# Time to Exit Equities?



## Belguy (May 24, 2010)

Danielle Park of Venable Investment Council was a guest on BNN's MoneyTalk this week and she stated the opinion that it was a dangerous time to be invested in equities, commodities, and the emerging markets. She has cashed in ALL of her equity positions on behalf of her clients. She feels that buy-and-hold equity investors are in for a world of pain!!

Here is the clip which I thought would be of interest to some out there who may not have seen the program:

http://watch.bnn.ca/#clip378134

The program will be repeated Sunday evening at 9:30 EST.

These are shaky times for investors.

Any thoughts?


----------



## Four Pillars (Apr 5, 2009)

Belguy said:


> Danielle Park of Venable Investment Council was a guest on BNN's MoneyTalk this week and she stated the opinion that it was a dangerous time to be invested in equities, commodities, and the emerging markets. She has cashed in ALL of her equity positions on behalf of her clients. She feels that buy-and-hold equity investors are in for a world of pain!!
> 
> Here is the clip which I thought would be of interest to some out there who may not have seen the program:
> 
> ...


All I can say about Danielle is that she is to equities what Garth Turner is to real estate. 

Whatever your investment strategy is - just stick to it.


----------



## the-royal-mail (Dec 11, 2009)

As a buy and hold investor, you shouldn't be worried about this type of discussion. Your earlier posts made very clear that you intend to stay invested through all of the ups and downs of markets.

Are you having second thoughts already?


----------



## dogcom (May 23, 2009)

I got this off her Juggling Dynamite website.
http://seekingalpha.com/article/238488-insiders-head-for-the-exits?source=email_watchlist

Insider selling is not a good thing. But even still usually Danielle is a little early so we should get a last spike.


----------



## slacker (Mar 8, 2010)

I've stopped buying into equity in the last few months, as I "feel" that it's increase had been unreasonable. But my cash position is getting uncomfortably high now (10%).

But I think the lesson is that the market can stay unreasonable for much longer than you can guess.


----------



## Broke (May 11, 2010)

Belguy said:


> Danielle Park of Venable Investment Council was a guest on BNN's MoneyTalk this week and she stated the opinion that it was a dangerous time to be invested in equities, commodities, and the emerging markets. She has cashed in ALL of her equity positions on behalf of her clients. She feels that buy-and-hold equity investors are in for a world of pain!!
> 
> Here is the clip which I thought would be of interest to some out there who may not have seen the program:
> 
> ...


You may want to consider tighter stop loss orders for your stocks and ETFs.


----------



## Lephturn (Aug 31, 2009)

Or investigate collaring your equities that are up with options to protect your gains. Much better than a stop loss when something like the flash-crash happens again... and it will.


----------



## kcowan (Jul 1, 2010)

Watching BNN can be injurious to your financial health...


----------



## brad (May 22, 2009)

I almost feel like there should be a pop-up window that appears whenever someone tries to post something to the "Investing" forum that asks: "what's your time horizon" and "what's your risk tolerance," and your responses to those questions are included with your post.

Sometimes I get the feeling that people are talking past each other because they are starting with different assumptions. If "investing" to me means investing for a goal that's 20 years in the future (e.g., retirement) and "investing" for you means investing for income now or in the next few years, we're going to have totally different perspectives on risk and the wisdom of buying and holding.

I have seen no convincing evidence to suggest that someone investing for the long term should pay attention to these cries to get out of equities now. The idea that anyone can predict how equities will behave over the next 15 years is ludicrous. This doesn't mean I think they're a safe investment or that they will reliably beat inflation over the long term. It just means that, given your other options, if you want to try to beat inflation with your long-term investments, you have to invest a healthy portion in equities. It's a gamble that may or may not work, but putting all your money in bonds or GICs is a gamble too, because your portfolio's value will likely be eroded by inflation. So either way it's a gamble and you're taking your chances.


----------



## Lephturn (Aug 31, 2009)

dogcom said:


> I got this off her Juggling Dynamite website.
> http://seekingalpha.com/article/238488-insiders-head-for-the-exits?source=email_watchlist
> 
> Insider selling is not a good thing. But even still usually Danielle is a little early so we should get a last spike.


Following up on that Seeking Alpha article - the graph they post shows that insider selling has been useless as a predictor of market tops. As I would expect, given that insiders sell for tons of reasons - but only buy for one. The previous spikes in the ratio did NOT predict market tops - check out the end of 2006 for example.

The spikes up in insider buying seem to be a bit more aligned with market bottoms, and yet they are not predictive based on what I see there. When prices go down insiders buy more and sell less... no surprise there as the insiders are normally given stock options and a strike price based on recent history. They are going to hold off on exercising options and selling since the strike price may be high enough that they would not collect any money or have any gains - why would the exercise options when they could purchase the stock in the market for less? They wouldn't.


----------



## the-royal-mail (Dec 11, 2009)

Yes. And I also find there are too many threads and posts describing some facet of our economy as some sort of a bubble. I think people are a bit jumpy after what happened in 2008 and are afraid it's going to happen again. I don't think we're in any sort of a bubble and wish we would all stop talking and worrying about it. Life is stressful enough as it is without constantly worrying that the economy is going to take a dive. Even if it does, nothing that is discussed here will do anything to stop it. There will always be ups and downs. Let's tone down the bubble predictions and stop worrying please.


----------



## Belguy (May 24, 2010)




----------



## Eclectic12 (Oct 20, 2010)

brad said:


> [ ... ]
> 
> I have seen no convincing evidence to suggest that someone investing for the long term should pay attention to these cries to get out of equities now. The idea that anyone can predict how equities will behave over the next 15 years is ludicrous. This doesn't mean I think they're a safe investment or that they will reliably beat inflation over the long term. It just means that, given your other options, if you want to try to beat inflation with your long-term investments, you have to invest a healthy portion in equities. It's a gamble that may or may not work, but putting all your money in bonds or GICs is a gamble too, because your portfolio's value will likely be eroded by inflation. So either way it's a gamble and you're taking your chances.


+1 for the points about the time horizon assumptions adding confusion to some discussions.

I also see no evidence for getting out of equities.

If I'd listened when the cry was "there's no more money to be made in oil", I'd have lost a lot of distributions and capital gains.


----------



## Belguy (May 24, 2010)

As I have often stated, I consider myself to be a long term, buy-and-hold investor who is prepared to take the full stock market rollercoaster ride through all of the highs and the lows.

That said, I am finding that the older I get, the harder it is to stick with that strategy and conviction due to the diminishing timeline. Twenty years ago, with a longer time horizon, I thought less about it. I stayed invested during the 2008 crash and eventually regained my losses but, I may not have the same stomach for the next crash, whenever it comes.

It doesn't give me any more confidence when I hear of professional money managers who have their clients currently with ZERO exposure to equities due to their conviction that there are just too many uncertainties out there currently to have money in the markets.

Their current lack of conviction reflects my lack of conviction. However, I will continue with my 60/40 portfolio split equities to fixed income with the hope that I will have enough time left to experience the highs and the lows and still come out ahead when all is said and done.

My hope now is that we will end this year with the markets up at least 7 percent and that there are no flash crashes in store for us next year not withstanding more severe credit crunches and other potential Black Swan events.

Buy, hold, and prosper?


----------



## Lephturn (Aug 31, 2009)

Belguy said:


> Buy, hold, and prosper?


It's more like buy and hope IMO. 

I don't think it's time to "exit equities" but at the same time I think you had better have a way to make money whether the market goes up, down, or sideways or for the next 10 to 20 years you will get nowhere. If you think it's bad now, wait until the boomers are all drawing on their savings and continually pulling money out of the market. There just are not enough people to put money in to keep up with it. Basing your investing strategy on a period where the boomers were progressively saving and investing more and more money each year is not going to work when that same demographic force is pushing the markets in the other direction.

This realization along with the events of the last few years is what has driven me to learn a lot more about investing and take control of my own money. I am investing a good bit of time and money learning about things like options strategies, dividend growth, etc., but I sleep well knowing that my portfolio can't be cut in half - that I'm protected. Now I'm in a position that I actually embrace the big swings and volatile markets as they give me great opportunities and far more gains than I would ever get doing buy and hold these crazy choppy markets.

I'm sure lots of folks here will disagree with my stance - and that's fine. But I would entreat all of you to read and study a bit about investing and finances and make your own decisions - don't just take other peoples opinions at face value, even if they seem to be the ones that are shared by the majority of "experts". I would say if the majority of experts all agree on something, you should not only be suspicious of that opinion but look for the contrary play as an opportunity.


----------



## Broke (May 11, 2010)

*A different perspective*

Belguy, this is to cheer you up. A bit of a different perspective...

http://www.financialpost.com/Plug+your+nose+jump/3893042/story.html


----------



## Belguy (May 24, 2010)

I think that article ends with a slam against Northern Ontario towns!! It was obviously written by a Miami Beach booster!!

On this forum and throughout the financial press, you can find as many different opinions are there are stars in the sky!!

The conclusion that I have drawn is that NOBODY KNOWS and I see that as an argument in favour of buying and holding.

If nobody else knows for certain, then it is darn well certain that I don't as well and neither does your advisor, or any of the pundits on BNN and CNBC, or any of the financial writers out there.

Sure, there were some out there who predicted the collapse of 2008 but much of that was probably from blind luck. Whatever happens in the future, there will be some who successfully predicted it but how do you ever know who is right!!

Just in the past day, I have read opinions varying from it's urgent to get out of the markets and fast to now is as good a time as ever to jump into the markets.

Either of these opinions may be correct or it might be something in the middle.

You pays your money and you takes your chances.

That said, my own personal experience is that, as you age, you generally become less tolerant of volatility because you have less time to experience the rebound and because you may be withdrawing money from your portfolio during market drops and that money becomes very difficult to recoup.

Those younger, with longer time horizons, and no need or plan to make any withdrawals for a number of years have less to be concerned about.

Tonight, I have been thinking about the performance of the Japanese stock market over the past 20 years.


----------



## Lephturn (Aug 31, 2009)

Belguy said:


> Tonight, I have been thinking about the performance of the Japanese stock market over the past 20 years.


Extremely good point that one. Especially when you consider that they started with a real-estate bubble that burst and have held interest rates extremely low for many years trying to get growth going. It's scary how similar it is to the policies in the US right now.

Now tell me, how is buy and hold going to do if we are flat for the next 20 years?


----------



## fatcat (Nov 11, 2009)

> I don't think we're in any sort of a bubble and wish we would all stop talking and worrying about it. Life is stressful enough as it is without constantly worrying that the economy is going to take a dive. Even if it does, nothing that is discussed here will do anything to stop it. There will always be ups and downs. Let's tone down the bubble predictions and stop worrying please.


 you can't change the course of events by pretending they don't exist ....

the nikkei 225 was at *38,915.87* on dec 29, 1989 and it dropped to *7,054.98* on march 10, 2009 ... almost *20 years later* and it's only above 10,000 today .....

the dow did not reach *pre-1929* crash levels until *1954*

i don't have enough good years left to weather either of those scenarios ....


----------



## Belguy (May 24, 2010)

Remember the Japanese experience!!!

If we don't learn from history, we are doomed to repeat it!!

All investors, who think that we are preparing ourselves for a financially secure future in retirement, may end up living in poverty if the Japanese example is repeated elsewhere in the coming years.

Heh, you just never know for certain what the future will bring.

If our investments remain flat for the next twenty years, and we don't withdraw anything from our portfolios, we will end up having more or less the same amount as we have today.

Sadly, many of us will be forced to sell along the way and will never be able to recoup our losses and thus will end up with much less than we have today.

When making your investment decisions, consider the Japanese experience as history does sometimes repeat itself.


----------



## Toronto.gal (Jan 8, 2010)

Japanification warning or what?! Funny enough, I was just reading about this over the weekend.

The Nikkei back then had increased by almost 2000%, so the equity/real estate bubble had to burst with same force and did it ever, to the tune of $14 trillion! Take a look at chart on pg.4.

http://www.dtic.mil/cgi-bin/GetTRDoc?Location=U2&doc=GetTRDoc.pdf&AD=ADA501071

Sure, who can forget 2008, but I second the-royal-mail comments.

http://www.financialpost.com/Plug+your+nose+jump/3893042/story.html


----------



## hboy43 (May 10, 2009)

Hi:

The average investor in particular mutual funds has a lower return than that of the particular mutual funds. I am sure someone here can quote the actual styudy(ies). I am good at remembering the lessons and conclusions of things I come across, but not the details. The inescapable conclusion is that the average investor is terrible at market timing.

In an average flat or even down market, the astute investor will still make money off the dynamics of rebalancing. The not so astute investor will continue to do poorly pretty much no matter what happens. It is in their nature.

I don't get all this interest in the "lessons of Japan". As commonly discussed, it isn't even the right lesson.

Sir, I think if we put all the tanks on this fastest frigate, they will get to Europe the quickest. Oops, it got torpedoed, none of the tanks made it, quickly or otherwise. This time, if we put all our tanks on this boat, it will get through for sure ...

Why historically would any astute investor have had all their money in Japan. Sure, Japan got torpedoed, but many boats made it through. Why would an astute investor today have all their money in the USA, or whatever country/asset class/currency/however you want to chop up the investing world of possibilities.

The lesson of Japan is to not have all your money one place, not that particular investments categories can and do perform poorly for decades.

hboy43


----------



## kcowan (Jul 1, 2010)

Keep your likely drawdown in cash. The period of cash needed will depend on your confidence in the markets. It can vary from 6 months to 3 years depending on the investor. Any cash held beyond that amount would be an attempt at market timing.


----------



## andrewf (Mar 1, 2010)

You make it sound like a dirty word (market timing, that is).


----------



## Lephturn (Aug 31, 2009)

The only thing I am taking from Japan is that the stimulus didn't really work. Extrapolating to the US economy, it may see similar results. A flat US economy for 20 years is not going to be good for the world economy, so even a geographically diversified portfolio is not going to do very well.

Sure you'll do better with regular re-balancing, but I can't see it giving me the returns I need. Re-balancing IS timing the market essentially, it's just doing it automatically and hoping that works out. It's good in that it forces you to buy low and sell high on a sector and regional basis, and that's a huge improvement over what the masses normally do. That does not mean such a portfolio will outperform a more actively managed account that incorporates re-balancing along with other strategies. What it does do is provide a really simple plan that takes very little work and can be done mechanically - an actual trading/investing plan which is something 99% of people don't have at all. It's part of my plan, but not the only one - but if that's the only plan people do it's a vast improvement over no plan at all or plain old buy and hope.

Yes - the average "investor" (and I use the term loosely) fails at timing the market. Color me shocked - they do no study, no investigation, no charting, no work and are driven completely by emotion. The studies effectively say that people who don't try to time the market but get spooked out when things go down fail at timing the market. Well... duh. I don't think you can judge what a competent investor/trader can do based on mutual fund performance for people that don't even look at their statements until they see a front page newspaper article about how bad (or good) the markets are doing.

Sure - it's comforting to think that you can do little to no work and get superior investment performance over time - I just don't think it's accurate.


----------



## Belguy (May 24, 2010)

Here's an interesting little tidbit from today's Toronto Star:

"As of mid-2010, only about 15 of more than 1,200 equity mutual funds still available in Canada after 15-year and 20-year periods have paid investors more than 12 per cent annualized."

I hope that your high paid financial advisor has been a good fund picker.

Investing legend John Bogle, founder of Vanguard, is a guest of Howard Green on Headline on BNN Tuesday at 12:15 P.M. EST, followed by a program on bonds at 1:00.


----------



## the-royal-mail (Dec 11, 2009)

I dunno. Do actively managed funds typically outperform the indexes?

I really like the idea of index funds. Much lower MERs and readily available in my bank's lineup.

Incidentally, what are the aformentioned 15 top performing mutual funds?


----------



## slacker (Mar 8, 2010)

Belguy said:


> Danielle Park of Venable Investment Council was a guest on BNN's MoneyTalk this week and she stated the opinion that it was a dangerous time to be invested in equities, commodities, and the emerging markets. She has cashed in ALL of her equity positions on behalf of her clients. She feels that buy-and-hold equity investors are in for a world of pain!!
> 
> Here is the clip which I thought would be of interest to some out there who may not have seen the program:
> 
> ...


The natural followup question is: If now is a bad time to be in equities, when is a good time to be in equities? Perhaps after a couple of years of bull run?


----------



## Lephturn (Aug 31, 2009)

the-royal-mail said:


> I dunno. Do actively managed funds typically outperform the indexes?
> 
> I really like the idea of index funds. Much lower MERs and readily available in my bank's lineup.
> 
> Incidentally, what are the aformentioned 15 top performing mutual funds?


Frankly you could have the most genius investor/trader on earth and if you forced them to run a mutual fund I don't know how they could out-perform their benchmark index. They can only go long, they can only hold tiny % of the portfolio in any one equity, they can't use options, they are so large in most cases that they can't buy or sell without moving the stock, and they can't invest in smaller companies because they are not liquid enough for these huge funds. There are more restrictions they face, but these are a few of the big ones.

I'm surprised they could find that many funds that returned so high. I bet they are small funds, possibly closed and not accepting new money.


----------



## osc (Oct 17, 2009)

Mutual funds are for the clueless masses. The hedge funds are where the money are made, in bull markets and in bear markets, using legal, semi-legal or illegal methods (see the recent insider trading investigation). That's why they are only for the rich. 
I don't think there is ever a time to exit equities, there are different ways to trade equities (and their derivatives) depending on what the market is doing and the risk one wants to assume.


----------



## brad (May 22, 2009)

the-royal-mail said:


> I dunno. Do actively managed funds typically outperform the indexes?


I think the answer is that they certainly can for a while, but rarely over the longer term. This is the crux of the argument in favour of index funds for long-term investing, in fact: an actively managed fund may beat the index (and beat it by a long shot) in the short term, but over the long term the index fund more typically comes out ahead. You can of course find some actively managed funds that beat the indexes over the long term as well, but everything I've read (with lots of evidence to back it up) suggests that this is the exception rather than the rule.

I don't lose sleep over this stuff. My philosophy is that it's only money. I walked into this with my eyes open, knowing that I am taking a risk by having a relatively high portion of my retirement investments in equities (all index funds, by the way). I am fully prepared to take the consequences of that risk if things should turn out badly. But the potential reward of the risk is great enough that it's worth taking, in my opinion.

The worst-case scenario is that I'll have to keep working part-time into my 80s, and frankly that scenario appeals to me anyway because I have no interest in a life of leisure. I make money with my hobbies and skills now, so I plan to devote more time (and make more money) from them in the future if I need to keep working to make ends meet.

If I had no backup plan and had dreams of spending my retirement years lying in a couch sipping piña coladas, that would be a different story and I'd think twice about taking on investment risk.


----------



## Belguy (May 24, 2010)

Well, here I am, retired, being a 'Couch Potato', and sipping on another drink.

As for which precious few managed funds beat the indexes over the long term, the Star doesn't list them. It likely wouldn't matter anyway because the managers for most of those funds have likely changed anyway and so past performance will not likely reflect future results.

There appears to be a healthy mix of investor types on this forum. Everything from day traders of Irish bank stocks to 'Couch Potato' types like moi.

Who will end up richer in the long run--day traders trying to shoot the lights out or index buy-and-holders?

Let's meet here in 20 years and compare results!!!


----------



## kcowan (Jul 1, 2010)

Belguy said:


> Who will end up richer in the long run--day traders trying to shoot the lights out or index buy-and-holders?
> 
> Let's meet here in 20 years and compare results!!!


No in 20 years many of our members will have died.

The real question is which of us will feel good about what we did to improve our lot in life on this short trip on earth. If we took an active role, will we feel good about it rather than laying about?


----------



## Lephturn (Aug 31, 2009)

Belguy said:


> Who will end up richer in the long run--day traders trying to shoot the lights out or index buy-and-holders?
> 
> Let's meet here in 20 years and compare results!!!


I'm going to bet it's the people in the middle of that range that will beat both extreme examples.


----------



## MoneyGal (Apr 24, 2009)

kcowan said:


> No in 20 years many of our members will have died.


How old do you think the people here are? I'm a female, age 43; my probability of survival over the next 20 years exceeds 90%. 

Editing to say: full disclosure: I'm 43 in a few days.


----------



## brad (May 22, 2009)

MoneyGal said:


> Editing to say: full disclosure: I'm 43 in a few days.


Happy birthday


----------



## Belguy (May 24, 2010)

OK, then perhaps we should hold off our get together until 40 years from now.

I will mark it in my date book.

Let's make it for December 1, 2050. I will be looking forward to the results.

Some of us will continue to try to shoot the lights out via day trading while the rest of us stay the buy-and-hold indexing route and we'll compare long term results.

Should be interesting!!!


----------



## peterboro31 (May 11, 2010)

And you would be 107 or 108 based on your age divulging previously, Belguy.


Why not have a call, re non trader portfolios, as to portfolio performance on the last trading day of 2010.

KC this forum has a broad range of ages compared to the old lamented 50Plus forum. I knew your post was to tweak Belguy.


----------



## humble_pie (Jun 7, 2009)

new voices crowding into this forum recently are whispering that buy & hold is yesterday.

strategies today are to be kicked up a notch with partial day-trading, selected shorting, advanced market timing & options, the voices chatter.

i ended the day today with exactly the same number of ry & bmo shares that i started out with in the morning. The same boring old banks that pay big, stable dividends. The same that appreciate their share price respectably over decades. The same whose ownership is like watching paint, as they say, dry.

nothing changed. No lights got shot out. The kicker was that by 2 pm i had taken in $2,574 from trading ry & bmo options.


----------



## the-royal-mail (Dec 11, 2009)

MoneyGal said:


> How old do you think the people here are? I'm a female, age 43; my probability of survival over the next 20 years exceeds 90%.
> 
> Editing to say: full disclosure: I'm 43 in a few days.


I believe MG - she's got the charts to prove this.


----------



## Toronto.gal (Jan 8, 2010)

Belguy said:


> There appears to be a healthy mix of investor types on this forum. Everything from day traders of Irish bank stocks to 'Couch Potato' types like moi.
> 
> Let's meet here in 20 years and compare results!!!


You would not be talking about me, would you? Remember that "the safest way to double your money is to fold it over once and put it in your pocket." 
And why wait 20 years to compare, why not 2? I'm guessing/hoping we'all be richer & happier by then!

I used to be nothing but 'buy/hold' type of investor [when I had an advisor, who let's just say wasn't the wisest], but times have changed drastically and now that I'm a DIY investor & fully in charge, I'm a mix; mostly long term buy-review and a bit of short term/day trading and so far I have had good luck with both. With respect to day/short term trading, I use the profits [not my own capital] to finance the shares I hold as I usually don't sell all. As an example, say I made $5K profit when I sold a portion of IRE shares and say I kept 1000 shares for long term:

1,000 shares @ $1.45 [my purchase price] = $1,450 
Balance of profit = $5,000 - $1,450 = $3,550
With the above balance, I can i) buy more of same shares when price drops, ii) add to existing shares of other companies and hence increase dividend payments and iii) buy new positions. Makes sense?

*************
Happy Birthday MoneyGal! On suggestion for a gift, "money is appropriate, and one size fits all."


----------



## dogcom (May 23, 2009)

Market timing or not it would be nice to get a bit more of a pull back to get some decent buys.


----------



## Belguy (May 24, 2010)

I just don't consider myself to be sharp enough to do all of the due diligence required of each stock before investing. I am not privy to all of the inside information and a I have no way of tapping into the internal correspondence. I don't have either the aptitude or the patience to wade through financial statements and then I would have a difficult time knowing when to buy and when to sell. I don't have the resources, research staff, and banks of computers like the big guys which I figure puts me at a disadvantage.

However, I do understand that some people make money on trading individual stocks and by successfully timing the markets.

For me, that is called blind luck!!!

The other observation, that I have made, is that we are far more apt to hear about the successes in such trading than in the losses even though I am convinced that there are more losers than winners in the individual stock picking/market timing game.

Some of the most successful investors out there agree with my point of view when it comes to the fortunes of small, individual investors.

After all, you have to convince yourself that you know more than the big institutional investors and that would be no small feat.


----------



## brad (May 22, 2009)

Belguy said:


> However, I do understand that some people make money on trading individual stocks and by successfully timing the markets.
> 
> For me, that is called blind luck!!!


Not necessarily. If you spend time researching a particular sector and the players in it, you can use your knowledge to make educated investments; it's not just a game of chance. And you can use your knowledge about that sector to decide when it might be best to sell, too. Sure, there's an element of luck in it, but it's not necessarily blind and to imply so does a disservice to the many smart people who work hard to learn a lot about the companies and the sectors they invest in.


----------



## Eclectic12 (Oct 20, 2010)

Lephturn said:


> Frankly you could have the most genius investor/trader on earth and if you forced them to run a mutual fund I don't know how they could out-perform their benchmark index. They can only go long, they can only hold tiny % of the portfolio in any one equity, they can't use options, they are so large in most cases that they can't buy or sell without moving the stock, and they can't invest in smaller companies because they are not liquid enough for these huge funds. There are more restrictions they face, but these are a few of the big ones.
> 
> I'm surprised they could find that many funds that returned so high. I bet they are small funds, possibly closed and not accepting new money.


+1 - then too, I've seen comparisons showing how the index ETF did better than 900+ mutual funds. When I looked closer, about 100+ funds were focussed on sectors such as forestry that were in the tank. If you can only invest in a sector that down, is it really a surprise you can't match/beat the index?

The studies that I read that IMHO were a better "apples to apples" comparison showed a smaller difference.

Is the "they can't use options" a new regulation? I have received notices from some of my mutual funds saying they were using options to increase revenue.

I'm also wondering about the "tiny % of the portfolio in any one equity". Some of the resource MFs I've used had 40% in one company.


----------



## humble_pie (Jun 7, 2009)

belguy you seem like a nice man but there is a limit to the number of ways one can say buy-and-hold-etfs.

now lobbing grenades at the guys on the other end of the rope in a rope-pulling contest is not nice at all.


----------



## Eclectic12 (Oct 20, 2010)

Belguy said:


> I just don't consider myself to be sharp enough to do all of the due diligence required of each stock before investing. I am not privy to all of the inside information and a I have no way of tapping into the internal correspondence. I don't have either the aptitude or the patience to wade through financial statements and then I would have a difficult time knowing when to buy and when to sell. I don't have the resources, research staff, and banks of computers like the big guys which I figure puts me at a disadvantage.
> 
> However, I do understand that some people make money on trading individual stocks and by successfully timing the markets.
> 
> ...


The key is to find what works for you, in the business the stocks are in.

Then too, timing can be a big help. If you believed in late 2008 that the Canadian banks would take hits but would be stable - buying at 50% off in March 2009 increases the current yield and gives more confidence that up is more likely than down. If you've also been watching the stock and it's news for years, you get a feel for it too.

Due diligence of newspaper reports and an investment newsletter that agree don't hurt. No "insider" info or correspondence required.

As for the resources, research staff and banks of computers - if I'd listened to them, I'd have avoided oil and missed a lot of distributions plus capital gains. Or there was also the "herd" mentality during first Iraqi war. The herd said there'd be a long war with rising oil prices. Instead I figured it would be a relatively short war and sold my oil trust units. The sale gave a $6 / unit capital gain and I was able to re-buy cheaper, two months later - for a loss of two month's distributions.

Sure - everyone likes to talk about their success. But since there's the same tendency for a mutual fund investor, an ETF investor, a day trader etc. etc., without some stats - there is no way of knowing for sure and who thinks what doesn't affect the results.

Finally - I think I'm a better position than an institutional investor. He'd reject the investment I bought in Mar 2009 as not liquid enough. I'm currently at dividends of $1.80 on a cost of $3.80 / share with capital gain of over $7. Of the eight stocks bought for my mortgage portfolio around Mar 2009, one is down, three are up about 10% and the rest are up 100% or better. This ignores that all eight are paying dividends on top.


----------



## kcowan (Jul 1, 2010)

Carl Weinberg was on Lang & Oleary Tuesday. He said that the European Banks were going to be the cause of the next crash. (Although he used a lot more words to say it!) I got the impression that he was definitely a gloom and doom guy. Hold on to your money!


----------



## Eclectic12 (Oct 20, 2010)

osc said:


> Mutual funds are for the clueless masses. The hedge funds are where the money are made, in bull markets and in bear markets, using legal, semi-legal or illegal methods (see the recent insider trading investigation). That's why they are only for the rich.
> I don't think there is ever a time to exit equities, there are different ways to trade equities (and their derivatives) depending on what the market is doing and the risk one wants to assume.


Hmmm ... I'd say it depends on what the MF is being used for. If it's to allow smaller amounts per month until there's enough to move into individual stocks, I'm not sure it's such a bad thing.

As for the hedge funds - after reading about several of them going broke, I'd say they are for the rich as the losses can be more than the same loss in the underlying stock. 

Exiting all equities, I'd agree with you. For some particular equities, exiting can be beneficial. This is especially true if the stock is oversold or the business has changed so that a re-buy is much cheaper.


----------



## kcowan (Jul 1, 2010)

Todd says


> I am cautious long here – 60% cash – have taken profits on all classes (metals, oil ETFs, and equities). The 40% long is still in metal ETFs, other commods, dollar long ETF, comsumer electronic and some retail (thinking it will be a stronger shopping year than expected – people can’t buy houses, but they can drop a grand at Wal-mart, and that will scratch the spending itch).


Winston says


> this is a sucker rally. Seen it over and over again for nearly a decade that I’ve been paying attention to this subject. If I were invested in index funds, I would look for ways to cover my *** right now.


Tim says


> Flat, or marginally higher for 3 months,
> then down 15-20%


Comments from The Big Picture blog.

And then there is the rumour of insider WikiLeaks about the big US banks. Will that be a _tipping point_?


----------



## warp (Sep 4, 2010)

I spoke to Danielle Park via email, a couple of years ago. She's in Barrie Ont
At the time she bacically ran a money management house that bought ETF's for clients.
Her bright idea was to move in and out of sectors, she thought were going to be hot to catch profits......( can anybody say market timing?)
If it does not work with individual stocks,,,,why would it work with ETF's?

I asked her about her fees, and she told me they were on top of the ETF mer's. So you pay her firm to buy and sell ETF's for you.
Exactly how does this differ from mutual funds??

If she indeed has her clients ALL in cash,,,out of equities entirely,,,she better be 100% correct, because the income generated by all that cash probably wont cover her fees!
This would put her clienst in the position of losing money every day! ( albeit small % amounts.)

I remember seeing some clowns on BNN earlier this year assuring viewers that the DOW will be going to 1000, and you better hold on for the global depression, end of the world!

BUY and HOLD is NOT dead......buying companies that increase profits, even if only marginally year to year, and pay and increase dividends year in and year out will suffice any investor,,including seniors.

With bonds being way , way overbought and over priced, causing yields to sink to historic lows, as so many investors are running to safety, it seems to me that buying solid equities is a good plan.

Nice to be back,,,just returned from CUBA.....never been there before, as I refused to go to a communist country,
Anyone here have views on Cuba?

Every local person I spoke to there seemed resigned to his fate, and seemed to hate what their country has become.......and of course they said it quietly, informing me they could get arrested for saying such things against the Castro brothers!


----------



## Lephturn (Aug 31, 2009)

warp said:


> Her bright idea was to move in and out of sectors, she thought were going to be hot to catch profits......( can anybody say market timing?)
> If it does not work with individual stocks,,,,why would it work with ETF's?


Sector re-balancing can work very well, effectively forcing you to sell high on the winners and buy low on the ones that are beaten down. With good quality stocks in various sectors it can also work. Why do you say it does not work with individual stocks? Granted it probably works better with ETFs in sector re-balancing or even rotation following the business cycle but without the extra risk you get with individual equities.



warp said:


> I asked her about her fees, and she told me they were on top of the ETF mer's. So you pay her firm to buy and sell ETF's for you.
> Exactly how does this differ from mutual funds??
> 
> If she indeed has her clients ALL in cash,,,out of equities entirely,,,she better be 100% correct, because the income generated by all that cash probably wont cover her fees!
> This would put her clienst in the position of losing money every day! ( albeit small % amounts.)


I would imagine most funds can't do what she does - they are likely scope limited to equities and probably cannot also invest in ETFs. Where you are paying a fund manager of an active mutual fund to pick stocks, you are paying her to do sector timing or rotation instead.

I think she is just talking her book - hoping the news will help get the markets to do what she wants them to.

I am with you on the bond market. It was VERY interesting a week or two ago when they announced and started QE2 only to have bond prices go DOWN. Um... ruh roh raggy. I can see bond prices drifting slowly down for a long long time.


----------



## andrewf (Mar 1, 2010)

There's research that shows that some quantitative market timing (even something as simple as using 200 day SMA) can work quite well with index investing. It might not increase CAGRs, but it often does reduce volatility significantly. It also tends to save you from blowing your brains out by holding the Nikkei as it drops 80 or 90%, never to recover. It's more a risk management technique.


----------



## larry81 (Nov 22, 2010)

andrewf said:


> There's research that shows that some quantitative market timing (even something as simple as using 200 day SMA) can work quite well with index investing. It might not increase CAGRs, but it often does reduce volatility significantly. It also tends to save you from blowing your brains out by holding the Nikkei as it drops 80 or 90%, never to recover. It's more a risk management technique.


is there any good website that track/chart the 200/d SMA ?


----------



## andrewf (Mar 1, 2010)

Yahoo and google both do it, under 'technicals'.

But, if you want some more info, give this a read:

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=962461

Click 'one-click download' to get the paper.


----------



## bean438 (Jul 18, 2009)

Four Pillars said:


> All I can say about Danielle is that she is to equities what Garth Turner is to real estate.
> 
> Whatever your investment strategy is - just stick to it.



Your last sentence is in my top ten list of best answers given to a forum question.

In my opinion, when it comes to strategies, everything works, but not everything works all the time.

Switching strategies usually fails because you will switch at the wrong time for the wrong reasons.


----------



## Jon_Snow (May 20, 2009)

Well, nothing more than a gut feeling, combined with the very disappointing job numbers out of the U.S., caused me to sell about 70k worth of stocks yesterday. After the dust settled, the TSX actually finished up for the day... I am rapidly concluding that I'm not good at this.


----------



## I'm Howard (Oct 13, 2010)

What does this person think will cause a calamity for equities?
Stocks cross all entities, so She is saying commodities, Real Estate, Drugs, everything will collapse, all at the same time.
People who are so smart they can predict an apocoloypse are in a Fortress with a Gun and a bag of gold, not on TV.
A balanced portfolio will weather any storm.


----------



## kcowan (Jul 1, 2010)

Jon_Snow said:


> ... I am rapidly concluding that I'm not good at this.


Maybe the right conclusion is that the market is NOT rational. Bank profits are down (except National). Yet the market goes up!

Hey these are supposed to be the best banks in the world! What does that tell you?


----------



## dogcom (May 23, 2009)

Here you go belguy I thought you might enjoy this scary article.
http://www.hussmanfunds.com/wmc/wmc101213.htm


----------



## kcowan (Jul 1, 2010)

How about a bank gets their debt rating cut and their stock price holds up (RY)?

Is that an indicator of irrational exuberance?


----------



## HaroldCrump (Jun 10, 2009)

kcowan said:


> How about a bank gets their debt rating cut and their stock price holds up (RY)?
> 
> Is that an indicator of irrational exuberance?


Well, I personally take that debt rating (and the agencies issuing it) with a grain of salt in the first place.
Recall that these are the same agencies that rated the toxic products of some financial institutions as AAA investment grade.
What RBC is doing is expanding its reach into the European portfolio and investment management market by acquiring local management companies.
I'd say this is a good time to do this - most of those companies are probably undervalued right now.
It's possible that a couple of those acquisitions may not work out, but so what.
In the larger scheme of things for an institution like RBC, it's probably not even a ripple.


----------



## kcowan (Jul 1, 2010)

HaroldCrump said:


> ...Recall that these are the same agencies that rated the toxic products of some financial institutions as AAA investment grade...


I had a different reaction. I thought "here are the ratings that agencies that rated Citi as AAA and now they think RY is risky?"

I agree that agencies are just an input and not the primary one. My personal worry is about their loan loss provisions. It is such an arbitrary number. Just watch what happens if interest rates increase!


----------



## hboy43 (May 10, 2009)

bean438 said:


> Your last sentence is in my top ten list of best answers given to a forum question.
> 
> In my opinion, when it comes to strategies, everything works, but not everything works all the time.
> 
> Switching strategies usually fails because you will switch at the wrong time for the wrong reasons.



YES, YES, YES! People panic out of a strategy into something else, and just end up serially harvesting the poor performances of successive strategies. This is why the average holder of a particular mutual fund has a lower return than the fund. They paniced out of one fund currently doing poorly into one currently doing well, ie sell low, buy high.

It perhaps is useful to consider the financial wisdom of the bible and Pete Seeger (mosty famously recorded by the Byrds):

"To Everything (Turn, Turn, Turn) / There is a season (Turn, Turn, Turn) / And a time to every purpose, under Heaven / A time to be born, a time to die ..."

hboy43


----------



## Belguy (May 24, 2010)

Buy, hold, rebalance and prosper.


----------



## atrp2biz (Sep 22, 2010)

kcowan said:


> How about a bank gets their debt rating cut and their stock price holds up (RY)?
> 
> Is that an indicator of irrational exuberance?


The change on the rating itself is old news. Rating agencies putting the rating on watch or under review is what moves the market.


----------



## bean438 (Jul 18, 2009)

After what happened with the subprime fiasco I place no value on ratings agencies what so ever.

They should all be put out of business, and probably jailed forever too.


----------



## warp (Sep 4, 2010)

bean438 said:


> After what happened with the subprime fiasco I place no value on ratings agencies what so ever.
> 
> They should all be put out of business, and probably jailed forever too.


I have to agree somewhat with that.

The ratings agencies were a joke the last two years and cost investors tons of money.
Still, they are an integral part of the markets and so one has to consider them.

I boughtb RY recently....a tiny bit early.....just before this rating downgrade talk...

However, since I intend to basically hold Royal Bank forever, and collect the divs....I'm not that concerned about it.


----------



## davext (Apr 11, 2010)

The reason it didn't move much was because the other 2 agencies had already downgraded them. Now everyone is in sync. No worries. I have RY, I'm looking to sell before the next dividend or after.


----------



## kcowan (Jul 1, 2010)

davext said:


> I have RY, I'm looking to sell before the next dividend or after.


Right! Buy, sell and trade...


----------



## Belguy (May 24, 2010)

This is a test as I am still having problems posting new threads and replies. My computer keeps telling me that I am not logged in. When I log in, it thanks me for doing so but still won't let me post.

Does anyone have any ideas on how I can correct this problem? Clearing cookies and the browser cache doesn't seem to help.

Has anyone else experienced similar problems?

Why me??

Once in a while I am successful at posting as is the case this time.

Weird!!!


----------



## Jungle (Feb 17, 2010)

Belguy you should be posting that here, in the site feedback section. You also posted this in  The 2010 Look Back thread and since no one else is reporting problems, it's probably your computer.

PS lower your security settings in your explorer browser. Press F10, then tools, internet options.


----------

