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Old 06-05-2010, 08:25 AM   #421
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How many bank failures will we have today

It's FDIC Friday
Regulators shut banks in Neb., Miss., Ill. - Yahoo! Finance=
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Old 06-05-2010, 10:57 AM   #422
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Looks like you sold half your equities about 13% ago on the SP 500 (when it was at 941) and the rest of your equities August 31, about 4-5% below where the SP500 is now (even after the recent dramatic slide). I'd be very bearish too if I were you - hoping for the market to keep crashing so I could buy back in without having lost a lot of ground.
I wish there was a more "mechanical" and emotion-free way to implement it, but the more I study the markets and look at what may lie ahead, the more I like the concept of "dynamic AA" based on market valuation. For example, if one could encapsulate a specific, emotion-free formula to overweight cheap stocks and underweight pricey stocks, I would think it a good thing. I suppose one could use something like PE10 but you might also need to consider what the current yields on cash and bonds might be. Such an approach might have told folks to underweight stocks in 2006 and 2007, and overweight them in late 2008 into 2009 -- perhaps with a fairly "neutral" weighting now. Of course, it might have also underweighted expensive stocks in 1996, and you'd have missed a fairly explosive last run of the secular bull market.

I see no real way to implement such a mechanical strategy, though -- unlike the standard rebalancing of a fixed AA. But in principle, it sure sounds good.
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Old 06-05-2010, 11:20 AM   #423
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I wish there was a more "mechanical" and emotion-free way to implement it, but the more I study the markets and look at what may lie ahead, the more I like the concept of "dynamic AA" based on market valuation. For example, if one could encapsulate a specific, emotion-free formula to overweight cheap stocks and underweight pricey stocks, I would think it a good thing. I suppose one could use something like PE10 but you might also need to consider what the current yields on cash and bonds might be. Such an approach might have told folks to underweight stocks in 2006 and 2007, and overweight them in late 2008 into 2009 -- perhaps with a fairly "neutral" weighting now. Of course, it might have also underweighted expensive stocks in 1996, and you'd have missed a fairly explosive last run of the secular bull market.

I see no real way to implement such a mechanical strategy, though -- unlike the standard rebalancing of a fixed AA. But in principle, it sure sounds good.
I use a dynamic AA based on market valuation and interest rates. It is a mechanical strategy for me. I created an excel spreadsheet incorporating a number of factors into an equation. I plug in the current numbers and it tells me what asset class to buy or sell. And that's what I buy or sell. No emotions involved. This spreadsheet has been refined over time. For example, I noticed that in 2008-2009 it was forcing me to start buying stocks too early into the bear market, and start selling stocks too early into the bull market - although, since I only rebalance with new money, I should say it forced me to stop buying stocks too early into the bull market. In other words, "momentum" was not factored in properly into my equation. Even now, it's not perfect of course (timing the market perfectly is impossible and it's not my goal either), but at least this strategy makes more sense to me than dollar cost averaging blindly into the market (which is what I used to do until 2007).
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Old 06-05-2010, 11:43 AM   #424
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I wish there was a more "mechanical" and emotion-free way to implement it, but the more I study the markets and look at what may lie ahead, the more I like the concept of "dynamic AA" based on market valuation. For example, if one could encapsulate a specific, emotion-free formula to overweight cheap stocks and underweight pricey stocks, I would think it a good thing. I suppose one could use something like PE10 but you might also need to consider what the current yields on cash and bonds might be. Such an approach might have told folks to underweight stocks in 2006 and 2007, and overweight them in late 2008 into 2009 -- perhaps with a fairly "neutral" weighting now. Of course, it might have also underweighted expensive stocks in 1996, and you'd have missed a fairly explosive last run of the secular bull market.

I see no real way to implement such a mechanical strategy, though -- unlike the standard rebalancing of a fixed AA. But in principle, it sure sounds good.
James Montier at GMO agrees with you. He just wrote a paper on this, see here https://www.gmo.com/America/Research/default. He doesn't answer the question of how much to allocate where, but measures like Shiller PE can be of help. Regardless, I think it is critical to have a view on valuations in the asset classes you invest in.
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Old 06-05-2010, 11:44 AM   #425
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I wish there was a more "mechanical" and emotion-free way to implement it, but the more I study the markets and look at what may lie ahead, the more I like the concept of "dynamic AA" based on market valuation. For example, if one could encapsulate a specific, emotion-free formula to overweight cheap stocks and underweight pricey stocks, I would think it a good thing. I suppose one could use something like PE10 but you might also need to consider what the current yields on cash and bonds might be. Such an approach might have told folks to underweight stocks in 2006 and 2007, and overweight them in late 2008 into 2009 -- perhaps with a fairly "neutral" weighting now. Of course, it might have also underweighted expensive stocks in 1996, and you'd have missed a fairly explosive last run of the secular bull market.

I see no real way to implement such a mechanical strategy, though -- unlike the standard rebalancing of a fixed AA. But in principle, it sure sounds good.
With a fixed slice and dice AA you do have a mechanical way of investing that does capture valuation in a sense. When stocks run up (and are relatively more expensive) you are buying bonds to "catch up". When the market falls and stocks become relatively cheaper you are buying them. In our case we were buying equities all of 2008 and most of 2009 and constantly chasing our target AA without quite getting there until late 2009. As equities took off I had to switch to buying bonds which I continued to do until last month when it was back to equities again - foreign as they had fallen the most.

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Old 06-05-2010, 01:28 PM   #426
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Rob Arnott runs two funds for PIMCO that do tactical asset allocation with decent results
PIMCO All Asset PAAIX http://www.pimco-funds.com/ff_report...titutional.pdf
PIMCO All Asset All Authority (PAUIX) http://www.pimco-funds.com/ff_report...titutional.pdf
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Old 06-05-2010, 04:56 PM   #427
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With a fixed slice and dice AA you do have a mechanical way of investing that does capture valuation in a sense. When stocks run up (and are relatively more expensive) you are buying bonds to "catch up". When the market falls and stocks become relatively cheaper you are buying them. In our case we were buying equities all of 2008 and most of 2009 and constantly chasing our target AA without quite getting there until late 2009. As equities took off I had to switch to buying bonds which I continued to do until last month when it was back to equities again - foreign as they had fallen the most.
I do the slice and dice AA as well. Last couple months it has been pushing me to buy international investments. This strategy does force you to buy the recently downtrodden investments, since those are the ones that will be under weighted.
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What a day at the race track
Old 06-05-2010, 05:13 PM   #428
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What a day at the race track

Does anybody ever consider how rigged these markets must be?
To be balancing on such a knife edge...that someone blinks and the market crashes?
Does it not concern any of you to have a fairly large % of retirement security invested in this crap-shoot? Stocks or bonds...it's still in the same crooked game.
I mean, for God's sake....
Most top Treasury officials originate from Goldman.
Goldman is charged with fraud.
Goldman has a 100% Q1, not a single losing day. WHAT?
High speed trading is viewed as unfair, but legal,
Corporations can now "buy" their favorite politicians.
We could o on & on with this list..........

Is everyone on drugs?
Is it not even conceivable that just maybe, the USA investing public is being played for complete suckers?
30 yrs ago, if we'd read about these market issues in Venezuela, Fox News would've been crowing about how crooked that Junta was.

Where is the outrage?
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Old 06-05-2010, 05:15 PM   #429
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Where is the outrage?
Looks like you've got all anyone would ever need.
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Old 06-05-2010, 05:42 PM   #430
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Where is the outrage?
I don't have mine any more. Goldman Sachs called me the other day and I sold it to them so they can package it into some securitized debt instrument and slice it up into tranches and sell it off to municipal governments in unsophisticated third world countries.
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Old 06-05-2010, 06:39 PM   #431
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Originally Posted by brogan007 View Post
Does anybody ever consider how rigged these markets must be?
To be balancing on such a knife edge...that someone blinks and the market crashes?
Does it not concern any of you to have a fairly large % of retirement security invested in this crap-shoot? Stocks or bonds...it's still in the same crooked game.
I mean, for God's sake....
Most top Treasury officials originate from Goldman.
Goldman is charged with fraud.
Goldman has a 100% Q1, not a single losing day. WHAT?
High speed trading is viewed as unfair, but legal,
Corporations can now "buy" their favorite politicians.
We could o on & on with this list..........

Is everyone on drugs?
Is it not even conceivable that just maybe, the USA investing public is being played for complete suckers?
30 yrs ago, if we'd read about these market issues in Venezuela, Fox News would've been crowing about how crooked that Junta was.

Where is the outrage?
I've got a circa 1974 copy of the Anarchist Cookbook I'd be glad to sell you.

So, what are the options? You've got to play in the sandbox you're in, or leave for a better one, if you can find it. The deck may be stacked, but as long as you're aware of it you can still play the game. I'm not thrilled about a lot of things, but life is much bigger than the lowlifes (however rich) that make the headlines. Karma, dude.
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Old 06-05-2010, 06:49 PM   #432
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Where is the outrage?
One word.........med's.
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Old 06-05-2010, 06:56 PM   #433
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Does anybody ever consider how rigged these markets must be?
We could o on & on with this list..........
Where is the outrage?
Where's your solution?

Is it really worth the rest of your ER life to bitch about the markets? Can you come up with some other asset allocation that doesn't require Diogenes' lamp?
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Old 06-05-2010, 07:05 PM   #434
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Where's your solution?

Is it really worth the rest of your ER life to bitch about the markets? Can you come up with some other asset allocation that doesn't require Diogenes' lamp?
VIVA LA REVOLUCION! That's the only possible guiding light, YMMV etc etc
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Old 06-05-2010, 07:47 PM   #435
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These few responses actually sums up American's engrained attitude pretty well.
"Pass the KY, and say Thank you very much sir"
Back in 1776, if the investing class had possesed that attitude your national sport would be cricket.
Pretty damned funny!
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Old 06-05-2010, 07:50 PM   #436
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As has been asked before (by me and others), what's your alternative? Get on the internet and whine? Tell us the answers, oh outraged one!
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Old 06-05-2010, 08:19 PM   #437
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Old 06-05-2010, 08:54 PM   #438
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Does anybody ever consider how rigged these markets must be?
To be balancing on such a knife edge...that someone blinks and the market crashes?
Does it not concern any of you to have a fairly large % of retirement security invested in this crap-shoot? Stocks or bonds...it's still in the same crooked game.
I mean, for God's sake....
Most top Treasury officials originate from Goldman.
Goldman is charged with fraud.
Goldman has a 100% Q1, not a single losing day. WHAT?
High speed trading is viewed as unfair, but legal,
Corporations can now "buy" their favorite politicians.
We could o on & on with this list..........

Is everyone on drugs?
Is it not even conceivable that just maybe, the USA investing public is being played for complete suckers?
30 yrs ago, if we'd read about these market issues in Venezuela, Fox News would've been crowing about how crooked that Junta was.

Where is the outrage?
i'm with you brogan. the others here will be too...someday. they just havent reached their breaking point yet. we are the canaries in the cole mine.
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Old 06-05-2010, 09:07 PM   #439
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i'm with you brogan. the others here will be too...someday. they just havent reached their breaking point yet. we are the canaries in the cole mine.
Well, you must concede there is a non-zero chance that the rest of us will continue being just fine. We will continue owning diversified portfolios of stocks, bonds, etc and either continue accumulating our nest egg (for those seeking to ER) or continue withdrawing an amount sufficient to live off of each year (for those currently ER'd).
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Old 06-05-2010, 09:16 PM   #440
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we are the canaries in the cole mine.
I suppose it is all a matter of perspective: where you see canaries in a "cole" mine, others see flies in the cole slaw...
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