We flew from LaGuardia to Chicago to Omaha and then drove to Des Moines for a family function that starts in a couple of hours. Tomorrow its back to Omaha for game six of the College World Series.Our luggage didn't quite make it to Omaha when we did so we are going to my nephew's wedding reception in a t-shirt and convertible pants for me and a t-shirt and jeans for Joellyn, what a hoot.
To a market related topic; I noticed that several stocks I own for clients have lifted their dividends substantially. The impact on the portfolio will just be a couple of basis points or so but it can add up over time.
I am reminded of the fact that people who bought Philip Morris (now Altria and a client holding) in the mid 1980s are getting 100% a year of their original cost. That to me is a very compelling argument to go heavy, but not exclusively, with dividend payers.
One item from the conference from the other day; during the panel I sat on (the only one I attended, shhh don't tell anyone!) I was asked a question about country selection and my answer included a mention of Sweden. One of my co-panelist who runs a lot more money than me but who I believe does not own any individual stocks (sorry if that it not correct) asked why I own Volvo instead of iShares Sweden (EWD) which he owns.
I have written favorably about EWD once or twice for TheStreet.com and while it has generally done well I view Volvo as a better way to capture the country. I pointed out that EWD is heaviest in Ericsson (turns out its 15%) and that telecom equipment stocks like that one, and Nokia for too, tend to rotate in and out of favor very quickly. Telecom is a sector (I think of Ericsson as a telecom stock) where I want less octane and more yield for now. Further Volvo is a way to add a lot of yield, more so when I first bought it four years ago.
I am guessing, based on the look on my counterpart's face, that they don't think about ETFs in that manner (to be clear this is supposition on my part). If you integrate any type of fund product into your portfolio I think it is crucial to make these sorts of assessments about the funds. It may be that adding volatility in telecom is the better trade but that is not the point, even with "passive" portfolios there will be some places where it will make sense to you to add volatility and some places where it will not.
I think viewing it in these terms will allow for better management of the overall result--maybe not better returns but maybe better risk adjusted returns.
5 comments:
Roger--Enjoy your thinking on how to capture the effect of a country using a stock(s) instead of an ETF. If you were a fund manager in another country, how would you capture the U.S. market, with an ETF or an individual stock(s)?
siestadreamer
Say hi to everyone.
siesta trader,
as i tend to prefer individual stocks...
Larry,
will do
The best managers I have seen pick stocks during a time when I would not have bought them. Thus, passive investing, or index, or ETF investing became a viable way to force yourself into buying whatever quant model the index says to buy. This way, you are not just following the herd.
So, if Roger can pick Volvo over Nokia...so be it. But I have serious doubts that picking individual stocks is going to give a better risk adjusted return. Maybe better returns, but the risk is increased.
Rarely will you see a stock picker understanding the ETF trade.
g
Models this week:
Timing Model=3.5
100% long
Global Allocation of long positions
MSCI EAFE Index 40%
MCCI Emerging Markets Index 30%
Russell 3000 Index - U.S. 30%
Top U.S. Sectors
Composite Internet 3.5
U.S. Basic Materials 3.5
U.S. Oil & Gas 3.5
U.S. Oil Equipment, Services & Distribution 3.0
U.S. Mobile Telecommunications 2.5
Top Intl ETFs
MSCI Malaysia Index Fund 3
MSCI Germany Index Fund 3
S&P Latin America 40 Index Fund 3
MSCI Netherlands Index Fund 3
MSCI Singapore Index Fund 3
MSCI Brazil Index Fund 3
MSCI Mexico Index Fund 3
FTSE/Xinhua China 25 Index Fund 3
MSCI South Korea Index Fund 3
MSCI Emerging Markets Index Fund 3
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