Mutual Funds - General Discussion
- azxcvbnm
- Normxxx
- bob90245
- Normxxx
- Normxxx
- Normxxx
- bob90245
- Normxxx
- mitelo
- Normxxx
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» azxcvbnm - Re: Re: Re: Vanguard International Explorer Fund
In response to Re: Re: Vanguard International Explorer Fund posted by Normxxx:Normxxx, I wasn't aware that the US defaulted on any of its bonds. The mantra of the government is that the US has NEVER defaulted on its obligations.
As for active management, I believe there is a case, but only for emerging markets due to the lack of a good index that captures all, or nearly all of the market cap of emerging markets. As more mutual fund assets go abroad, it will become impossible to pick consistant winners ahead of time (just like in the US market). You should remember that managers have had a terrible record timing ups and downs (holding cash at the bottom and almost 100% invested at tops) and I don't see why they'd do any better internationally. Their gains have been due to stock selection and country selection. By avoiding Japan, which at one point took nearly 60% of the EAFE, they've been able to do decently, but I don't think this can continue. The low expense ratios and turnover give index funds too much of an advantage. With even bulls conceding that the future decade will only bring in gains of 6% real at most, a 1% advantage in costs is huge.
-- posted by azxcvbnm
» Normxxx - Re: Re: Re: Re: Vanguard International Explorer Fund
In response to Re: Re: Re: Vanguard International Explorer Fund posted by azxcvbnm:Normxxx, I wasn't aware that the US defaulted on any of its bonds. The mantra of the government is that the US has NEVER defaulted on its obligations.
Don't know what you are referring to here. The U.S. has never tecnically defaulted on any bonds. But prior to 1971, we devalued the currency at least a couple of times, and never made bond holders whole, so those were partial defaults.
And, if you are a German, you have seen the value of your U.S. Treasury bond drop in Euros by some 40% in the last 4 years, which may never be made up.
As more mutual fund assets go abroad, it will become impossible to pick consistant winners ahead of time (just like in the US market).
You don't have to wait; hedge funds have already ruined the Emerging Markets!
However, you will be able to beat out 6% in the coming decade, but not by passively buying and holding. I know it contradicts the Efficient Market Hypothesis, but you can beat the averages if you are willing to work at it. As in any profession, good knowledge, good skills, and a lot of effort will beat the competition. You don't have to be a true professional (most of them lack the patience and foresight to be above average); you just have to be a good, smart amateur.
The key is to have patience and not go for the fast buck. Buy what everyone else is selling (with a little judicious selection) and sell what everyone else is buying!
-- posted by Normxxx
» bob90245 - Re: Value Investing
In response to Re: Re: Re: Re: Vanguard International Explorer Fund posted by Normxxx:Buy what everyone else is selling (with a little judicious selection) and sell what everyone else is buying!
Sounds like value investing. And as we've discussed, "value" has beaten "growth" over the long term. But it's not necessarily true over the short term.
<img src=http://www.geocities.com/bob90245/Growth...>
Read more here.
-- posted by bob90245
» Normxxx - A View of the Next Decade or So
A View of the Next Decade or So:
Curse of the Trading Range 2 full text
by Adam Hamilton | January 21, 2005
Epic 17-year trading ranges are the bane of stock investors' existence, and unfortunately today's markets look like we are 5 years into another one.
Due to the stock markets’ largely poor performance in 2004, the idea of a trading range has come back into vogue. Whenever Wall Street temporarily loses faith in its usual all-bullish-all-the-time mantra, it tends to revert back to drumming up trading-range expectations among its clients. Trading ranges can be quite advantageous from a financial-industry perspective. When the markets are meandering in a trading range, both stock picking and timing become crucial skills. Big profits can only be won if the right stocks are traded at the right time.
Trading ranges probably reward hard-won market expertise more than any other type of trending market. Trading ranges negate the relative ease of trading secular bull markets. In a normal bull, the rising tide lifts virtually all boats. Just as in 1999, all one has to do is buy a stock, almost any stock, at almost any time and it is likely to blossom into a profitable trade along with the markets. This is why the famous dartboard stock-picking studies work so well during long-term bulls. But the value of pure luck fades considerably in a trading range.
*************************
If you graph these Long Valuation Waves, they look like parabolas. Our first chart updated from my original essay shows the last two-thirds of the twentieth century cut into individual thirds and superimposed over the top of each other. Each third shows an entire valuation wave from peak to trough to peak.
Other than the order-of-magnitude-different Dow 30 scales, the similarities between the two ascent arcs in the up-phases of the last two Long Valuation Waves are remarkable. While the X-axis only lists the years for our latest valuation wave from the late 1960s to 2000, the annual hash marks also correspond to the previous valuation wave from the 1930s to the late 1960s. Both vertical axes are zeroed so the respective percentage gains are perfectly comparable without visual distortion.
Thus normal trading ranges can be good news for the financial industry, as the premium placed on market expertise grows considerably when one can’t just rely on luck and buy any random stock and expect a win. But what happens when the trading range becomes far larger and ominous than most investors can even imagine?
<img src="http://www.zealllc.com/c2005/Zeal012105A...">
I think you'll find that 1901 - 1933 followed pretty much the same parabola. Beyond that, the records are too imperfect to evaluate.
More. . .
The content of this letter/report does not necessarily reflect the opinions or viewpoint of normxxx. They are provided for informational/educational purposes only.
The content of this message is not to be construed as constituting market or investment advice. It is intended for educational purposes only. Individuals should consult with their own advisors for specific investment advice.
-- posted by Normxxx
» Normxxx - Re: Re: Value Investing
In response to Re: Value Investing posted by bob90245:I really like your charts!
But it is usually a lot harder to pick a good growth stock index at the "proper" time. (As for individual stocks-- rationality has very little to do with why Taser and Google are sitting on the multiples they have!)
-- posted by Normxxx
» bob90245 - Re: Emerging Markets
In response to Re: Re: MACSX posted by Normxxx:If there's an advantage to EM, it appears that bottoms are easier to call (judging by the recent examples of Far East EM and India). With developed markets, bottoms could take 2 years as the recent Mar00 - Oct02 slide showed.
-- posted by bob90245
» Normxxx - Re: Re: Value Investing
In response to Re: Value Investing posted by bob90245:Ah, but it's a little more subtle than that! For example, see the article I posted on my thread
http://www.suite101.com/discussion.cfm/i...
Right now, it looks like everyone and his or her grandmother are onto small cap value stocks! So that's what everyone will be buying. Keep an eye out for large cap value or growth (or both)-- I suspect they may come into their own on the next big up move. Also, we have hit a plateau in the commodities-- which should resolve as soon as we know if we are going to have fire (inflation) or ice (deflation)-- or both! For the moment, bet on fire, but stay loose-- it can go either or both ways.
-- posted by Normxxx
» mitelo - Re: Value Investing
In response to Re: Re: Value Investing posted by Normxxx:"- it can go either or both ways."
Astute.
-- posted by mitelo
» Normxxx - Re: Re: Value Investing
In response to Re: Value Investing posted by mitelo:The mantra is: All things that Chindia import (e.g., oil, raw materials), inflate. All things that Chindia export (e.g., labor, manufactured goods), deflate.
If we have a world recession, we deflate; if we have a major financial/currency crisis, we inflate.
Get Used To It!
The days of easy market profits and a reliable economy are over for a bit.
-- posted by Normxxx
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