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Post by paulr888 on Jul 21, 2021 3:08:19 GMT
I saw interview today on CNBC with Meb Faber. He was discussing asset allocation. I found that I agreed with many things he said. I tried to find and post interview here but CNBC has it on its Pro subscription. I found something from 2 years ago on internet. If you are not familiar with Meb, check him out. www.youtube.com/watch?v=Pu-TDlbQ8q4I just went on www.cambriainvestments.com and the free asset allocation handbook is still available. It is 109 pages. All it requires is an e-mail address.
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Post by yogibearbull on Jul 21, 2021 3:17:19 GMT
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Post by paulr888 on Jul 21, 2021 3:46:44 GMT
Oh oh. Am I going to start receiving junk emails? Have you learned anything from him, YBB?
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Post by Norbert on Jul 21, 2021 5:09:34 GMT
Personally, I find him gimmicky and salesy, but others may see value.
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Post by paulr888 on Jul 21, 2021 8:55:26 GMT
Well ... I like him and find him educational and will continue to post what I hope at least some others find merit to. Here is another one. I liked when he said investors need to be good losers. Maybe that's why I like golf and am a bogie golfer at that. www.youtube.com/watch?v=GzsggtUjAJkHere's another one, more current. I see a lot of Gundlach thinking in this one. www.youtube.com/watch?v=Q9egMIbTo0EAnother from last year: www.youtube.com/watch?v=HPHjn-K_RAIHere is a long video but I found very interesting. A couple of takeaways: you don't buy players, you buy wins (meaning, does your team (portfolio) perform better with a new player (asset class) addition? Criticism of Sharpe Ratio was insightful. www.youtube.com/watch?v=Dqt0SAeHH0w
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Post by yogibearbull on Jul 21, 2021 12:21:34 GMT
I was only pointing out that Meb Faber has a large commercial operation that generates lots of PR and junk emails - may be less than WisdomTree & associated Jeremy Siegel (he is almost hawking his Econ Nobel). Beyond that, it is a reality of life that Fidelity, Schwab, Vanguard also generate lots of PR/junk emails.
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Post by paulr888 on Jul 21, 2021 13:55:42 GMT
I will watch for junk mails because they annoy me. The worst was when I donated to a political candidate for the first time and then got peppered with emails. Recently Motley Fool has been doing it to me. Other than that I can't identify any obvious violators. Certainly not Fidelity doing that to me that I can see.
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Post by retiredat48 on Jul 21, 2021 20:21:52 GMT
I am a big M. Faber fan...a fan for his early work on analyzing Moving Averages and momentum investing. He has written one of the bibles on these matters.
Then he tried to monetize this by creating some "momentum" mutual funds. He did poorly. Not surprising, as ALL mutual fund managers use momentum and Moving Averages, but do not publicize such. (Just like they all use stock charts--but don't state such in prospectuses.) Stock picking and trading is not an easy game, and Farber did not follow his rules much. His funds were terrible and became a proxy for "see, you can't use momentum in the market." Yet we know momentum stocks were tops in last decade--by a mile!
I will review these links cited to get an update on him...thanks for posting.
R48
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Post by FD1000 on Jul 21, 2021 20:47:26 GMT
Norbert: Personally, I find him gimmicky and salesy, but others may see value FD: I was a fan of Faber until his methods didn't work. The 10-12 months moving averages that worked great in 2000-2010 failed since 2010. This ( link) 2000-2010 show the SP500 lose money in 10 years while 10 months MA making 7.35% annually. This ( link) 2010-now shows the SP500 made a lot more money than 10 months MA with no trades. How painful it was to trade and make less money. Faber also have several funds he created based on his models. Let's look at 3 older funds GVAL,GAA,GMOM compared to the SP500. See ( link). They made less than half of the SP500. Faber introduced other funds ( link). 1-2 ETF may be better, such as TAIL but I lost my passion about these alternative/special/quant funds years ago.
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Post by paulr888 on Jul 21, 2021 21:26:55 GMT
No surprise FD. My goal is an "all bases covered" portfolio, bull markets, inflation, deflation, stagflation and volatility. The Dragon Portfolio is aimed to do that. My challenge is I want 4% yield and and Dragon Portolio does not yield that. But as an example of divergent thinking, Artemis interview said "You don't buy players, you buy wins." You are all about the best players, the best Sharpe Ratio. A rebounding Dennis Rodman added to a shooting Michael Jordan team analogy was insightful. You seem to compare a lot to S&P 500 and use Sharpe ratio. Not what these guys are doing and as pointed out the Sharpe ratio has flaws. These videos are helpful to people taking time to watch videos and thinking outside the box.
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Post by paulr888 on Jul 21, 2021 21:29:04 GMT
R48, I'd love to hear your thoughts after you had time to review and think about.
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Post by chang on Jul 21, 2021 23:59:29 GMT
"thinking outside the box" I have done it for years but I never forget the basics, risk/reward is always first, only then comes the rest. The other option is to be a good trader. There are all kind of traders. I will repeat what I said on the "Market Observations" thread (sorry cannot link to a single post inside a multipage thread): "I think Sharpe ratio is overrated, especially for younger investors who should embrace volatility. RPHIX had the highest 10-year Sharpe ratio out of all mutual funds, but if 2.83% APY is your portfolio 10-year return, shame on you. A low Sharpe is nothing to brag about, but a high one isn't either."FD you ply a very low-risk, low-return strategy, which is great if that's what you want. It's not necessarily what everyone else wants. I continue to think Sharpe (Sortino, etc.) is overrated, and managing a portfolio around risk-reward metrics is potentially deleterious. I hate to sound like a broken record, but some investors welcome volatility and capitalize on it. Even retirees!
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Post by paulr888 on Jul 22, 2021 0:17:47 GMT
FD ... I started this thread because I am intrigued by Meb and his podcasts and I am learning from them. Just like DoubleLine podcasts that I learn a lot from. My hope was people who take investing seriously have the time to listen to a 40 minute video or even an hour and half video. I do. But I am used to investing my time in learning. I've had enough experience with that with 2 advanced degrees. I hoped people with an open mind would listen to the videos and share their comments. With all respect, I have seen you in action for several years now and you are not capable of doing that. R48 is willing to do that. Perhaps others I thought might. If this thread goes nowhere, I am perfectly willing to cancel and delete and move on.
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Post by chang on Jul 22, 2021 0:28:40 GMT
Paul: I watched the videos. I had never heard of him before, so thanks for posting it. The only way I ever learn and improve what I do is by getting exposure to other people's thoughts and ideas. A few people (Albert Einstein, for example) can discover revolutionary new things by listening to the voices inside their head, but I fall somewhat short on that scale. I did find him a little salesy, and I didn't experience a strong connection with his messages. But I nevertheless appreciate when people link webcasts here. I can watch as much or as little as I want, but the fact that someone here has found value in a message makes it worth at least watching the first minute or so.
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Post by yogibearbull on Jul 22, 2021 0:33:45 GMT
chang "... sorry cannot link to a single post inside a multipage thread..." From the wheel-menu on upper-right of the post frame, use "Link to Post" and default is link to a particular post within the thread (posts above & below are also shown), see Example , or link only to that post.
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Post by chang on Jul 22, 2021 1:20:09 GMT
chang "... sorry cannot link to a single post inside a multipage thread..." From the wheel-menu on upper-right of the post frame, use "Link to Post" and default is link to a particular post within the thread (posts above & below are also shown), see Example , or link only to that post. THANKS yogibearbull, that is a brilliant find!
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Post by FD1000 on Jul 22, 2021 3:39:16 GMT
"thinking outside the box" I have done it for years but I never forget the basics, risk/reward is always first, only then comes the rest. The other option is to be a good trader. There are all kind of traders. I will repeat what I said on the "Market Observations" thread (sorry cannot link to a single post inside a multipage thread): "I think Sharpe ratio is overrated, especially for younger investors who should embrace volatility. RPHIX had the highest 10-year Sharpe ratio out of all mutual funds, but if 2.83% APY is your portfolio 10-year return, shame on you. A low Sharpe is nothing to brag about, but a high one isn't either."FD you ply a very low-risk, low-return strategy, which is great if that's what you want. It's not necessarily what everyone else wants. I continue to think Sharpe (Sortino, etc.) is overrated, and managing a portfolio around risk-reward metrics is potentially deleterious. I hate to sound like a broken record, but some investors welcome volatility and capitalize on it. Even retirees! I replied before that PERFORMANCE is always first for me then I look for risk attributes (SD, Sharpe and other) and why I never owned a fund such as RPHIX. SD+Sharpe are important only after performance.
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Post by retiredat48 on Jul 22, 2021 17:05:17 GMT
"thinking outside the box" I have done it for years but I never forget the basics, risk/reward is always first, only then comes the rest. The other option is to be a good trader. There are all kind of traders. I will repeat what I said on the "Market Observations" thread (sorry cannot link to a single post inside a multipage thread): "I think Sharpe ratio is overrated, especially for younger investors who should embrace volatility. RPHIX had the highest 10-year Sharpe ratio out of all mutual funds, but if 2.83% APY is your portfolio 10-year return, shame on you. A low Sharpe is nothing to brag about, but a high one isn't either."FD you ply a very low-risk, low-return strategy, which is great if that's what you want. It's not necessarily what everyone else wants. I continue to think Sharpe (Sortino, etc.) is overrated, and managing a portfolio around risk-reward metrics is potentially deleterious. I hate to sound like a broken record, but some investors welcome volatility and capitalize on it. Even retirees! +1...I do not shun volatility, and fully expect it in capital growth investments. Further, I have recommended forever that younger investors should SEEK VOLATILITY, in their selections. Max gains simply equate to max volatility , most of the time. And especially in 401.K plans , volatility is your friend. Since 401.K is essentially dollar cost averaging with small bi-weekly payroll deductions. It is those purchases at extreme fund bottoms in bear markets, that make a world of difference to positive wealth growth. R48
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Post by paulr888 on Jul 22, 2021 18:26:41 GMT
This retiree (moi) does not welcome volatility, particularly a big market sell off. My cash needs are planned for and I always have bond OEFs I can trim for more cash. The equity I own is for long term growth and my cash plan allows the equity time to recover. So in a big market sell off, it will get my attention and cause some angst but I will do nothing and just hold and wait for recovery. I do not need nor desire to rebalance into a plunging market. Being a bucketeer with an adequately funded bucket 1 allows me to implement this plan.
Thinking about adding some VIRT at the right price as a vol kryptonite play.
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Post by FD1000 on Jul 22, 2021 20:02:42 GMT
I will repeat what I said on the "Market Observations" thread (sorry cannot link to a single post inside a multipage thread): "I think Sharpe ratio is overrated, especially for younger investors who should embrace volatility. RPHIX had the highest 10-year Sharpe ratio out of all mutual funds, but if 2.83% APY is your portfolio 10-year return, shame on you. A low Sharpe is nothing to brag about, but a high one isn't either."FD you ply a very low-risk, low-return strategy, which is great if that's what you want. It's not necessarily what everyone else wants. I continue to think Sharpe (Sortino, etc.) is overrated, and managing a portfolio around risk-reward metrics is potentially deleterious. I hate to sound like a broken record, but some investors welcome volatility and capitalize on it. Even retirees! +1...I do not shun volatility, and fully expect it in capital growth investments. Further, I have recommended forever that younger investors should SEEK VOLATILITY, in their selections. Max gains simply equate to max volatility , most of the time. And especially in 401.K plans , volatility is your friend. Since 401.K is essentially dollar cost averaging with small bi-weekly payroll deductions. It is those purchases at extreme fund bottoms in bear markets, that make a world of difference to positive wealth growth. R48 You take a bit out of context. This is correct for young investors, but they should not invest in the most volatile fund, and why the SP500 is the most recommended index for a good reason. Higher volatility doesn't guarantee higher performance. Many retirees I know + on this board have enough, why should we take too much volatility if we don't need it? sure, there are always the exceptions(a. lots of money b. pension+401k that covers expenses c. late age and invest for heirs) but I'm talking about most. This is why most experts tell you to lower your % in stocks as you age, when you have enough.
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Post by retiredat48 on Jul 23, 2021 2:35:59 GMT
+1...I do not shun volatility, and fully expect it in capital growth investments. Further, I have recommended forever that younger investors should SEEK VOLATILITY, in their selections. Max gains simply equate to max volatility , most of the time. And especially in 401.K plans , volatility is your friend. Since 401.K is essentially dollar cost averaging with small bi-weekly payroll deductions. It is those purchases at extreme fund bottoms in bear markets, that make a world of difference to positive wealth growth. R48 You take a bit out of context. This is correct for young investors, but they should not invest in the most volatile fund, and why the SP500 is the most recommended index for a good reason. Higher volatility doesn't guarantee higher performance. Many retirees I know + on this board have enough, why should we take too much volatility if we don't need it? sure, there are always the exceptions(a. lots of money b. pension+401k that covers expenses c. late age and invest for heirs) but I'm talking about most. This is why most experts tell you to lower your % in stocks as you age, when you have enough. FD, you're not reading my words closely. I stated "I do not shun volatility, and fully expect it in capital growth investments."This sentence is limited to capital growth investments. It does not apply to total portfolios. To the extent one seeks capital growth (in lieu of dividend themes) in a percent allocation in their portfolio...seek volatility. Your allocations control the amount of risk you are comfortable with. Lastly, higher volatility DOES GUARANTEE HIGHER PERFORMANCE, for young investors in 401.Ks for example. Given two funds that start at $10 per share and end up at $20/share, you will always have more gain, more money, in the more volatile fund, with dollar cost averaging! (It's in the mathematics). It is also why you can start buying a fund in your 401.K at $10/share, have it be at $10/share two years later, yet you are way ahead...a positive return...math. R48
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Meb Faber
Jul 23, 2021 5:38:35 GMT
via mobile
Post by Norbert on Jul 23, 2021 5:38:35 GMT
chang"I continue to think Sharpe (Sortino, etc.) is overrated, and managing a portfolio around risk-reward metrics is potentially deleterious. I hate to sound like a broken record, but some investors welcome volatility and capitalize on it. Even retirees!" A few points ... All things being equal, I would prefer to own a portfolio with 20% annual gains and zero volatility; not 20% annual gains and massive volatility. But, that's impossible. The problem with the Sharpe and Sortino stats is that they "overweight" the importance of low volatility. Individual risk preferences are not considered in their formulas. Another problem is that past volatility is not predictive of future volatility. We all remember certain bond funds with amazingly smooth historical total return curves ... which suddenly crashed hard. So, I expect to see a degree of portfolio volatility and don't obsess about it. And my trading skills are not good enough to avoid all the market corrections. Bottom line: I don't hold 100% equities and low rated bonds simply because I would be upset to see my portfolio lose 30-50%. True, stocks always bounce back (though it took a very long time after 1929; think WW II). Getting another 20% would not have the impact of losing 20%, so it's not worth the risk for me personally. N.
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Post by FD1000 on Jul 23, 2021 13:09:59 GMT
FD, you're not reading my words closely. I stated "I do not shun volatility, and fully expect it in capital growth investments."This sentence is limited to capital growth investments. It does not apply to total portfolios. To the extent one seeks capital growth (in lieu of dividend themes) in a percent allocation in their portfolio...seek volatility. Your allocations control the amount of risk you are comfortable with. Lastly, higher volatility DOES GUARANTEE HIGHER PERFORMANCE, for young investors in 401.Ks for example. Given two funds that start at $10 per share and end up at $20/share, you will always have more gain, more money, in the more volatile fund, with dollar cost averaging! (It's in the mathematics). It is also why you can start buying a fund in your 401.K at $10/share, have it be at $10/share two years later, yet you are way ahead...a positive return...math. R48 "higher volatility DOES GUARANTEE HIGHER PERFORMANCE." You may think stocks vs bonds. I think all categories. Easy to prove it's not correct. SPY vs EEM the last 10 years(link). SPY had 4 times the performance with lower volatility. See attachment.The trick is to find the right risk-adjusted performance for your goals...if you care, and I do. 401K matters while your working, it's irrelevant when you retire and need to live off your savings for several decades. BTW, even if you invested $1000 monthly in each SPY,EEM in the last 10 years...your investment in SPY would be much greater. ============= Volatility is great when 1) It's mostly upward 2) You add volatility after a meltdown 3) If you avoid some of it. It's a lot more profitable to avoid the big losses( link). I don't mind being wrong and avoid the big losses. I was wrong about 50%. I missed the last 2 big correction of 2018,2020 (being out several weeks out) but hardly lost performance when I was wrong, out for only days. Attachments:
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Post by retiredat48 on Jul 24, 2021 3:18:05 GMT
FD, I'll simply repost what I stated:
Lastly, higher volatility DOES GUARANTEE HIGHER PERFORMANCE, for young investors in 401.Ks for example. Given two funds that start at $10 per share and end up at $20/share, you will always have more gain, more money, in the more volatile fund, with dollar cost averaging! (It's in the mathematics).
It is also why you can start buying a fund in your 401.K at $10/share, have it be at $10/share two years later, yet you are way ahead...a positive return...math.
-----------------------------------
Don't go off on some tangent like a comparison of asset class investments. Where are the statements I made incorrect, for the situation stated? Which BTW is quite common for most investors to find themselves in.
It can create quite an "ah ha" moment for those who realize these two facts for the first time.
R48
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Post by FD1000 on Jul 24, 2021 23:57:12 GMT
FD, I'll simply repost what I stated: Lastly, higher volatility DOES GUARANTEE HIGHER PERFORMANCE, for young investors in 401.Ks for example. Given two funds that start at $10 per share and end up at $20/share, you will always have more gain, more money, in the more volatile fund, with dollar cost averaging! (It's in the mathematics).
It is also why you can start buying a fund in your 401.K at $10/share, have it be at $10/share two years later, yet you are way ahead...a positive return...math.----------------------------------- Don't go off on some tangent like a comparison of asset class investments. Where are the statements I made incorrect, for the situation stated? Which BTW is quite common for most investors to find themselves in. It can create quite an "ah ha" moment for those who realize these two facts for the first time. R48 You are looking at a specific idea that hardly ever happens. Both funds started and ended at the same price. Please find me 2 stock funds at $10 each 10 years ago that ended at $20 after 10 years. I bet you can't find it. Let's look at a real case regardless of what are the starting/ending price and look at performance + SD.Investor Joe started with 3 funds(SPY,EEM,AMLP). He started with $10K in each and add $1000 monthly. After 10 years SPY had the lowest SD(volatility) but the highest end result where AMLP had the highest SD with the lowest results. See this( link) Attachments:
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Post by fishingrod on Jul 25, 2021 0:43:38 GMT
If one simply wants volatility to welcome higher performance, One only needs to invest in Penny stocks? You certainly get more volatility , But does one get higher Performance? I highly doubt it!! Why not put everything into the most volatile asset class when you start out?
Everybody was younger 15 years ago. When does one start to go towards more reliable assets?
Hmmm? Fishingrod
I also have got a lot of junk mail from his firm for a while.
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Post by fishingrod on Jul 25, 2021 0:46:31 GMT
Viable investments over a long time. Period. Not the most volatile you can find.
Fishingrod
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bf22
Commander
Posts: 135
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Post by bf22 on Jul 25, 2021 0:57:06 GMT
I don't think R48 meant that higher volatility leads automatically to better performance. However, volatility lets you buy more at lower prices. For example, I have been adding to UTG whenever the yield is at or above 7%. This has provided much better performance over the last 7 years years than the posted return numbers. If I misinterpreted R48, sorry...
(I don't want to hear that there is a better investment than UTG, that's not the point).
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Post by chang on Jul 25, 2021 1:21:35 GMT
I don't think R48 meant that higher volatility leads automatically to better performance. However, volatility lets you buy more at lower prices. For example, I have been adding to UTG whenever the yield is at or above 7%. This has provided much better performance over the last 7 years years than the posted return numbers. If I misinterpreted R48, sorry...
(I don't want to hear that there is a better investment than UTG, that's not the point).
That's the way I read R48's post as well. Suppose assets A and B both rise from $10 to $20 in 12 months; and suppose A does so in a straight line, while B goes up and down. If a hypothetical investor buys each asset according to a strict DCA plan on the 1st of each month, it is possible that at the end of 12 months the value of B will be more or less than the value of A. However, if the investor is afforded some latitude in when he makes his purchases, and if he buys on dips, then his final value of B can be much more than A.
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Post by fishingrod on Jul 25, 2021 2:00:13 GMT
"Lastly, higher volatility DOES GUARANTEE HIGHER PERFORMANCE"
I didn't say it.
I understand the math. It doesn't mean that the more volatile asset is going to guarantee higher performance, only the potential for higher performance , but also the potential for lower performance. Been there done that.
Fishingrod
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