Clippings
Irrational exuberance is on full display in some of the developing economies' stock markets that I've been ducking in and out of lately. India's Sensexhas breeched the record 12,000 mark. The index mimicking CEF India Fund is up more than 14% in a week. I took a 1% gain overnight, thinking that was a handy bit of change; at mid day it's up nearly 5%. And that's on a day that the underlying Sensex index is down. Similarly,EWZ, sampling the Bovespa index is sharply up today, even though the underlying index was down yesterday and the market is closed today.
"Every decent man is ashamed of the government he lives under." H.L.Mencken
The Independent (UK)
History doesn't always repeat itself
By Jonathan Davis
Published: 22 April 2006
"One market observer who has been following the business for more than half a century is the New York commentator Peter Bernstein. In his latest circular to clients, he offers a long-term perspective on the current valuations of shares and bonds.
He points out that the way investors regard these two asset classes has been undergoing a profound and important change over the past few years - though not all the implications, he thinks, have yet been fully thought through."
History doesn't always repeat itself
By Jonathan Davis
Published: 22 April 2006
"One market observer who has been following the business for more than half a century is the New York commentator Peter Bernstein. In his latest circular to clients, he offers a long-term perspective on the current valuations of shares and bonds.
He points out that the way investors regard these two asset classes has been undergoing a profound and important change over the past few years - though not all the implications, he thinks, have yet been fully thought through."
If you take a look at Peter Bernstein's website you'll see a link for "good reads" which may be of interest.
Hanging onto Harvard's $25.9 billion stash
By Andy Serwer, FORTUNE senior editor at large
April 20, 2006: 9:47 AM EDT
Emerging-markets whiz Mohamed El-Erian takes over the world's biggest endowment fund -- can he match the performance of near-legendary, now-ousted Jack Meyer?
By Andy Serwer, FORTUNE senior editor at large
April 20, 2006: 9:47 AM EDT
Emerging-markets whiz Mohamed El-Erian takes over the world's biggest endowment fund -- can he match the performance of near-legendary, now-ousted Jack Meyer?
Investors need to take look at their asset mix
DON MACDONALD, The Gazette
Published: Monday, April 24, 2006
DON MACDONALD, The Gazette
Published: Monday, April 24, 2006
We're just entering the silly time
Norman Levine, Financial Post
Published: Monday, April 24, 2006
"You can't be right unless you are wrong first. You have to feel dumb before you are shown to be smart."
Norman Levine, Financial Post
Published: Monday, April 24, 2006
"You can't be right unless you are wrong first. You have to feel dumb before you are shown to be smart."
Taggart wrote:We're just entering the silly time
Norman Levine, Financial Post
Published: Monday, April 24, 2006
"You can't be right unless you are wrong first. You have to feel dumb before you are shown to be smart."
Someone agrees with me, GB.With energy stocks representing 30% of the value of the S&P/TSX composite index and materials comprising an additional 15%, we find it highly imprudent to have such a large concentration in cyclical commodity stocks. Leave that to the speculators and gamblers.
A real sorry bit of crap by Jim Stanford. I don't have access to a complete version of this because at the G&M you apparently have to pay extra to read garbage.
http://tinyurl.com/hj266
He equates the completely legitimate strategy of conversion to an income trust as the same as you and I changing our name to get off the tax rolls. The premise is dumb and there are several dumb points. He doesn’t factor in taxes paid by shareholders to arrive at a net tax loss. He only talks about how much taxes corporations save (sorry, “avoid”). He say’s it’s legal but immoral (?!) and a scandalous practice.
http://tinyurl.com/hj266
He equates the completely legitimate strategy of conversion to an income trust as the same as you and I changing our name to get off the tax rolls. The premise is dumb and there are several dumb points. He doesn’t factor in taxes paid by shareholders to arrive at a net tax loss. He only talks about how much taxes corporations save (sorry, “avoid”). He say’s it’s legal but immoral (?!) and a scandalous practice.
- Bylo Selhi
- Veteran Contributor
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- Joined: 16 Feb 2005 10:36
- Location: Waterloo, ON
- Contact:
Via Google Nooz: What's in a name change? A heck of a lot of moneysmelly wrote:A real sorry bit of crap by Jim Stanford. I don't have access to a complete version of this because at the G&M you apparently have to pay extra to read garbage.
(Click on the first hit. Evidently the Grope 'n Flail checks the referrer URL to deny access to 90%ers )
Sedulously eschew obfuscatory hyperverbosity and prolixity.
Eurovision's principal player says he wants a fresh start
Denies charges 'I've never taken money or stolen'
DON MacDONALD, The Gazette
Published: Tuesday, April 25, 2006
The alleged mastermind of an offshore investment scheme that cost Montreal-area investors more than $15 million says he's broke and trying to start his life over as a Florida real-estate agent.
Armando Ferrucci, former president of bankrupt Eurovision Financial Services Ltd., denied any wrongdoing in the 2003 collapse of his Anguilla-registered company.
That collapse left scores of small investors, mostly in Montreal's Italian-Canadian community, holding heavy losses in unregistered offshore investments carrying extravagant interest rates.
Denies charges 'I've never taken money or stolen'
DON MacDONALD, The Gazette
Published: Tuesday, April 25, 2006
The alleged mastermind of an offshore investment scheme that cost Montreal-area investors more than $15 million says he's broke and trying to start his life over as a Florida real-estate agent.
Armando Ferrucci, former president of bankrupt Eurovision Financial Services Ltd., denied any wrongdoing in the 2003 collapse of his Anguilla-registered company.
That collapse left scores of small investors, mostly in Montreal's Italian-Canadian community, holding heavy losses in unregistered offshore investments carrying extravagant interest rates.
The Irish Question
Terence Corcoran, Financial Post
Published: Tuesday, April 25, 2006
"A few contrasts were obvious. The Canadian economy "remains solid," said Mr. Flaherty, with growth this year up 2.9%. Ireland, he said, "continues to prosper" with real GDP growth of 4.7%. Canadian federal debt is down to 39% of GDP. Ireland's debt is down to 28% of GDP."
"Fortunately for Mr. Flaherty he didn't have to deliver more news on Irish economic output. According to the latest IMF numbers, Ireland's GDP per capita is now up over US$40,000, compared with $34,273 for Canada. As recently as 2000, Canada was still ahead."
"The Irish Question is this: What economic policies created the conditions that propelled Ireland, recently a backwater economy in which the Irish were half as productive as Canadians, into the fourth-most-productive nation on Earth, behind only Luxembourg, Norway and the United States. Canada is seventh, according to the latest IMF report."
Terence Corcoran, Financial Post
Published: Tuesday, April 25, 2006
"A few contrasts were obvious. The Canadian economy "remains solid," said Mr. Flaherty, with growth this year up 2.9%. Ireland, he said, "continues to prosper" with real GDP growth of 4.7%. Canadian federal debt is down to 39% of GDP. Ireland's debt is down to 28% of GDP."
"Fortunately for Mr. Flaherty he didn't have to deliver more news on Irish economic output. According to the latest IMF numbers, Ireland's GDP per capita is now up over US$40,000, compared with $34,273 for Canada. As recently as 2000, Canada was still ahead."
"The Irish Question is this: What economic policies created the conditions that propelled Ireland, recently a backwater economy in which the Irish were half as productive as Canadians, into the fourth-most-productive nation on Earth, behind only Luxembourg, Norway and the United States. Canada is seventh, according to the latest IMF report."
The Sunday Times
April 23, 2006
‘The secret of investing is to keep your cool’
Mark Shipman, who made a fortune in the City, tells William Kay that success as a stockpicker is down to self-control
“Before attempting to control your own investments,” he says, “make sure you’re mentally prepared for the task. Keeping the psychological side of investing under control is going to be the key to a long and successful investment career.”
his wider message is that you have to get the mind game right before you can know what you are doing. If not, you are liable to fall into the common trap of continually chasing the latest fashion, jumping in and out of investments without any rational plan or system.
“By using this unusual and highly questionable form of analysis in the fashion he was, my friend had simply found another way of imposing one of the most important rules of investing: run your profits and cut your losses. It had very little to do with Jupiter or Saturn. It was his discipline that was making him money.”
He warns that there is no such thing as a steady return and, if you want to make money, you had better get used to losing.
“It happens to us all,” he says, “and don’t let anyone tell you differently.”
In his view, the correct temperament for successful investors demands they see things as they are and can evaluate everything with cold, unemotional logic. There is no room for impulsiveness, fads or fancies, for elation when things go right or depression when they don’t.
“You have no time for chopping or changing your investment approach, but must proceed in a disciplined and methodical manner. You must remain focused and ignore advice to the contrary. You must learn to evaluate everything completely, devoid of sentiment, and maintain confidence in the ability of the investment strategy you have chosen.”
This begs the question of which investment strategy to choose. But that is Shipman’s point: which strategy is less important than the fact that you have settled on any strategy at all, as long as it makes sense. If in doubt, you can always test your magic formula against the 1,001 books expounding different approaches. Or you can do it the hard way and see whether you make money or not.
“You will often find that the only difference in performance between two virtually identical investors holding the same views will be down to how they control themselves mentally during the ups and downs of the market. The best way to ensure you can cope with the psychological pressure is to have a plan and stick to it. Don’t attempt to be the best, just the most balanced and disciplined.”
“Don’t look at your portfolio every day: if you are going to be a passive investor, then behave passively. And only invest what you can afford to leave untouched for a long time. Then you can ride out the ups and downs.”
April 23, 2006
‘The secret of investing is to keep your cool’
Mark Shipman, who made a fortune in the City, tells William Kay that success as a stockpicker is down to self-control
“Before attempting to control your own investments,” he says, “make sure you’re mentally prepared for the task. Keeping the psychological side of investing under control is going to be the key to a long and successful investment career.”
his wider message is that you have to get the mind game right before you can know what you are doing. If not, you are liable to fall into the common trap of continually chasing the latest fashion, jumping in and out of investments without any rational plan or system.
“By using this unusual and highly questionable form of analysis in the fashion he was, my friend had simply found another way of imposing one of the most important rules of investing: run your profits and cut your losses. It had very little to do with Jupiter or Saturn. It was his discipline that was making him money.”
He warns that there is no such thing as a steady return and, if you want to make money, you had better get used to losing.
“It happens to us all,” he says, “and don’t let anyone tell you differently.”
In his view, the correct temperament for successful investors demands they see things as they are and can evaluate everything with cold, unemotional logic. There is no room for impulsiveness, fads or fancies, for elation when things go right or depression when they don’t.
“You have no time for chopping or changing your investment approach, but must proceed in a disciplined and methodical manner. You must remain focused and ignore advice to the contrary. You must learn to evaluate everything completely, devoid of sentiment, and maintain confidence in the ability of the investment strategy you have chosen.”
This begs the question of which investment strategy to choose. But that is Shipman’s point: which strategy is less important than the fact that you have settled on any strategy at all, as long as it makes sense. If in doubt, you can always test your magic formula against the 1,001 books expounding different approaches. Or you can do it the hard way and see whether you make money or not.
“You will often find that the only difference in performance between two virtually identical investors holding the same views will be down to how they control themselves mentally during the ups and downs of the market. The best way to ensure you can cope with the psychological pressure is to have a plan and stick to it. Don’t attempt to be the best, just the most balanced and disciplined.”
“Don’t look at your portfolio every day: if you are going to be a passive investor, then behave passively. And only invest what you can afford to leave untouched for a long time. Then you can ride out the ups and downs.”
- Bylo Selhi
- Veteran Contributor
- Posts: 29494
- Joined: 16 Feb 2005 10:36
- Location: Waterloo, ON
- Contact:
From The Last of the Originals
Confucius wrote:the superior man understands what is right; the inferior man understands what will sell.
Sedulously eschew obfuscatory hyperverbosity and prolixity.
Why Industry Growth is Wildly Overrated
by Jeremy Siegel Ph.D.
Thursday, May 4, 2006
One of the most frequent questions investors ask is, "What is the next fast-growing industry or sector in the economy?" But this question is misguided.
My research has shown that knowing the answer is of surprisingly little value to the longer term investor. Over long periods, many sectors that have expanded greatly have often offered mediocre returns while some sectors that shrunk have rewarded investors with above-average returns.
by Jeremy Siegel Ph.D.
Thursday, May 4, 2006
One of the most frequent questions investors ask is, "What is the next fast-growing industry or sector in the economy?" But this question is misguided.
My research has shown that knowing the answer is of surprisingly little value to the longer term investor. Over long periods, many sectors that have expanded greatly have often offered mediocre returns while some sectors that shrunk have rewarded investors with above-average returns.
Consuelo Mack WealthTrack - Original Air Date: April 28, 2006
CONSUELO MACK: This week on WealthTrack How do you build your investments in an era of low market returns and high uncertainty??? Buy boring old, dividend-paying stocks says Wharton whiz, Jeremy Siegel….. Protect your purchasing power by buying commodities and inflation-indexed bonds, says PIMCO’s high performance money manager John Brynjolfsson. Want to learn more? Stay tuned…Consuelo Mack WealthTrack is next!
Link
CONSUELO MACK: This week on WealthTrack How do you build your investments in an era of low market returns and high uncertainty??? Buy boring old, dividend-paying stocks says Wharton whiz, Jeremy Siegel….. Protect your purchasing power by buying commodities and inflation-indexed bonds, says PIMCO’s high performance money manager John Brynjolfsson. Want to learn more? Stay tuned…Consuelo Mack WealthTrack is next!
Link
Twenty Tips for No-Nonsense Investing - JONATHAN CLEMENTS
1) You don't have any friends on Wall Street. You may want to make money. But so does the Street. And the more the Street makes, the less investors pocket.
2) Your neighbors are delusional. They spend too much, they own investments they don't understand and their overall portfolio isn't faring nearly as well as the one or two stocks they boast about.
3) Most stock mutual funds are laggards and it's hard to find the winners. Sure, there are funds with great 10-year records. But you can't buy their past performance. Instead, what you get is the future -- and often that isn't nearly so dazzling.
4) There are no "magic" investments. Yes, investments enjoy brief surges of popularity and, for a few months or even years, they can seem like a sure thing. Think technology stocks in early 2000, hedge funds in 2003 and real-estate and energy stocks in 2005. But the magic never lasts. See a crowd gathering? Grab your cash and start running in the opposite direction.
5) You can control risk and investment costs, but you can't control returns. So why do investors spend so little time on risk and costs and so much time on returns? Beats me.
6) There's no substitute for saving money. Next time you crack open your wallet, think on this: The dollars you spend today are delaying your retirement.
7) Sophistication is usually an excuse for Wall Street to charge fat fees. If you don't understand an investment, don't buy it. Most folks can do just fine with a handful of plain-vanilla mutual funds, preferably market-tracking index funds.
8) Rich people often have more dollars than sense. Hedge funds? Venture-capital investments? Make no mistake: You have to be truly wealthy to afford the potential losses involved.
9) Your portfolio's growth is driven, more than anything, by how much you save and by how you divide your money between stocks and conservative investments. Your savings rate depends on your ability to delay gratification, while your stock allocation depends on your risk tolerance. So what exactly is your investment adviser doing for your portfolio? Good question.
10) If an investment is exciting, it probably won't be especially profitable. Investors love to buy hot growth companies, trade mutual funds and take a flier on initial public stock offerings. Before you join the fun, however, consider how much you might lose -- and how many paychecks it will take to recoup the money lost.
11) There is nothing like the prospect of a fat payday to skew advice, so be leery of all investment recommendations from commission salesmen. That brings me to a pet peeve. Investment advisers will often claim that most folks aren't smart enough to invest on their own, so they need an adviser's help. And yet, in the next breath, they will defend high-commission products like variable annuities, mutual-fund B shares and equity-indexed annuities, saying they only sell this stuff because that's what customers want.
12) Land appreciates, houses deteriorate. Like your car, your home sits out in the rain. You know your car is depreciating. Why should your home be any different? Keep that in mind next time your neighbors tout the investment value of their new kitchen.
13) Sound investment strategies don't change with the news. By all means, read the personal-finance magazine's 2006 market prediction and listen to the television reporter's breathless dispatch from the floor of the New York Stock Exchange. But for goodness sake, don't act on this nonsense.
14) Your worst investment enemy is often found in the mirror. Even if you don't get tripped up by Wall Street shenanigans or your brother-in-law's foolish advice, you could still end up with wretched returns if you chase hot investments or panic when the market declines.
15) Tax deductions are money losers. True, if you are in the 25% federal income-tax bracket and you incur $1,000 of mortgage interest, you will save $250 in taxes. But the other $750 is coming out of your pocket.
16) Leverage bites when you get it wrong. Most people wouldn't dream of borrowing money to buy stocks. Yet, it's considered prudent to borrow 90% of a home's purchase price. Most of the time, your leveraged real-estate bet will work out just fine. But cross your fingers, and hope you don't suddenly have to sell just as real-estate prices are sinking.
17) If financial forecasters are unanimous that stocks, or bonds, or the dollar are about to plummet, they almost certainly won't. The reason: Presumably, these soothsayers and their clients have already acted on their prediction -- and thus it's already reflected in current market prices.
18) Insurance is a necessary evil. When you buy insurance, you are paying somebody else to take on risk that you can't afford to bear. That can be a smart move. It will also cost you, however, so you shouldn't buy more insurance than you really need.
19) You can't get rich by spending money. The folks with the big house, fancy cars and designer clothes are, no doubt, loaded. But they may be loaded with debt.
20) Investment experts who promise market-beating returns deserve our profound skepticism. After all, if they are so wise, why are they still working for a living? And if their investment ideas are likely to be so profitable, why are they sharing them with us?
The Independent (UK)
Follow the crowd and pay the price
By Jonathan Davis
Published: 06 May 2006
It has been said here more than once that investors in funds should avoid putting their money where the bulk of other investors are directing their cash. This is an outwardly surprising statement, because it flies in the face of apparent common sense, but it has been borne out time and again. Even those who acknowledge the validity of the idea often find it hard to put into practice, as it requires a certain temperament that not everyone enjoys.
Follow the crowd and pay the price
By Jonathan Davis
Published: 06 May 2006
It has been said here more than once that investors in funds should avoid putting their money where the bulk of other investors are directing their cash. This is an outwardly surprising statement, because it flies in the face of apparent common sense, but it has been borne out time and again. Even those who acknowledge the validity of the idea often find it hard to put into practice, as it requires a certain temperament that not everyone enjoys.
- Norbert Schlenker
- Veteran Contributor
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The Dash to Trash by James Montier, Director of Global Strategy at Dresdner Kleinwort Watterstein
Investors seem to be displaying signs of pure fearlessness. Perhaps they see themselves as high-wire walkers, bravely showing their skill to the breath-holding crowd. To us they look more like Wile E. Coyote, running in thin air before looking down and realizing they have nothing to support them, and succumbing to the inevitable gravity check.
Our fear and greed index continues to remain at extreme risk-loving levels. This suggests that it is an obsession with return without any regard for risk, that best characterizes investors' behavior at the current juncture.
The Economist
Baby boom and bust
May 11th 2006
Will share prices crash as baby-boomers sell their assets to pay for retirement?
Baby boom and bust
May 11th 2006
Will share prices crash as baby-boomers sell their assets to pay for retirement?
Legg Mason's Mauboussin Likens Fund Managers to Zebras, Guppies
By James Pressley
May 11 (Bloomberg) -- To hear Michael Mauboussin tell it, fund managers often behave like frightened zebras, fickle guppies and lost army ants.
These are curious comparisons for a guy who works with Legg Mason Inc.'s Bill Miller, whose Value Trust fund has bested the Standard & Poor's 500 Index for 15 years in a row.
By James Pressley
May 11 (Bloomberg) -- To hear Michael Mauboussin tell it, fund managers often behave like frightened zebras, fickle guppies and lost army ants.
These are curious comparisons for a guy who works with Legg Mason Inc.'s Bill Miller, whose Value Trust fund has bested the Standard & Poor's 500 Index for 15 years in a row.
The J. Lo marriage market
Ian McGugan
From the May 8-21, 2006 issue of Canadian Business magazine
Investing in this market is a bit like sending a note of congratulations to J. Lo on the occasion of her latest wedding. You hope — you really do — that things will turn out well, but you strongly suspect they won't.
Ian McGugan
From the May 8-21, 2006 issue of Canadian Business magazine
Investing in this market is a bit like sending a note of congratulations to J. Lo on the occasion of her latest wedding. You hope — you really do — that things will turn out well, but you strongly suspect they won't.