BusinessWeek had a midyear followup of its 2006 survey of market forecasts. The follow up had brief opinions from four people listed in the graphic along with their expectations for the Dow, S&P 500, Nasdaq and Russell 2000. The graphic also lists their current asset allocations.I think there are a couple of mistakes on the graphic based on the text of the article. First, Warren Bagatelle expects the Dow to finish the year at 11,150 and the S&P 500 at 1365 but the article says he does not expect much for the rest of the year. Something doesn't add up there, maybe he means 1265 which is where we closed on Friday.
The other mistake is in the allocation from Barry Freeman. The graphic says 40% in domestic stocks, 40% in foreign stocks, and zero in bonds. The text says 40% in domestic stocks, 40% in bonds and makes no mention of foreign stocks.
I know one or two people from the magazine stop by this blog now and then, perhaps someone can shed some light?
None of that is even the point of the post. Depending on what Mr. Freeman really has in mind, either two or three of the four people profiled have zero weight to foreign stocks. Just because I think there is a clear and obvious path for outperformance from foreign investing doesn't make it correct. I could be wrong.
But zero is a big bet. Only one of the four appears to advocating a diversified portfolio based on assets class exposure. In that a major theme of this site is trying to help do-it-yourselfers get better results with a little less risk; one of the virtues of proper diversification is that you don't need to be right about as many things to have success. I would think this would appeal to people that do not want to make their portfolios a full time job.
10 comments:
The graphic either does not add up (Bagatelle and Freeman allocations total less than 100%) or represents a rather obviously poor allocation decision (Johnson) but regardless seems too optimistic WRT US market direction for the next few quarters. BusinessWeek either needs to do a better job copy editing or find a better set of analysts or both; the only analyst who makes any allocation sense WRT the graphic is Conkey, never mind the relatively rosy US market forecast (which I assume is intermediate term).
I personally think we'll see an attempt to resolve currency dislocations before the $USD falls too far (it is not in any one's interest to see a complete $USD collapse) but ignoring or devaluing international assets in this day and age simply makes no sense any way one slices it.
Roger,
Need real opinion - real analysis. Looking at a long tern investment of 3 to 7 years in one of the below -- What's your view on Vanguard Selected Value Fund {VASVX}. I have been in it for a few years and it has moved very little compared to others in the same area. I was thinking of moving it to a new mid - cap fund - THIRD AVENUE VALUE FUND {TAVFX}. PLEASE give me your full thoughts on both funds. I know you will have to look through both, but value your thoughts on this. Please don't beat around the bush or take both sides or neither side. I just feel my money is going nowehere at the Vanguard mid-cap fund as mentioned above. Real Thoughts???????
Freeman puts 10% in gold which is why his does not add up.
you are 100% right about a dive in the US dollar being in no one's interest.
To the request about the midcap funds.
How is anyone supposed to guess what the managers of either fund will do over the course of three to seven years from now?
If you have been reading this site for any length of time you may know I don't use open end funds. How can I pick one of the two for a product I don't use?
What's to say that whatever caused the one to lag over the last 12 months won't reverse and cause it to outperform over the next 12 months.
The only forward looking analysis you can make on this type of fairly wide, actively managed objective is something that Jonas says on Cashin' In every now and then, I think the manager will do a good job. How useless is that? It is a guess. There are plenty of OEF managers with fantastic track records which guarantees nothing in the future.
The Midcap SPDR (MDY) beats both for one and two years and lags TAVFX slightly for five years.
That is as good as I can give to the question. That said, I get a strange vibe from this question like the reader feels I owe them something which I don't care for. Like a lot of blogs we're giving away the milk, no one has to buy the cow.
There is no need to tell me that you need real anything.
Maybe I'm just adding one plus one and getting eleven.
Freeman puts 10% in gold? Okay, that's fairly aggressive but it should pay off. Do you think Bagatelle is doing something similar; i.e., allocating 10% to an asset category not represented in the table?
PS: Maybe anon meant to query you about "money for nothing, chicks for free"? FWIW I don't tend to allocate based on market capitalization, at least not as a primary strategic screen, but in reviewing my first half I notice I do seem to be lighter in the "mid-cap value" category than usual, likely due to technical weakness affecting my tactical decisions the past 6 months.
Roger, I just retired and I'm trying to determine what my annual percent goal needs to be for the next 30 years with given parameters: X dollars to be distributed per year; estimated annual inflation; and total/current principal. Is there a website that has the tools to answer this? Retirement planners love to do this, but for a fee which I should be able to avoid. Any suggestions?
p.s....those saturday am finacial shows, etal...including Cramer...while there is some education about investment to be had, all these shows are any good for is very active trading and (false) bravdo to very temporarily mitigate a viewer's anxiety. Your advice, if one was measuring those entertainers/pundits, and too bad someone isn't, would be far superior and generate far less anxiety. my two cents.
There was no mention of of Bagatelle allocating elsewhere like they did with freeman.
As to cap, I have mentioned before I view the average cap size of the portfolio not how much in large small mid. The average cap is close to $40 billion right now.
To the reader asking about planning software on the web. My experience has not been good. Some of the free ones tell me I will have a gajillion dollars left over when I am 100 and other tell me I will run out of money right away.
It might be worth the money to have a planner do it for you even though it is not free. You don;t have to have them manage money for you, it can be a one time thing.
Lest anyone take that as a shameless self promotion I do none of that type of work and do not participate in those revenues at our firm.
Generically I can tell you don't withdraw more than 5% of your principal per year. Most models assume 3% inflation, I might suggest 4%. Find/create an additional stream of income for yourself.
Roger...re software for planning...I had Fidelity Advisors do it...at their request..they want my 401k funds...so for free I spent a long time on the phone answering their questions to be inputted into their software..they sent me a ton of personalized glossy printouts..and yep, you are right they had me in my old age with millions of dollars. Their program was too opague for me. Real fools for trying to get my trust, which sadly disappointed.
The www.betterinvesting.org site has some pretty good information and software that can be bought. The stuff they have has been vetted by the members of the investment clubs that support the org. At least you are not on your own and get sound advice (much like Roger's) for a nominal fee. Tom in Indy
thanks for the lind word, Tom
Post a Comment