There were 13 markets that are down less than 10% which to my way of thinking constitutes down a little. There were 30 markets down between 10-20% and 17 markets down 20-30%. By any reasonable account that is a bad year but that goes with the territory.
Relative to the numbers on Bespoke's table the US had a pretty good year down just a hair. I tend to think the fundamentals are such that the US should not have outperformed quite a few of the countries that it did. Either that assessment is correct in which case 2011 is a good reminder that for a short period of time anything goes regardless of fundamentals.
If I am wrong about the US' fundamentals in relation to other markets then it raises the need for have some sort of counter strategy in a narrow based portfolio for the times you are wrong.During the last decade there were stretches where the US was a relative solid performer like in 2011 but that did not change the rather long term result for the decade. Along the lines of the market being a short term voting machine versus a long term weighing machine I think it is important to understand what you're investing for and so what is consistent with your real objective.
Long time readers will know I tend to think that for most people the real objective is simply to have enough money when you need it. It would be great if everyone could beat the market every year or maybe go up the same 12% every single year but neither is realistic which, to my way of thinking, shifts the orientation to the longer term--again for most people. There are people who have the emotional makeup and skill for short term trading and there is no reason those folks should not pursue trading in that capacity. But if that isn't you then you need learn that and figure out what type of participant you really are.
The picture is of University of Louisiana Lafayette strength coach Rusty Whitt on the sideline of ULL's bowl game against San Diego State. The coach is very committed, in fact I think he was, once (Rodney Dangerfield line from the movie Old School in reference to the Sam Kinison character). I'm guessing some sort of seemed like a good idea at the time headbutting incident but I'm not sure.
4 comments:
I saw the column also and was courious. Also saw 75% or so of the fund managers are off their respective benchmarks.
So I am assuming from that informtion it is better to go banchmark vs actively managed or this year has been so irrational very few could find the handle?
No strategy can be best for all times.
We had an entire decade where indexing did very badly. 2011 was one of those years where active did poorly (apparently?) and there will be others.
Nothing has changed IMO about choosing what is best for you and realizing it won't be the best for every single market condition.
"We had an entire decade where indexing did very badly."
I respectfully disagree with that statement. It is simply not true.
By definition, the active manager on average underperformed the corresponding benchmark by his expense ratio. I would love to see the supporting facts that say otherwise.
It is true that various combinations of funds/bonds/ETFs may have out performed the SP500, but that isn't an accurate comparison.
Perhaps you meant to say that passive investing did very badly when compared to active management. I would love to see proof of that assertion as well.
"Back to School."
And the market is doing a Triple Lindy.
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