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« Weighing the Week Ahead: The Debate about Jobs | Main | September Employment Report Preview »

October 02, 2012

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oldprof

Heat Rate -- Those of us who do not have a mutual fund are not allowed to advertise performance. Try checking Doug or Barry, for example, and you will see the same thing.

In the first place, I have six different programs, and the performance varies by program.

The longest program I have (ten years) is normally fully invested, but actively managed. It has a great long-term record which I am happy to share fully with investors who make inquiries.

I did really well in 1998 (despite the crisis then which you omitted), and also in the 2001-03 period. I also did well around both Gulf wars. I am always working to improve methods.

Regular readers know that my investment posture shifts regularly reflecting a number of factors. Last October, for example, I became more conservative for most accounts because of risk.

My most popular program right now is the enhanced yield approach -- dividend stocks with short-term covered calls (and the short-term is the key).

If you do not understand the wall of worry concept, you are essentially doomed as an individual investor. You will get the market timing wrong not just once, but every time. That is why the average person loses 4-8% to the market every year while the pros are beating it.

If you are a legitimate investor, please give me a call and I will be happy to discuss your individual needs, and which program might work for you!

And thanks for giving me a chance to highlight some important points!

Jeff

Heat Rate

Jeff - what was your performance between 2007 and March of 2009? Stocks climbed a wall of worry then too? Same with 2001 to 2003?

At some point reality sets in.

oldprof

Dumb Money -- I agree with your assessment, and it is sad. To be a good advisor you need to separate your own views from your market forecast.

Jeff

oldprof

Pacioli -- This is an interesting article which also cites a number of excellent sources.

Thanks for the link!

Jeff

Pacioli

I thought this was relevant and timely.

http://bit.ly/Vi3woz

This writer has been well reasoned in his recent discussions regarding QE.

@vladkeynes

Misconceptions... thats the key, since I do not believe "model driven assesment on the past qes" included any irrational behavioural concepts on the part of investors, or any subjective probabilities at all. Models will work only within certain constraints and assumptions; real world is another thing we should really come back to Keyness' work on uncertainty - he did some extensive work with probabilities. Meanwhile please see this article ( http://www.economist.com/blogs/freeexchange/2012/10/monetary-policy?fsrc=gn_ep), as it sheds light on who can and will really profit from the FEDs policy

The_Dumb_Money

Thanks as always for your perspective. A great many financial advisors, most of whom are CFAs but do not have economics degrees, have highly innacurate and ideological perspectives on the Fed.

oldprof

Pacioli -- If there were no misconceptions, the stocks I named would have rallied:) That is the point.

The trading world uses very simplistic rules, expecting an immediate effect from a QE announcement. That is why you see the pundit parade announcing that it "didn't work."

Time will tell. And I generally agree with your interpretation of a weak and extended recovery. I think that corporate profits will do fine.

Thanks for joining in --- interesting points.

Jeff

Pacioli

OldProf –

I definitely agree that pervasive, disastrous misunderstandings abound regarding what QE is and what it is not. I agree that the term “money printing” is erroneous, agenda-driven, and a completely inaccurate way of describing the mechanics involved. And your point regarding the scale of QE in the context of total Treasury volume is very well taken.

However, I think the “how to profit” component of your entry is sorely lacking. Below are the returns of the recommendations you cite specifically, from the closing price the day before the QE3 announcement, through yesterday’s closing price.

CAT -4.1%
ITW -3.7%
AFL -2.0%
ORCL -1.9%
INTC -1.5%
AAPL -1.3%
GS -0.8%
IEV -0.5% (proxy for Europe – ‘Europe will be helped’)
JPM 2.5%

So, all names are down except for JPM. Meanwhile the S&P is flat, and long-term US Treasuries (TLT) are up 1.8%.

I recognize that you did attach the caveat that “the business cycle is going to be extended”. But I think that that characterization is just a euphemism for the reality that this recovery is going to be exceedingly weak for an extended period due to the massive scale of private sector debt deleveraging that must transpire following the prodigious imbalances that were allowed to persist through 2007-2008.

Despite my disappointment with your “how to profit” component, I do agree that the widespread Fed bashing is severely misguided. Fed policy will never be enough to affect anything other than marginal dimensions. They are doing what they can, but there is so much that is completely out of their control.

fresh

I would disagree with "fed is not trying to push people into risky assets". Their is no yield anywhere.

Municipal bonds are getting promoted at every level, media, government, legislative (make FA's not liable for recommending munis).

Sure they are trying to get people to move money into anything.

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