second half of my lessons learned from 2012 markets

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second half of my lessons learned from 2012 markets

Postby larryswedroe » Mon Jan 28, 2013 9:25 pm

http://www.cbsnews.com/8301-505123_162-57566180/grasping-what-the-market-can-teach-you/

Some lessons are remedial courses, but many keep repeating the same mistakes

Best wishes
Larry
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Re: second half of my lessons learned from 2012 markets

Postby baw703916 » Mon Jan 28, 2013 9:57 pm

I have to thank my good friend and fellow author Bill Bernstein for this one: "Asset classes are like tourist destinations; while they're undiscovered, they're fabulous. After they get found, not so much."


This is a great quote!

Thanks for sharing the column, Larry.

Best wishes,
Brad
Most of my posts assume no behavioral errors.
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Re: second half of my lessons learned from 2012 markets

Postby dratkinson » Tue Jan 29, 2013 3:14 am

article wrote:One of the major lessons we learned in 2012 was one we learn almost every year. Hedge funds should be avoided as investments. In 2012, the HFRX Global Hedge Fund Index returned 3.5 percent, and the S&P 500 index returned just 1.7 7.1 percent, over the past 10 years. The table below sums up the evidence pretty well.


Suggested update to match table and assumed intended meaning.
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Re: second half of my lessons learned from 2012 markets

Postby larryswedroe » Tue Jan 29, 2013 5:50 pm

dratkinson
The text was exactly right as is, you made the error of changing the second part ot the S&P 500 index when the 10 year return shown was the HFRX index
Best wishes
larry
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Re: second half of my lessons learned from 2012 markets

Postby dratkinson » Tue Jan 29, 2013 7:51 pm

larryswedroe wrote:dratkinson
The text was exactly right as is, you made the error of changing the second part ot the S&P 500 index when the 10 year return shown was the HFRX index
Best wishes
larry


I'd admit to being dense, but it is still not sinking in. I'll look at it later with fresh eyes.
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Re: second half of my lessons learned from 2012 markets

Postby Angst » Tue Jan 29, 2013 8:22 pm

dratkinson wrote:
larryswedroe wrote:dratkinson
The text was exactly right as is, you made the error of changing the second part ot the S&P 500 index when the 10 year return shown was the HFRX index
Best wishes
larry


I'd admit to being dense, but it is still not sinking in. I'll look at it later with fresh eyes.


dra, I sympathize with you - I think a CBS Moneywatch editor might have improved the verbiage up front. The actual text:

Moneywatch wrote:In 2012, the HFRX Global Hedge Fund Index returned 3.5 percent, and the index returned just 1.7 percent over the past 10 years


could be less confusing as:

Angstious editor wrote:In 2012, the HFRX Global Hedge Fund Index returned 3.5 percent while its annualized 2003-2012 return amounted to only 1.7 percent.


Moreover, these numbers deserve their own line in the table that immediately follows. That way the reader could clearly see the information and make simple, direct comparisons between the HFRX Global Hedge Fund Index and the other indexes shown. It's just basic editing, something the web is often a little short on. You're not dense!
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Re: second half of my lessons learned from 2012 markets

Postby dratkinson » Wed Jan 30, 2013 4:16 am

dratkinson wrote:
article wrote:One of the major lessons we learned in 2012 was one we learn almost every year. Hedge funds should be avoided as investments. In 2012, the HFRX Global Hedge Fund Index returned 3.5 percent, and the index returned just 1.7 percent, over the past 10 years. The table below sums up the evidence pretty well.


RTFQ! (Read the full question/quote.) :oops:

I didn't read the word "index" in "HFRZ...Index". So thought it was a fund, compared to an index with a 10-year 1.7% return in the table below. From that error I then assumed a transposition of the S&P 500 index 10-year value.

The paragraph does make perfect sense to me now. The 10-year return (1.7%) of the under-performing "index of hedge funds" is compared to the superior returns of the indexes in the table below.

Meh culpa, meh culpa, meh maxima culpa.
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