We are in the middle of a huge storm that started Saturday night. It is going to take a break for a day or two and then start snowing again through the weekend. The picture is from yesterday around 4 pm. We now have about two feet. About every three hours I go out to shovel out the little pen to get to the woodshed, then up the path past the cars to the satellite dishes to wipe them off and finally the path you see on the deck. It is repetitive but it means shoveling four or five inches instead of two feet all at once, it is great exercise and minimizes wet feet from sinking in the snow.
CNBC had what could have been phenomenal business television yesterday when they managed to get Nouriel Roubini and Nassim Nicolas Talleb on for a double segment. They billed it as Dr. Doom and Black Swan.
Unfortunately it was mostly squandered. Whatever you think of either one of them they have contributed a stream of consciousness to the current crisis (Roubini more economic, Talleb more philosophical). To the extent they have been useful to anyone we are at a certain point between the beginning and the end of the crisis and the greatest benefit now comes from their assessment of where things are now along with some investment philosophy. That is these guys A-game.
Robin Farzad was on there and asked a ridiculous question about how to invest a college fund for a new born. Michelle Caruso Cabrera devoted about 30 seconds to a monologue that their status as "rock stars" could be sign of a bottom. Someone else asked if there was anything to the financials being up today (Monday). Dennis Kneale was asking square one questions thus preventing the dialogue from advancing beyond elementary. I gather from what I have read from Talleb that he has a lot of disdain for this sort of thing, I doubt anything about yesterday changed his mind.
A couple of things that emerged are that Roubini thinks a bottom might come sometime in 2010 which is not that far away in terms of time but in terms of price he thinks another 20% down from here. Talleb said we haven't even started deleveraging, a lot of private equity will go out of business but I did not hear him quantify what he thought the decline in equity prices would be or the time needed for this to all play out.
As opposed to investing advice I would have rather heard more about Talleb's philosophy on investing. They got into it a little but there were a lot of interruptions. From Roubini I would have liked to have heard a little more detail on what he thinks is going on currently and maybe a couple of if/then scenarios about what is being proposed and what he thinks should be done. Instead we learned that both of them have a large allocation to cash.
As I started to write this I did not intend it to be a rant. I get plenty of utility from watching in terms of straight news. For years I have spent more of my reading time on more opinion-oriented commentary as opposed to straight news because of the network. This is a tremendous time saver. An example of this that I have used before is the car companies. I have never owned a car company and doubt I ever will. I don't need every last detail I just need to be in touch with the story. When something comes up that I hear about on the network that I need to read more about I can seek that out later.
11 comments:
Roger, I agree with you about news vs. commentary, but I have to say that I'm getting tired of all of it.
The news is a steady diet of layoffs, foreclosures, and retail misery. Huge layoffs at UBS? Yawn.
CNBC can't figure out if they're Hardball or Hollywood Squares, and neither is useful.
The smarter than thou bloggers are uniformly dissing the new bailout plan before details are even finalized. Not helpful.
I hope I'm typical and this is a sign of a bottom.
I can't believe you spend so much time watching TV.
6:47, weariness is very reasonable after all these months.
6:59, example; the second thing i read everyday is the FT. it might take me an hour to get through it all. if during that hour something important happens i would not otherwise know until later. this is not acceptable to me.
There's been a few comments left on this board about possible Taleb styles recently, such as 90/10 Bond/Speculative allocations.
One other alternative I've personally used in the past is to speculate (equities) with the whole, but stop-loss and switch out into cash for the remainder of the year upon encountering a 5% decline.
Only wished I had stuck to that style over the last year! Wouldn't be 30% to 35% down at present had I done so :(
Strikes me that stocks will generally give you 12% p.a. for perhaps 14 years and then slap you with a 35% loss in the 15th year - knocking your compound rate down to 8% across that 15 year period.
Read somwhere (think it was in one of Crestmont research's documents) that you only need to capture something like 30% of the average up-run and avoid the losers in order to compare equally with buy-and-hold over the longer term.
PS : Yep - was Crestmont http://www.crestmontresearch.com/content/market.htm "Up and Down Capture"
It seems when someone with some notoriety is correct on the market, they become the focus of media attention such has been the case with Roubini, Schiff, and from the past, Garzarelli, Muhlenkamp,Granville,Battipaglia, and many more. What is missed is what they did in the past and the future and how wrong they also were. Even Buffet has made huge mistakes you rarely hear about. Is there really anyones advise you want to follow? Who do you think is really best?
there can be no best. each event is different. someone might nail this event in terms of true understanding but just not get the next one. this event was clearly a very hittable pitch for Roubini, then next event could be the equivalent of an effective knuckleball for him but for someone else it will be the equivalent of a hanging curve.
BTW, pitchers catchers report this week, lol.
What I find very interesting, in the the past 5 years and maybe longer, that the Lehman Aggregate Bond Fund Index has done better than most domestic equity funds and at much less risk. Is that saying something? And the broad market has not earned anything in past 10 years but the bond index (VBMFX) had total return of 5.21% Only about 20 equity (not including specialty) did better.
Of all pitches I hate a knuckleball the most: Slow and erratic, even the catcher doesn't know where it's going to land and you can snap your spine leaning forward and back while hanging the swing trying to hit it; which must have been the way Roubini and Taleb felt cuz, based on the snippet(s) I saw, the CNBC knuckleheads where throwing nothing but knucklers.
As entertainment, which is about a third of what financial TV is, it didn't work well at all but I'm sure management (and the advertisers) felt the sacrifice was worth it if only to protect the more important half of the biz which is supporting sales; i.e., if someones 'celebrity' forces you to invite them on the show even when they are (a) pessimistic about financial assets and (b) critical of the way markets have been engineered and the sell-side forces that engineered them, then it's important to make sure their message is obscured; if it's a couple someones then it's tag-team time (oops, mixed my metaphors).
What's the first thing you read? Do you take the FT in print or online and what is your opinion of WSJ? I read the print version of WSJ everyday, but the money and investing section has really been cut back since Murdoch's takeover, otherwise still a great newspaper. I prefer print because I am away from my PC for most of the day.
Curions minds want to know!
there have been several, not many, ten year periods where bonds outperformed--i think this has occurred 8% of the time over the last 90 years. that stat is close but probably not exact. the concept is the reason for owning equities.
I read Seeking Alpha Must Knows first then some of the short SA posts which is a good way to warm up, then the FT, then WSJ. along the way I open links from other things that i then read later along with the long SA posts.
Krugman actually had something funny to say about the interview with Roubini and Taleb: http://krugman.blogs.nytimes.com/2009/02/10/nouriel-roubini-and-nassim-taleb-on-cnbc/
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