except opportunity cost which I use as a basis for deciding whether the potential gain is big enough for the risk I'm taking).
Most of us have read from Buffett or any number of other people that owning stock is like owning a small piece of that business. For me, however, owning a share of stock in a public company doesn't really make me feel like an owner of that business. In the case of these investments I totally feel like an owner. I write to the CEOs with questions about quarterly letters, I encourage or challenge strategies, I scrutinize the financials, and they write back. Of course I only own a small percentage of these companies but aside from the desire to make a lot of money, it has been a great experience so far.
@LLJB: Thanks. Great comments. Like Ol Skeeter, I wasn't going to say any more either.
However, with reference to your new car analogy, I think that's one reason Scott's threads may appear to some to focus only on the funds that were recently bought. (the "unlimited bankroll" comment comes to mind). When you buy a new car, that's what you're prone to think about and talk about to others. The old one you traded in is "history" and you're inclined not to mention it unless somebody asks about it. Human nature. ..... Plus, a lot of folks have built up some pretty large cash positions in recent years as stocks have soared.
@hank: True enough, and the threads about what you're buying/selling/considering tend to illustrate that trend as well. I like those discussions and I would like ones that focused on what's your favorite investment right now, regardless of whether its new or held for years. It would just be an alternative way of discussing ideas and how people are thinking. I would read and contribute to both types of discussions and might even start them at some point. I know some people have opinions about what might or might not be valuable in these discussions and I have my opinions as well. I just wouldn't want to stop anyone from posting whatever they find valuable or want to discuss, and I'd rather place the burden on myself to just not participate in the topics that don't interest me.
Comments
One of my regrets in my investing career is that I spent too much time (and money) trying to uncover star fund managers and time the market. Moving more and more into ETF indexing, particularly in the domestic, REIT and emerging market areas. Bonds are still actively managed with many of the managers mentioned here (PIMCO, Gundlach, Fuss, Gaffney). International holdings are about 50/50 index ETFs/actively managed.
Have a small percentage allocated to commodities...probably spent too much time listening to those that Paul Krugman of the NYT would call "inflation scolds". Have some PAUDX, but think Arnott is a better academic than investment manager. Use Target Date funds...relatively easy to pick out the better long term performers there. Have an allocation to alternatives, which I call my fun money.
Would like to find some "defensive" mutual funds, but not convinced there is such a thing. Yacktman funds come to mind. Yes, he did do well in the 2007-2009 downturn, but does that mean he will do well in the next downturn? Has done just average in the last 5 years.
Ten years ago I would have laughed if someone said I couldn't uncover managers who would "beat the market" and do better than average. Now, I'm not so sure.
I appreciate your comments.
By the way, I did not take your comments as being critical. Please get some thick skin and continue to express your thinking. Nothing wrong in doing that. I just wanted to know if those asking questions of me had a game plan or were they just floundering. When you stated it was not your style of investing ... I got to thinking and thought I'd ask about your style.
Nothing more ... Nothing less.
Old_Skeet
I guess hank missed the nail with the hammer on this one.
I enjoyed your thread >>> What are you buying, selling or pondering? >>> which I enjoyed reading and finding out what others were doing and thinking. It is probally the best all time thread here at MFO. I sincerely hope you will continue opening the thread from time-to-time.
And, I did not mean to high jack Junkster thread ... So this will be my last comment that I make under it. But, I felt it in good tast to answer those that made comments or ask questions of me.
Another time,
Old_Skeet
Regards- OJ
I like those threads; it's good to read what other people are doing, and it's a prod to think objectively about recent and near-term decisions.
Cheers, AJ
It's not a contest
In your terms I have 4 sleeves: stocks, mutual funds, futures and private equity.
For stocks, I follow the Sound Advice newsletter and I invest based on M* screens I created focused mostly on wide or narrow moats and low price/fair value. I won't buy a stock unless its 5* and I don't hold most stocks above 90% of fair value. Both are value oriented approaches and following the newsletter is highly mechanical, although I exercise some discretion in an attempt to improve on his returns.
For mutual funds, which is the largest portion of my portfolio, I take a top down view and together with stocks I want my M* X-ray to achieve certain objectives based on the global market capitalization. Right now those objectives are significantly overweight frontier markets and small/mid-caps, overweight healthcare and emerging markets, equal weight US and significantly underweight developed international markets and large-cap stocks. At this point I have no fixed income investments as I'm far more concerned about eventually rising interest rates than I am about geo-political risks or a global slowdown. In picking funds, I'm looking for managers with outstanding records (sometimes with different funds or companies) and/or investment approaches that make very good sense to me. I have a preference for low AUM, focused portfolios, turnover that's not too high and reasonable expenses, but there are very few rules, just guidelines and preferences.
My targeted year-end collection of funds, from largest investment to smallest, includes POAGX, GPIOX, GPEOX, WAFMX, WAAEX, FSCRX, PRNHX, KGGAX, IWIRX, MEASX, OAKWX, PTSGX, OBIOX, MAPIX, DGS, GEGCX and PRHSX. I say targeted because I have a couple funds I'm rotating out of to build investments in some of these I've listed, specifically MEASX and IWIRX which I became aware of here on MFO and KGGAX which I read an article about on M*. I tend to start with smaller positions in new investments and build bigger positions as I get more comfortable with the manager, although Grandeur Peak was a big exception because of the hard closes. I tend to be a long-term investor but I will rotate when I find opportunities that better achieve my objectives. As an example, I'm funding part of my investment in MEASX by reducing GEGCX because I like the smaller-cap nature of the fund as well as greater frontier market exposure.
Futures are a very small portion of my portfolio and its my play money. Most of the time I make bets based on a combination of fundamental and technical aspects of whatever I trade. Right now I'm long Canadian $ and short Euro and keeping my eyes open for opportunities to short Yen and 30 Year Treasury Bonds.
Finally, I have a few investments in private equity that have become a much larger percentage of my portfolio than they should be but it shouldn't be too much longer before I find out whether my thought process was right or not.
Frankly - If you require "actionable advice" on where to invest your money, hire a fee-based financial planner. Get one with known credentials, excellent references, a proven track record, his or her name on a shingle out front and having a phone number you can call when you need help.
Sorry if I've mis-nailed this one.
---
*(FYI: I chopped a few rhetorical questions out of this post to keep it brief and to the point. Scott addressed some of those (and quoted from one) in his exceptionally clear and pointed response further down. Thanks Scott.)
This includes the well known names among the Wall St. crowd, Phd'd. economist folks and other related studies/theories; who/that continue to have bouts of "cranial-rectal inversion", regarding the world of investments.
Time to leave.....
The other thing that I think may be a little bit of an issue is, what are you (and I direct this to everyone) looking to get out of this forum? What do you expect it/want it to be? Maybe that's a discussion to have.
Personally, feel that when I make a decision to invest in something, I'm responsible for that decision. For me, nothing here is going to be an "actionable idea" in and of itself, ever - I may find someone's idea interesting and if I do, I'll do the research and then I'll make that decision. That should be for any investment idea from someone on the internet, whether here or on seekingalpha or a morningstar article or whereever - you have to do the research and decide whether or not that investment is something that is right for you and understand it yourself rather than go on what an article says.
To me the whole idea of the threads wasn't about actionable advice as much as it was some manner of "small talk", where people could just kind of throw out what they like. Rather than multiple threads of people talking about what they currently like/are looking at, there could be something of a chat (once every week or perhaps two) within the larger chat forum.
"Is there a reasonable time period for our ideas to pan-out? Or will we be held up to scorn if the investment doesn't make money next week?"
Well, then it becomes something else, where we're writing articles with detailed recommendations and specific time periods. This, combined with the fact that many of us are very different, different risk tolerance, different time horizons, etc. I buy with the intent of holding for possibly years. Others may trade by the day. I don't disagree with the various methods that people use on this board (I'm of the mindset that hey, if that's working for you, great) and, if anything, am fascinated by the diversity of ideas and approaches. What you're doing sounds very cool. I own a fair amount of private equity and I view it more as the desire to have continual exposure to that asset class with the understanding that it is volatile and does go through cycles. Despite the variable nature of the dividend from the private equity companies, I'm largely paid to wait with it.
I like the threads casual. Brainstorming, back and forth. Investing for many of us is solitary, so it's fun to see what others are doing or thinking. Often there are ideas worth researching, but I enjoy those threads (and perhaps this forum) mostly for the sense of community they give. Small talk (and good manners!) are part of what makes a community.
If on the other hand one is looking for free actionable investing advice on the Internet, well, that's pretty dangerous, even if the "advisor" does put up details about his or her investments.
The great exception to the above is David's monthly commentary, which is huge source of wisdom, but there too, of course, one should do additional research before investing.
1. Didn't mean to suggest that people should limit their comments to "actionable advice". That's simply what I'm looking for and is easier to distill than "I like this, or don't like that (without explanation)" comments. Again, just what I'm looking for.
2. I don't take anyone's advice, especially from an unknown source on the Internet, without determining if it's suitable for my situation first; and
3. haven't yet concluded that the advice rendered here is of less quality that than I would receive from a paid financial advisor.
I was not going to make continued comment ... about my investmet style.
What you wrote about your father was much in of the same as to how my father raised me. I believe they both were wise gentlemen. I lost my father about ten years ago but his teaching and lessons I learned form him about life still remain a big part of my life today. One of them was to learn from others but think on your own. I take great pride in being able to write this as you probally did about what you wrote.
Sincerely,
Old_Skeet
Most of us have read from Buffett or any number of other people that owning stock is like owning a small piece of that business. For me, however, owning a share of stock in a public company doesn't really make me feel like an owner of that business. In the case of these investments I totally feel like an owner. I write to the CEOs with questions about quarterly letters, I encourage or challenge strategies, I scrutinize the financials, and they write back. Of course I only own a small percentage of these companies but aside from the desire to make a lot of money, it has been a great experience so far.
However, with reference to your new car analogy, I think that's one reason Scott's threads may appear to some to focus only on the funds that were recently bought. (the "unlimited bankroll" comment comes to mind). When you buy a new car, that's what you're prone to think about and talk about to others. The old one you traded in is "history" and you're inclined not to mention it unless somebody asks about it. Human nature. ..... Plus, a lot of folks have built up some pretty large cash positions in recent years as stocks have soared.