Do you fear a world wide bubble??

[Alex]

Quote:

Originally Posted by Nords None. He's a perma-bear. I'd like to see his actual portfolio compared to his thesis. Sorta like Saint Jack being busted with an actively-managed mutual fund...

I figured as much. I read the article but would not change my AA because of it. Therefore IMHO, it's really just Financial Porn.

[haha]

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

[teejayevans]

Quote:

Originally Posted by HaHa Maybe so, but Jeremy Grantham is no Bubblevision Tout. He is a very wealthy man with a very impressive client list and a very good long term record. Just because active management is not easy does not mean it is not possible. One just has to be smarter than the average bear, and also have the right mindset. (Mind you I am not attributing those laudable characteristics to myself, only to J. Grantham.)

I think it's like predicting the weather, too many variables to properly predict anything
too far in advance, if they get it correct, they are mostly lucky.
TJ

[yakers]

Just my 2 cents, what HA, & Grantham and some interesting others are saying is not ‘porn’ IMHO. That does not mean to jump in and agree with their direction. There are some good financial posters on this board and they range from bulls to bears. As I see it there are conflicting bits of financial information in the ‘tea leaves’ on the down side there is real govt & private (but maybe not too much corporate?) debt, a bad balance of payments and an overheated real estate market. On the plus side corporate profits are still good and unemployment is very low. Nothing to laugh at, profitability is key to growth and as long as people are working they can keep buying and managing debt. One use of bearish opinions is to help dampen even more financial exuberance. It just seems to reinforce setting an asset allocation that I can live with and getting on with life. My core retirement fund is in a Target Retirement type fund. And I have my wife switching more into Wellesley. And we are 7% to 9% cash so we could buy something if a good buying opportunity arises.
I just don’t think we need to ‘bash the bears’ (and I don’t mean the wackos who say buy only gold, food & firearms) they have something to say and overall they help moderate the market.

[Nords]

Quote:

Originally Posted by yakers I just don’t think we need to ‘bash the bears’ (and I don’t mean the wackos who say buy only gold, food & firearms) they have something to say and overall they help moderate the market.

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.

[haha]

Quote:

Originally Posted by Nords 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]

Quote:

Originally Posted by HaHa 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]

Quote:

Originally Posted by Nords 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/arti...reinvest/30733

[lazyday]

Thanks for posting the Siegel argument.

Quote:

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.

Quote:

Originally Posted by HaHa 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]

Quote:

Originally Posted by HaHa 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]

Quote:

Originally Posted by HaHa 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]

Quote:

Originally Posted by 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

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]

Quote:

Originally Posted by Alex 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.