Hi Guys,
While 2016 was not a banner year it did allow most investors to increase their portfolio value. And women once again outdistanced men in that task. How do I know? Here's a Link to a quick report that accessed individual's portfolios as its data source.
http://money.cnn.com/2016/12/30/investing/stock-market-2016-women-beat-men/index.htmlThat's the good news. But all is not sweetness and light. Certainly not; here is a Link to a 2017 market forecast by a group of economists that project a devastating dive:
http://thesovereigninvestor.com/exclusives/80-stock-market-crash-to-strike-in-2016/The somewhat good news here is that the forecast was made by a bevy of economists, and everyone knows their poor score at the forecasting business. Wow! An 80% downfall is a gutsy and dire projection. Is it possible? I suppose so, but highly unlikely from an historic perspective.
Why does an economist risk his reputation with such a forecast that challenges the more normal returns? Is it technical or emotional? I suspect it just might.be a play for fame. If he's right he claims immediate prescience fame; if he's wrong, his outlandish forecast will be quickly forgotten. The rewards are asymmetric in payoffs and encourage outside-the-normal forecasts.
The weakness in my argument is that this group of economists are really very famous already. They don't need more attention, although a subset of them are pessimistic by nature.
Do I believe this dire forecast, and will respond accordingly? Absolutely not. I only referenced it to be fair and balanced in my post. You folks get to choose for yourself. I will greatly appreciate any and all comments regarding your .2017 forecasts.
Will I act on any one forecast? Absolutely not? Your individual guesstimate is no better and probably less so than any economist. But a group assessment is likely superior to most individual estimates. Averaging the projections just might be a worthwhile and profitable task.
The sad part of this specific averaging process is that it also applies to the band of reported negative economists also. I guess uncertainty in investing is a constant and never easy in terms of decision making.
Best Regards.
Comments
Let's see ...
Most likely human (male or female)
Probably has a pulse with a body temp over 95 F
Probably possess some wealth (amount unknown)
Probably can read and write and/or operate an internet connected device
Probably assumed more investment risk during 2016 than bank CDs would afford
Got it.
Enjoyed the vivid colorful language in MJG's linked Dire forecast. Edgar Allen Poe would approve. And I hope somebody re-links the article at Halloween. (However, for sheer terror, it pales in comparison to Jonathan Edwards' Sinners in the Hands of an Angry God.) I do enjoy listening to some of the market gurus cited when they appear on Bloomberg TV or CNBC-West. Faber's a riot, IMHO, and makes a certain amount of sense - though he's been wrong more than he's been right over the past decade or longer.
Personally, I added a tad more cash to my already decent cash position as the end of the year approached. And, importantly, shifted all the money intended for distribution (into the 2017 budget) to cash at/around the market highs reached in recent weeks. You can only do so much.
Everybody needs to plot their own (investment) course and adhere to it. The important things don't change. Assume a risk profile/allocation model suitable to your situation. Be patient. Use low cost funds or ETFs. Diversify. Did I say diversify?
I've not yet discovered whether the proper wave will arrive while I'm alive to take an investment action.
As the linked article is equity centric (99% are, yes?), I suppose our house will remain safe with some form of sovereign government bond........or not?
Be safe this New Year's evening.
Regards,
Catch
LOL. You forgot two:
1) "Average investor" also: probably buys high, sells low, and while they may read on their internet device they don't do serious due diligence before taking action in the markets.
2) "Average investor" = someone with some money in the markets who is ripe for 'expert' advice from 'broke-ers' and mass market newsletters advertising on late-night TV / website overlays.
Indeed the average investor tends to buy high and sell low. The accumulated performance data supports that observation.
It seems to be a double-barreled negative finding that has been consistent over an extended timeframe. Mutual Fund managers on average fail to meet their Index benchmark, and also individual investors fail to match the returns that the Mutual Funds that they invest in register. It's a persistent double whammy.
We don't learn money making market rules very well. Our patience is limited, we often overreact, and we suffer herding instincts. It seems we're only comfortable when blindly following what the majority are doing.
Adam Smith's book "the Money Game" is an industry acknowledged classic. It was written in the late 1960s and updated in the 1970s. It is still relevant. I read it two decades ago, and am currently rereading it.
Although I'm not yet deeply into this classic, it appears that the author (believed to be George J.W. Goodman) has a low regard for both fund managers and individual investors, especially females. He characterizes these groups to be far too emotional which has no place in profitable investment decision making.
Although he believes fund managers are dedicated with an impressive IQ substantially higher than the 100 standard level, emotions negatively subtract from his investment decisions. He thinks even less of us far too emotional private investors.
Perhaps my current interpretations of the author's observations will change as I complete my rereading. Regardless, I do recommend that you get a copy of this excellent book. It just might impact your investing philosophy and decision making.
Best Wishes.
To be fair, I don't invest much with mutual funds anymore mostly because I suck at selecting them or at least formulating a strategy around their selection despite all that Roy and David have tried to teach me. At this point I hold 6 funds which are on autopilot and I hardly ever look at them. I do use CEF's though so when the board discusses a mutual fund or fund category of interest I'll often look for a similar offering in the CEF pile.
What I do invest in mainly is a dividend growth strategy based portfolio containing 20-25 stocks. For a great example of what this entails see here: http://seekingalpha.com/article/4033646-dividend-growth-portfolio-2016-review-2017-preview?uprof=46&isDirectRoadblock=false
No this is not me or my exact portfolio but the idea, returns and many of the holdings are the same. I am overweight Reit's & Energy but not underwater on any of those positions. I'm looking to spread some of that into Tech and Industrial holdings if I can find the right positions. Healthcare related things were my biggest detractors to better results last year. Damn you Gilead, pull it out already!
My most valuable lesson learned was that the less I fiddled with things, the better I did. Honestly I don't trade this portfolio much unless a dividend gets cut (KMI got me) or I can swap a good one for a better one.
Along a similar vein I have shifted my large cap holdings to individual dividend paying equities. But I have kept my small call and international mutual funds.
Best,
BY
http://funds.us.reuters.com/US/funds/overview.asp?symbol=HSGFX.O
Sad for those who've lost money. There have to be a lot of lessons to be gleaned from a once popular manager (way back in FA days). I'd say first - It's hard to time markets, and second, playing defense perpetually doesn't work. Am sure there's many more.
I agree that forecasting is folly and the trend is your friend. Trivial sayings but true nevertheless.
As J. Paul Getty said: "Bank on the trends and don't worry about the tremors". Getty is not a bad choice when accepting financial advice.
But it's not clear when a trend becomes a broken trend that demands some action. There are plenty of sources offering advice in that arena. Here is one such source:
http://www.investopedia.com/articles/active-trading/041814/four-most-commonlyused-indicators-trend-trading.asp
This is just one of many Links that summarize a host of candidate trading signals. I post it only as an example. I don't subscribe to any of them. I am basically a buy and hold investor, and typically make only 2 or 3 trades each year. These days they are coupled to my required mandatory withdrawals that are age related.
Again quoting Getty: "The big profits go to the intelligent, careful, and patient investor, not to the reckless and over eager speculator". I at least qualify as a patient investor. I'm not so sure about the other qualifiers.
Mark Twain wisely added this bit of wisdom: " There are two times in a man's life when he should not speculate: when he can't afford to and he can". But speculators help to make a market. More power to them.
And more power to you regardless of your investing philosophy. Thanks for your input.
Best Wishes.
>> Stay with a trend until shows otherwise.
k; let us know when.