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« Weighing the Week Ahead: The Beat Goes On | Main | February Employment Report Preview: Time for a Real Rebound? »

February 28, 2011



Ken-- I want to answer your fine questions, but let me first talk about what I do and negativity. I want to be clear that our outlook is often neutral and sometimes bearish. I go with the data, and I carefully explain the methods. This is in sharp contrast to most pundits who never change their viewpoints.

You are correct that my weekly piece looks at the week ahead. Our Felix model looks about three weeks ahead.

I often write for the long-term investor, but none of my accounts are "buy and hold." Everything is actively managed since I expect to find new and good themes all of the time.

For most people, paying a small fee to get good management is a good deal. But let's take the hypothetical example of someone who wants a completely passive approach.

I think that such a portfolio should have an annually reviewed asset allocation, reflecting current earnings expectations and interest rates. Like Warren Buffett, I like stocks much better than bonds right now. If you are a young person who is looking ahead, buying stocks and adding to the portfolio is a good plan. Check it out every year or two to see how things are changing, but do not get caught up in the scare stories.

Thanks for the good question. I may need to emphasize more the various time frames. Most people seem to have forgotten that things get better over time, including profits and stock prices.



Jeff, I like your blog, though the first thing I ever wrote as a comment was critical.

I have one wish: in your weekly series, and generally, you appear to me to focus on short-term risk and on what returns are likely to be for, maybe, a year or so. That seems to me to be your whole focus, maybe it's just all I have read. It appears to conflict with your statements about how you operate in your actual investment business, whereby you look to what a client seeks, and you are more agnostic, including as to things like investment timeframes. While I find your blog a wonderful anectdote to the negativity, you don't seem to say anything about the long-term. Perhaps that's just because you're an active manager, and now you say what you say, and that's enough for you. But I would love to hear a thought on whether you think the S&P or another index, or stocks, are a hold/buy for ten years, or thirty years, rather than one year, and why. Or is that something you just don't attempt to model?

Paul in KC

That was helpful Jeff. Thanks


Mark -- I look at four factors:

1) Expected earnings -- up more than stock prices
2) Economic growth -- improving, supporting of profits
3) Financial risk -- at lowest levels in years
4) Good stock of widely-publicized worries -- we have in abundance.

You certainly ask the question on the mind of all, and one that I try to revisit each week.



Mark Wolfinger

I can deal with the correction.

How do I know it's an extended rally and the party is not over?


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