Down goes the Dow

Maserati,

Two of the big projects in Boise are on land that was already owned by the respective builders. The first a corporate headquarters, they moved from another town 35 miles away. The company had tried to sell the property for years to the downtown convention district. The second, and right outside my office window, the owners of my office building, are in the last stages of an eleven story office building and adjacent five story parking lot and ballroom. Yes a ballroom on top of a parking garage. The have built on every last square inch of real estate. Interesting how these projects were on already owned land, and the tenants are moving from other areas in the vicinity.

Igy

agip wrote:

so let me get this straight

Investors in the vanguard reit index VGSIX have made 10.77% per year on average each year for the last 20 years. Without lifting a finger. These investors went on earning their normal incomes working. Passively making 10.77% per year.

Or you can take the magic maserati pixie dust and spend a lot of time and effort doing some sort of real estate deals and - we'll take his word for it - make some amount more.

But but Maserati's word, passive investing is a casino.

Well I don't get it but maybe someone else does.

There's the "slight" matter of the 69% drawdown in 2007-2009 that you had to sit through to get those returns. I'm not aware of any wealthy clients that would sit through this kind of thing, my family clients for sure. By comparison, the Boston Partners Long/Short Equity Fund BPLEX is something you might get from a private banker. The return is about the same as VGSIX, but the max drawdown is about half of what you listed, and this is a long/short fund and is not managed as a passive investment although you can buy-and-hold..

All of this is why trend following delivers higher returns for lower risk--the Sharpe Ratio is much higher.

Also, keep in mind that Janet Yellen is scheduled to speak a couple of hours after the GDP revision and consumer spending comes out tomorrow. If the Fed really intends to hike on 6/15, there is likely to be market making news here, as she will likely provide warning.

Maserati wrote:

agip, is there ANYTHING you do that is not living in the past?

I'm talking about predicting the future behavior of markets, not about what has already happened.

As Igy has said, money is looking for a place to go. Overcapacity is developing in some condo and commercial RE, and it is true that much of it is not demand-fueled. Yes that particular REIT has done well in the past, and yes HD might have good revenues this year, and yes HOVNP might have a good showing by year end.

fair

portfolio theory, man!

while this fund, which might make up 7% of your portfolio, was falling by half, your long term treasuries, which might make up 25% of your portfolio, were flying.

Ghost of Igloi wrote:

agip,

I had my best AlterG workout so far yesterday. Still have a hitch in my giddy-up, but improving. I may try something a little more intense Monday with the day off.

Igy

what's the hitch?

Yet he didn't seem to mind NFLX going from 304.79 to 53.05; a 82.6% drawdown !!!

la gente está muy loca wrote:

agip wrote:

portfolio theory, man!

while this fund, which might make up 7% of your portfolio, was falling by half, your long term treasuries, which might make up 25% of your portfolio, were flying.

Yet he didn't seem to mind NFLX going from 304.79 to 53.05; a 82.6% drawdown !!!

well here's a criticism of the fund I'm more comfortable with:

It has a wonderful long term record. Beaten every benchmark over 10+ years.

But that seems to have stopped in 2011.

It has underperformed both the SP500 and the vanguard balannced index since around 2011.

So what do you do with that? Do you think the previous outperformance was just luck, or maybe you figure that the managers were only in sync with markets for a while but not any more?

Or do you figure sometimes you have to wait out bad performance?

that's the problem with active management - you'll have these long 5 year streaks of poor performance. You won't know if the managers have lost their touch or if it is a hiccup.

I'd rather be passive - indexes can't underperform...they are the benchmark. And you aren't relying on the quality of a manager's marriage or alcoholism.

So far they are doing some catchup in 2016 - doing very well so far this year.

...and one more thing on that fund - it lost 21% in 2008. The vanguard balanced index lost 22%. So active management didn't add much value in the downturn.

agip,

The best description would be an imbalance in muscle of the hip on the right side. It causes an anterior tilt of the right hip, and resulting lack of leg extension same side. AlterG runs and weekly PT exercises are helping. Six months ago I thought hip replacement surgery was in the cards. Running ten milers in the foothills were only a dream. As one of my running buds would say "not sure what that will buy me."

Igy

Happy 120th birthday to the Dow.

la gente está muy loca wrote:

agip wrote:

portfolio theory, man!

while this fund, which might make up 7% of your portfolio, was falling by half, your long term treasuries, which might make up 25% of your portfolio, were flying.

Yet he didn't seem to mind NFLX going from 304.79 to 53.05; a 82.6% drawdown !!!

But I'm not implying that I can make--easily--250% either. NFLX was up 2200% at the end of last year and 1674% now since I bought it. And, no, I'm not selling with analysts projecting earnings to go up 295% next year, and that's not a misprint (and the estimate is going up, not down).

You can't have it both ways. If you are going to claim that you can just sit there and enjoy 10-11% returns with passive investing (which Agip did say), then you have to face the drawdown. If you are going to say that this is less than 10% of your portfolio, then you aren't making 10-11% on your whole investment and you aren't making 10-11% easily with passive investing.

U.S. stock futures inched higher on Friday, with investors hesitant to make major moves ahead of a speech by Federal Reserve Chairwoman Janet Yellen and a long holiday weekend.

"Given that we have two major risk events for the markets in the coming weeks--EU referendum in the U.K. and possible rate hike from the Fed--I do wonder though whether this [recent] rally has the legs to build significantly on the moves of the last couple of days," said Craig Erlam, senior market analyst at Oanda, in a note.

U.S. stocks closed little changed on Thursday after two days of strong gains, which came on the back of upbeat economic data and oil prices moving above $50 a barrel. However, the rally started to fizzle later Thursday as crude failed to hold above $50. Both West Texas Intermediate crude oil and Brent continued to fall on Friday.

The Fed chief pays a high-profile visit to Harvard University on Friday, where she's scheduled to deliver a speech at 1:15 p.m. Eastern Time. Investors are eager to hear any views on the interest rate outlook, after a week of mixed signals from other Fed members. "While the Fed doves have led the game so far this week, any hawkish hint could bring the hawks back on the field," said Ipek Ozkardeskaya, market analyst at London Capital Group, in a note. "However, it is also well possible that Janet Yellen doesn't talk about the monetary policy at all, and that the U.S. dollar closes the week flat before the jobs week," he added.

MarketWatching

"Given that earnings continue to decline--I do wonder though whether this [recent] rally has the legs to build significantly on the moves of the last couple of days," said Igy said.

The Fed chief pays a high-profile visit to Harvard University on Friday, where she's scheduled to deliver a speech at 1:15 p.m. Eastern Time. Investors are eager to hear any views on the interest rate outlook, after a week of mixed signals from other Fed members.

"While the Fed doves have led the game so far this week, any hawkish hint could bring the hawks back on the field," said Igy, in a note. "However, it is also well possible that Janet Yellen continues the double talk, and that the U.S. dollar closes the week flat before the jobs week," he added.

Ghost of Igloi wrote:

agip,

The best description would be an imbalance in muscle of the hip on the right side. It causes an anterior tilt of the right hip, and resulting lack of leg extension same side. AlterG runs and weekly PT exercises are helping. Six months ago I thought hip replacement surgery was in the cards. Running ten milers in the foothills were only a dream. As one of my running buds would say "not sure what that will buy me."

Igy

hmmm...

glad that things are improving so quickly and that you might avoid hip replacement. The body is a mysterious thing...all connected and unpredictable. The only thing I know for sure is that we need to use as many muscles as possible. And rest a lot.

I'm adding new dings every month it seems. Feeling old. I have a neuroma, plantar fascitis that somehow moves up to my ankle, and a chronic hip flexor pain.

It's all manageable and I'm running pain free 90% of the time, but it's like a video game trying to steer through a boulder field. One of these things is going to hit me.

agip,

I should have consulted profession help on the hip years ago. At the time of the injury the wife and I were busy caring for elderly parents. Moving into a new house, each of us getting hernias. All kind of funny looking back.

The Straussberg Sock (sp) and eccentric calf stretches (up on two, down on one with bent knee) have worked for me on plantar fasciitis.

Fortunately I have always stayed active, maybe not running competitively. At times limited to doing my own house and yard maintenance.

I think you are right, use it or lose it.

Igy

Ghost of Igloi wrote:

agip,

I should have consulted profession help on the hip years ago. At the time of the injury the wife and I were busy caring for elderly parents. Moving into a new house, each of us getting hernias. All kind of funny looking back.

The Straussberg Sock (sp) and eccentric calf stretches (up on two, down on one with bent knee) have worked for me on plantar fasciitis.

Fortunately I have always stayed active, maybe not running competitively. At times limited to doing my own house and yard maintenance.

I think you are right, use it or lose it.

Igy

I've heard of that sock - I'll give it a try.

use it or lose it indeed. You walk around the streets of NYC and you can see 90% of people never use muscles enough...they just sag everywhere. When you see an athlete they stand out so sharply.

Econ today:

1Q GDP revision up to 0.8% q/q and now +2.0% y/y

corporate profits minus 3.6% - stuck in that range

Consumer sentiment: big positive jump. up to among the highest numbers in the last 4 years.

agip,

You have extremes in Idaho, lots of avid runners/bikers/triathletes but the other extreme of fatsos. My wife and I consider NYC one of our favorite cities and we have commented how generally folks were slimmer there. Our theory was more walking to from work then people out West.

Theory on the Strassberg sock is opening up the tissue to aid circulation and healing during sleep. Can be a little uncomfortable to get use to, but it works.

Igy

"I think you are right, use it or lose it."

This might be the single most valuable piece of advice to maintaining capability, both physical and mental.

Regarding the issue that some of you apparently believe that passive is just fine, I'm here to tell you that momentum investing like coach d does, if done right, can make you a medium winner--not the biggest winner, but also not the greatest risk-taker. Again, I have a friend who does this, who has done very, very well for the past 10 years. All told, his returns have equaled mine...and, he has had to work at it even harder (longer) than I have.

Also, regarding equities, I will say again that out of the FANG stocks, I might actually buy AMZN, if it were for the long term (20 yrs), MAYBE also NFLX, but NFLX is going to run into significant competition in content delivery, which is why the move is on among all those players to content generation.

IMO much will be dependent on management team strategies. I admit I don't know enough about them at the moment to make an informed decision one way or another.

Igy

I've only been in Idaho once, and it was in a tourist place so not all locals, but I was so impressed by the kids - rail thin and running all over the place, very few phones visible.

NYC has a lot of everything I suppose yeah...that's the appeal.