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15 comments:
Roger,
Is a strengthing dollar a leading indicator that the market and the economy is starting to improve? If so, doesn't this indicate that the market has bottomed. I realize that this dollar strength could be a temporary move, but if it is the beginning of a bull for the dollar, than why can't we theorize that we have reached a bottom and we are now in an uptrend and not just a bear rally.
Thanks,
BWJR
Roger. In the video, you mentioned performance and the phrase "global total market." I consider myself a global investor (US, international, commodities, REITs, etc.), but, I believe like you, have traditionally compared my portfolio's performance to that of the S&P 500. This week, due I believe to the strengthening dollar, I trailed the S&P 500 significantly; however, I beat the performance of 3 global ETF's (VT, ACWI, and PTO). Is there a better comparison than the S&P 500 for a global investor? Thanks, JCarr
My broker was always calling to trade the "Z"s for the "W"s and back again.....made him a fortune :)
everything you said about the dollar could be true and the market could have bottomed. At times the dollar is a leading indicator.
If you want to reequitize based on something you did not think of before, go for it but I think changing plans midstream is a bad idea. I have my plan that I will stick to regardless of any of that other stuff.
Until it proves otherwise why would this be anything but a feel good rally in a bear market started by the worst financial crisis since....
Do you really think that adds up to such a mild bear market?
Jcarr, sorry but I spend no time thinking about this. The only input i ever had was that we should use SPX plus dividends. It makes sense for a firm providing service to clients to use an index people know and can follow.
Roger.
I was wondering if you ever head of the Hindenburg Omen?
http://tinyurl.com/67weqy
yes i have mentioned it a few times, just a few. I am no expert on it.
if i recall it is been triggered during every crash or the like but it has also triggered with nothing bad to follow, i think maybe more times with nothing bad to follow but I may be remembering incorrectly.
oh yeah, it triggered in june, i mentioned it in the video i did from Fenway Park
Roger,
Good piece...You referred to DFA in your video and I was wondering if you had any words of wisdom for someone comparing a DFA pure BH asset allocation policy versus a more active strategy. The BH advocate that over long periods they will always outperform due to lower fees, taxes, transactions, etc...
What is your counterpoint to this?
data can be mined to make every side of the argument. more benignly speaking people can take whatever they want from data to fit in with their thinking.
each one can work over the long haul probably providing different paths to similar results. Someone who is 60 with a chance of being longlived can count on a certain number of bear markets in his lifetime. In those bears, something close to 30% down is a good bet. some people will be ok taking the full brunt of those declines (so buy and hold or DFA) and others will not be ok with that. Those folks need to figure something else out for themselves.
Good answer - I would expect most prospects could benefit from your explanation. I guess I'm looking for some sort of magical risk/reward-fees calculation. For example, if you expect an advisor to deliver market (S&P 500) returns and less than market volatility, what kind of fees should one expect to pay?
thanks TomK
the idea behind trying to communicate how cycles work to clients before things get messy helps them to not worry as much; maybe instead of getting to level 7, for example, proper communication on our part can keep them at level 3 or less.
part of the equation, and i think this comes across in the writing, is that everyone, if they really think about knows what is going to happen. they may not know when or how much but a bear will come...and then end. we know this.
as far as what that is worth? totally subjective with the need to be competitive too.
Anon 9:12 - I use the MSCI All Country World Gross Index (USD, Standard, core options) as a benchmark. You can get it here:
http://www.mscibarra.com/webapp/indexperf/pages/IEIPerformanceRegional.jsf
I believe this is the best available benchmark for a global equity oriented portfolio.
mOOm where do you get sector and country weights? how do you truly benchmark if you do not have access to that information?
Roger: I don't try to math the index in terms of countries or sectors etc. but I think if you do have a globally diversified portfolio it seems an approriate benchmark to measure performance against, whereas in recent years beating the SPX total return index was easy if you had plenty of non-US exposure.
You can get the detailed information by paying MSCI for it:
http://www.mscibarra.com/support/ifaq.html
There are plenty of sources with recent info on the rough country weights, for example Ken Fisher's book. I use the "gross" index because I want to have a pre-tax benchmark it includes reinvestment of the full dividends. The net index has after withholding tax dividends.
i think we diff definitions of benchmarking.
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