Is there an undervalued asset class in the house?

[cute fuzzy bunny]

Quote:

Originally Posted by brewer12345 There will be no pleasing you on this score, so I decline to play the game. I'd suggest others do the same.

I am not seeking to be 'pleased', but simply - and at an invitation - to add my opinion to the discussion. I owned close to 100 individual issues at one point and some made money, some didnt. In my final analysis, my efforts created a lot of work and expense and except for a few years where I knocked the cover off the ball, I didnt beat a broad market index over the long haul.

As Bernstein points out in the paper linked above, your odds are roughly 1 in 6 of being able to beat the market with 30 stocks in your portfolio...so while i'm no math whiz i'm guessing you need a couple of hundred to be sure?

I learned my lesson and I'd like to share it with those who give a hoot. In this case I think i've made my point: most of your setups are too complex to even measure if you're doing better than a cheap index fund.

At least I give people my best ideas, I dont mind taking my lumps over bad ones, and I let people know I'm going to sell off something i recommended when I do it, rather than days or weeks later.

[cute fuzzy bunny]

Cyclinginvestor - You've done well grasshopper!

Were your returns well spread or were there one or two stocks that gave you the bulk of your returns? Did you anticipate that they'd be big winners when you bought them or were they pleasant surprises?

In the 401k rollover, was that a concentrated portfolio or was it primarily holdings of your employers stock?

Wow...I'm pleased! And we're learning!

[brewer12345]

Welcome to my ignore list, cute fuzzy [moderator edit]. Congrats: you are the first and only occupant.

[cute fuzzy bunny]

I imagine there are plenty of others and i'm perfectly okay with that.

But since i'm on it and cant offend you, hows that investment in MOVI and blockbuster working out?

[CyclingInvestor]

Quote:

Originally Posted by cute fuzzy bunny Cyclinginvestor - You've done well grasshopper! Were your returns well spread or were there one or two stocks that gave you the bulk of your returns? Did you anticipate that they'd be big winners when you bought them or were they pleasant surprises? In the 401k rollover, was that a concentrated portfolio or was it primarily holdings of your employers stock?

The returns were well spread between stocks, but the results from 1998-2005 were
heavily influenced by REITs (negatively in 98-99, positive in 00-05). I do not asset-
allocate, but try to own the best-valuation stocks in the small universe (about 30) of
stocks I follow. In late 98 thru the end of 05 all those slots were occupied by REITs.
Although I had already discovered REITs via ValueLine, I will always be thankful
to Ralph Block's books and Motley Fool posts for giving me sufficient understanding
of REIT fundamentals to invest heavily in them.

My 401k was SP 500 index before I rolled it over, the only low-fee choice I had.

I never buy a stock because I expect it to go up - I buy it because I get the most
(IMO) risk-adjusted dividend flow in the future. Random (IMO) short-term price
fluctuations just allow me to 'trade up' future dividend flows. Of course, this means
I almost always buy 'falling knives' (with strong business fundamentals), so there are
sometimes periods like the 15 months from late 98 to the end of 99 where the
market value of my portfolio lags the indices, but since I had always planned to retire
on the dividends it was easy to ignore it.

[FinanceDude]

Quote:

Originally Posted by Nords For a guy who posts as "FinanceDude", the level of detail to your analysis (let alone its quality) leaves a little to be desired.

The INTC reference was a joke toward CFB........you didn't get that? :confused::confused:

Are you saying you want a full blown discussion of stochastics, Wave Theory, CAPM, Black and Scholes Option Pricing Model, etc? Because I could post that stuff on here but 80% of the folks wouldn't care or understand it.........

Most of my discussion is in the PM mode with the other "stock-pickers" on the board. That way we can talk freely without ongoing nit-picking and thread overrun.......

[FinanceDude]

Quote:

Originally Posted by brewer12345 Welcome to my ignore list, cute fuzzy [moderator edit]. Congrats: you are the first and only occupant.

[brewer12345]

Quote:

Originally Posted by FinanceDude That way we can talk freely without ongoing nit-picking and thread overrun.......

Barring moderator involvement (don't hold your breath), I suspect that this section of the boards will always be overrun with adamant indexers looking to nitpick (particularly a certain knowitall alpha male who doesn't take several hints to give it a rest and seems to be overcompensating for *something*).

A shame, really. I thought this would turn out to be a relatively civil place to kick ideas around. Looks like I was overly optimistic Time will tell, I guess.

[2soon2tell]

Brewer,

Whats your opinion of Canadian O&G trusts. They were beaten down heavily in the last year due to proposed tax law changes by the Canadian govt.

2soon

[brewer12345]

Quote:

Originally Posted by 2soon2tell Brewer, Whats your opinion of Canadian O&G trusts. They were beaten down heavily in the last year due to proposed tax law changes by the Canadian govt. 2soon

Might be some gold to pan for, but I mostly think the better-run O&G operating companies are a better choice.

[Nords]

Quote:

Originally Posted by FinanceDude The INTC reference was a joke toward CFB........you didn't get that? :confused::confused:

In the context of other stock comments I must've missed the subtlety of the humor.

Quote:

Originally Posted by FinanceDude Are you saying you want a full blown discussion of stochastics, Wave Theory, CAPM, Black and Scholes Option Pricing Model, etc? Because I could post that stuff on here but 80% of the folks wouldn't care or understand it.........

Well, I prefer a discussion oriented toward an income statement or a balance sheet or a spreadsheet model but I'm conversant with the other concepts too. If you think you can hold up your end of the conversation then bring it on...

As for the TA and the CAPM, I guess it has its appeal and its limited applications. But I remember Bill Sharpe saying that he was glad the Nobel Committee can't reclaim its awards in light of subsequent research.

We can get plenty of non-specific comments on Yahoo! or M* or TMF. The only other board that I've seen come close to decent analysis was FundVision, but that's a board for hyperactive day-traders led by a moderator who never seemed to lose a shekel. I'm more interested in fundamental deep-value analysis, especially long-term and dividend-oriented, by people who can teach what they've learned from their mistakes as well as their successes. This section of the board was created for the purpose of doing something better than the crap that can be found everywhere else, so why revert to old habits?

Quote:

Originally Posted by FinanceDude Most of my discussion is in the PM mode with the other "stock-pickers" on the board. That way we can talk freely without ongoing nit-picking and thread overrun.......

And without the harsh glare of publicity!

[kcowan]

One of my "high-growth" O&G plays is Connacher (CLL.TO), recently integrated and well-positioned for growth.

[terminator]

Quote:

Originally Posted by Nords If you think you can hold up your end of the conversation then bring it on...

IFC -- Investor's Fight Club

[cute fuzzy bunny]

First rule about IFC...we dont talk about IFC...

Hey brewer (useless since you arent reading this, right?), I made a quick jab joke complete with a winky to financedudes opening gambit. You elected to take it as criticism and go thermonuclear.

In a discussion about stock picking, I think its pretty dang relevant to talk about the issues with the process, success factors, wins and losses, strategies and the real facts and data behind the whole matter. Perhaps not in a "which asset class is undervalued" post, but its a relevant discussion.

The facts and data say that stock picking is a losers game. Some people will be lucky, some people will have an innate skill.

But I'm afraid you leave me chilly when you make picks, tell us they're not your best, bunch up your knickers when someone brings up a bad pick, sell off stuff you had been praising just days before, and then top it off by telling us that you have no idea how much money you're making or losing.

[cute fuzzy bunny]

Quote:

Originally Posted by FinanceDude The INTC reference was a joke toward CFB........you didn't get that? :confused::confused:

I got it...for Nords' benefit, I made a comment about people who get rich off of one stock as much by luck as by chance. FD was just noting that i'm one of those lucky stiffs.

I suspect we all get here one of two ways: long LBYM/penny saving and getting lucky. People who are working a low six figure portfolio probably need to pick some individual stocks in the hopes of snagging the superstock that puts them through the ceiling and makes their ER dream happen.

Just dont confuse luck with skill...

Cyclinginvestor...pretty interesting stuff...I was quite interested in why your portfolio was so uncorrelated from the S&P 500 in the late 90's and early 00's...REITS make a lot of sense, and clearly that whole sector has been a runaway train for the last 6-7 years. Congratulations on the picks.

[FinanceDude]

Quote:

Originally Posted by Nords In the context of other stock comments I must've missed the subtlety of the humor.

I'll give you the benfit of the doubt since you actually OWN some stocks, unlike CFB, who doesn't own any now but keeps beating the drum on the
"stockpicking is a loser's game" mentality..........:confused:

Quote:

If you think you can hold up your end of the conversation then bring it on...

I apologize, I guess you do have a sense of humor, because that comment is darn funny to me.............

Quote:

This section of the board was created for the purpose of doing something better than the crap that can be found everywhere else, so why revert to old habits?

So let me understand this, you want an in-depth analysis of a stock so you can nitpick it more? You would never buy an aggressive stock anyway, so why should I bother with some of my more interesting picks?

I will post an in depth analysis on one of my growth stocks. If that doesn't satisfy you, well too bad, brewer is the bottom-fisher quant guy on here............. I look at technical and fundamental analysis regarding a stock, and will buy into weakness or strength depending on positive long-term signs, like increasing cash flows, increased R&D spending or acquisition of another firm's patents, etc. It's not pure fundamental amalysis...........

[bpp3]

Here is my cumulative performance versus a total market index fund. To do the comparison, for each stock I own I pretended that I bought an equal amount of the index fund. This should give a pretty good net-of-fees comparison. Dividends are ignored, but the dividend yield of my portfolio is a bit higher than that of the index. Also, two stocks which went private on me are ignored, but they were sold at a profit anyway. The plot starts from Feb. of this year, though my portfolio of individual stocks started about 3 years ago.

I took Bernstein's 15-stock myth message to heart, so I hold as many names as possible (I'm up to 70 so far) in an attempt not to lag the index too badly. So far so good.

My stock-picking rule more-or-less consists of throwing darts at the list of stocks which are in the lower half of the market in terms of P/E and P/B. I also have more small and microcaps than are in the index, but the net effect of the size tilt (if broken out separately) has fluctuated around zero over the course of this graph.

[cute fuzzy bunny]

Bpp...interesting stuff...so your portfolio from your description seems to have a value tilt? Looks like you're picking up a 1.25-1.75% boost over the s&p500...however the value indexes have about a 2-2.25% boost over the S&P.

Do you think your outperformance of the S&P 500 is due to the picking or the value tilt in selection?

[bpp3]

Quote:

Originally Posted by cute fuzzy bunny Bpp...interesting stuff...so your portfolio from your description seems to have a value tilt? Looks like you're picking up a 1.25-1.75% boost over the s&p500...however the value indexes have about a 2-2.25% boost over the S&P.

Sorry if I wasn't clear: my bogey is not the S&P500, but the TOPIX, a Japanese total-market (almost) index. Specifically, I am tracking against a TOPIX ETF put out by Nikko Asset Management (ER = 11 BP), which is what I would have invested in were it not for certain tax issues.

Quote:

Do you think your outperformance of the S&P 500 is due to the picking or the value tilt in selection?

I wouldn't really call the outperformance statistically significant at this point; it would be wiped out entirely if my single best-performing stock (Sumitomo Metals, up 350% -- and no, I had no idea it would do that well) were to go bankrupt.

If it persists, my guess would be that the value tilt at purchase time is good for a one-time pop as a stock goes back to the mean (on average, excepting cases like the aforementioned Promise, which has probably suffered a permanent loss due to the changed laws). Over time, though, the performance of my portfolio should come to approximate more and more that of a total-market index. At least that is my hope.

[CyclingInvestor]

Quote:

Originally Posted by cute fuzzy bunny I suspect we all get here one of two ways: long LBYM/penny saving and getting lucky. People who are working a low six figure portfolio probably need to pick some individual stocks in the hopes of snagging the superstock that puts them through the ceiling and makes their ER dream happen. Just dont confuse luck with skill... Cyclinginvestor...pretty interesting stuff...I was quite interested in why your portfolio was so uncorrelated from the S&P 500 in the late 90's and early 00's...REITS make a lot of sense, and clearly that whole sector has been a runaway train for the last 6-7 years. Congratulations on the picks.

I did not really try to load up with REITs, but once I understood them well enough
to analyze them and add them to my stocks tracked (in late 98 ), they all were
20-40% undervalued, while the other blue chips I tracked (GE, JNJ, etc) were
all 20-50% overvalued. It took until late 05 for the REIT valuations to start
exceeding the other blue chips (based on how I evaluate them), causing me to
start replacing them with the non-REITs that I follow.

My primary reason for holding individual stocks, however, is not superior
performance, but a better feel-good factor. I sleep much better at night holding
the companies that I respect, than the motley collection that index funds must
by their nature include.