A quick peek into how out of touch I am before dissecting the market from the past week.I got my first iPod this week as a gift along with $15 for the iTunes store. This thing is a little bigger than a quarter and holds about 240 songs. I loaded most of my CDs used most of the gift card and have only filled up 3/4 of the iPod.
Welcome to the 21st century.
So by now you know that the past week was the worst first week of a new year for the stock market in something like 1000 years. In a note I put out for my colleagues to send to clients I noted that other than the calendar there was nothing this week that hasn't happened before.
I have been clear as to what I think is happening. If you have been reading this site for a while I hope you have begun to really grasp the fact that bear markets and the declines that they bring are a very normal part of the stock market cycle and so there is no reason for emotion to ramp up in the face of very normal.
Further anyone reading this site for a while who believes in at least some active management of their portfolio (point conceded that this is not right for everyone) should have some sort action plan for defensive action that they devised long before the market started rolling over.
While it's unlikely that a blog post can really convey how unemotional I get about these things I hope that in writing over and over how normal this is that you will come to believe it and only act rationally in response...if it even is a bear market which of course is may not be.
Part of my thinking as to why this is a bear market is that we are two and a half months from what I think will turn out to be the high, the drop has been gradual and I feel like most of the commentary on TV and in print is denying the severity of the problem although it seems like that is becoming less true.
The picture is from Iceland about an hour outside of Reykjavik.
7 comments:
Well, I was wondering, how well has Roger’s all ETF “lazy portfolio” done, this past year? Back in late June, 2006, Roger wrote an article for “seekingalpha.com” outlining a portfolio with 28 ETFs stuffed into it. It was called “A Model ETF Portfolio With Recognizable Flaws.” How has it done in 2007?
I’ve been following a virtual version, so I thought I’d look it up, flaws and all. In 2007, the portfolio came in at 14%. The Beta for this portfolio was 1.06, with an Alpha of 8.6 and a R squared of .94 (the R squared simply means the Alpha and Beta are relevant) with an average yield of 1.48%.
Congratulations, Roger! And this was done without any alterations.
Since inception, Jun 27th, 2006, the lazy portfolio has returned 16% compared to the S&P’s 5.93% as of this past Friday. Nice.
The article can be found here:
http://tinyurl.com/2exyuk
A follow up article called “Questions on My All-ETF Portfolio” can be found here:
http://tinyurl.com/2cypj8
lol, for anyone new this whole thing devolved into a compliance issue but either way I find it interesting that the performance was better (but the yield was lower) and the risk adjusted numbers were not as good despite all of the themes being so similar.
Thank you for taking the time to share that info, I have not been following it. I think i still have it in my M-star account but never look at it.
Thanks again.
Roger, from time to time you've mentioned interesting new ETFs that catch your eye. Sometimes I catch a post that updates your thinking on a particular sector (e.g., infrastructure ETFs viz utilities) but wondered if you have any regular timetable for taking a look back at things you've called to your readers' attention. I know you advise waiting for 6 months before jumping into anything unproven despite backtested performance, but by then they've fallen off my radar. Maybe my New Year's resolution needs to be to keep a better watch list. :)
Thank you.
Just posted my model updates:
www.regimenia.com
My timing model hasn't changed much in weeks, however, my global allocation of long positions model has changed for the first time in many months. I don't know if this will hold though.
Is using the S&P 500 a valid benchmark for your portfolio. You have indicated a fair amount of foreign positions and alternative products and I was wondering if your benchmark properly reflected your real holdings? This is not intended to be disrespectful. I'm just a victim of reading too many books that seek to establish a true benchmark to insure your active management has resulted in a positive return relative to the appropriate index.
fair question that has been addressed many time before.
any criticism of SPX is valid but it is the US benchmark, easy for clients to know and follow and the thinking is that were it not for hiring a manager most people (blog readers are not most people) would simply use an index fund.
Post a Comment