txitxo

Exactly, uccmal. I fully agree with you. What happens if the CAPE goes to 100? Passive investing tells you to keep putting *all* your savings into those crazily expensive stocks. People think that buying the SPY is as safe and worry-free as buying houses a decade ago or tulips in Amsterdam. We all know how that ends.

29.84%.

As a Norwegian minister once put it, “if you want to run Europe, you must be in Europe. If you want to be run by Europe, feel free to join Norway.” http://www.economist.com/news/briefing/21693568-david-cameron-will-struggle-win-referendum-britains-eu-membership-if-he-loses

51.6%, in euros. Most of my portfolio was in European small caps, which did very well.

32% YTD. ~40 stocks, mostly European, also a few Aussie ones.

...we have quite an urgent scientific problem they may be able to give us a hand with... Cheers, Txitxo

Paramés may still take a while to open a new shop. They are looking to buy an existing investment firm so that they do have to go through the lengthy process of registering a new one in Spain. http://vozpopuli.com/fondos/58023-los-socios-de-parames-en-bestinver-crean-advalor-embrion-de-su-futura-gestora-en-espana

How many scientists do you know personally? I know plenty of young scientists, and disagree with you completely. You’re creating an exaggerated caricature here. Sagan wasn’t a brilliant scientist either. Some of this is just an increase in specialization, not “Aspergers” or anything else. That’s not to say that your caricature doesn’t or can’t exist, as it certainly does. But the politics involved in being a scientist do not lend themselves well to the kind of people you describe, either. I think there are waves of focus in particular sub-fields, then counter waves where people bring together scientists in different fields to collaborate and work together. That’s just how it goes. Well, I've worked about 20 years as a scientist (h=47), I am married to a scientist and practically all my friends are scientists. In fact my children were astonished when they learnt that some grown-ups do not have a PhD. People were complaining about specialisation 50 years ago. It is not a new phenomenon. What is new to me is that, generally speaking, the young people coming in (and there are of course some exceptions) do not seem so bright as the people who got into science a few decades ago. It is not so difficult to see. Just sit them side by side at a conference dinner and float different conversation topics. For example you will see very few well-read postdocs (and I am not talking about Stalin's 500 pages/day quota which is often mentioned around here). I don't think it is so difficult to understand. People with high IQs are also affected by incentives. In the sixties, a household with two Professors at a top university were upper middle class. Now they won't make it into the top 1%. Look at the houses old professors bought when they got tenure and compare them with what young assistant professors are buying now. So you tend---and remember I am saying "tend"--to get smart people who are dysfunctional and would not fit in a corporate environment, or absolute fanatics, who live science as a cult, I know of a guy who abandoned his pregnant wife because it thought it may hurt their career. Which, in the best case scenario would end up with him working 60hrs/week and earning 150$/year. Politics in science is very amateurish. The kingdom of the blind. Although some of the older folks are really good.

The jobs being eliminated are those of people with low to average IQ, and no redeeming graces like people skills or iron-clad honesty. That population group is fast becoming unemployable in developed economies and most of them will have to live on welfare. Automatisation is also putting strong pressure on the middle. Salaries are shrinking there. Of course the counterpart is that very high IQ, creative people never had it so good at making a living. This is being felt in academia. The best scientists used to be people with well-rounded intelligences, very good at research but with plenty of other intellectual abilities. It was obvious they could have succeeded in many other fields apart from science. Think, for instance, of Carl Sagan. What you see arriving now, more and more often, are terminal Aspergers with a zealot's mindframe (you have to be highly ideologized to resist the call of the "dark side"). It is quite revealing that the new Cosmos had to be done by a guy who is very good at science outreach, but who is not a brilliant scientist. There are very few people left with a whole brain. You could have many of the discussions in this forum (about books, history, etc.) with scientists in the 60's, people who have plenty of interests. It is almost impossible to have them with postdocs or young assistant professors. Don't get me wrong, they are very smart and good at what they do. But most of them have not read a book outside of their particular scientific area in their entire lives. That produces tunnel-vision and solidifies paradigms. Many of those people won't recognise the next scientific revolution even if chews off their asses. The younger ones are even worse. So the future of research may resemble old Rome, a long stagnation because the best minds were building bridges and aqueducts, not doing "philosophy". I think that trying to make money from the worsening conditions of low classes is very bad karma. Don't go there or a flower pot will fall on your head. Or at least it should. But a sure bet, although on the long-term side, is looking for companies which maintain a core of very well-paid, "blue sky" basic researchers. It has always been difficult to make money from that, but with the dwindling competition from academia it will be become easier in the future.

Well, I don't follow their strategies exactly, I don't know how an ETF will do, specially if it starts getting big. Most of the most interesting companies I find have relatively small volumes. But it is a very interesting compendium of what works and what doesn't. You can use their results to build you own screens or to modify existing ones. They look in detail at the MF performance, and I love their study of Graham's very simple, p/e<10, debt/equity < 50% strategy: "Graham's simple strategy sounds almost too good to be true. Sure, this approach worked in the 50 years prior to 1976, but how has it performed in the age of the personal computer and the Internet, where computing power is a commodity, and access to comprehensive financial information is as close as the browser? We decided to find out. Like Graham, we used a price-to-earnings ratio cutoff of 10, and we included only stocks with a debt-to-equity ratio of less than 50 percent. We also apply his trading rules, selling a stock if it returned 50 percent or had been held in the portfolio for two years[...]Graham's strategy turns $100 invested on January 1, 1976, into $36,354 by December 31, 2011, which represents an average yearly compound rate of return of 17.80 percent—outperforming even Graham's estimate of approximately 15 percent per year " In their approach they "clean" their investable universe by eliminating questionable stocks (bad accrauls, Z score, beneish score, etc) It is a little hard for a small investor like me for replicate as it requires a sophisticated database and a ton of programming to trim the universe. I strongly recommend that you only use value-based screens. If you play long enough with the data, you will find some weird combination that worked in the past but will disappear as soon as you try it. Value investing has worked for 80 years. So pick your parameters. You still have to do your due diligence, make sure than the numbers in the screener are correct, that they are truly representative, that there is nothing fishy about the company or management which doesn't show up in the numbers. Buy at least 30 stocks per year as high in the list as you can, keep the winners for 1Y+1 day (so you pay long term tax rates) and sell the losers at 1Y-1day (short term tax loss). You should easily beat the index (unless you investing 100M)

Well, I don't follow their strategies exactly, I don't know how an ETF will do, specially if it starts getting big. Most of the most interesting companies I find have relatively small volumes. But it is a very interesting compendium of what works and what doesn't. You can use their results to build you own screens or to modify existing ones. They look in detail at the MF performance, and I love their study of Graham's very simple, p/e<10, debt/equity < 50% strategy: "Graham's simple strategy sounds almost too good to be true. Sure, this approach worked in the 50 years prior to 1976, but how has it performed in the age of the personal computer and the Internet, where computing power is a commodity, and access to comprehensive financial information is as close as the browser? We decided to find out. Like Graham, we used a price-to-earnings ratio cutoff of 10, and we included only stocks with a debt-to-equity ratio of less than 50 percent. We also apply his trading rules, selling a stock if it returned 50 percent or had been held in the portfolio for two years[...]Graham's strategy turns $100 invested on January 1, 1976, into $36,354 by December 31, 2011, which represents an average yearly compound rate of return of 17.80 percent—outperforming even Graham's estimate of approximately 15 percent per year "

Well, the median household income of Chinese americans is about 30% higher than the US average. So maybe not all regions in China will reach 20k. But the average will certainly get there. India is more complex and diverse, but come on, Indians are the top earning ethnic group in the US, it is a country with world class brains and a very inexpensive workforce. With the right changes it would explode economically. It reminds me a bit of Russia in the 2nd half of the XIX-th century. It had similar ingredients, and underwent massive spurts of growth after every round of reforms. My point is, you are going to have 2-3 billion people doubling or tripling their GDP per capita with respect to the rich countries in the next 20 years. In a sense, those 200M in the rich regions of China are just the tip of the iceberg. The changes won't be lineal, they won't be smooth, but they are unstoppable. I see them as the safest bet for the next two decades.

1. "Probability Theory: The Logic of Science", by E. Jaynes. A jewel of a book. A bit heavy on math, though, have a look at it before you buy it. 2. "The Misbehaviour of Markets." by Mandelbrot. It makes you lose all respect for the current paradigm in Economics. Cauchy distributions are much nastier than widened Gaussians. 3. "Fooled by randomness", N. Taleb. Not for his investing advice, but because he makes you think about the application of the ideas in 1 and 2 to real world situations. I think this is the best of Taleb's books. 4. "The intelligent investor", B. Graham. If only for the Mr. Market analogy, crucial psychological help to endure the vagaries of stock prices. 5. "Quantitative value investing", Gray & Carlisle. Best recent reference on mechanical investing.

The safest bet are probably natural resources. China, India and Latin America have about 3.2B people, three times more than Europe and the US put together. The average GDP/person of China and Latam is about 9000$, India has 4000$. If, in the next 20 years, these countries get close to, let's say, typical Southern/Eastern Europe GDP/person, 20,000-25,000$ (and I don't see any reason why they shouldn't), they will need to spend a tremendous amount in infrastructure. The china-induced boom we have seen during the last 10 years has only been the beginning. So regardless of what happens in the short term (China's credit problems, etc.), 20 years from now prices for iron ore, oil, gas, etc. must be much higher than they are now. This is such a clear conclusion that I don't see what could change it, not even a major catastrophe, like a war in East Asia. So, if I had to buy something now, and leave it there for 20 years without touching it, I would get a basket of companies with lots of stuff in the ground, which are reasonably well run (honest management is essential) and which are undergoing short term problems. Even if the CEOs are not geniuses, the tailwinds will lift them much higher in the next two decades. One such company I like is Corridor Resources (although it has more than doubled since I bought it). If Altius were to remain an independent company, that probably would be another good option. More speculative stocks are Mobius Resources or Petrobank (now Touchstone). I have also been looking at companies with oil in places undergoing turmoil, like Yemen (Calvalley Petroleum). The cheapest mining company in the world is RAND mining. But I don't think they pass the honest management test. Of course it is much easier to make 20% a year "trading". But some people seem to consider that as sinful as going to a steakhouse during Lent.

And now, Americans cannot use these rockets anymore because of Russian sanctions... http://rt.com/news/158680-russia-usa-rocket-gps/