Search found 1876 matches

by ken250
Wed May 06, 2009 4:33 pm
Forum: Investing - Theory, News & General
Topic: Jeremy Grantham: The Last Hurrah and Seven Lean Years
Replies: 34
Views: 5702

ddb, can you run the same numbers against GBMFX?
by ken250
Wed May 06, 2009 4:01 pm
Forum: Investing - Theory, News & General
Topic: Jeremy Grantham: The Last Hurrah and Seven Lean Years
Replies: 34
Views: 5702

he was predicting 500/550 on the s+p not too long ago...
by ken250
Wed May 06, 2009 1:56 pm
Forum: Investing - Theory, News & General
Topic: NYT: "There’s Hope in Those Dividends"
Replies: 36
Views: 4391

Ariel, I see nothing in this market that makes me want to own stocks. Still a very low current yield, CEOs still playing games with bailout money, and nearly unregulated entitities still taking huge risks. Very disturbing. Well put. They just announced last night Geithner is approving an additional ...
by ken250
Wed May 06, 2009 12:57 pm
Forum: Investing - Theory, News & General
Topic: Some misc. fund YTD performance
Replies: 20
Views: 3606

Not sure how long it's been like this, but Wellington's stock allocation is almost all large.
by ken250
Wed May 06, 2009 12:38 pm
Forum: Investing - Theory, News & General
Topic: NYT: "There’s Hope in Those Dividends"
Replies: 36
Views: 4391

suarabhec, That may be true based on today's yields, but a retiree most likely locked in his Treasury yields some time ago...most likely when Ts yielded more than stocks, which is generally the case. I think a good part of the reason Ts current yields are so low is people flocked to them in the last...
by ken250
Wed May 06, 2009 12:22 pm
Forum: Investing - Theory, News & General
Topic: NYT: "There’s Hope in Those Dividends"
Replies: 36
Views: 4391

suarabhec, I don't think rebalancing was involved in my post, the poster mentioned selling Ts while stocks were low. I guess the assumption being divs from stocks and bond income couldn't provide the needed income...so sell some bonds too, for a profit. Once you start selling bonds you're really cut...
by ken250
Wed May 06, 2009 12:00 pm
Forum: Investing - Theory, News & General
Topic: Trying to defend boglehead theory...anyone help?
Replies: 27
Views: 3303

Doc,

That's the same point I was trying to make to several posters several days ago.

I use historical risk-adjusted performance to pick my active funds, the BHs use it to select classes.

Am I missing something?
by ken250
Wed May 06, 2009 11:32 am
Forum: Investing - Theory, News & General
Topic: for stocks...when do those "future cash flows" mat
Replies: 20
Views: 2070

FYI: According to the Dividend-Growth Model a stock's price is not just dependent on dividends, it's also dependent on the investor's required return and the earnings growth rate. The earnings growth rate gives you insight into price appreciation/depreciation and dividend growth/decline. Ignore the ...
by ken250
Wed May 06, 2009 11:29 am
Forum: Investing - Theory, News & General
Topic: for stocks...when do those "future cash flows" mat
Replies: 20
Views: 2070

btownguy,

Good questions. BTW, I agree the market is slowly becoming a greater fool game.
by ken250
Wed May 06, 2009 10:56 am
Forum: Investing - Theory, News & General
Topic: NYT: "There’s Hope in Those Dividends"
Replies: 36
Views: 4391

Andy, In today's market, the guy who is smoothing is selling (nicely appreciated) Treasury securities for spending money, keeping his standard of living constant. The guy who links his income to dividends is seeing his standard of living drop....not only due to the lower level of dividend income, bu...
by ken250
Wed May 06, 2009 9:45 am
Forum: Investing - Theory, News & General
Topic: NYT: "There’s Hope in Those Dividends"
Replies: 36
Views: 4391

Despite the cuts... My portfolio is somewhere between 70/30 and 75/25. The stock allocation includes REITs and Int'l, and that stock allocation is heavily slanted toward LV and dividend payers. My yield is 5.10%, not too bad although a few months ago it was about 5.85% and at one point last year it ...
by ken250
Wed May 06, 2009 9:10 am
Forum: Investing - Theory, News & General
Topic: One-way rebalancing strategy
Replies: 34
Views: 4974

As P/Es drop, future returns disperse all over the place. (When P/Es get high returns converge.) There is enough historical evidence to show that investing at low P/Es does not necessarily produce high returns, so there should be no expectation of high returns. Investors are wise to be cautious abou...
by ken250
Tue May 05, 2009 4:47 pm
Forum: Investing - Theory, News & General
Topic: BlackRock’s Doll Says S&P 500 May Fall 11%, Led By Ban
Replies: 7
Views: 1959

FYI: BlackRock, founded by former First Boston executive Laurence Fink in 1988, has emerged as the top adviser to the U.S. government on devalued mortgage assets since the takeover of Bear Stearns Cos. by JPMorgan Chase & Co. last year. BlackRock, Wellington Asset Management, and PIMCO are the a...
by ken250
Tue May 05, 2009 4:44 pm
Forum: Investing - Theory, News & General
Topic: BlackRock’s Doll Says S&P 500 May Fall 11%, Led By Ban
Replies: 7
Views: 1959

...the economy is on the mend.

Famous last words. :P :P :P
by ken250
Tue May 05, 2009 3:15 pm
Forum: Investing - Theory, News & General
Topic: Gold to reduce risk?
Replies: 4
Views: 1029

asterix0, I own a tactical asset allocation fund and about 6 months ago it opened a small allocation to gold. You probably ran the numbers correctly too, gold is good for reducing volatility. If you're going to keep the allocation low it's probably not bad idea to add some gold, I would just keep my...
by ken250
Tue May 05, 2009 1:32 pm
Forum: Investing - Theory, News & General
Topic: Monte Carlo Fails to Gauge Extreme Events
Replies: 146
Views: 25613

speedbump, There's 2 steps, greatly simplified. 1) First you need to determine how much you'll need at retirement, call that R. R will support your yearly inflation adjusted income needs, and also take into consideration how much you want to leave behind. 2) In order to meet R at retirement you need...
by ken250
Tue May 05, 2009 12:04 pm
Forum: Investing - Theory, News & General
Topic: Monte Carlo Fails to Gauge Extreme Events
Replies: 146
Views: 25613

I didn't mean to imply precision, this caution would have to be impressed on the customer...historical returns, future may not be like the past, unpredictable markets, etc. In fact the whole investment process has to be undertaken with those warnings. Again, not to imply precision...For example, a c...
by ken250
Tue May 05, 2009 11:22 am
Forum: Investing - Theory, News & General
Topic: Monte Carlo Fails to Gauge Extreme Events
Replies: 146
Views: 25613

It's pretty easy to wave one's hand and tell someone to be prepared to lose every red cent they've put into the market or tell them they'll earn 10% per year. The cynical customers probably have already faced the possibility of losing everything and the optimists are already expecting 10% per year. ...
by ken250
Tue May 05, 2009 10:11 am
Forum: Investing - Theory, News & General
Topic: Do passive investors need active investors to survive?
Replies: 20
Views: 3268

I think bombcar has it right actually.

All investors won't go into TSM, you'll have people overweighting/underweighting every segment of the market...that'll keep things interesting.
by ken250
Tue May 05, 2009 9:55 am
Forum: Investing - Theory, News & General
Topic: Are 200-day market timers ready?
Replies: 185
Views: 43252

I'm with Ariel. I don't have his insight as to what to look for but I'm waiting for the S&P to go back down below 700 again...then I'll start buying again.
by ken250
Tue May 05, 2009 9:29 am
Forum: Investing - Theory, News & General
Topic: william Sharpe on risky assets
Replies: 90
Views: 10195

RobertT, · Earnings growth does not affect expected total rates of return. Expected returns are determined by risk, and the greater the risk, the higher the expected rate of return. The thread somehow was shifted over to return at a few points but I nor Rick was discussing return. We said earnings g...
by ken250
Tue May 05, 2009 9:02 am
Forum: Investing - Theory, News & General
Topic: william Sharpe on risky assets
Replies: 90
Views: 10195

Hi Herb,

Thanks for taking the time to research this issue.
by ken250
Tue May 05, 2009 8:55 am
Forum: Investing - Theory, News & General
Topic: william Sharpe on risky assets
Replies: 90
Views: 10195

richard, If some people make math errors, does that make long division an invalid method? Recent events have shown accounting for risk is not the neat PV calculation you and others want investors to buy into. There's a well-known behavioral problem humans have, can't recall the technical name for it...
by ken250
Tue May 05, 2009 8:38 am
Forum: Investing - Theory, News & General
Topic: william Sharpe on risky assets
Replies: 90
Views: 10195

Larry, Here's what I posted earlier... I have no problem accepting the reduction of fair value coming out of a valuation model, which incorporates growth, to account for risk. This is obvious given the uncertainty built into earnings and earnings growth, although I don't see what the problem is with...
by ken250
Mon May 04, 2009 5:20 pm
Forum: Investing - Theory, News & General
Topic: william Sharpe on risky assets
Replies: 90
Views: 10195

Larry, two things happened --earnings went down and risk premiums went up That's obvious from a high level, it's like looking out the window in the morning on a sunny day and saying "Gees, the sun must have risen.". Risk is part of the valuation process, but I'm sure managers are not tryin...
by ken250
Mon May 04, 2009 4:50 pm
Forum: Investing - Theory, News & General
Topic: william Sharpe on risky assets
Replies: 90
Views: 10195

richard,

The S&P went from about 1550 to about 650, somebody did a great job of pricing market risk over the last 18 months.
by ken250
Mon May 04, 2009 4:05 pm
Forum: Investing - Theory, News & General
Topic: william Sharpe on risky assets
Replies: 90
Views: 10195

At some point this thread has come undone, so I'll make one last comment... I have no problem accepting the reduction of fair value coming out of a valuation model, which incorporates growth, to account for risk. This is obvious given the uncertainty built into earnings and earnings growth, although...
by ken250
Mon May 04, 2009 2:56 pm
Forum: Investing - Theory, News & General
Topic: How many funds for you?
Replies: 47
Views: 6605

7 in Roth, same 7 in Rollover IRA. Then I have 4 in my 401k. Total = 11.
by ken250
Mon May 04, 2009 2:42 pm
Forum: Investing - Theory, News & General
Topic: william Sharpe on risky assets
Replies: 90
Views: 10195

:?:
by ken250
Mon May 04, 2009 2:34 pm
Forum: Investing - Theory, News & General
Topic: william Sharpe on risky assets
Replies: 90
Views: 10195

suarabhec, Agreed. The PV of the higher growth rate company's cash flows will be higher, and this will be reflected in its market cap. That is exactly what Larry said and I said in my example. This doesn't say anything about expected returns on it being higher, unless you view the market cap of the ...
by ken250
Mon May 04, 2009 1:56 pm
Forum: Investing - Theory, News & General
Topic: william Sharpe on risky assets
Replies: 90
Views: 10195

suarabhec,

Beta is in response to earnings, earnings growth, etc.

I have not once said higher growth rates indicate higher return because I understand the price generated out of something like the DGM has to be compared with the current price.
by ken250
Mon May 04, 2009 1:53 pm
Forum: Investing - Theory, News & General
Topic: william Sharpe on risky assets
Replies: 90
Views: 10195

According to the DDM, 2 stocks with equal discount rates but differing earnings/div growth rates do not generate the same fair value price.
by ken250
Mon May 04, 2009 1:28 pm
Forum: Investing - Theory, News & General
Topic: william Sharpe on risky assets
Replies: 90
Views: 10195

Larry,

Short of a catastrophe, why can't the risk be built into earnings/growth ?
by ken250
Mon May 04, 2009 1:24 pm
Forum: Investing - Theory, News & General
Topic: william Sharpe on risky assets
Replies: 90
Views: 10195

Larry,

As I said, the market forecasts an earnings growth rate for a stock--but that does not set the price. The market sets the price by then assigning a risk premium to that forecast...

This I can accept because we know anything can happen to earnings.
by ken250
Mon May 04, 2009 12:18 pm
Forum: Investing - Theory, News & General
Topic: WSJ: TIPS (funds) Aren’t Perfect In Battling Inflation
Replies: 35
Views: 6206

I use TIPS and REITs to defend against inflation, assuming stocks don't do well. By virtue of a TAA fund I'll probably have small exposure to some other classes.
by ken250
Mon May 04, 2009 11:42 am
Forum: Investing - Theory, News & General
Topic: Tight-Fisted Investing/Rick Ferri in WSJ
Replies: 82
Views: 18810

It's your psyche.
by ken250
Mon May 04, 2009 11:12 am
Forum: Personal Consumer Issues
Topic: Name your top favorite tv shows
Replies: 188
Views: 30109

The Honeymooners.
by ken250
Mon May 04, 2009 10:35 am
Forum: Investing - Theory, News & General
Topic: william Sharpe on risky assets
Replies: 90
Views: 10195

suarabhec, For individual stocks it is effectively useless, because individual companies usually don't conform to the simple monotonically increasing model it has for earnings. Not true. The Div-Growth Model is not monotonic, although the equation generally presented gives that impression. The price...
by ken250
Mon May 04, 2009 9:57 am
Forum: Investing - Theory, News & General
Topic: Engineer's view of CAPM, F/F 3-factor models, please comment
Replies: 27
Views: 4521

richard, It's a bit odd that many take FF as a recommendation to overweight small and value or to claim that more SV makes a portfolio more diversified. I don't have much SV in my portfolio, I go with LV. I believe SV responds to different parts of the business cycle than other stocks so overweighti...
by ken250
Mon May 04, 2009 9:45 am
Forum: Investing - Theory, News & General
Topic: william Sharpe on risky assets
Replies: 90
Views: 10195

If there is no earnings growth the price will stabilize, this does people looking for price appreciation no good.

If there is no earnings growth the dividend cannot be increased, this does people looking for their dividends to at least keep pace with inflation no good.



:?:
by ken250
Mon May 04, 2009 8:52 am
Forum: Investing - Theory, News & General
Topic: william Sharpe on risky assets
Replies: 90
Views: 10195

Larry, surabhec, Rick, The Dividend-Growth Model uses earnings growth to determine price based on required return. Now, I'm not going to say the Div-Growth Model is the end all of valuation techniques, but it is used and it relies on earnings growth . Cash flows are important too, more specifically ...
by ken250
Sun May 03, 2009 3:50 pm
Forum: Investing - Theory, News & General
Topic: william Sharpe on risky assets
Replies: 90
Views: 10195

Larry, In the FF world there are three RISK factors. and BtM is simply a "proxy" for risk. Thanks, I forgot they call them risk factors. I'm glad you mentioned "proxy", that was my point earlier. BtM is a valuation measure, FF take the approach high BtM implies risk. Others don't...
by ken250
Sun May 03, 2009 3:33 pm
Forum: Investing - Theory, News & General
Topic: TSM is more RISKY than Slice & Dice (Volatility).
Replies: 188
Views: 19851

Mispricing vs Risk... I'm not really sure what the big deal is. When a value manager is looking at a basket of stocks he's looking at fundamentals which may indicate a mispricing, as he does this he comes across some stocks with unpromising fundamentals. The former stocks are easy, he buys them. The...
by ken250
Sun May 03, 2009 3:10 pm
Forum: Investing - Theory, News & General
Topic: Small Value and Behavior
Replies: 36
Views: 4628

orisni, There's nothing preventing one from overweighting any sector of the market, it really comes down to one's personal tolerance for deviating from the market. For instance, I hold 50% of my stock portfolio in Large Value. I am 75/25 stocks/ bonds, so that gives me about 37.5% of my overall port...
by ken250
Sun May 03, 2009 1:02 pm
Forum: Investing - Theory, News & General
Topic: Monte Carlo Fails to Gauge Extreme Events
Replies: 146
Views: 25613

If a tool is able to demonstrate to an investor how big a loss he might realize then the tool has done its job. Of course if the tool makes the investor more comfortable that's good too.
by ken250
Sun May 03, 2009 12:50 pm
Forum: Investing - Theory, News & General
Topic: william Sharpe on risky assets
Replies: 90
Views: 10195

Larry, Do loading factors incorporate risk, or are they just an indication of BtM ? As I understand BtM it does not include risk, it is merely the ratio of book value to market value. Now some might extrapolate risk from BtM, IOW high BtM implies high risk. The only thing valuation measures tell me ...
by ken250
Sat May 02, 2009 2:10 pm
Forum: Investing - Theory, News & General
Topic: william Sharpe on risky assets
Replies: 90
Views: 10195

Here are the 3, 5, and 10 year betas for VG's Small Growth Index fund (VISGX) and VG's Small Value Index fund (VISVX)...

VISGX: 1.21, 1.29, 1.03

VISVX: 1.18, 1.23, 0.97

Clearly, Sharpe was refering to value stocks.
by ken250
Sat May 02, 2009 12:55 pm
Forum: Investing - Theory, News & General
Topic: william Sharpe on risky assets
Replies: 90
Views: 10195

Larry,

The market does not price earnings growth rates.

Isn't the earnings growth rate used in the Dividend-Growth Model, where Growth is earnings growth rate and the result of the equation is the price?
by ken250
Sat May 02, 2009 12:50 pm
Forum: Investing - Theory, News & General
Topic: william Sharpe on risky assets
Replies: 90
Views: 10195

Larry, Note Sharpe did not say that if you want high returns buy stocks with either high SD or high beta but buy investments that do poorly during bad times. That is what the research on value stocks has found- That's a stretch, considering Sharpe is against any kind of tilting. Talk about believing...
by ken250
Sat May 02, 2009 12:45 pm
Forum: Investing - Theory, News & General
Topic: william Sharpe on risky assets
Replies: 90
Views: 10195

Larry, There is no evidence whatsoever to support your statement. Simply because you believe something doesn't make it true. The evidence in fact is against you. Otherwise we would have two groups of value stocks, split as you suggest and that would explain returns better than the FF 3 factor model ...