Consensus View

[wabmester]

Schwab just polled 1400 investment advisors:

press release

* Advisors have an affinity for large cap equities overall: nine out of
ten advisors (93%) plan to maintain or accelerate their investments in
both domestic and developed international large cap equities during
the next six months.

* Advisors are also very enthusiastic about investing in ETFs: The
majority of advisors (75%) invest in ETFs today and half of those plan
to invest more in the next six months.

* Advisors are less enthusiastic about REITs and real estate: 25% of
those who now invest in REITs plan to invest less or discontinue their
investments in the next six months; 17% of those who now invest in
real estate express the same sentiments.

* Hedge funds are being used by more than one-third of advisors, and
one-third of all advisors say that they would be more likely to invest
in hedge funds if there were more SEC oversight; however, 62% of those
who do not currently invest in hedge funds and private equity have no
plans to begin investing in those vehicles during the next six months.

* Advisors think healthcare, information technology, and the financial
sectors will be top performers in the next six months.

* Japan, Hong Kong and Singapore are deemed the top up-and-coming
developed international markets; China and India are cited as the
emerging international markets that will perform best during the next
six months.

 

[NinjaPigeon]

Well then, guess REIT isn't such a good idea for me as my next purchase

 

[LOL!]

Hmmm, 75% of advisors who now invest in REITs plan to invest more or continue their investments in the next six months.

 

[FIRE'd@51]

Hmmm, 75% of advisors who now invest in REITs plan to invest more or continue their investments in the next six months.

ETFs not REITs - you misread it.

 

[LOL!]

ETFs not REITs - you misread it.

Someone please help this gentleman.

 

[CybrMike]

Schwab just polled 1400 investment advisors:

* Advisors are less enthusiastic about REITs and real estate: 25% of
those who now invest in REITs plan to invest less or discontinue their
investments in the next six months; 17% of those who now invest in
real estate express the same sentiments.

Doesn't say what the other 75% are doing.

 

[Spanky]

Doesn't say what the other 75% are doing.

I would infer that they either stay put or increase their holding of REITs (not likely).

 

[FIRE'd@51]

Someone please help this gentleman.

Oops! I misread it! Sorry.

 

[bssc]

Doesn't say what the other 75% are doing.

They plan to underperform the S&P 500.

 

[cute fuzzy bunny]

Part I really like is the favor of the financial sector...which was highly unfavored a year ago, yet hasnt had any fundamental changes in any measurable area since then.

Now we dont like it...presto!...now we do!

Truth be told Fire'd@51, it doesnt say what the rest of the 75% plan on doing. We didnt get to see the actual survey.

It might have read -

What are your plans with REITS:

A) invest less or discontinue
B) light myself on fire
C) light my money on fire
D) buy knocker-downers close to the freeway and try to flip them in six months after putting in 100k a pop in sweat equity

Note; you must choose one of the above.

This is why I hate seeing surveys without the root survey and the data collection/processing methods, who was polled, the sample size, yada yada yada.

All I can gather from the above is that the sample is derived from 1400 financial advisors who would agree to fill out a survey that Schwab gave them when one could infer that they'd be providing the results to Schwab customers.

In other words, nobody smart or busy.

 

[lem1955]

So if the herd is going in one direction... we should go in the other. Right? I thought you all weren't market timers?

 

[donheff]

I thought the idea with us haystackers is not to "go" anywhere. Set up a desired allocation, rebalance, stay put. Doesn't matter what the herd is doing.

Going the opposite direction from the herd is market timing.

 

[cute fuzzy bunny]

I often find myself with investable cash that needs to go somewhere. The cheap, out-of-favor segments that are 'against the herd' for good underlying long term reasons are purchase candidates.

While I dont condone market timing based on some formula with 'in and out' levels, there are times things are hideously and obviously expensive or cheap and nobody can rationally explain why. If the underlying business is fundamentally sound or particularly unsound, I think an investor can periodically decide to get in or out of certain situations.

Good historic examples are the late 90's tech boom and the bond market of the last few years during the feds long slow rate cutting. There are some current investments with great recent returns and little or no explanation as to their current price levels. Investors are hesitant to get out because the high recent returns make them feel good.

I sure missed out on the last year of reit returns by bailing out late in 2005. But Templeton said he made all of his money by selling a little too soon...which sure beats the alternative.

 

[FinanceDude]

But Templeton said he made all of his money by selling a little too soon...which sure beats the alternative.

I think he "borrowed" that phrase from Baron Rothschild:

"Fortunes have been made by selling too soon"...................

 

[lem1955]

I thought the idea with us haystackers is not to "go" anywhere. Set up a desired allocation, rebalance, stay put. Doesn't matter what the herd is doing.

Going the opposite direction from the herd is market timing.

Yes. Absolutely right. More often than not, the direction the herd is going is chasing last year's returns, which means asset allocators are going against the herd - by rebalancing - selling what won last year (high) and buying what didn't (low). But we don't go against the herd just for the sake of contrariness.

 

[samclem]

I thought the idea with us haystackers is not to "go" anywhere. Set up a desired allocation, rebalance, stay put. Doesn't matter what the herd is doing.

Going the opposite direction from the herd is market timing.

Well, there are all kinds of variation and degrees, and sometimes you must buy/sell just to "go nowhere". If you've set up you allocation as you want it (e.g. 50/50 bonds/S&P 500, or something more complicated with portions to foreign, value stocks, small stocks, REITS, etc) then the percentages will get out of whack as some assets go up relative to others. When the "herd" is buying stocks and drive their prices up, you'll need to sell some and buy an asset class that hasn't appreciated as much in order to keep your allocation right. Most of us would say that this is not market timing, even though the effect is the same. Now, it is just a small further step to say "well, those foreign stocks stocks have been running up at amazing levels for 3 years, and I've been rebalancing every year. They can't keep doing this forever--the barber and cab driver are raving about these foreign stocks and they are on the cover of Money magazine again. Maybe it's time to weight them a little lower in my %ages--who is to say I got it exactly right when I set this up?"

It's a slippery slope, and maybe one of the advantages of the Target retirement Funds (or other balanced MFs) is that they protect us from our tendancies to predict the market. Still, I dont think a little tinkering around the edges is likely to be a tremendously bad thing. Hopping in and out of entire asset classes is a a road to disappointment for most, however.

 

[nwsteve]

For you Vanguard diehards, Bogle is quoted in todays WSJ online column by J. Clements. Bogle certainly seems to be "batting down the hatches"
"These days, Mr. Bogle isn't sounding particularly enthusiastic about the market's prospects. "Figure out what your stock allocation should be," he advises. "Now is a time to stay where you are or reduce. The odds are, we are in for a period of modest returns."

Mr. Bogle reckons stocks will average 7% a year in the decade ahead. He gets that estimate by dividing the market's performance into two parts, its investment return and its speculative return."

Column is available online but log-in is necessary.

 

[wabmester]

For you Vanguard diehards, Bogle is quoted in todays WSJ online column by J. Clements. Bogle certainly seems to be "batting down the hatches"
"These days, Mr. Bogle isn't sounding particularly enthusiastic about the market's prospects. "Figure out what your stock allocation should be," he advises. "Now is a time to stay where you are or reduce. The odds are, we are in for a period of modest returns."

Mr. Bogle reckons stocks will average 7% a year in the decade ahead. He gets that estimate by dividing the market's performance into two parts, its investment return and its speculative return."

That's his standard spiel (which doesn't mean he's not right). He basically argues that the outsized gains of the 80's-90's bull market were due to P/E expansion. And that now we're looking forward to a period of P/E compression, which means stocks will grow more slowly than the economic fundamentals.

pdf link