Do you fear a world wide bubble??

[haha]

We're casting aspersions on persistently bearish predictions that are stridently driven by reversion to the mean new market highs and a need to sell newsletters financial management.

Heck, even Bogle is still selling-- let alone shills like Burns, Grantham, & Mauldin. They're nice guys and perhaps their hearts are in the right place but I'd feel a lot more sympathetic toward their crusades if they disclosed where their profits are going. I'm much more enamored of the way Swedroe & Ferri (and formerly Bernstein) give it away on the Vanguard Diehards discussion board.

But hey, they're all better than Gross, Cramer, & Blodget.

Where do you think their profits are going? They are an investment advisory firm. People pay them to manage funds. Last I saw this is not illegal or immoral in a capitalist country.

As far as selling to his clients, it is very hard to maintain a bearish posture when your clients are largely institutional investors. The market just keeps on keeping on, and the bears are suffering and losing clients. Everyone knows that people want to hear good news, especially when the near term at least is validating and financially rewarding to a bullish posture. Read this very thread-- notice the reaction of most posters to an idea that is not playing straight to what most of us already think, and have committed money and ego to?

When and if a big bear arrives, the professional who has stuck to his guns may by then be talking to empty room. So even then he loses. It is integrity that drives Grantham.

The other thing that I find odd is the idea that securities professionals are not able to make judgments about valuations of securities and/or asset classes. In Grantham's case his firm values asset classes. They make the further assumption that something which has always happened-reversion to the mean for a class- will continue to happen in the future. IMO, this is not a huge stretch.

If one doesn't make grounded assumptions like this, how can any investment be valued? Today’s market price + 10% pa? That would have worked splendidly with the NAZ in 2000!

IMO, many things are a good buy at some price, and a good sell at another. Not necessarily a short, because then you are not valuing, you are making a short term prediction that had better be right.

Ha

 

[Nords]

When and if a big bear arrives, the professional who has stuck to his guns may by then be talking to empty room. So even then he loses. It is integrity that drives Grantham.

Nah, it's profits and a one-key piano.

I find it odd, perhaps even hypocritical, that everyone laughs at Abby Joseph Cohen's cheerleading and yet we soberly nod & genuflect at Grantham's Cassandra-like pronouncements. Yet one person's bull is right two-thirds of the time and the other's bearishness is only batting a bit over .300.

Admittedly that's major-league performance. Are there any Hulbert subscribers in the house who can look up Grantham's record?

 

[haha]

Nah, it's profits and a one-key piano.

Well I suppose you must know.

ha

 

[kcowan]

Sure there is a bubble in most places except Japan. But are any of the gurus recommending overweighting Japan? The biggest bloodbath will be in the hedge funds. Fortunately, hedge funds are the playground of the rich so the onset of the bear should have less impact on mortgage-holding banks than they have in the past. Brokerages will suffer as always.

 

[hogwild]

Jeremy Siegel responds to Grantham:

http://finance.yahoo.com/expert/article/futureinvest/30733

 

[lazyday]

Thanks for posting the Siegel argument.

The share of proprietors’ income has been trending downward over most of the last fifty years as more capital migrates into corporate entities. This transformation has particularly been strong in the financial sector, where many commercial banks, brokerage houses, investment banks, and government sponsored enterprises such as Fannie Mae and Freddie Mac have become public corporations. Once this shift is taken into account, the total profits to corporate and non-corporate capital, now at 20% of GDP, is only slightly above its post World War II average and is not at all at record levels.

Interesting. Would like to see counter-argument to that.

They make the further assumption that something which has always happened-reversion to the mean for a class- will continue to happen in the future.

He did indicate that oil prices might be the first thing not to.

I think it's reasonable to expect a return to the mean, but I'm not counting on it happening in the next 7 years. (IIRC, Grantham said that typically within 7 years, an asset class will pass through fair value.)

 

[Alex]

A little more of what Alex dismisses as "porn":

"Just think about it: if we are correct, the process of moving all asset prices smoothly to fair value over 7 years (which is how we do our 7-year forecasts) will have resulted in a world where investors are paying for the privilege of taking risk! If you believed this data you should, of course, put all your money in cash. In the real world, unfortunately, even if you believed it with every fiber in your body, you could only have a little cash on the margin because the career risk or business risk of moving more would be unsupportable."

--Jeremy Grantham, April 2007 Client Newsletter

AFAIK, Yeah, that is porn. It tells me nothing. But heh, you can do whatever you want to. It's your money and your life.

So, tell me HaHa what specifically are you doing to your portfolio because of this 'valuable' information? :

 

[haha]

Alex. take a hike.

You sound like the one who might need some physical relief.

 

[Alex]

Alex. take a hike.

You sound like the one who might need some physical relief.

You seem to be having a hard time (no pun intended) answering my question. What specific changes are you making based upon this 'valuable' information? What is so difficult about the question?

 

[teejayevans]

In summary we have in the US:
low dollar causing international companies to have inflated earnings
inverted yield curve on bonds
record highs
housing bubble
$3/gal gas
its May: "sell in may, go away"

I'm not trying to time the market, but I think its an excellent time to
re-balance.
TJ

 

[Mwsinron]

In summary we have in the US:
low dollar causing international companies to have inflated earnings
inverted yield curve on bonds
record highs
housing bubble
$3/gal gas
its May: "sell in may, go away"

I'm not trying to time the market, but I think its an excellent time to
re-balance.
TJ

Yield curve means nothing. Look at the rally last year with the inverted curve. 3 gal gas? So what people and business showed they could absorb it. Housing shows it has not been the big downer that everyone thought it would be. Record highs? Ok if a market moving up worries you I guess its time to get out

 

[brewer12345]

AFAIK, Yeah, that is porn. It tells me nothing. But heh, you can do whatever you want to. It's your money and your life.

So, tell me HaHa what specifically are you doing to your portfolio because of this 'valuable' information? : if the answer is nothing, then you are simply jerking yourself off - to what is essentially financial PORN. Knock yerself out bub, just make sure you have a kleenex handy.

Alex, this is really over the line. You owe Ha an apology, IMO.