A couple of good comments came in on the post about T's portfolio and there were a couple that came in on the post for Randall Forsyth's ETF portfolio too. Some thought they each looked good and some offered critique for possible tweaks.
This circles back to an important notion I have tried to convey about how do-it-yourself investors develop their own process by taking little bits from many different places. It is unlikely that T's portfolio, although ideal for him, is ideal for you but it is likely that you picked up at least one useful nugget from what he is doing.
One reader asked for OEF and ETF names for any frontier markets. There are no ETFs that I am aware of for real frontier markets-I don't think of South Africa (EZA) as frontier. I don't think of Russia as being frontier either but there are a couple of CEFs that focus on Russia with some other Eastern European exposure; CEE and TRF.
One OEF that might fit the bill is from T Rowe Price with ticker TREMX. It is supposed to invest in the region but it looks very top heavy to Russia. Anyone can feel free to leave other ticker symbols as I am sure there are others.
Is it me or are bears getting harder to find? I have no idea if a major turn is coming but I do know that when the next one comes very few people will see it coming.
Wikinvest Wire
18 comments:
Try VEEEX from Vontbel
The world is ending over here:
http://www.rgemonitor.com/blog/roubini
Bears are everywhere. Sky is falling. Cats sleeping with dogs. Plagues of locusts. Financial Armageddon. And whatnot.
It's just you.
Roger,
As a retiree I'm thinking about adding some TIPS to my asset allocation. In 2005 in Seeking Alpha you wrote that you owned (for clients) WIW as a TIPS CEF. Do you still like that fund for TIPS exposure? What are your thoughts about the need for inflation protection going forward.
i rotated into TIP last summer
.....if it's good, it can't be true...the sky IS falling, just as it did this Summer at the "bottom"
It's not you.
Within the blog world most of the Bears (perma-Bear or otherwise) are still bearish. It is within the main stream wall street punditry that they are getting a little scarce on the ground.
If you look at the last popping bubble, the bears got beat up for (at least) 2 years before they were eventually provin correct.
But on a index price bases the S&P 500 from Fall of 1996 to Summer of 2002 (almost 6 years) went absolutely nowhere. More to the point, looking at todays index prices puts you back around even with the Summer of 1999.
So the Bears can get beat up for a long time. Given that stock prices have gone up slower in recent history then they have gone down, that would lead to an obvious bias in the on-camera pundits toward bullishness (survivor bias). If your job involves matching a bench mark, it can involve an awful lot of finger pointing and withdrawn money before you are shown to be correct.
Of course being skeptical of the market and shorting the market are two different issues. This current run up is certainly causing a lot of shorts to cover their positions.
I like the phrase "until you are shown to be correct."
Would you rather be correct, or profitable? Last I checked, only one of those scored points.
Re: 1996 to 2006, unless you were on a desert island for ten years, you were in the market from 1996 to late 2000, early 2001 at the most, then re-entered in early 2004. Made more money by being bullish and bearish by turns. Good returns doing that. Much better than break-even.
The bears were legitimately talking about overvaluation as early as 1998, and there were two more years of gains. Better to ride it and wait for the trend to end, than to sit on cash. Assuming they're right (which I don't). Right now, the bears don't have near the case they had then.
BTW, strategists are more pessimistic about 2007 than they were about the two previous years. I downloaded all three BW surveys and deconstructed them on my blog. The options market is looking for a downturn. It's not just "the bloggers" –
I agree with NoDooDahs assessment of Russell120's statement, "If you look at the last popping bubble, the bears got beat up for (at least) 2 years before they were eventually provin correct."
I also picked up on the "correct" statement which should have been put in parenthesis with a "LOL" added for effect.
Losing two years of gains to miss a 10-15% correction through trying to time the market is a losers game.
My brother gets an investment advise subscription from an economist named Shepherd who has been warning his readers to be in cash for the last year based on the inverted yield curve. I'm sure that he also will tell his readers that he was "correct" too when the next correction comes. Wasn't it someone here that noted that Louis Rukeyser once said tongue in cheek something like "Economists have predicted 12 of the last 3 recessions"?
My advise is that if you feel antsy about the next correction that you stay invested with about a 20-40% cash position and let the correction happen. Then go right back in 90-95% in stocks and take the bounce right back up. Missing days like yesterday (ho, ho ,ho to the Santa Claus rally BTW) can also kill you portfolio.
I would wait until after January though to cut back. January is usually a great month when mutual fund managers who have sold this years dogs and folks with cash buy back in the market.
I know I'm a few weeks late on this, but what about an ETF that only owns equity securities of firms that don't provide quarterly guidance...
Roger, actually I was just asking for which countries you would classify as frontier markets. I wasn't necessarily looking for actual fund ideas, but thanks for bringing it up.
re: VEEEX, thanks that's worth more diligence.
@ anon: Raising cash is one way, but you have to take gains to do that. You could also sell covered calls, buy puts, use an inverse market ETF (even a levered one), buy a bear fund, short the Emini, etc. There are dozens of ways to hedge the position without getting "out" of the market if you feel a tidge of bearishness, and you could always rely on a trailing stop to take you out.
I'm bearish. Now is the time to not reinvest dividends.
"unless you were on a desert island for ten years, you were in the market from 1996 to late 2000, early 2001 at the most, then re-entered in early 2004"
How exactly is that supposed to work? Sounds more like a game of musical chairs where you just think you are more clever then the next guy.
Correct=
Jeff Vinik, ousted from Fidelity after being too bearish when faced with the Nasdaq bubble. From 1996 to 2000 his Vinik Partners went to high quality bonds and returned 646% over 4 years (S&P 110% over the same time period). In 2000 he retired. I am unaware whether or not he was living on a desert island at this time.
Characterizing it as a game of musical chairs is probably too charitable. Anyone who lost 30% by 2001 (a fairly common occurrence if you were fully invested) would have been confronted with the knowledge they had to earn a simple return of more than 42% on what they had left just to break even in nominal terms (with the additional risk that required level of return implies) in an environment where risk already seemed elevated everywhere.
Assuming that was the case and you had the nerve and got the timing right that means you would have needed to invest in a portfolio mix providing an annualized return of over 19% (compounded quarterly) from the beginning of 2004 to now to hit that 42+% and that's just break even, in real terms you're still a 'loser.'
Perhaps it's just the skeptic in me but I'm inclined to doubt a lot of folks have been doing that well.
Vinik got it 'correct' -- find a different game.
It depends on who the "next guy" is.
It would have taken a complete moron to NOT know the party was over by Jan '01. Combine the five-year parabolic trajectory of the markets with a super-fast "death cross" of the 50 and 200 DMA, and it was there for all with eyes to see. It "works" through a simple understanding of the market and a chart, you might think of getting one of those, or perhaps both.
Oh, about Vinik being "correct" - your words - by being bearish on the Nasdaq. From Jan 1996 to Jan 2000, the Naz returned 290% without dividends. He was "bearish" on it at the time that it was making 40.5% annualized.
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