Down goes the Dow

idiot investor wrote:

Limiting risk allows one to compound at a faster rate.

if you limit the portfolio drawdown at high equity valuations you will compound at a greater rate.

contradiction?

Yes, of course. Just don't expect the author to admit it.

Ghost of Igloi wrote:

Ryan,

Pretty simple equation, if you limit the portfolio drawdown at high equity valuations you will compound at a greater rate. The problem in this era you started with low yielding Treasuries (high valuations), so cash, short term bonds and alternatives become the preferred assets to lower volatility. Of course my view is based on a view that the 40-55% equity losses are assured by completion of this market cycle.

Igy

Ghost of Igloi wrote:

agip,

Here are a couple of "What ifs"....

What if rising interest rates are due to the end of QE and Central Banks to influence markets rather than growth?

What if we have the opposite of the QE phase, instead of stocks and bonds both going up, both asset classes go down?

What if populism leads to trade and currency wars?

What if the ETF trade blows up, with its dangerous market structure of overweight positions, coupled with institutional trading and buy-on-the-dip trading?

What if this whole Trump Trade is institutionally driven, and would have been similar with a Hillary Win (good for economy just like Bill)?

For better or worse, my history in the business keeps me scared and skeptical.

Igy

and of course if interest rates rise it will crimp the national budget as carrying costs on the national debt go up.

if the republicans actually care about deficits, they might push back hard aginst a free-spending Trump, esp after the fairly restrained last few budgetary years.

the whole freaking world will rely on congressional republicans - if they can hold back trump from what he has said he wants to do.

I'm a democrat so I have little faith in GOP leaders, but I'm hoping to be proven wrong.

The Republican Party is disfunctional. They'll be arguing with each other instead of with the Dems.

agip,

Central Bank policy has dominated this phase of the economic cycle. I am skeptical that a "hand-off" to higher growth is anything but a fantasy. Government programs have a tendency to suppress PEs via misallocation of capital. Demographics of an aging populations points to the difficulty of getting anything close to 4% GDP.

Igy

Ghost of Igloi wrote:

agip,

Central Bank policy has dominated this phase of the economic cycle. I am skeptical that a "hand-off" to higher growth is anything but a fantasy. Government programs have a tendency to suppress PEs via misallocation of capital. Demographics of an aging populations points to the difficulty of getting anything close to 4% GDP.

Igy

agreed that 4% growth is unlikely, for the same reasons as you

but

disagree that central banks have dominated. QE ended a long long time ago and wasn't very effective...the fed only sets on little interest rate....

the world economy is more massive than a central bank can influence meaningfully.

agip,

Here is link to a piece by Fasanara Capital. I know how you are not a fan of Zero Hedge, but this was the only link I could find. It is really worth the read even if you disagree with the conclusions.

http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/11/06/Fasanara%20Capital%20Investment%20Outlook%20November%2021st%202016.pdf

Igy

Isn't that the same sight that was posting fake news that you fell for?

read the article you might just learn something....

I read it. Did you? It's just a bunch of hypotheticals. The author even admits the market may invalidate what he wrote. What makes his guesses any better than anyone else's?

Speed reader huh? Maybe read a little more carefully next time.

here's one big reason for the bond rout - china selling treasuries to prop up its currency. That suggests this is a temporary blip. Certainly us treasuries should be pulling in money from around the world at this interest rate.

http://money.cnn.com/2016/12/16/investing/china-japan-us-debt-treasuries/index.html

Ghost of Igloi wrote:

Speed reader huh? Maybe read a little more carefully next time.

Speed reader? I replied 31 minutes after you posted the article. If you consider that speed reading, that would certainly explain a lot about you.

Ok, right....

I am gordeon

I used to be Igy

I am Leon.

I used to be Detector.

I am Detector.