Down goes the Dow

kinda helped me wrote:

agip wrote:

eh, I wasn't in this business until 2008. so I had nothing to contribute. In my own accounts I had no gold until 2008, so I did miss out the gold rally in my own money.

I had about 3% of client portfolios in commodities from 2008-2011 ish. Sold when commodities moved below their 200 day moving average.

I'll get back in when commodities move back above their 300 day moving average.

the bigger point is that owning only large cap us stocks is not a diversified portfolio.

What percent of the "commodities" allocation is gold? Do you just hold a general commodities fund/etf or do you actually hold gold or a gold etf within that 3% "commodities" allocation?

__

hmmm well I made some changes through the period. the biggest position I had was a basket of commodities - around 25% of it is metals incl gold. an ETF. It was also agriculture, softs and energy.

then I would own some gold on top of that sometimes.

Now the only commodity type thing I own is timber - a fascinating asset class.

I generally don't like commodities - I just use the 200 or 300 day rule to be in or out. And in small quantities. If there is no dividend or earnings...hard to value the critters. something with a cash flow is usually a better investment, I believe.

agip wrote:

eh, I wasn't in this business until 2008. so I had nothing to contribute. In my own accounts I had no gold until 2008, so I did miss out the gold rally in my own money.

I had about 3% of client portfolios in commodities from 2008-2011 ish. Sold when commodities moved below their 200 day moving average.

I'll get back in when commodities move back above their 300 day moving average.

the bigger point is that owning only large cap us stocks is not a diversified portfolio.

agip wrote:

A good advisor will make sure that a portfolio is truly diversified, so you get those 15% per year returns from emerging markets, and 10% per year returns from mid cap, and the massive return from gold during the 2000-2013 period.

your dour description of the 'market' is proof of the value of a good advisor.

I don't disagree with the "big picture".

The problem I have is that (underlined above), you stated that "good" advisors capitalized on the massive returns of gold from 2000-2013. That is obviously not the case for you or most advisors like you. You likely never had more than 1% of your client's portfolios ever allocated to gold. Just 3% to "commodities". So why is gold one of the three examples you listed?

Furthermore, "commodities" in general got crushed in 2008. A 200-day system wouldn't have entered again until mid/late 2009 (yet, you claim 2008). And, commodities sucked 2009-2011 compared to gold, yet you originally said "gold" and not "commodities". That's interesting. Nice spin. (gold vs commodities:

;range=20080125,20131118;compare=gld;indicator=sma(200);charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;) ** need to copy & paste that entire link to see the comparison, and the 200-day MA.

I know it works better for your sales pitch (and ego) to cherry pick the best returns of all asset classes and try to associate yourself with them, but you should really be more honest in your claims.

fresterer wrote:

No lie. You're reading skills are really terrible.

"reading skills".

Do you mean literacy? Or perhaps reading comprehension?

What language did you speak growing up? It couldn't have been English.

wow. I'd love to have a conversation with you - you are assuming too much and being way too aggressive. You don't have the full picture, which is understandable in a messageboard format.

let's see.

Q: You likely never had more than 1% of your client's portfolios ever allocated to gold. Just 3% to "commodities". So why is gold one of the three examples you listed?

A: my point there was to defend the profession and to point out us large cap is not the only measure of the investment markets. Surely you would agree that a good advisor would have had clients in gold in 2000-2011. I never claimed I had put clients in gold in a large way.

When i wrote that, I was thinking of asset classes that did great while big cap US stocks did crap. Gold came to mind so I put it in the list. I'll agree that I don't like commodities much as investments - so what? I will never own more than 5% in commods, unless you count timber, which I like.

Q: A good advisor will make sure that a portfolio is truly diversified, so you get those 15% per year returns from emerging markets, and 10% per year returns from mid cap, and the massive return from gold during the 2000-2013 period.

A: I wasn't an advisor til late 2008. I started in the depths of the recession. Commodities had already crashed. I then bought commodities cheap. You can't hold that against me. It was the right decision at the right time. From when I started work in late 2008 til I got out of commods in 2011, the basket I use and gold had essentially identical performance.

Q: Why did you own commods in such small size?

A: Well, starting in 2008 at massively cheap equity prices, I thought stocks were better investments. So I preferred stocks. And I was right, again. Stocks outpeformed gold and commod baskets in 2009-2011. You are criticizing me for making the right decision in favoring stocks over commods - that makes no sense.

Q: Commodities got crushed in 2008, gold didn't.

A: yes. But I had neither gold nor commodities nor clients til October 2008, so your point is largely irrelevant. I suppose I wish I had personally owned some gold in 2008 cause it was up 5% or so that year. My bad.

in short, I understand with and agree with many criticisms of my profession. Most are indeed hacks. that's how I have built my business - by stealing clients from bad advisors. it's not hard, for some of the reasons you have stated.

But your criticisms don't touch me - I'm the good guy here.

A better question is 'why should anybody ever invest in commodities?'

Taking the following as given (i.e., the most supportable assumptions available):

1) The stock market will outpace inflation over time

2) Predicting when the market will be outpaced by inflation is an impossible task

3) Commodities can be expected to just pace inflation over time

Then it would seem that the only rational justification for investing in commodities is for some diversification benefit. Even this, however, would seem to be a mirage unless one has evidence that somehow commodities' place in the global economic system is somehow underrepresented by commodities' import within global equities. Otherwise one would actually be hurting one's diversification by adding a commodities component to one's portfolio in much the same way that adding a high-tech fund to your portfolio of a single global equities index fund will hurt your diversification by over-weighting a particular sector.

commodity returns are not highly correlated to stocks - that's why you own them.

and as a hedge against weakness in your home currency

or if you think the world will start to run out of commodities. then you buy them cheap, before the shortages drive up the prices.

i'm sure there are other reasons but those came to mind.

agip wrote:

commodity returns are not highly correlated to stocks - that's why you own them.

and as a hedge against weakness in your home currency

or if you think the world will start to run out of commodities. then you buy them cheap, before the shortages drive up the prices.

i'm sure there are other reasons but those came to mind.

You appear to not fully understand what was written. But thanks for trying anyway.

PS: I don't know what dbc is - I used GCC, which seems to have done far better than DBC.

fresterer wrote:

No lie. You're reading skills are really terrible.

K5 wrote:

"reading skills".

Do you mean literacy? Or perhaps reading comprehension?

What language did you speak growing up? It couldn't have been English.

I purposely kept it simple for you. Apparently it wasn't simple enough. Sigh.

Maybe you should email Warren Buffett and Bill Gates. Those guys are pretty good investors, who bought huge stockpiles of silver. You could obviously educate them.

Bill Gates is not known as a good investor. Please try to educate yourself.

And while you are educating yourself you may want to try to reach the level of Warren Buffett in order to be able to claim (without causing laughter in those around you) sufficient insight into world markets to be able to determine the short term direction of equity and commodity markets and to be able to do this consistently enough to be useful.

If you are not going to reach the investment level of Warren Buffett then you may want to think about what is a sensible strategy for you. Of course, this assumes that you do possess the ability to think at all.

Better Questions wrote:

Bill Gates is not known as a good investor. Please try to educate yourself.

Educate yourself about Cascade Investments LLC.

fresterer wrote:

fresterer wrote:

No lie. You're reading skills are really terrible.

K5 wrote:

"reading skills".

Do you mean literacy? Or perhaps reading comprehension?

What language did you speak growing up? It couldn't have been English.

I purposely kept it simple for you. Apparently it wasn't simple enough. Sigh.

I see. You find the word literate and the term reading comprehension to be complex do you?

The Real K5 wrote:

I see. You find the word literate and the term reading comprehension to be complex do you?

Not at all, but is was afraid that you did. That's why I dumbed it down for you. You're welcome.

fresterer wrote:

The Real K5 wrote:

I see. You find the word literate and the term reading comprehension to be complex do you?

Not at all, but is was afraid that you did. That's why I dumbed it down for you. You're welcome.

Dumber it down? No. Effed it up is more accurate. You have no grasp of the English language. You are one stupid MFer.

Strews wrote:

Better Questions wrote:

Bill Gates is not known as a good investor. Please try to educate yourself.

Educate yourself about Cascade Investments LLC.

Please educate yourself regarding the difference between ownership and management. Then look up Michael Larson and Robert Thomas.

fresterer wrote:

Not at all, but I was afraid that you did. That's why I dumbed it down for you. You're welcome.

K5 wrote:

Dumber it down? No. Effed it up is more accurate. You have no grasp of the English language. You are one stupid MFer.

No, I "dumbed" it down. There's those pesky reading issues of yours again. I'm starting to understand why you have trouble grasping the simple concepts presented in this thread. Have you been tested?

P.S. "Effed" and "MFer" are not part of the English language. See? Not only do I have a grasp of the language, but I have a better one than you.

https://www.youtube.com/watch?v=X9Svm8xc1z8

the free flowing aggression is free flowing a bit too much

Better Questions wrote:

Bill Gates is not known as a good investor. Please try to educate yourself.

Strews wrote:

Educate yourself about Cascade Investments LLC.

Better Questions wrote:

Please educate yourself regarding the difference between ownership and management. Then look up Michael Larson and Robert Thomas.

"Cascade Investment, L.L.C. is an American holding and investment company headquartered in Kirkland, Washington, United States. It is controlled by Bill Gates, and managed by Michael Larson."