agip,
A point of concern if I was an domestic ETF investor would be
1) the fund must replicate the index, therefore overweighting high market capitalization stocks
and
2) inability to overweight cash in the portfolio
I believe active managers will outperform passive managers in 2016. There is another prediction you can dig up 12/31/2016.
Igy
More on stock market valuations, this time from Henry Blodget, business Insider:
I believe active managers will outperform passive managers in 2016.
I'll take that bet.
POTO,
Like before your favorite beverage if I lose, and you do not have to reciprocate.
Can't beat that deal.
Igy
POTO,
By the way, active managers perform poorly relative to an index during a bull run. So by proxy, the bet largely hinges on the direction of the market.
Igy
So it's a win-win for both of us?
Ghost of Igloi wrote:
Uncle,
Perhaps he sold at year end, but here is an article from November 2015:
http://www.forbes.com/sites/petercohan/2015/11/08/5-reasons-warren-buffett-should-take-his-losses-on-ibm/Igy
So, you endorse the points in the linked article? My question was about YOUR thoughts, specifically. I know what's in the press. ('what leads you to declare IBM one of Warren's "losers"?')
Since you claim to focus on value vs prices (for the market as a whole), it surprised me that you jump to the conclusion that IBM is a loser. For example, point #5 in your article - sell IBM (at a 9 p/e) and buy MSFT (at a 37 p/e)... after MSFT stock has already appreciated 50% in less than 12 months... really?!
Uncle,
I was responding to a comment that Warren Buffett would never sell his winners, and I correctly responded that he didn't sell his losers either. Warren Buffett once said something to the effect that one should never buy a stock for a day, a month, a year, perhaps at a ten year time horizon if justified then buy. I suspect Mr. Buffett is more the face of Bershire than the active manager of the past. Certainly the purchase of Precision Cast Parts deviated from the past style that has been so successful.
In regards to IBM, I think it could be interesting at this level. I disagree with management's emphasis on stock buybacks rather than investment in the business. This in my estimation has been a serious mistake by management. I would want to see signs of a change in direction for investment in growth rather than financial engineering.
Microsoft under the new CEO has embarked on their own stock buybacks program. In the recent quarter the firm emphasized their non-GAAP earning growth. The valuation of the stock is very stretched at this level. Most large capitalized companies that trade at excessive valuations go thru extended periods of slower growth.
Igy
I don't think you correctly responded when you said he didn't sell his losers either, and claimed IBM was one.
1. He does sell losers (loser meaning bad investment, not just that the stock price went down for a few years). He sold COP, and said it'd been a bad purchase.
2. Buffett doesn't think IBM is a "loser". I suspect the long-term will prove him right, and your declaration short-sighted. Only time will tell, but your explanations of your reasoning, and linked article don't give me much confidence in your thesis. Just because the stock price has gone down for a few years doesn't mean it's a loser. The business is performing about as he expected when he bought with no surprises (his words on video). He's happy with the business performance, and has bought more stock this year. He has stated in numerous interviews that he's happy with their stock repurchases. He was aware when he bought that revenues would decline.
3. "I suspect Mr. Buffett is more the face of Bershire than the active manager of the past." Interesting, and weird, theory. This is so out there, I can't quite get my mind around it. Buffett has stated several times in recent interviews that particular larger purchases were his doing, and several medium-size investments were done by either Ted or Todd. They've made public exactly how much money Ted & Todd are running for Berkshire. So, basically you think he's lying when he says a particular big purchase was his doing? And, you think Ted & Todd (or some un-named other person) is running more money than Buffett & Berkshire has publicly stated? Quite the theory.
All the best to you.
Uncle,
OK, I will defer to your judgement on Warren Buffett. If I have erred on Mr. Buffett's current contribution I stand corrected. The Precision Cast Parts purchase was out of the Berkshire norm. My assumption was the youngsters with less stringent valuation metrics were asserting their influence. I do believe that Berkshire has taken a long view on investments and in the case of IBM has proven necessary. I believe companies that buyback stocks at excessive levels rather than investing for the future are suspect. ConocoPhillips is an interesting stock at current prices.
Best to you as well. Looks like another tough day ahead.
Igy
Maybe this will be the buying opportunity I thought we might see on Monday.
Or, another buying opportunity to go lower.....I think you will wish you waited.....
I have waited and am still waiting. I have a price point in mind. Not there yet.
Big,
I find it interesting that the number excuses for why the market goes down are increasing. I believe in the near future we will test the August/September lows.
Igy
Ghost of Igloi wrote:
Big,
I find it interesting that the number excuses for why the market goes down are increasing. I believe in the near future we will test the August/September lows.
Igy
I think you are probably right
but we should remember - anecdotally anyway - that the weeks leading up to earnings season are often jolty.
Last year at this time we dropped like a stone out of the gate - down around 3% I think. then had a small but material 1H rally.
Dow currently at 16,950.
Looking back on the predictions made less than one week ago about the Dow for 2016 we see:
• Ghost of Igloi 12/31/15
Close 10,900
High: 18,200
Low: 8,900
• Me 12/31/15:
Dow low in 2016 will be 11,800.
Close at 11,800.
High 17,900.
agip 12/31/15:
Dow high 19,100
Dow low 16,800
Dow finish 17,900
Big Dog 1/1/16:
Close: 17425
High: 18351
Low: 15370
Looks like agip is at a high risk of already being wrong on one of his guesses -- the low for the year. Less than one week in. Impressive!
Actually he's currently the closest to being right.
Pointing Out the Obvious wrote:
Actually he's currently the closest to being right.
Let's point out what's really obvious.
You are either just trolling or are legitimately one of the dumbest folks on the planet.
That's pretty funny coming from the guy who's been waiting 2.5 years for the Dow to go below 13,000.