james22

On the relationship between the two, once read: Studies show if mortgage rates double, home prices decline by 15% within 2-3 years.

+1

Rate is not the only consideration. I'd want to know the reputation of my lender as well. https://newrepublic.com/article/134722/foreclosure-sleuth

Saudi Arabia’s new strongman, deputy crown Prince Mohammad bin Salman, known popularly as MbS has revealed some detail on the IPO listing of Saudi Aramco, Saudi Arabia’s state owned oil company and world’s largest exporter. According to latest, Saudi Arabia is looking to list 5% stake of Saudi Aramco and expects the valuation of the company to reach to $2 trillion. The kingdom wants to convert Aramco as a holding company. Subsidiaries of the company will also be listed and its board will be elected and financial information of the company will be released soon enough. http://www.econotimes.com/Saudi-Prince-reveals-first-details-of-Aramco-IPO-199934

Today's Hussman: In 1954, John Kenneth Galbraith offered a similar narrative of the top-formation leading up to the 1929 crash: “The temporary breaks in the market which preceded the crash were a serious trial for those who had declined fantasy. Early in 1928, in June, in December, and in February and March of 1929 it seemed that the end had come. On various of these occasions the Times happily reported the return to reality. And then the market took flight again. Only a durable sense of doom could survive such discouragement. The time was coming when the optimists would reap a rich harvest of discredit. But it has long since been forgotten that for many months those who resisted reassurance were similarly, if less permanently, discredited.”

Was reminded of this last night when my golfing partners were talking about the market going up. Wake me when it falls.

I can borrow a year's base salary from my employer at 3%. The market crashes and BRK falls with it to BV (or below), I'll take advantage of it.

I repeat myself, but the time- and dollar-weighted investment horizon of a 25 year-old is only about 12 years. http://media.pimco-global.com/pdfs/pdf/VP001-050107%20Better%20Glidepath.pdf

The time- and dollar-weighted investment horizon of a 25 year-old is only about 12 years. http://media.pimco-global.com/pdfs/pdf/VP001-050107%20Better%20Glidepath.pdf

I do expect the Vanguard REIT Index Fund Institutional Shares (VGSNX) to outperform the Admiral Shares (VGSLX) and ETF (VNQ) by .02% and Investor Shares (VGSIX) by .16%...

I'd very much like it to remain undervalued until the day I retire, please.

I see bargains, sure. But I'm market timing (http://www.arborinvestmentplanner.com/market-timing-valuation-timing/). As the bargains will likely fall with the market in any significant correction, I'll hope to buy them then.

I'd forgot Stewart. Funny. Our bottom line result is that perfect foresight has great returns, but gut-wrenching drawdowns. In other words, an active manager who was clairvoyant, and knew ahead of time exactly which stocks were going to be long-term winners and long-term losers, would likely get fired many times over if they were managing other people’s money. http://blog.alphaarchitect.com/2016/02/02/even-god-would-get-fired-as-an-active-investor/

"He [Lou Green] said to me, 'Why did you buy Marshall-Wells?' "And I [buffett] said, 'Because Ben Graham bought it.'" ... "Lou looked at me and said, 'Strike one!' "I'll never forget the way he looked at me when he said it." It dawned on him: "Warren, think for yourself." He felt foolish.

I'd begin with Deming's 14 Points. As applied to higher education, for example: http://digitalcommons.wku.edu/cgi/viewcontent.cgi?article=1001&context=csa_fac_pub&sei-redir=1&referer=http%3A%2F%2Fwww.google.com%2Fsearch%3Fclient%3Dsafari%26rls%3Den%26q%3Ddeming%2B14%2Bpoints%2Beducation%26ie%3DUTF-8%26oe%3DUTF-8#search=%22deming%2014%20points%20education%22

Click on the link next to my picture. Will update for January over the weekend, but hasn't changed much. Really like the portfolio overviews. I've relied on reviewing my thinking by reviewing my posts (on another forum), but you've convinced me to begin more formally doing something similar. Thanks.

http://www.zerohedge.com/news/2016-02-01/here-are-3-trades-hedgies-are-using-bet-yuan-devaluation

I was a great investor for the 5 years 1995-2000.

Vanguard's Energy fund (VGELX)

That's a fair criticism. I feel he might underestimate black swans and the possibility "this time is different." We don't really disagree that much, probably. And I appreciate the discussion. Why not assume his commentary holds him accountable and appreciate it for whatever insights it provides you? I sure do.

Can valuation time indexing too. I guess. My point was if you are unsure if you can beat the market but unsure if you want to index, why not make the S&P 500 50% of your portfolio (or more or less)? If you only find one investment every one or two years, maybe the right answer is 80% index and 20% 2 or 3 names. IDK, just something to consider. Two reasons: asset location differences (restrictions, tax treatment) and asset classes/sectors preferences. I'm restricted to only a few attractive few index funds in my 401k, so value time there between TSM/TIM and TBM. I prefer index-like funds for SV, ISV, and EM classes and Energy and PM&M sectors and so value time between them and STT in my Roth IRA. I prefer dividend-paying individual stocks of a type (FRFHF) in my Roth IRA, adding when attractive. I prefer non-dividend-paying individual stocks of a type (BRK, MKL) in taxable, adding when attractive.

Can valuation time indexing too.

It is perfectly fair to question Hussman's reliance on "hard, historically reliable evidence." (After all, he didn't forecast the March 2009 FASB 157 change.) But it seems unfair to call him a permabear or question his duty to investors.

The reality is that my reputation as a “permabear” is entirely an artifact of two specific elements since the 2009 low, but that miscasting may not become completely clear until we observe a material retreat in valuations coupled with an early improvement in market internals. Despite my reputation in recent years as a “permabear,” I’ve actually had quite a variable relationship with equity risk across three decades in the financial markets, and that relationship has always depended on market and economic conditions. For someone who has been labeled both a “perma-bear” over the past decade, as well as a “one lonely raging bull” in the early 1990's (Los Angeles Times), I can't say that either description is fitting at the moment. One of the things that some forget is that we shifted to a constructive stance between those two crashes in early 2003, and initially moved toward a constructive stance after the market collapsed in late-2008 (see Why Warren Buffett is Right and Why Nobody Cares) until a parade of policy errors forced us to entertain Depression-era outcomes. My 2009 stress-testing miss and the awkward transition that resulted certainly injured my reputation during this uncompleted half-cycle. Still, having addressed that “two data sets” problem, I expect no similar stress-testing response in future market cycles. Meanwhile, I have every expectation that the current speculative extremes will end in tears for those inclined to dismiss hard, historically reliable evidence by mumbling “permabear.” In recent years, I've gained the reputation of a "perma-bear." The reality is that I'm quite a reluctant bear, in that I would greatly prefer market conditions and prospective returns to be different from what they are. People often like the idea of being part of an exclusive club, sometimes the more exclusive the better. As Groucho Marx put it, “I’d never join a club that would have me as a member.” With the percentage of bearish investment advisors recently plunging to just 14%, investment bears are certainly a rather exclusive group, mostly representing advisors who are considered “permabears.” What’s odd is how little affinity I feel with members of that group. Though I seem to be one of the better-identified members, those who actually understand our narrative in recent years should recognize that I stumbled into this clubhouse quite unintentionally. The fact is that I’ve become constructive or aggressively bullish after each bear market retreat in the past quarter century. The main difficulty began with my 2009 insistence on stress-testing our methods against Depression-era data, which cut short our late-2008 turn to the constructive side (see Why Warren Buffett is Right and Why Nobody Cares). When we shift our outlook over the completion of the current market cycle and begin encouraging a constructive or even leveraged stance, those who’ve incorrectly inferred that I’m some sort of “permabear” may become bewildered, or even believe that I’ve abandoned my investment discipline. The permabear label may be satisfying in a sort of “kick him when he’s down” kind of way, but it doesn’t explain the success prior to 2009. An alternative explanation for our challenges in this half-cycle is that I’m simply a permabear. But that’s harder to square with my being a fully-leveraged “lonely raging bull” in the early 1990’s, or with our strongly constructive shift (despite valuations that were still elevated relative to historical norms) in early 2003 as a new bull market was taking hold, and is also inconsistent with our similarly constructive shift after the market plunge in 2008. google: permabear site:hussman.com Reminiscences of a misidentified permabear In October 2008, after the market had plunged by more than 40%, our valuation measures indicated a clear shift to undervaluation. The challenge that emerged was not that valuations were rich, but that measures of what we call “early improvement in market action” which were quite reliable in post-war data were whipsawed like mad in the final months of 2008, as they were in the Depression-era. I leave everything I’ve written online – right, wrong, or neutral – and you can see us walk into that challenge in real-time by reviewing my rather constructive October 20, 2008 comment Why Warren Buffett is Right and Why Nobody Cares (note the section on early improvement in market action). Measured from the market’s peak to trough, we came out of the 2007-2009 collapse virtually unscathed, but we were certainly whipsawed in late-2008. The similarity of that market action to Depression-era outcomes, coupled with what I viewed as misguided policy actions, forced a stress-testing decision that I still view as a necessary and fiduciary response. The resulting ensemble methods address that "two data sets" challenge, and we've validated them in data from market cycles across history. Taking our present methods to that period (without training them on that data), sufficient improvement in market internals did not emerge until early 2009. The market conditions required to navigate both Depression-era data and post-war data are simply more demanding than in post-war data alone. Of course, in real-time we were working to address that "two data sets" problem, and those methods were not available to us. It’s quite easy in hindsight to assert that my insistence on stress-testing every aspect of our approach was unnecessary given improved valuations during the crisis. But it’s important to recognize that during the Depression, valuations similar to those of 2008 and 2009 were followed by an additional two-thirds loss of the market’s value. As for whipsaws, the Dow followed the initial 1929 crash by advancing fully 48% between November 13, 1929 and April 17, 1930, and then losing more than 80% of its value from there. In hindsight, what finally ended the credit crisis in 2009 was a stroke of the pen – the March 2009 FASB 157 change that replaced mark-to-market accounting with “significant judgment” – making the risk of widespread bank failures vanish through the magic of erasers and sharpened pencils. Fed interventions and troubled asset purchases did not end the crisis. Though Fed purchases of mortgage securities clearly supported the housing market, the other policies were largely an expensive sideshow. The “miss” that resulted in the interim of our 2009-2010 stress-testing is the real story behind my “permabear” reputation, because I doubt that anyone would think twice or second-guess our concerns about present speculative conditions in the absence of that miss. http://www.hussman.com/wmc/wmc140324.htm

Outperformance over ten-year periods is difficult, sure, but who cares? All that matters is end performance. Remember that the 2000-2002 market loss wiped out the entire total return of the S&P 500 – in excess of Treasury bill returns – all the way back to May 1996. Remember that the 2007-2009 market loss wiped out the entire total return of the S&P 500 – in excess of Treasury bill returns – all the way back to June 1995. Hussman