Matthew O’Brien provides some good investment advice in his article in the The Atlantic yesterday, “Don’t Invest in Hedge Funds: Stick with boring, old index funds“:
There are some ideas worse than putting your money in a hedge fund — like burning it — but not many. Indeed, the supposedly smart money has not been so for the past decade, at least not for actual investors. But now, with hedge funds free to advertise for the first time, don’t be surprised if you hear about the outsized returns they offer. Ignore them.
As you can see in the chart above from The Economist, hedge funds have cumulatively underperformed a simple 60-40 stock-bond index going back to 2003 — and underperformed it badly. Hedge funds have returned just 17% after fees the last decade; a stock-equity index returned over 90%. (Even adjusted for risk, hedge funds likely come out well behind).
Now, it’s certainly true that there are a few hedge funds that can and do consistently beat the market — which are, in other words, worth the fees. But those hedge funds don’t want your money. They have more than enough investors already. That leaves people looking for the Next Big Fund — and that’s not easy. Can you tell the difference between someone who just got lucky, and someone who is actually good?
See, the rich are different from you and me — they blow their money on hedge funds, instead of lottery tickets.
Do you want to have a broker that drives a Yugo? That would not be a confidence builder either. Though I agree with you. My wife was a big time victim of Paine Webber churning prior to their demise in 2000. She lost about two thirds of her company profit sharing capital. Partly her fault for giving them control.
As I have eased out the bond funds I have owned the last number of years, I am just getting ready to go into stocks...As the experiences I have had with etf and liquidity, I am going to buy a stock based fund, but not at these levels......Fortunately I have a place to park funds at an advantage place with no fluctuation and what, in these times, is a fair return, so I`m only in a rush to think the market is poised for further gains.....Right now I am waiting for the earnings to be reported....
I swear there are so many diverse currents out there, it is hard to really have any belief......Tony
Do you want to have a broker that drives a Yugo? That would not be a confidence builder either. Though I agree with you. My wife was a big time victim of Paine Webber churning prior to their demise in 2000. She lost about two thirds of her company profit sharing capital. Partly her fault for giving them control.
Sorry about your wife's misfortune. The reason to stay knowledgeable on investing is that one unscrupulous broker can ruin your life savings. That's pretty important not to have happen.
With our 401Ks, we've been in Windsor and PrimeCap for a long, long time, and they've served us well.. Started moving towards index funds a few years ago with new contributions.. But, we are 97% equities, right now.
Now, she has that pension rollover, which is about 10% of the total, including the 401K.. It's just sitting in the money-market fund, waiting for me to do something with it... I just can't stomach bond funds, with interest rates having only one way to go... Thought about the REIT index fund, but even though that's real estate, it's still a stock fund, and I really want to diversify a little bit..
I know I should dial back on risk a little bit, as she'll actually start drawing on her retirement funds in about three years, but equities have been really good to me for so long.... and, we might live 35-40 more years (mid '50s).
What to do? Always had a plan for accumulating retirement assets... never really thought about planning for the payouts..... lol.
It sounds to me that you have done well with your different holdings....For what it is worth, I would stay away from the likes of NLY etc......The leverage is great, and the future is un-clear, so that could end up poorly...
I did well with the junk funds, and have sold them , so I can say that :-) ...As I mentioned, I`m just going to wait and see how I feel after some of the different companies have reported earnings......I`v done well with the banks in the past, but my real problem is I have always chosen individual stocks, and not a blend, so for me this is a big step in a different direction..
The primary reason I am considering Vanguard is I can buy alot at one time and exit alot in the same fashion.....Just getting out of some of the etf, a ten thousand share order would upset the bid and asked almost immediately, and I may have had fifty thousand more shares behind that......Hard to buy and hard to sell...
In perusing some of the different funds at Vanguard, I noticed one that was a mid to small cap with just dozens of different firms that represented names we all know, but I would rarely buy any of them....This way I can get a known dollar amount and be able to buy and sell in one day.....I`m not an investor who is stuck in my ways, but there could be some un-nerving events in the more immediate future that could change my perspective immediately....and I always believe the number before my eyes, not the hype, or my own wishful thinking......The only exception to the above is my obstinate holding of aapl :-) Tony
Fortunately for me , we own a private company, and I can park cash there....There isn`t any risk and can get it anytime...Done this for the last thirty years.....Now if I didn`t have that, I do not think it is a worthy risk to really do anything other than have some patience......I have made more poor decisions and lost much money by being in a rush because I thought I just had to invest the money because I wasn`t getting anything....
Right now I have other funds just sitting , earning nothing, so I can appreciate how you feel.....I sort of feel `stupid` myself, but resist the urge to move.......I will probably just buy some of the vanguard stock fund---slowly--maybe a little medium sized company fund, and just follow along til after earnings season....If people decide to drive the market higher, I`l have a little, and if it corrects I`l buy more as it does so.......Like I said ` I have always purchased individual issues` so this is a change for me...The only difference is I`l be buying a basket instead of individual ones....If it doesn't work out, I`l try something different..
Philosophically I have grown to appreciative of a given return over the years----each and every month---and know the stock market has got to be managed -- with a sharp eye.....If you have a decent return, you had better be aware of it and re-invest . Tony
There are always many diverse currents. Always. It just seems like there are more today because, over time, we tend to forget yesterdays' issues and challenges. Therefore, the current issues seem more significant than the past ones. The past is simply easier to understand than the present and future because of the benefit of hindsight. Put another way, the future is generally opaque while the past is transparent.
A reporter would like to speak to a recent new car buyer who is 60 years old or older, and who plans to buy more vehicles in the future for a story about how Baby Boomers are driving the car market. If you are an older Baby Boomer and you would like to share your story, please send your daytime contact information no later than Wednesday, 7/17/13 at 10 a.m. PT/1 p.m. ET.
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After hitting an all-time high of 133.26 yesterday, Tesla shares closed at 109.05, down 14.31% today. The stock suffered a further 2.15% decline in after hours trading, to 106.70. The next few days should tell if another tech bubble burst, or the steep decline is just a correction of the long, steep rise. While the Model S is very impressive, and Elon Musk is a brilliant entrepreneur, I'd guess that it's the former.
Hedge fund mania. Tesla's price makes no sense. Read this story on SAC and how they jumped out of Wyeth and Dell on inside knowledge. Both stocks plummeted after run-ups that made no sense. The same thing may be going on with Tesla. You have to be very careful with high flying multiples that lack good fundamentals. They are driven by hedge funds, either colluding or getting inside dope. These guys follow each other like beached whales do. Cohen is as guilty as it gets and I hope the SEC makes his life miserable. Anyone that thinks hedge funds are not dirty and cheat like hell is nuts. Cohen has made an average of 30% every year. That is impossible. He's trading on inside knowledge and manipulation.
Further there is a good article about the commodities that the big banks have been corralling ....No question in my mind the hedge funds have been very disruptive to many investments we contributors here have made over the years....It almost seems hopeless to think the SEC will do something...Tony
Tony - you might have meant this story. It is very revealing about how the big banks control commodities, drive up prices and then play the market on inside information they have from the companies they own that cause the drive up in prices. I have no doubt that they collude with hedge funds as they drive up the prices with commodities they hold in inventory for themseslves and hedge funds. They then transport it from warehouse to warehouse to comply with regulations but their real reason is to make it difficult for the goods to reach the market. Goldman bought the company Metro International, which controls 25% of the aluminum on the market. Before it bought it the average wait for goods to be delivered to customers was 6 weeks. After they bought it that changed to 16 months - all to drive up prices which then get passed on to all of us. It almost reminds me of the Seinfeld episode where George can't get his car from his parking lot because the owner is using the customer cars for prostitution. He has to wait 3 days after putting in his request. More sickening is that the big banks owned 80% of the Londom Metals Exchange - which is the regulatory arm. So they controlled their own regulations. The article focuses on aluminum but the banks own other companies that do the same thing with many other commodities and they are the cause of the drive up in copper and oil as well. In effect they take the goods off the market making them more rare and of course pricier.
This article is long but it is MUST reading. It's for all intent and purposes criminal activity that takes billions of dollars out of the economy. And these are the banks we rescued! It's long but you have to read it and it will make you angry.
I swear all this stuff makes me feel like I live somewhere else, like Mars...All my life this stuff has been going on --but not at this magnitude....I think we all are just trying to be honest people , with well thought out ideas, but seem to be waylaid a every turn by these un-scruplious people......Our form of government is suppose to keep the playing field level, and they have been corrupted along with what appears to be everything else....
This is why I`m going to funds that are offered by the likes of Vanguard.....I`m very afraid of single stocks that for no apparent reason can just be hammered....You might notice many issues are cloaked in low dollar numbers....just one penny can loose you thousands if you have larger number of shares.....Long ago you were smart to deal in several different funds.....Tony
Just amazing how corrupt everything in our lives has become. From the gas in our cars to the cans we have a beer from.
One little tidbit of a lie I picked up on.
Metro International, which declined to comment for this article, in the past has attributed the delays to logistical problems, including a shortage of trucks and forklift drivers
Shortage of labor in Michigan where the unemployment is still double digit? Seems I remember a campaign promise in 2008 to fix the speculation in the oil and commodities market... Hmmmmmm You have to be smarter than the criminals at Goldman.
Or maybe it shows it doesn't really matter who wins a vote, the same interests control both sides. Oligarchy.
Seems I remember a failed party mentioned a miracle economic plan that would produce amazing resultd, yet was never able to provide details. They are about as transparent as the ones who failed at transparency.
The article on price fixing and manipulation in commodities is sickening, but I'm not at all surprised. Why is it that banks are allowed to trade commodities in the first place? This makes me furious. The corruption in this industry is beyond belief. Both political parties are equally at fault for not trying to fix this crap. They can fix it but obviously they don't want to.
And they say the mafia is corrupt. This price fixing combined with speculation in the same things they control prices on is a big drag on the economy. It's downright sickening. If you had a real Congress they'd never allow this.
Seems I remember a failed party mentioned a miracle economic plan that would produce amazing resulted, yet was never able to provide details. They are about as transparent as the ones who failed at transparency.
Well, we got a glympse of it as outlined by Ryan in his unsuccessful run, features based on the Simpson-Boles committee recommendations. This, plus opening the Keystone pipeline, etc. There were multiple economic bills passed by the GOP-lead House, never making it to a Senate vote after Harry repeatedly called them "dead-on-arrival".
But where is the actual plan? We were told it existed, but only got minor details. Vaporware? Or maybe the bitter cut off their nose to spite their face types who are hoping for an economic collapse so they can say "told ya so" are keeping it secret, to reveal it later?
I agree. The Republicans better propose something big and popular, like eliminating the IRS and going to a simple flat tax or an add on sales tax, etc. or the Democrats will steam roll them again.
I don't think it will happen because they are too greedy to give up the power to reward their backers with tax breaks, so it looks like I will have to become a Libertarian.
That's exactly right. The elephants need something massive and revolutionary - no hopeful details-free promises, but a game changing plan. Until then, the donkeys will have an easy time - as they are the devil you know. They might not offer much positive, but anyone who pays attention knows what they will deliver, tax and spend. For their opposition, not so much other than a continued love of trickle down theory. Uncertainty (and to many, regressive social issue stances) is less appealing than ineffectual policy and debt.
Libertarians need some corporate and special interest group backing - that's what wins elections. Corporations are people too.
Apple's CFO Peter Oppenheimer said in a statement, "We generated $7.8 billion in cash flow from operations during the quarter and are pleased to have returned $18.8 billion in cash to shareholders through dividends and share repurchases."
Yes they bought $16 billion in devalued shares. That only leaves $2.8 billion in dividends. What say ye shareholders?? The stock going gangbusters has to make you all happy....
Those shares were devalued only if they had been bought above the price AAPL paid for them. Who knows - many millionaires may have been minted from the shares they bought back.
My thought was they were devalued from their peak of $700 per share. How much has Apple manipulated the market for their shares. Watching it go up then down nearly everyday, makes it seem like a roller coaster.
I`m more happy than I was, but will be feeling alot better with an additional hundred point gain from here :-) The pain of a single stock holding is evident in this example.....Tony
IPO was $38. Dropped to a low of $18. I started dollar cost averaging into it last August in that rea. It's up over $6 a share today (25%) to over $33 a share on excellent results. It's returned over 60% for me in the last year.
Siephen A Cohen's got to be miserable today. He's got his money but his company and his ego is history after this. The guy stole $9bln as far as I'm concerned and ruined plenty of people financially. His ego is about to get destroyed and that's worth a lot more than the money to him. i wouldn't be surprised by a suicide in the future.
I guess we shouldn't underestimate the idea that people will line up to voluntarily give detailed personal demographic information in a quest to be recognized and liked by people they didn't care for in high school. I heard that up 25% news today, baffling.
I guess we shouldn't underestimate the idea that people will line up to voluntarily give detailed personal demographic information in a quest to be recognized and liked by people they didn't care for in high school.
I'm currently reading a book called The Facebook Effect. It really goes into detail on how Zuckerberg was and still is very focused on the user experience and that monetizing the site was something he never cared about.
I heard that up 25% news today, baffling.
The jump is tied to their blowing away analyst estimates. Facebook was able to transition their platform - and the ads - to the mobile market.
I personally think that is just the tip of the iceberg ....This stuff has been going on for years, and the authorities are now just getting around to doing what they should have been doing all along...
Now that we are all accustomed to being mis-lead, and even not being able to logically follow a formula for investing, they will slowly begin to revamp the system until it resembles what it use to be....Unfortunately we will all be dead before that happens Tony
Depending on how this goes, I would not be surprised if the gov. tried to "claw back" most, if not all, of his illegal profits. If he is only left with a couple of billion $$, that is when he will go on suicide watch.
Meanwhile, we have the "all mighty" Amazon defying logic. Its PE is now 114. How can this stock continue to go to the moon? One of these days, it will start to collapse and it will be a blood bath. Take a look at this video from today from 2 analysts on CNBC. I think Ms. Doolittle will be proven right in the not too distant future.
Oh yeah, people are addicted to it. It was a hell of an idea, something so basic and obvious, but nobody was able to run with it.
I don't have a facebook account - at least a real one (my job requires a fake one for research), I can't get into it. Maybe as I get closer to my 20 year reunion and I feel like enough time has passed to want to see certain people again. I don't know if any of my investments hold fb - I only have one holding of an individual stock, and it is in telecom, not internet.
Comments
Matthew O’Brien provides some good investment advice in his article in the The Atlantic yesterday, “Don’t Invest in Hedge Funds: Stick with boring, old index funds“:
There are some ideas worse than putting your money in a hedge fund — like burning it — but not many. Indeed, the supposedly smart money has not been so for the past decade, at least not for actual investors. But now, with hedge funds free to advertise for the first time, don’t be surprised if you hear about the outsized returns they offer. Ignore them.
As you can see in the chart above from The Economist, hedge funds have cumulatively underperformed a simple 60-40 stock-bond index going back to 2003 — and underperformed it badly. Hedge funds have returned just 17% after fees the last decade; a stock-equity index returned over 90%. (Even adjusted for risk, hedge funds likely come out well behind).
Now, it’s certainly true that there are a few hedge funds that can and do consistently beat the market — which are, in other words, worth the fees. But those hedge funds don’t want your money. They have more than enough investors already. That leaves people looking for the Next Big Fund — and that’s not easy. Can you tell the difference between someone who just got lucky, and someone who is actually good?
See, the rich are different from you and me — they blow their money on hedge funds, instead of lottery tickets.
I swear there are so many diverse currents out there, it is hard to really have any belief......Tony
Sorry about your wife's misfortune. The reason to stay knowledgeable on investing is that one unscrupulous broker can ruin your life savings. That's pretty important not to have happen.
Now, she has that pension rollover, which is about 10% of the total, including the 401K.. It's just sitting in the money-market fund, waiting for me to do something with it... I just can't stomach bond funds, with interest rates having only one way to go... Thought about the REIT index fund, but even though that's real estate, it's still a stock fund, and I really want to diversify a little bit..
I know I should dial back on risk a little bit, as she'll actually start drawing on her retirement funds in about three years, but equities have been really good to me for so long.... and, we might live 35-40 more years (mid '50s).
What to do?
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I did well with the junk funds, and have sold them , so I can say that :-) ...As I mentioned, I`m just going to wait and see how I feel after some of the different companies have reported earnings......I`v done well with the banks in the past, but my real problem is I have always chosen individual stocks, and not a blend, so for me this is a big step in a different direction..
The primary reason I am considering Vanguard is I can buy alot at one time and exit alot in the same fashion.....Just getting out of some of the etf, a ten thousand share order would upset the bid and asked almost immediately, and I may have had fifty thousand more shares behind that......Hard to buy and hard to sell...
In perusing some of the different funds at Vanguard, I noticed one that was a mid to small cap with just dozens of different firms that represented names we all know, but I would rarely buy any of them....This way I can get a known dollar amount and be able to buy and sell in one day.....I`m not an investor who is stuck in my ways, but there could be some un-nerving events in the more immediate future that could change my perspective immediately....and I always believe the number before my eyes, not the hype, or my own wishful thinking......The only exception to the above is my obstinate holding of aapl :-) Tony
2013 LX 570 2016 LS 460
Right now I have other funds just sitting , earning nothing, so I can appreciate how you feel.....I sort of feel `stupid` myself, but resist the urge to move.......I will probably just buy some of the vanguard stock fund---slowly--maybe a little medium sized company fund, and just follow along til after earnings season....If people decide to drive the market higher, I`l have a little, and if it corrects I`l buy more as it does so.......Like I said ` I have always purchased individual issues` so this is a change for me...The only difference is I`l be buying a basket instead of individual ones....If it doesn't work out, I`l try something different..
Philosophically I have grown to appreciative of a given return over the years----each and every month---and know the stock market has got to be managed -- with a sharp eye.....If you have a decent return, you had better be aware of it and re-invest . Tony
There are always many diverse currents. Always. It just seems like there are more today because, over time, we tend to forget yesterdays' issues and challenges. Therefore, the current issues seem more significant than the past ones. The past is simply easier to understand than the present and future because of the benefit of hindsight. Put another way, the future is generally opaque while the past is transparent.
MODERATOR /ADMINISTRATOR
Find me at kirstie_h@edmunds.com - or send a private message by clicking on my name.
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Review your vehicle
http://dealbook.nytimes.com/2013/07/19/s-e-c-files-civil-case-against-steven-coh- - - - en-of-sac/?ref=todayspaper
This second story is encouraging. Hopefully the SEC is really starting a crackdown.
http://dealbook.nytimes.com/2013/07/19/under-new-chief-a-feistier-s-e-c-emerges/- - - - ?ref=todayspaper
2013 LX 570 2016 LS 460
This article is long but it is MUST reading. It's for all intent and purposes criminal activity that takes billions of dollars out of the economy. And these are the banks we rescued! It's long but you have to read it and it will make you angry.
http://www.nytimes.com/2013/07/21/business/a-shuffle-of-aluminum-but-to-banks-pu- - - - re-gold.html?hp&_r=0
This is why I`m going to funds that are offered by the likes of Vanguard.....I`m very afraid of single stocks that for no apparent reason can just be hammered....You might notice many issues are cloaked in low dollar numbers....just one penny can loose you thousands if you have larger number of shares.....Long ago you were smart to deal in several different funds.....Tony
One little tidbit of a lie I picked up on.
Metro International, which declined to comment for this article, in the past has attributed the delays to logistical problems, including a shortage of trucks and forklift drivers
Shortage of labor in Michigan where the unemployment is still double digit? Seems I remember a campaign promise in 2008 to fix the speculation in the oil and commodities market... Hmmmmmm You have to be smarter than the criminals at Goldman.
That's why I drink it "on tap", whenever possible..
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Seems I remember a failed party mentioned a miracle economic plan that would produce amazing resultd, yet was never able to provide details. They are about as transparent as the ones who failed at transparency.
Not the highest returns but not the lowest either. I'm good with that.
Not the highest returns but not the lowest either. I'm good with that.
The article on price fixing and manipulation in commodities is sickening, but I'm not at all surprised. Why is it that banks are allowed to trade commodities in the first place? This makes me furious. The corruption in this industry is beyond belief. Both political parties are equally at fault for not trying to fix this crap. They can fix it but obviously they don't want to.
http://dealbook.nytimes.com/2013/07/21/s-e-c-case-reveals-cohens-links-to-dubiou- s-actions-at-sac/?ref=todayspaper
2013 LX 570 2016 LS 460
Well, we got a glympse of it as outlined by Ryan in his unsuccessful run, features based on the Simpson-Boles committee recommendations. This, plus opening the Keystone pipeline, etc. There were multiple economic bills passed by the GOP-lead House, never making it to a Senate vote after Harry repeatedly called them "dead-on-arrival".
I don't think it will happen because they are too greedy to give up the power to reward their backers with tax breaks, so it looks like I will have to become a Libertarian.
2013 LX 570 2016 LS 460
Libertarians need some corporate and special interest group backing - that's what wins elections. Corporations are people too.
Along with the rest of us "RINO's". :P
Whoever plays the better propaganda and spin game wins. Right now the Dems. are vastly superior at that.
And neither will dare confront the Wall St. shenanigans.
Apple's CFO Peter Oppenheimer said in a statement, "We generated $7.8 billion in cash flow from operations during the quarter and are pleased to have returned $18.8 billion in cash to shareholders through dividends and share repurchases."
Yes they bought $16 billion in devalued shares. That only leaves $2.8 billion in dividends. What say ye shareholders?? The stock going gangbusters has to make you all happy....
http://abcnews.go.com/Business/apple-aapl-sold-312-million-iphones-3rd-quarter/s- tory?id=19751467
Those shares were devalued only if they had been bought above the price AAPL paid for them. Who knows - many millionaires may have been minted from the shares they bought back.
IPO was $38. Dropped to a low of $18. I started dollar cost averaging into it last August in that rea. It's up over $6 a share today (25%) to over $33 a share on excellent results. It's returned over 60% for me in the last year.
http://dealbook.nytimes.com/2013/07/24/indictment-of-fund-is-a-rare-and-bold-mov- - e/?ref=todayspaper&_r=0
I'm currently reading a book called The Facebook Effect. It really goes into detail on how Zuckerberg was and still is very focused on the user experience and that monetizing the site was something he never cared about.
I heard that up 25% news today, baffling.
The jump is tied to their blowing away analyst estimates. Facebook was able to transition their platform - and the ads - to the mobile market.
Now that we are all accustomed to being mis-lead, and even not being able to logically follow a formula for investing, they will slowly begin to revamp the system until it resembles what it use to be....Unfortunately we will all be dead before that happens
2013 LX 570 2016 LS 460
http://finance.yahoo.com/blogs/talking-numbers/anything-stop-amazon-205739360.ht- - ml
I don't have a facebook account - at least a real one (my job requires a fake one for research), I can't get into it. Maybe as I get closer to my 20 year reunion and I feel like enough time has passed to want to see certain people again. I don't know if any of my investments hold fb - I only have one holding of an individual stock, and it is in telecom, not internet.