In the face of a nasty Greek exit from the eurozone, investors have little choice now but to cling to low-yielding U.S. government debt, says Pimco's Bill Gross. Despite our own debt mess, a flight from risk assets is going to continue to send money into Treasurys. "It's what we call the cleanest dirty shirt," Gross says; "at the moment the cleanest dirty shirt is the United States." [View news story]
SEC staff will not recommend any enforcement action against Lehman or any of its former executives after completing a probe of possible financial fraud there, reports Bloomberg. "Repo 105 is magical," tweets Josh Brown, "It makes losses disappear long enough to file a 10Q, then they come back until the next Q is due." [View news story]
Reminds me of the paradigm in the 1930's that Nazism was the opposite of Communism which was really bad so therefore Nazism was good or better. Tens of millions of dead later we realize both were bad and it all happened right under our noses.
Reps and Dems are not that different in real terms. Rhetoric is different I suppose but actions and results are the same.
SEC staff will not recommend any enforcement action against Lehman or any of its former executives after completing a probe of possible financial fraud there, reports Bloomberg. "Repo 105 is magical," tweets Josh Brown, "It makes losses disappear long enough to file a 10Q, then they come back until the next Q is due." [View news story]
I seem to recall claims in the last election that Bush's SEC was corrupt and wasn't doing anything about these massive failures like Lehman and Bear.
So what has changed? Either that was just election trash talk or someone did not know what they were talking about.
Vanguard's Jack Bogle takes advantage of Facebook's (FB) plunge and the negative impact it's had on the psyche of the retail investor to hammer home the merits of index investing. Bogle says: "It all comes down to value and it all goes away from price, and avoiding IPO's and avoiding individual stocks is the best strategy for investors." (video) [View news story]
kmi
You are a relatively sophisticated person arguing that you are simple..........LOL. Anyways if you want to show the rough math on your hypothetical portfolio that would be interesting.
Index funds from the John Bogle perspective are invest and and forget it because people are just not smart enough to know what to do with their money and they will do better than any other approach. That I don't believe. Just buy CDs and forget them is better from 2000 to 2011.
Vanguard's Jack Bogle takes advantage of Facebook's (FB) plunge and the negative impact it's had on the psyche of the retail investor to hammer home the merits of index investing. Bogle says: "It all comes down to value and it all goes away from price, and avoiding IPO's and avoiding individual stocks is the best strategy for investors." (video) [View news story]
kmi
I am being fair to the arguement and I chose the S&P 500 because it is reasonably broad.
The arguement was that investors don't have time or the expertise to analyze stocks. So how do they have time or expertise to analyze different sectors or countries? If you have expertise to analyze sectors or countries which means you are also making currency calls then you can likely handle stocks also.
If you throw in ETF's they have another set of problems that take sophistication to navigate.
Vanguard's Jack Bogle takes advantage of Facebook's (FB) plunge and the negative impact it's had on the psyche of the retail investor to hammer home the merits of index investing. Bogle says: "It all comes down to value and it all goes away from price, and avoiding IPO's and avoiding individual stocks is the best strategy for investors." (video) [View news story]
DV
So the CAGR for the S&P 500 including dividends from Jan 2000 to Dec 2011 is 50 basis points. Over the same time period the inflation rate averaged 2.53% which is arguably low but for sake of this analysis we will keep. So in real terms you lost 2.03% every year in the S&P 500 index. That would make a $1000 investment made in Jan 2000 only worth $781 by the end of 2011 in real terms. About a 22% loss.
Conversely if you bought CDs at a bank with no risk your nominal return is around 1.5% to 2% over the same time period which also does not keep you ahead of inflation but it performs relatively better.
At the same time in an Index fund your VAR is pretty substantial given the macro economic factors at work and on a relative basis to CDs. Taxes only complicate matters further.
Summary in my mind is that index funds do not offer a good risk return relationship. A lot of this has to do with how screwed up and overleveraged our economy is with government needing a bailout through inflation. Most investment advisors also are subject to that conclusion as well as they are not really managing anything they just want a lot of assets to skim off.
So index funds don't offer a solution. One strategy may be to only expose a small percentage of your investment dollars to stocks and pick out 5 to 8 growth stocks with global potential or buy some turn around stories and keep the rest of the invesment funds in CD's and/or corporate bonds with short maturities.
A broader question in my mind is regardless of class do we keep our investments in the US dollars?
Vanguard's Jack Bogle takes advantage of Facebook's (FB) plunge and the negative impact it's had on the psyche of the retail investor to hammer home the merits of index investing. Bogle says: "It all comes down to value and it all goes away from price, and avoiding IPO's and avoiding individual stocks is the best strategy for investors." (video) [View news story]
DV
I will let other people weigh in here as I have to travel for a while but I also forgot that you cannot manage your tax events very well in the Index funds.
Vanguard's Jack Bogle takes advantage of Facebook's (FB) plunge and the negative impact it's had on the psyche of the retail investor to hammer home the merits of index investing. Bogle says: "It all comes down to value and it all goes away from price, and avoiding IPO's and avoiding individual stocks is the best strategy for investors." (video) [View news story]
DV
OK here is more:
1. When you buy an index you buy the slow moving dogs, companies going bankrupt as well as the growth and turn around companies. Why not just buy the best? 2. When you buy an index you really buy the performance of the largest companies in the index which really drive the index. In the case of the Nasdaq why not just buy Apple? 3. Since 2000 if you invested in the S&P 500 index you are down in nominal terms and signficantly in real terms. You would be much farther ahead by just buying CD's. 4. The risk weighted return is just not worth it. Or you could use VAR and then ask yourself what is the risk? You have no idea when in an index. 5. Comparing an index against the professional fund managers is often just comparing apples to apples with different packaging. Many of them just put the money to work and churn and burn clients. Any fund manager that can actually manage risk weighted return however may be worth their salt. 6. Index funds sell the idea that you can invest and forget about it. And they lull people to sleep that they have nothing to manage. The US is driving inflation now and depreciating our currency. Perhaps we go broke. But apparently people in index funds will be OK? If you take the other approach and say "no you have to manage" then why bother with index funds? 7. Index funds are just another sales pitch to give me your money and it will be optimzed but if something goes wrong it is not my fault because it is an index fund. 8. Finally index funds really only buy companies that are mature and then go public which often means the best growth years of the company are behind it. Smart money is not spending a lot of time in the index companies they are selling by that point. 9 - 20. Please add.
Vanguard's Jack Bogle takes advantage of Facebook's (FB) plunge and the negative impact it's had on the psyche of the retail investor to hammer home the merits of index investing. Bogle says: "It all comes down to value and it all goes away from price, and avoiding IPO's and avoiding individual stocks is the best strategy for investors." (video) [View news story]
deer
Where is Jon Corzine? I appreciate your insistence on making this slug surface to take the heat he deserves. Maybe this is the new Where's Waldo?
Vanguard's Jack Bogle takes advantage of Facebook's (FB) plunge and the negative impact it's had on the psyche of the retail investor to hammer home the merits of index investing. Bogle says: "It all comes down to value and it all goes away from price, and avoiding IPO's and avoiding individual stocks is the best strategy for investors." (video) [View news story]
Index funds are a joke for investors also. End of story.
As concerns grows on the economic front, former Council of Economic Advisers Chairman Martin Feldstein says the dangers are all too real. We're stumbling along right now, Feldstein says, and the folks forecasting 3% growth are far too optimistic. "We'll be lucky if we have 2%." As for the "economic cliff" we're facing in 2013, if everything that's due to expire expires, it will in fact be an economic disaster. (video) [View news story]
Some day we may look back on this slow motion crash as good days.
As concerns grows on the economic front, former Council of Economic Advisers Chairman Martin Feldstein says the dangers are all too real. We're stumbling along right now, Feldstein says, and the folks forecasting 3% growth are far too optimistic. "We'll be lucky if we have 2%." As for the "economic cliff" we're facing in 2013, if everything that's due to expire expires, it will in fact be an economic disaster. (video) [View news story]
I agree with the comment that 3/4ths of people now simply ignore the news. What impact does one have anyways on it? I don't believe that it is the troika mentioned however although they are big players. What is even larger is dollars for votes so they government is as dysfunctional as ever from multiple perspectives. Both parties are corrupt.
Agree the federal government needs to be cut down to size. And state governments should shoulder more responsibility.
The language is couched in diplomat-speak, but the "clear aim" of Hollande, Monti, and Rajoy "is to wrest control of the EU's governing machinery from Germany," writes Ambrose Evans-Pritchard. Giles Merritt speaks of an "ugly mood" in the EU corridors of power. "(Merkel and the Germans) are beginning to understand how deeply unpopular they have become and how little time they have to act." [View news story]
Soros is probably shorting government bonds at the same time he lays up those pearls of wisdom.
The language is couched in diplomat-speak, but the "clear aim" of Hollande, Monti, and Rajoy "is to wrest control of the EU's governing machinery from Germany," writes Ambrose Evans-Pritchard. Giles Merritt speaks of an "ugly mood" in the EU corridors of power. "(Merkel and the Germans) are beginning to understand how deeply unpopular they have become and how little time they have to act." [View news story]
From what I have seen Germany has a large amount of trade with the rest of the EU so letting it sink is a problem for them. No easy roads from here it appears.
The language is couched in diplomat-speak, but the "clear aim" of Hollande, Monti, and Rajoy "is to wrest control of the EU's governing machinery from Germany," writes Ambrose Evans-Pritchard. Giles Merritt speaks of an "ugly mood" in the EU corridors of power. "(Merkel and the Germans) are beginning to understand how deeply unpopular they have become and how little time they have to act." [View news story]
TA
Hilarious comment. Now if only we were in the EU then we would be in the same boat.
Reminds me of the movie Money Ball where the GM trades an All Star player because he was making the rest of the team look bad......LOL.
In the face of a nasty Greek exit from the eurozone, investors have little choice now but to cling to low-yielding U.S. government debt, says Pimco's Bill Gross. Despite our own debt mess, a flight from risk assets is going to continue to send money into Treasurys. "It's what we call the cleanest dirty shirt," Gross says; "at the moment the cleanest dirty shirt is the United States." [View news story]
Excess debt is the culprit and that is global.
SEC staff will not recommend any enforcement action against Lehman or any of its former executives after completing a probe of possible financial fraud there, reports Bloomberg. "Repo 105 is magical," tweets Josh Brown, "It makes losses disappear long enough to file a 10Q, then they come back until the next Q is due." [View news story]
Reps and Dems are not that different in real terms. Rhetoric is different I suppose but actions and results are the same.
SEC staff will not recommend any enforcement action against Lehman or any of its former executives after completing a probe of possible financial fraud there, reports Bloomberg. "Repo 105 is magical," tweets Josh Brown, "It makes losses disappear long enough to file a 10Q, then they come back until the next Q is due." [View news story]
So what has changed? Either that was just election trash talk or someone did not know what they were talking about.
Vanguard's Jack Bogle takes advantage of Facebook's (FB) plunge and the negative impact it's had on the psyche of the retail investor to hammer home the merits of index investing. Bogle says: "It all comes down to value and it all goes away from price, and avoiding IPO's and avoiding individual stocks is the best strategy for investors." (video) [View news story]
You are a relatively sophisticated person arguing that you are simple..........LOL. Anyways if you want to show the rough math on your hypothetical portfolio that would be interesting.
Index funds from the John Bogle perspective are invest and and forget it because people are just not smart enough to know what to do with their money and they will do better than any other approach. That I don't believe. Just buy CDs and forget them is better from 2000 to 2011.
Vanguard's Jack Bogle takes advantage of Facebook's (FB) plunge and the negative impact it's had on the psyche of the retail investor to hammer home the merits of index investing. Bogle says: "It all comes down to value and it all goes away from price, and avoiding IPO's and avoiding individual stocks is the best strategy for investors." (video) [View news story]
I am being fair to the arguement and I chose the S&P 500 because it is reasonably broad.
The arguement was that investors don't have time or the expertise to analyze stocks. So how do they have time or expertise to analyze different sectors or countries? If you have expertise to analyze sectors or countries which means you are also making currency calls then you can likely handle stocks also.
If you throw in ETF's they have another set of problems that take sophistication to navigate.
Vanguard's Jack Bogle takes advantage of Facebook's (FB) plunge and the negative impact it's had on the psyche of the retail investor to hammer home the merits of index investing. Bogle says: "It all comes down to value and it all goes away from price, and avoiding IPO's and avoiding individual stocks is the best strategy for investors." (video) [View news story]
So the CAGR for the S&P 500 including dividends from Jan 2000 to Dec 2011 is 50 basis points. Over the same time period the inflation rate averaged 2.53% which is arguably low but for sake of this analysis we will keep. So in real terms you lost 2.03% every year in the S&P 500 index. That would make a $1000 investment made in Jan 2000 only worth $781 by the end of 2011 in real terms. About a 22% loss.
Conversely if you bought CDs at a bank with no risk your nominal return is around 1.5% to 2% over the same time period which also does not keep you ahead of inflation but it performs relatively better.
At the same time in an Index fund your VAR is pretty substantial given the macro economic factors at work and on a relative basis to CDs. Taxes only complicate matters further.
Summary in my mind is that index funds do not offer a good risk return relationship. A lot of this has to do with how screwed up and overleveraged our economy is with government needing a bailout through inflation. Most investment advisors also are subject to that conclusion as well as they are not really managing anything they just want a lot of assets to skim off.
So index funds don't offer a solution. One strategy may be to only expose a small percentage of your investment dollars to stocks and pick out 5 to 8 growth stocks with global potential or buy some turn around stories and keep the rest of the invesment funds in CD's and/or corporate bonds with short maturities.
A broader question in my mind is regardless of class do we keep our investments in the US dollars?
Vanguard's Jack Bogle takes advantage of Facebook's (FB) plunge and the negative impact it's had on the psyche of the retail investor to hammer home the merits of index investing. Bogle says: "It all comes down to value and it all goes away from price, and avoiding IPO's and avoiding individual stocks is the best strategy for investors." (video) [View news story]
I will let other people weigh in here as I have to travel for a while but I also forgot that you cannot manage your tax events very well in the Index funds.
More later.
Vanguard's Jack Bogle takes advantage of Facebook's (FB) plunge and the negative impact it's had on the psyche of the retail investor to hammer home the merits of index investing. Bogle says: "It all comes down to value and it all goes away from price, and avoiding IPO's and avoiding individual stocks is the best strategy for investors." (video) [View news story]
OK here is more:
1. When you buy an index you buy the slow moving dogs, companies going bankrupt as well as the growth and turn around companies. Why not just buy the best?
2. When you buy an index you really buy the performance of the largest companies in the index which really drive the index. In the case of the Nasdaq why not just buy Apple?
3. Since 2000 if you invested in the S&P 500 index you are down in nominal terms and signficantly in real terms. You would be much farther ahead by just buying CD's.
4. The risk weighted return is just not worth it. Or you could use VAR and then ask yourself what is the risk? You have no idea when in an index.
5. Comparing an index against the professional fund managers is often just comparing apples to apples with different packaging. Many of them just put the money to work and churn and burn clients. Any fund manager that can actually manage risk weighted return however may be worth their salt.
6. Index funds sell the idea that you can invest and forget about it. And they lull people to sleep that they have nothing to manage. The US is driving inflation now and depreciating our currency. Perhaps we go broke. But apparently people in index funds will be OK? If you take the other approach and say "no you have to manage" then why bother with index funds?
7. Index funds are just another sales pitch to give me your money and it will be optimzed but if something goes wrong it is not my fault because it is an index fund.
8. Finally index funds really only buy companies that are mature and then go public which often means the best growth years of the company are behind it. Smart money is not spending a lot of time in the index companies they are selling by that point.
9 - 20. Please add.
Vanguard's Jack Bogle takes advantage of Facebook's (FB) plunge and the negative impact it's had on the psyche of the retail investor to hammer home the merits of index investing. Bogle says: "It all comes down to value and it all goes away from price, and avoiding IPO's and avoiding individual stocks is the best strategy for investors." (video) [View news story]
Where is Jon Corzine? I appreciate your insistence on making this slug surface to take the heat he deserves. Maybe this is the new Where's Waldo?
He is probably raising money for Obama right now.
Vanguard's Jack Bogle takes advantage of Facebook's (FB) plunge and the negative impact it's had on the psyche of the retail investor to hammer home the merits of index investing. Bogle says: "It all comes down to value and it all goes away from price, and avoiding IPO's and avoiding individual stocks is the best strategy for investors." (video) [View news story]
Do I have to write more?
As concerns grows on the economic front, former Council of Economic Advisers Chairman Martin Feldstein says the dangers are all too real. We're stumbling along right now, Feldstein says, and the folks forecasting 3% growth are far too optimistic. "We'll be lucky if we have 2%." As for the "economic cliff" we're facing in 2013, if everything that's due to expire expires, it will in fact be an economic disaster. (video) [View news story]
As concerns grows on the economic front, former Council of Economic Advisers Chairman Martin Feldstein says the dangers are all too real. We're stumbling along right now, Feldstein says, and the folks forecasting 3% growth are far too optimistic. "We'll be lucky if we have 2%." As for the "economic cliff" we're facing in 2013, if everything that's due to expire expires, it will in fact be an economic disaster. (video) [View news story]
Agree the federal government needs to be cut down to size. And state governments should shoulder more responsibility.
The language is couched in diplomat-speak, but the "clear aim" of Hollande, Monti, and Rajoy "is to wrest control of the EU's governing machinery from Germany," writes Ambrose Evans-Pritchard. Giles Merritt speaks of an "ugly mood" in the EU corridors of power. "(Merkel and the Germans) are beginning to understand how deeply unpopular they have become and how little time they have to act." [View news story]
The language is couched in diplomat-speak, but the "clear aim" of Hollande, Monti, and Rajoy "is to wrest control of the EU's governing machinery from Germany," writes Ambrose Evans-Pritchard. Giles Merritt speaks of an "ugly mood" in the EU corridors of power. "(Merkel and the Germans) are beginning to understand how deeply unpopular they have become and how little time they have to act." [View news story]
The language is couched in diplomat-speak, but the "clear aim" of Hollande, Monti, and Rajoy "is to wrest control of the EU's governing machinery from Germany," writes Ambrose Evans-Pritchard. Giles Merritt speaks of an "ugly mood" in the EU corridors of power. "(Merkel and the Germans) are beginning to understand how deeply unpopular they have become and how little time they have to act." [View news story]
Hilarious comment. Now if only we were in the EU then we would be in the same boat.
Reminds me of the movie Money Ball where the GM trades an All Star player because he was making the rest of the team look bad......LOL.