Search found 483 matches

by Bradley
Sat Jun 29, 2013 1:48 pm
Forum: Investing - Theory, News & General
Topic: Is Technical Analysis a Waste of Time?
Replies: 66
Views: 16068

Re: Is Technical Analysis a Waste of Time?

The blue line typically does not rise or fall by more than ten in a day, today it went up 31 leaving technicians nervous and giddy. The angle of the line, while disconcerting, caused some bullishness, while more experienced technicians urged caution. One chartist in the background could be heard saying, that based on the steepness of the green line and the fact that it outperformed the yellow line, green line and came damn close to the dotted purple line, he expected to be handsomely rewarded, noting that this all had to be confirmed by Mar’s movement past Jupiter. :happy
by Bradley
Thu Jun 27, 2013 11:02 am
Forum: Investing - Theory, News & General
Topic: Increasing International to 40% ... good idea or not?
Replies: 37
Views: 3879

Re: Increasing International to 40% ... good idea or not?

The following reference may help your decision making process. Foreign operations of S&P 500 companies have been growing. You may have more exposure than you realize. http://www.forbes.com/sites/rickferri/2011/08/14/going-foreign-with-the-sp-500/ “You don’t have to take money out of your U.S. stock index funds to get more international exposure. U.S.-based companies are already doing that for you as they continue to increase their presence all over the world. Today, U.S. companies conduct almost as much business overseas as they do in the U.S. Close to 50 percent of production, sales, and profits are from overseas business, and the amount paid in foreign taxes is more than that paid in U.S. taxes. S&P 500: 2010 Global Sales, analysi...
by Bradley
Tue Jun 25, 2013 12:21 pm
Forum: Investing - Theory, News & General
Topic: infrastructure as inflation hedge
Replies: 4
Views: 1097

Re: infrastructure as inflation hedge

Larry,

Looks like a broken link?
by Bradley
Mon Jun 24, 2013 8:14 pm
Forum: Personal Investments
Topic: What should I do with the TBM portion??
Replies: 20
Views: 2560

Re: What should I do with the TBM portion??

You should have written and signed an investment policy statement. The IPS is one of the most important components of investing and should be the basis of all actions taken with your investments.
by Bradley
Sun Jun 23, 2013 6:49 pm
Forum: Personal Investments
Topic: Help me select a commodities fund!
Replies: 36
Views: 22792

Re: Help me select a commodities fund!

I looked into commodities/CCFs as deeply as I could a couple of years go, I came to the conclusion that I wanted 0% exposure to them. Apparently Vanguard supports that decision. The fact that Vanguard does not offer a commodity fund demonstrates the importance it puts on their use in a portfolio. They have published research on the subject, one such study is referenced below; https://institutional.vanguard.com/iam/pdf/commodities_WP.pdf .....................” While recognizing the historical portfolio diversification benefit of an allocation to commodities, we caution against making such an allocation on the basis of an extrapolation of historical commodity returns. ” Below is a partial list of Vanguard’s research team in place when study ...
by Bradley
Fri Jun 21, 2013 2:12 pm
Forum: Investing - Theory, News & General
Topic: An analysis my colleague did on high yield
Replies: 52
Views: 8689

Re: An analysis my colleague did on high yield

[Comments referencing posts no longer in this thread removed by admin LadyGeek]

As many warts as the fund you choose to speak poorly of ( DFRAX ) in your linked article, it has outperformed PRCIX on average by 13.85% over the past five years. PCRIX will have to have some spectacular returns to ever make up that underperformance. There are times when the spread justifies taking additional risk. Also, though not the same VWEAX is a much cheaper and better performing fund than DFRAX if someone were looking to stretch for yield. You make some good points to consider but I think your much too hard and overreach in your HY opinions.

Bradley
by Bradley
Wed Jun 19, 2013 6:33 pm
Forum: Investing - Theory, News & General
Topic: Do commodities/CCFs belong in an investment portfolio?
Replies: 49
Views: 4570

Re: Do commodities/CCFs belong in an investment portfolio?

Bradley 1) That stuff about DFA and bond funds is total BS. 2) The data you present is not meaningful as it is short period, I would add that the Gorton and Rouwenhorst paper on commodities is one of the most cited papers I've read. Almost every paper on the subject cites that one. That adds credibility to the paper, Best wishes Larry 1.) The performance figures come from morningstar, they appear to agree with DFA's posted performance data. 2. ) Below is the 15 year Data as far back as I could find on Morningstar. DFA Funds 15 YEAR DATA DFGFX----------3.33% DFGBX----------4.67% Vanguard 15 YEAR DATA VWEAX----------6.04% VBTLX-----------5.48% 3.)The reason I did not post 10 year DFA Inflation Protection Fund is because it has no 10 year dat...
by Bradley
Wed Jun 19, 2013 11:56 am
Forum: Investing - Theory, News & General
Topic: Do commodities/CCFs belong in an investment portfolio?
Replies: 49
Views: 4570

Re: Do commodities/CCFs belong in an investment portfolio?

You on other hand have not provided any evidence or logic to support your view on why you ignore French's advice on bonds. We await your explanation, with data and logic Best wishes Larry Larry, EXPLANATION Every one knows that DFA is known for it’s equity products. Their fixed products, not so much. Do you use DFA’s bond funds?........ Either do many of the other well informed advisors. As former Director of Investment Strategy, French is at least partially responsible for DFA’s dismal bond fund performance vs cheaper, diversified alternatives. LOGIC The logic I use is diversification and low cost in an efficient market place will keep me from underperforming market returns. The fixed products and relative allocation used comes from Rick’...
by Bradley
Wed Jun 19, 2013 9:23 am
Forum: Investing - Theory, News & General
Topic: Do commodities/CCFs belong in an investment portfolio?
Replies: 49
Views: 4570

Re: Do commodities/CCFs belong in an investment portfolio?

Second, advisory fees are IMO irrelevant The last statement about the most experienced academics --have no idea how one can make such a declarative statement. I don't know how Bradley draws that conclusion.What survey did he cite? Best wishes Larry Larry, I disagree that advisory fees are irrelevant. All costs are relevant. Investors should know what they are investing in and how it works. How many investors do you think know what CCFs are? How many investors (%) do you think know how to extend maturity in an efficient manner? What%, what product, what to sell in order to extend? Should they be held in taxable or qualified accounts? Are they suitable for accumulators as well as de-accumulators. Many investors place their faith and future i...
by Bradley
Tue Jun 18, 2013 6:12 pm
Forum: Investing - Theory, News & General
Topic: Do commodities/CCFs belong in an investment portfolio?
Replies: 49
Views: 4570

Re: Do commodities/CCFs belong in an investment portfolio?

Bradley So I repeat, if you think French is the expert why do you ignore his advice on that fund but cite his advice on CCF. Second, on commodities it's true you don't see studies with costs--but your statement was about academic papers in general. Larry Larry, I meant for my statement, “Most academic works ignore the cost of implementation of theory.” to be in context of thread topic on commodities. I will restate it to clear up any confusion; most academic works ignore the cost of implementing their commodity/CCF theories and the effect those costs have on the performance/data of their theories in the real world” . Sorry for any confusion. I agree with Bernstein and Ferri that when spreads become compelling, VWEAX is well worth the risk....
by Bradley
Tue Jun 18, 2013 3:04 pm
Forum: Investing - Theory, News & General
Topic: Do commodities/CCFs belong in an investment portfolio?
Replies: 49
Views: 4570

Re: Do commodities/CCFs belong in an investment portfolio?

. Finally, here's an interesting question for Bradley--You cite Ken French as the authority and ask why one should ignore his advice. Well French is the same professor who recommends avoiding HY bonds and all callable bonds (so things like MBS). Seems like selective choice of following advice based on preconceived notions rather than factual data. Should be interesting answer. Best wishes Larry I happen to agree with French’s view on HY. VWEAX is very different from true HY. I just reviewed the academics works you posted earlier in this thread and was unable to find any adjustment or accommodation for including any costs of implementing the theories presented. It appears an index vs funds were used. No er’s, no trading costs no reference t...
by Bradley
Tue Jun 18, 2013 12:51 pm
Forum: Investing - Theory, News & General
Topic: Do commodities/CCFs belong in an investment portfolio?
Replies: 49
Views: 4570

Re: Do commodities/CCFs belong in an investment portfolio?

menlo wrote:
afan wrote: The questions that the article leaves unanswered are (1) what is the expected diversification return (and is it meaningful)
Most academic works ignore the cost of implementation of theory. No e/r's, no trading costs and no investment advisory fees. Since most properly constructed portfolios have sufficient exposure to to commodities through the companies that grow, mine and produce commodities, the additional cost to acquire additional and direct exposure to the incremental theoretical benefits evaporate and is why you see some of the most experienced and respected academic and investment professionals forgo additional exposure to commodities.

Bradley
by Bradley
Tue Jun 18, 2013 12:38 pm
Forum: Investing - Theory, News & General
Topic: Surprising 10 yr performance for VWEAX
Replies: 6
Views: 1851

Re: Surprising 10 yr performance for VWEAX

I rode this happy HY train for a decade but recently closed out my position. Garland Whizzer Garland, If there is ever a time to revaluate holding a non core allocation it would be after ten plus years of outperformance. To expect it to continue another ten years is unrealistic which leads me to agree wholeheartedly with your opinion “I do not believe that the next 10 years will be a mirror of the past 10”. An asset that has outperformed both stock and bonds over 10 plus years will revert. Dropping VWEAX could certainly be called timing but in my mind I would justify it as respecting “expected returns” and transitioning to a simpler portfolio which I have always planned on doing as I age. Every investor's situation is unique and I do belie...
by Bradley
Tue Jun 18, 2013 10:53 am
Forum: Investing - Theory, News & General
Topic: Do commodities/CCFs belong in an investment portfolio?
Replies: 49
Views: 4570

Re: Do commodities/CCFs belong in an investment portfolio?

And here is a paper on diversification return, explaining the CCF anomaly--why it's big mistake to look at returns in isolation http://arxiv.org/pdf/1109.1256.pdf Best wishes Larry Larry, Thanks for taking the time to post the references. The point I wished to question in this Thread could be highlighted by the quote and reference you provided. Consider the following facts. 1.) French and Fama have spent considerable time and effort researching commodities. In 1987 they published an article on commodities in the Journal of Business in 1987. 2.) Quote from your linked article..........”The term “diversification return” was coined by Booth and Fama (1992) in the context of a rebalanced portfolio, that is, a portfolio with a constant percenta...
by Bradley
Mon Jun 17, 2013 8:00 pm
Forum: Investing - Theory, News & General
Topic: Surprising 10 yr performance for VWEAX
Replies: 6
Views: 1851

Re: Surprising 10 yr performance for VWEAX

Thanks for additional info. Just thought it was worth posting this “sub-set”(VWEAX) of an asset class outperformed both stocks and bonds for more than ten of the past years and 90+ % of it’s own life. Not often you come across that combination.
by Bradley
Mon Jun 17, 2013 3:26 pm
Forum: Investing - Theory, News & General
Topic: Do commodities/CCFs belong in an investment portfolio?
Replies: 49
Views: 4570

Do commodities/CCFs belong in an investment portfolio?

Considering French, Fama, Bernstein, Ferri and Bogle recommend forgetting about commodities in a portfolio the logical answer is to avoid commodities/CCFs. While there are academic papers which conclude commodities do provide some benefits to portfolios under certain conditions at certain times, do we reject the advice of those much more qualified to asses the validity and conclusions drawn by some of these academics and their studies. Who is better equipped to analysis their data? You/me or French and Fama? If any one understands how to conduct, validate and draw conclusions from academic work it would be French/Fama. As the former Director of Investment Strategies for DFA, French had available not only the works of the academics posted on...
by Bradley
Sun Jun 16, 2013 11:53 am
Forum: Investing - Theory, News & General
Topic: Surprising 10 yr performance for VWEAX
Replies: 6
Views: 1851

Surprising 10 yr performance for VWEAX

Came across a surprising result when comparing returns over the past five years and it was the ten year returns that were unexpected and eye-opening. I knew that Vanguards VWEAX had done very well the past five years, but 10 year results were a bit of a surprise. Using standard benchmark Vanguard Admiral class fund performance published on Vanguard site today, with data as of 5/31/2013. The data below gives additional credence to John Norstad’s Total Market proofs. http://www.norstad.org/finance/tsmproofs.pdf 5 yr 10 yr S&P 500 ( VFIAX ) 5.45% 7.56% Total Bond ( VBTLX ) 5.49% 4.66% HY ( VWEAX ) 9.03% 7.61% Past results are not an indication of future results, and the current trend may indicate that equities may outperform HY in the foll...
by Bradley
Fri Jun 14, 2013 11:01 am
Forum: Investing - Theory, News & General
Topic: An analysis my colleague did on high yield
Replies: 52
Views: 8689

Re: An analysis my colleague did on high yield

No one claimed that one was a substitute for another. And there is clearly no mis-understanding of a 15.8% return per year over 5 year period effect on ones portfolio. There is absolutely no need for either commodities OR high yield in any one’s portfolio. BUT, if one had chose to add one, as a diversifier, after the great commodity debate, those who rejected commodities and instead added VWEAX were well rewarded. You do not have to be a CFA to understand how these two asset classes have contributed to portfolio performance over the past five years. Now let’s look at take the allocation from the bond side. Over the past 5 years the total bond market(BND) has returned 5.61%/year. Over the past 5 years VWEAX has returned 8.80%/year. Even usin...
by Bradley
Fri Jun 14, 2013 9:22 am
Forum: Investing - Theory, News & General
Topic: An analysis my colleague did on high yield
Replies: 52
Views: 8689

Re: An analysis my colleague did on high yield

Those who have followed and taken Rick’s advice have been well rewarded and that provides the best evidence there is. Why do people make statements that are not true, even after they have been shown that they are false. I have repeatedly showed, and my colleague Jared Kizer's blog as I posted, that HY has been a poor investment, resulting in lower Sharpe ratios. Here is just one example of the many I have provided included in my books http://www.cbsnews.com/8301-505123_162-37841232/high-yield-bonds-effect-on-portfolios/ Larry Anyone who was considering a diversifying asset at the time of the great commodity debate which was just over five years ago was richly rewarded if they rejected the argument to include commodities and instead chose V...
by Bradley
Fri Jun 14, 2013 8:49 am
Forum: Investing - Theory, News & General
Topic: An analysis my colleague did on high yield
Replies: 52
Views: 8689

Re: An analysis my colleague did on high yield

Below is a snippet from William Bernstein’s opinion published on his Efficient Frontier site. Those who have followed and taken Rick’s advice have been well rewarded and that provides the best evidence there is. “But high-yield is a remarkable asset class and worth examining.................. Belief in the efficient market theory does not relieve one of the duty to estimate asset-class returns . Because of the term structure of high-yield bonds, returns will tend to mean-revert more quickly, and more surely, than equity. Yes, there is risk. But when their long-term expected returns start approaching 5% over Treasuries (as they did not so long ago), it looks like a risk worth taking with a small corner of one’s portfolio. One caveat: Because...
by Bradley
Fri Jun 14, 2013 8:35 am
Forum: Personal Investments
Topic: Gold and Silver Coins in IRA?
Replies: 26
Views: 2099

Re: Gold and Silver Coins in IRA?

nimo956 wrote: Gold is also very tax efficient in that it doesn't throw off any dividends or capital gains.
The same can be said of rocks. Very tax efficient.
by Bradley
Fri Jun 14, 2013 8:30 am
Forum: Investing - Theory, News & General
Topic: How Commodities Can Help a Portfolio
Replies: 129
Views: 13929

Re: How Commodities Can Help a Portfolio

afan First, PIMCO is totally passive on the commodity side in terms of exposure to the commodities. Their active component is only trading on different exchanges to get better prices. So it's totally passive Second, here is where Rick and I very much disagree. To him if it's not totally passive it's not good. Larry You can't be just a little pregnant. This is what PIMCO claims on it's website. They state that they do actively manage their commodity exposure . Much of what is guessed about is easily confirmed or denied by simply asking or verifying with the product providers published data/information. PCRIX "Why Invest In This Fund A Double RealTM inflation-hedging strategy Combining the benefits of commodities with the experience of ...
by Bradley
Tue Jun 11, 2013 10:21 pm
Forum: Investing - Theory, News & General
Topic: How Commodities Can Help a Portfolio
Replies: 129
Views: 13929

Re: How Commodities Can Help a Portfolio

MCSquared wrote: Relative to Buffett, you forgot to find the quote explaining why he bought 130 million ounces of silver (roughly 20% of the entire world supply at the time). Since we know for a fact that he is not a fan of commodities, why make this type of investment?


http://bit.ly/ZICKqV
by Bradley
Tue Jun 11, 2013 5:01 pm
Forum: Investing - Theory, News & General
Topic: How Commodities Can Help a Portfolio
Replies: 129
Views: 13929

Re: How Commodities Can Help a Portfolio

Dan Solin is another very well rounded investment advisor to the wealthy that has an opinion on adding commodities as a separate asset class to your portfolio.

Question: Is now the right time to invest in commodities?

“Personally, I am content with the commodities exposure I receive by owning a broadly diversified domestic index stock fund. I do not have exposure to commodities as a separate asset class in my portfolio and I do not recommend it for inclusion in the portfolios of my clients.”
-------------Dan Solin Jun 11, 2008


Below is a reference to a book presentation he gave at Google.

http://www.youtube.com/watch?v=Y0LSG2omvEg

Book was good and Taylor has posted the GEMS from it.
by Bradley
Tue Jun 11, 2013 9:24 am
Forum: Investing - Theory, News & General
Topic: How Commodities Can Help a Portfolio
Replies: 129
Views: 13929

Re: How Commodities Can Help a Portfolio

Carlos Slim and Warren Buffett, have both invested in commodities? Morning MC, There is a oft quoted saying, "If you look in the mirror and don't see Warren Buffett, don't try to invest like him". It is also a fact that Warren is not a fan of commodities as part of any strategic allocation. Below are a few of his quotes, many apply to one specific commodity, gold, but the logic applies to all commodities. 1.“The problem with commodities is that you are betting on what someone else would pay for them in six months. The commodity itself isn’t going to do anything for you….it is an entirely different game to buy a lump of something and hope that somebody else pays you more for that lump two years from now than it is to buy something...
by Bradley
Mon Jun 10, 2013 10:12 pm
Forum: Personal Investments
Topic: Flat Fee Advisor - Cardiff Park Advisors?
Replies: 50
Views: 15812

Re: Flat Fee Advisor - Cardiff Park Advisors?

Need to cut both in half to be close. Since I was very early client I am on a different fee contract than today's schedule. I spent some serious time in 2005 conducting due diligence for a place to park my retirement funds. Cardiff won and I have been very pleased with the service I have received. What I liked was the fees did not increase as the AUM increased, that management fees were due after the end of the quarter, fees are not taken out of account but billed, very similar investment opinions, friendly low fee and access to all funds and very accommodating.
by Bradley
Mon Jun 10, 2013 9:40 pm
Forum: Investing - Theory, News & General
Topic: How Commodities Can Help a Portfolio
Replies: 129
Views: 13929

Re: How Commodities Can Help a Portfolio

Thanks for posting Craig’s video, very good info and well presented. Craig has written hundreds of articles for Financial Planning over the years. Many years ago I e-mailed him a question about one of his articles. He responded that same evening with a clear and concise explanation and in addition sent all the raw data he used in spreadsheet form. He and Rick collaborated on a very informative article titled “Is a Pension a Bond?” within the past 5 years. Many of his latest articles can be found here:


http://www.financial-planning.com/thoug ... elsen.html
by Bradley
Mon Jun 10, 2013 4:33 pm
Forum: Investing - Theory, News & General
Topic: How Commodities Can Help a Portfolio
Replies: 129
Views: 13929

Re: How Commodities Can Help a Portfolio

larryswedroe wrote: anyone who knows anything about commodities and investing in them would never even suggest using the CRB index, never.

Larry

Roy,

I agree with your post. I simply posted information which showed the claim above may be overreaching. Many investors do invest in the CRB based commodity funds. Those who did, outperformed according to data published by M*. Which funds will outperform in the future cannot be determined at this time.

Bradley
by Bradley
Mon Jun 10, 2013 3:18 pm
Forum: Investing - Theory, News & General
Topic: How Commodities Can Help a Portfolio
Replies: 129
Views: 13929

Re: How Commodities Can Help a Portfolio

larryswedroe wrote: the data above posted by Bradley is totally meaningless
Larry
Larry,

If you reread my post you will see I already said it was meaningless data. It does however show that the two separate CRB index based funds did outperform your PRCIX fund. If it does so in the future, neither you or I know. I posted only to add balance to your claim;

"larryswedroe wrote:only one other comment, anyone who knows anything about commodities and investing in them would never even suggest using the CRB index, never."


It appears both CRB funds have outperformed so never may have been an overreach. If the data I posted is in error please provide the correct data.

Thanks,
Bradley
by Bradley
Mon Jun 10, 2013 1:04 pm
Forum: Investing - Theory, News & General
Topic: How Commodities Can Help a Portfolio
Replies: 129
Views: 13929

Re: How Commodities Can Help a Portfolio

I don't own commodities but my choice has nothing to do with any opinions expressed here. Hi Roy, I don't own commodities either. Below is some data that may surprise some. As meaningless as they are in determining which funds will outperform in the future, they do tell us what was the most productive commodity fund among the three displayed below. For now, the two CRB based funds lead the GSCI in both cases It appears that both commodity funds based on the CRB have outperformed PCRIX using the longest data available on M* retail site. 5 Year GCC lost 4.98 (NAV) 5 Year PCRIX lost 6.78 NAV CRB based GCC outperformed PCRIX by 1.89% over the 5 year period ((All periods greater than 1-Year are annualized. GCC (Price) return as of 06/07/2013.))...
by Bradley
Mon Jun 10, 2013 11:01 am
Forum: Investing - Theory, News & General
Topic: How Commodities Can Help a Portfolio
Replies: 129
Views: 13929

Re: How Commodities Can Help a Portfolio

only one other comment, anyone who knows anything about commodities and investing in them would never even suggest using the CRB index, never . Larry Below are two separate operating funds based on the CRB. Below that are recent studies using the CRB. GCC ------ GreenHaven Continuous Commodity Index is the least volatile and one of the more diversified broad-basket commodity exchange-traded funds. Most broad commodities funds weight their portfolios by economic significance, which results in a very high energy allocation (up to 70%) and a relatively low allocation to agriculture, metals, and "soft" commodities (coffee, sugar). GCC equally weights its 17 constituents, resulting in a diversified portfolio with a relatively higher w...
by Bradley
Sun Jun 09, 2013 5:41 pm
Forum: Investing - Theory, News & General
Topic: How Commodities Can Help a Portfolio
Replies: 129
Views: 13929

Re: How Commodities Can Help a Portfolio

Bradley keeps citing such comments as "proof" for his case but it's irrelevant, totally. Larry I do not believe quoting the opinions, statements, recommendations of other highly respected investment professionals is irrelevant. According to you, Bogle is wrong. FF is wrong and/or irrelevant. Bernstein? and Ferri, our CFA, wrong! I think members may find their opinions helpful. Also sharing their recommendations with others will only help to enhance the discussion and show competing points of view. Larry, have you ever expressed your concerns or asked DFA for their explanation on why they keep their posting of FF commodity opinion on their website even though they now sell a commodity fund? What are Bernstein’s concerns with using...
by Bradley
Sun Jun 09, 2013 12:06 pm
Forum: Investing - Theory, News & General
Topic: How Commodities Can Help a Portfolio
Replies: 129
Views: 13929

Re: How Commodities Can Help a Portfolio

What do the thinkers at Dimensional think about adding commodities to a portfolio? “It’s nuts”, says the former head Director of investment strategy and current Board member and consultant to DFA’s investment strategies. If anyone understands objective financial research it is Kenneth French. Kenneth R. French is the Roth Family Distinguished Professor of Finance at the Tuck School of Business at Dartmouth College. He is an expert on the behavior of security prices and investment strategies. French is a research associate at the National Bureau of Economic Research, an advisory editor of the Journal of Financial Economics, a former associate editor of the Journal of Finance and the Review of Financial Studies, and a former president of the ...
by Bradley
Fri Jun 07, 2013 4:41 pm
Forum: Investing - Theory, News & General
Topic: How Commodities Can Help a Portfolio
Replies: 129
Views: 13929

Re: How Commodities Can Help a Portfolio

afan wrote:


There is still the problem that picking an index that intentionally is not representative of the commodities universe raises the usual concern that the performance of the index may not tell us what was the performance of commodities.

The oldest commodity index data was published in 1958(CRB). It still trades on the exchange and like the other indexes has changed the way it is calculated. It was originally calculated by the Commodity Research Bureau. It’s energy weighting is about 1/3 of GSCI which started up in 1992.
by Bradley
Fri Jun 07, 2013 4:26 pm
Forum: Investing - Theory, News & General
Topic: How Commodities Can Help a Portfolio
Replies: 129
Views: 13929

Re: How Commodities Can Help a Portfolio

Thanks for pointing that out.
by Bradley
Fri Jun 07, 2013 4:04 pm
Forum: Investing - Theory, News & General
Topic: How Commodities Can Help a Portfolio
Replies: 129
Views: 13929

Re: How Commodities Can Help a Portfolio

Try VTSAX the Total Market Mutual fund. It has beaten PRIX over YTD, Past yr, past 3yr, past 5yr and the past 10 years.
by Bradley
Fri Jun 07, 2013 10:38 am
Forum: Investing - Theory, News & General
Topic: How Commodities Can Help a Portfolio
Replies: 129
Views: 13929

Re: How Commodities Can Help a Portfolio

nisiprius, ....... The most fundamental and accepted definition is that with insurance you exchange the potential of a large loss with the certainty of a small(er) loss. .............. But a specific component of a portfolio that generally, predictably, moves in the opposite direction of another component can rightly be called "insurance" because it does what insurance (see above) is supposed to do. It's ridiculous to think of it as anything else, ............. it is portfolio insurance (please note the lower case "i") My “insurance” policy is the TBM. I pay .10 for that “insurance”. The commodities fund recommended on this forum has been Pimco’s PCRIX. That “insurance” is 7.4 times as expensive as my “insurance”. In 20...
by Bradley
Thu Jun 06, 2013 9:06 pm
Forum: Investing - Theory, News & General
Topic: How Commodities Can Help a Portfolio
Replies: 129
Views: 13929

Re: How Commodities Can Help a Portfolio

TO39 wrote: repeated assertion that another fund would do this or that, but never the charts or data that back it up
Here is some data. The fund the OP uses and recommends for commodities is PIMCOs PCRIX. The fund went live in 2002 so you can look at ten year data. The Commodity fund returned $16,997.19 over 10 years compared to $21,473.95 for Vanguard’s Total Market Fund based on an intial $10,000 investment. That works out to an outperformance of nearly 3%/year for 10 years. Over the past five years the total market fund has outperformed the commodity fund in excess of 13%/yr on average over each of the past 5 years. All this data is available at M*.

Hope this helps,
Bradley
by Bradley
Thu Jun 06, 2013 8:35 pm
Forum: Personal Investments
Topic: Flat Fee Advisor - Cardiff Park Advisors?
Replies: 50
Views: 15812

Re: Flat Fee Advisor - Cardiff Park Advisors?

Have been with Cardiff since before they received their SEC registration and have been very satisfied. The flat fee I pay works out to be .033 as a %AUM. Portfolio e/r of .19, monthly performance reports and timely responses.

Bradley
by Bradley
Thu Jun 06, 2013 12:59 pm
Forum: Investing - Theory, News & General
Topic: How Commodities Can Help a Portfolio
Replies: 129
Views: 13929

Re: How Commodities Can Help a Portfolio

Sorry, I forgot to include the opinions of Ken French and Gene Fama, long time opponents of commodities in most investor portfolios over the years. If these guys do not understand how commodity futures affect one’s portfolio, who does? Nov 8th 2008 So is this a once-in-a-lifetime opportunity to climb about the commodities train, as many burned advisors are now saying? No, says Ken French, professor of finance at Dartmouth's Tuck School and the director of investment strategy at Dimensional Fund Advisors. There's no reason for most investors to own commodities. Contrary to popular belief, they aren't a good inflation hedge, and they don't provide a long-term real return that investors aren't already exposed to through normal stock ownership ...
by Bradley
Thu Jun 06, 2013 8:47 am
Forum: Investing - Theory, News & General
Topic: How Commodities Can Help a Portfolio
Replies: 129
Views: 13929

Re: How Commodities Can Help a Portfolio

There is nothing silly at all about the returns data I have shown. Larry Larry, This is what William Bernstein had to say about commodities and the GSCI upon which you build your case. “Why don't you ever write about commodities? Because I don't trust the data, particularly the GCSI index, which reportedly has a real return of 5% and zero correlation with the rest of the market over the past three decades. This makes no sense at all during a period when the underlying commodities have had a negative real return. It's just too good to be true..........................................................................In other words, the next time someone tries to sell you a commodities fund based on the Goldman Sachs Commodities Index, smile a...
by Bradley
Wed Jun 05, 2013 5:28 pm
Forum: Investing - Theory, News & General
Topic: How Commodities Can Help a Portfolio
Replies: 129
Views: 13929

Re: How Commodities Can Help a Portfolio

Bradley When I present a case I present the evidence to support the statement. Now you if you want to provide some real evidence Bogle presents rather than just his opinions, then we can discuss those facts. Larry Larry, The evidence you cite in your article to advance your theory on commodities is silly. Data should be objective and not biased toward the “researcher’s” theory. For example, your use of an index vs a fund which bolsters your portfolio’s performance. You show no cost involved. You use inappropriate benchmarks. When you use an index vs a fund you first give your self the advantage of not accounting for the funds e/r. If you used an investable fund like PCRIX, your recommended fund, you would have had to add 74 basis points pe...
by Bradley
Wed Jun 05, 2013 3:43 pm
Forum: Investing - Theory, News & General
Topic: How Commodities Can Help a Portfolio
Replies: 129
Views: 13929

Re: How Commodities Can Help a Portfolio

this is not evidence that commodities don't help. If a 40% loss over five years in commodities is not evidence that the asset class is not working what would be? CaLPERS has more indexed funds under management than any other pension fund and with near $250 billion in assets. I think it is fair to say they can afford the best advice available. ............ Illinois Teachers ’ hired three groups in February 2008 to manage its first commodities investment of $600m, announcing the fund was taking “additional steps to protect retirement nest eggs”. By June 30 2008, the investment had swelled to $652.8m. Two days later, what was then known as the Dow Jones-AIG commodity index peaked before tumbling 57 per cent in the financial crisis. In June 20...
by Bradley
Wed Jun 05, 2013 1:15 pm
Forum: Investing - Theory, News & General
Topic: How Commodities Can Help a Portfolio
Replies: 129
Views: 13929

Re: How Commodities Can Help a Portfolio

So it's clear from the evidence that CCF correlate with inflation positively, and the longer the term the higher the correlation, and more importantly they perform best in rising inflation Larry Not so sure the evidence is as clear as you claim it is. http://online.wsj.com/article/SB10001424127887324761004578286172166045096.html February 5, 2013, 9:08 p.m. ET Pension Funds Cut Back On Commodity Indexes 
 "Pension funds and other institutions are retreating from popular investments linked to commodities after finding they did little to protect their portfolios against inflation risk and the unpredictable returns of stocks .....Investors have yanked nearly $10 billion from tradable indexes tied to energy, food, metals and other commodit...
by Bradley
Tue Jun 04, 2013 5:02 pm
Forum: Investing - Theory, News & General
Topic: How Commodities Can Help a Portfolio
Replies: 129
Views: 13929

Re: How Commodities Can Help a Portfolio

muntz wrote:Bradley - Commodities protect agst certain types of inflation risks that could harm the rest of your portfolio.
by Bradley
Tue Jun 04, 2013 10:51 am
Forum: Investing - Theory, News & General
Topic: How Commodities Can Help a Portfolio
Replies: 129
Views: 13929

Re: How Commodities Can Help a Portfolio

As shown in the OP's article, there certainly appears to have been a large positive premium historically. This positive premium can also be seen longer term studies such as frequently cited Gorton and Rouwenhorst paper. However, the Gorton and Rouwenhorst reasoning for the cause of the historical premium is the Keynesian theory of "normal backwardation" , which may have made sense in Keynes's era...but doesn't seem consistent with how people think about risk premiums in a world with modern asset pricing theory and integrated capital markets. The OP’s article used the GSCI index and not an actual CCF. What’s wrong with the GSCI index? Below is a reference and a couple of snippets from the article they come from. http://www.efficie...
by Bradley
Tue Jun 04, 2013 8:56 am
Forum: Investing - Theory, News & General
Topic: How Commodities Can Help a Portfolio
Replies: 129
Views: 13929

Re: How Commodities Can Help a Portfolio

Commodities protect agst certain types of inflation risks that could harm the rest of your portfolio. ........... This is central to the entire subject of Modern Portfolio Theory. Below are the thoughts of some of the brightest/most experienced minds in money management today which express their opinions on including commodities in a portfolio. Before learning the hard way, anyone thinking about adding commodities AND then adding term risk should first consider the following comments on commodities. I'm quite sure these men are very familiar with Modern Portfolio Theory. Should not be in “ any body’s portfolio, at any time, under any circumstances” --------John Bogle "You're picking up nickels in front of a steamroller" ---------...
by Bradley
Mon Jun 03, 2013 1:27 pm
Forum: Investing - Theory, News & General
Topic: How Commodities Can Help a Portfolio
Replies: 129
Views: 13929

Re: How Commodities Can Help a Portfolio

Unfortunately Bradley thinks that if you buy homeowner's insurance but not flood insurance and you lose your house to a flood that homeowner's policies are bad, they don't work .......... in demand shocks, when both CCF and stocks do poorly, longer term safe bonds do exceptionally well, so if you are going to add CCF you should also consider adding some term risk to hedge the stock side further. Had you done that in 2008 you would have been better off than if you did not add CCF,...............-- which is exactly what I did and assume others did as well Best wishes Larry There has been no mention of home insurance so lets not muddy the discussion. Portfolio insurance has a meaning in finance and it has nothing to do with CCFs. Referring to...
by Bradley
Sun Jun 02, 2013 2:56 pm
Forum: Investing - Theory, News & General
Topic: How Commodities Can Help a Portfolio
Replies: 129
Views: 13929

Re: How Commodities Can Help a Portfolio

muntz wrote:Thanks for the article Larry. I own PCRDX, but still have a nit to pick.

You used indices in your analysis rather than investible funds. What funds do you recommend one own to get commodity exposure and have you run the numbers with these?

Larry has posted his preference for PCRIX. Warning! Do not consider this as “insurance” as is often referred to on this forum. In 2008 the total market measured by VTI declined 36.98, PCRIX lost 43.33%, in fact over the past 5 years the total market fund has outperformed PCRIX by 11.38% a year. Anyone using commodities as “insurance” should cancel their policy. What good is "insurance" if it is not there when you need it?

Bradley
by Bradley
Sun Jun 02, 2013 11:29 am
Forum: Investing - Theory, News & General
Topic: 3-fund vs 4-fund approach (reason for a REIT fund)
Replies: 22
Views: 2910

Re: 3-fund vs 4-fund approach (reason for a REIT fund)

Valuethinker wrote:
More likely 90% of Commercial Real Estate is privately held?

Thanks for clarifying my poorly worded post. :oops:





by larryswedroe » Fri Dec 14, 2007 3:33 pm

IMO he is however wrong on the other issue--RE is an asset class and the academic literature is pretty clear on that IMO. It is not a sector.

Also add that RE is vastly underweighted by TSM because about 90% of RE is privately owned. Thus if you want to even market cap weight you have to own much more RE than the 3% or so you get from TSM.