Do you net out investment expenses from your SWR?

[unclemick]

Re: Do you net out investment expenses from your S

Yep - Bernstein has visited what he calls 'the value premium' more than once over the years and has admitted on occasion the limits of his math/stat ability to explain it to his own satisfaction - yet (he has faith he'll get it).

Ben Graham - in a glancing blow said that the market values dividends more 'highly' than other valuations/methods in value stocks - the bird in hand school of thought.

 

[wabmester]

Re: Do you net out investment expenses from your S

OOOh Wabmester, I disagree.

Blow me  

Owning a broad collection of value stocks, either hand picked, in a manged fund specializing in value stocks, or in a broad index does NOT appear to me to induce more volatility as a rule.

You're sort of right.   At least when the economy is strong.  When things go bad, junk/value is the first to feel the hit.

I'll let our hero Swedroe explain it:

http://www.etfzone.com/articles/20020211_valuepremium_adv_md_LS.php

In fact, in times of overvaluation like these, there is some comfort in owning a collection of stocks with price to earnings ratios in the single and low double digit range.

As long as you understand why the P/E is low.   The market is telling you these companies are risky and might fail.   The low P/Es of value stocks are pretty much a direct analog to the high yields of junk bonds.  Holding individual issues is risky, but holding a basket will generally provide good returns.   The volatility of individual issues generally tends to be out of phase with one another, so as you learned in physics, that will lower the amplitude.   You need to watch out when the volatility is in phase, such as economic downturns, which will increase the risk amplitude, dude.

 

[BigMoneyJim]

Re: Do you net out investment expenses from your S

Blow me

I wonder if this will catch on like the dryer sheet thing....

I won't make flags this time, though.

 

[Cut-Throat]

Re: Do you net out investment expenses from your S

I wonder if this will catch on like the dryer sheet thing....

I won't make flags this time, though.

And I won't be changing my Moniker to Deep-Throat

 

[cute fuzzy bunny]

Re: Do you net out investment expenses from your S

Hey, we could sell those flags for real money.

I want one in fact.

Junk bonds do get killed in poor economical situations, but isnt it true that in the recent bear markets value stocks did much better than growth or blend, at least in broader funds?

 

[John Galt]

Re: Do you net out investment expenses from your S

Maybe part of the reason that I own "junk" bonds
is empathy. There was a time when I had to
struggle to borrow what I needed. Now people
are throwing money at me. Anyway, I understand
junk bonds and am comfortable with a large part of
my portfolio being allocated there.

John Galt

 

[charlie]

Re: Do you net out investment expenses from your S

Hey TH,

You should read the Swedroe link provided by
wab earlier. It's the straight poop!

Charlie

 

[cute fuzzy bunny]

Re: Do you net out investment expenses from your S

Charlie...I have read it before and just did read it again.

Supports what I said...in the 73-74 bear market value stocks outdid growth, and in the recent 2000-2002 bear market, value thumped growth pretty good.

My feeling is that stuff that is already beaten up is a better place to be in a down time that stuff thats way over priced.

But I'm a weirdo.

 

[unclemick]

Re: Do you net out investment expenses from your S

Heh,heh,heh Well TH

Being weird just might be better than the 215 orangutans - Appendix I, 4th ed, The Intelligent Investor Ben Graham. Warren Buffett's 1984 speech on value investing at Columbia. But then again the orangutans may have gone on to develop the fro-runner of the efficient market hypothesis and mordern portfolio theory - no post script on that.

Of course I have a bet on both camps - just in case the orangutans were on to something and Buffett was wrong. Heh, heh