more from those fiscal conservatives

[westend1]

http://news.yahoo.com/taxpayers-dish-350-000-house-sue-obama-210126137.html

 

This will accomplish what, exactly?

[stevenash]

Not sure it will accomplish anything but it very entertaining to watch the left cry about financial responsibility/ waste of taxpayer dollars. If my memory is correct the losses at Solyndra make $350,000 look like a lost penny. Jeff Neely, a regional commissioner for the GSA, spent $823,000 on a conference for GSA employees in Vegas. I 2009, seven GSA employees were found guilty of accepting bribes and defrauding the government. The cost for that adventure was $750,000. Therefore, while the lawsuit may be a waste of money, lets cry foul about more serious wastes. I also wonder what the "cost" has been to finally get the IRS to admit they have back ups for the missing Lois Lerner emails when they could have easily admitted same in the first place and saved months and $ of investigatory efforts?

[shovel]

Nash, you are absolutley correct, but Westend wanted to know what this would acomplish. What this will acomplish will be Boehner looking like a fool and a very poor leader. While I disagree with what Obama does, this move is unprecedented and makes Boehner and the GOP look weak. You can bet that is what the mainstream media will make of it.

Another thing... Westend blames this on the fiscal conservatives. John Boehner is no such animal.

[westend1]

Nash, you are absolutley correct, but Westend wanted to know what this would acomplish. What this will acomplish will be Boehner looking like a fool and a very poor leader. While I disagree with what Obama does, this move is unprecedented and makes Boehner and the GOP look weak. You can bet that is what the mainstream media will make of it.

Another thing... Westend blames this on the fiscal conservatives. John Boehner is no such animal.

Nash is doing what he claims to hate.  Well they did it, so I guess it's ok.   And Boehner didn't do this by himself.  Looks like all the Republicans voted for it.

[stevenash]

I still maintain that $350,000 in the larger scheme of things, is far too insignificant about which to be concerned. For those who are "concerned" about the waste of taxpayer dollars, there are a 1000 places where considerably more than this can be saved.
As for me doing what "I claim to hate" I will try to put it another way. If a local gas station owner has a couple of employees stealing a coke from the drink machine twice a week and another employee stealing 500 gallons of gas per week, which issue is more important and should be addressed first? I am sure that you could also find some republicans abusing their franking privilege but, on a relative basis, its so insignificant that misusing some postage stamps is too far down in the pecking order to attack right now.

[Big girl]

Nash is doing what he claims to hate. Well they did it, so I guess it's ok. And Boehner didn't do this by himself. Looks like all the Republicans voted for it.

I have discovered that Nash really does not know what he is talking about.

[stevenash]

How did you discover this? Was it from your "friend" who told you I understood microeconomics but not macroeconomics?

[EnlightenedChosenOne]

Nash you're a financial advisor you stick people in index funds lol stop.

[stevenash]

Never use index funds unless at customer request. Since you apparently do not care for index funds, what strategies do you employ for your investment dollars?

[EnlightenedChosenOne]

Mutual funds, index funds. Tomato tomato. The correlations are through the roof.

Never use index funds unless at customer request. Since you apparently do not care for index funds, what strategies do you employ for your investment dollars?

[stevenash]

You never answered the question. What strategies do you employ for your investment dollars in order to secure sufficient alpha? Since 75% of all active managers, ( not just mutual funds) underperform the indexes on a consistent basis, I am curious what your methodology involves. Is it algorithmic trading, contrarian, emh,momentum, or something else?

[EnlightenedChosenOne]

Well, my personal IRA options are limited so I'm stuck in the usual highly correlated assets. Large, mid, small caps, intl, emerging, etc. Most managers underperform but I do know managers that consistenly outperform.

What I recommend usually isn't available to the average Joe Schmoe. Private equity (venture, growth, special sits, buyout, secondaries) , sponsored and unsponsored private debt (mezz, senior loans ), real estate (core, value add, opportunistic), hedge funds (cta/managed futures , macro, credit, multis) and real assets (upstream, midstream, infra, timber, nat resources)

[stevenash]

The average Joe Schmoe can access any of that by, guess what, mutual funds and/or hedge funds. These items that you mention that arent available to the average Joe Schmoe; how do you guage performance since most are privately held? I know how sophisticated the word "hedge funds " sounds, but a very large number of them have gone bust in recent years.

[EnlightenedChosenOne]

And a very large number of hedge funds have beaten their benchmarks since inception. It's called doing your due diligence on the team, philosophy, process and infrastructure.

And are you really asking how performance is calculated? Like for reals for reals?

[EnlightenedChosenOne]

Correction - you asked how to gauge performance. They're usually compare to a benchmark composed of other similar funds with the same vintage year

[stevenash]

Correction - you asked how to gauge performance. They're usually compare to a benchmark composed of other similar funds with the same vintage year

Disagree- Performance of a stock fund is not compared to other similar funds within the same vintage year. Good example is a Large Cap U.S. stock fund. Its benchmark will most likely be the S&P 500 or some simlar large cap index rather than a group of peer funds. One thing hasnt changed, the great majority of money managers, on a year in year out basis UNDERPERFORM the broad market. Yes they will have a year or two here and there where they outperform but when you average it all out, 75% still underperform. Furthermore, a manager who finished in the upper quintile this year has a 40% chance of being in the bottom two quintiles next year.

[EnlightenedChosenOne]

Stevey boy,

You asked how to gauge performance on privately held investments, not publicly held equities.

Privately held investments (limited partnerships) are almost always compared to a benchmark of similar funds with the same vintage year. I am 110% sure of that.

Obviously large caps are benchmarked against the S&P, Small caps with R2K, etc.

Disagree- Performance of a stock fund is not compared to other similar funds within the same vintage year. Good example is a Large Cap U.S. stock fund. Its benchmark will most likely be the S&P 500 or some simlar large cap index rather than a group of peer funds. One thing hasnt changed, the great majority of money managers, on a year in year out basis UNDERPERFORM the broad market. Yes they will have a year or two here and there where they outperform but when you average it all out, 75% still underperform. Furthermore, a manager who finished in the upper quintile this year has a 40% chance of being in the bottom two quintiles next year.

[EnlightenedChosenOne]

Your comments about underperforming managers are a moot point. I'm not disagreeing with you there. I believe you're wasting your time trying to beat some of the most efficient asset classes.

Where skilled managers CAN consistently outperform is the least efficient markets such as small cap, micro cap, international, emerging and frontier. Yes, most probably underperform because they suck, but that doesn't discredit my argument that skilled managers exist.

[EnlightenedChosenOne]

BOOM ROASTED KABOOM POW BADABING BADABANG

I should start charging a consultants fee for all the education and enlightenment I'm providing for this board.

Markets closed, wrapping up some stuff and I'm off for the 3 day weekend.

[stevenash]

Yes, you have really provided some really valuable insights into the markets. Does this mean that, in your IRA, you were heavily concentrated in those areas you claim are the least efficient? By the way, limited partnerships are one of the most expensive ways to invest your money. So you are behind the eight ball more than most when you begin.

[EnlightenedChosenOne]

By the way, skilled alternative managers return 15-30% net irrs and 2.0-3.0x moic, depending on the strategy. With returns so high the fees are almost an afterthought. Sure you'll fall behind at the beginning due to the j curve but will surpass traditional portfolios by harvest period.

And that's just looking at alternatives from a performance perspective. Alternatives also reduce volatility and increase the sharpe of a traditional portfolio since it's an almost uncorrelated asset class.

Yes, you have really provided some really valuable insights into the markets. Does this mean that, in your IRA, you were heavily concentrated in those areas you claim are the least efficient? By the way, limited partnerships are one of the most expensive ways to invest your money. So you are behind the eight ball more than most when you begin.

[stevenash]

For every skilled hedge fund manager that makes 15-30% on an annual basis ( and I don't mean one or two good years and then 5 or 6 poor ones) there is a multiple that have gone out of business. Money is very smart and if what you say was accurate, nearly all the money would have found its way to those portfolios. The fees I refer are not just the initial fee but also exceptionally high management fees that never stop. By the way, 10 hedge funds exceeded 30% in 2013. As a percentage of all hedge funds, that is a very small percentage. I haven't researched this, but I am pretty confident there were more than 30 asset managers ( stock universe) that exceeded 30% in 2013.

Here is a note from a Hedge Fund survey that might interest you: The industry is finishing its FIFTH CONSECUTIVE year of underperforming stocks, cumulatively trailing EAFE in dollar terms by 26.6per cent and the S&P 500 by more than 62% over this period.

[EnlightenedChosenOne]

I never said hedge funds routinely get 15-30% returns. I was referring to limited partnerships with long lock up periods, hence including moic in the performance metrics.

In fact, most hedge funds target high single/low double digit returns with low vol. And the money did flow to those skilled hedge fund managers , that's why top hedge funds are controlling more and more of the market share and are either hard or soft closed, only accepting new capital to match redemptions.

And comparing hedge fund performance to equity performance is apples to oranges. Hedge funds underperform in bull markets and outperform in bear markets.

[stevenash]

Take a look at a chart of the stock market over 25,50 or 100 years and let me know if there are more bull markets or more bear markets

[EnlightenedChosenOne]

I never said put all your money in hedge funds. As a financial advisor, you are supposed to know at least the very basics of asset allocation and diversification across asset classes.

Example - A traditional 60/40 portfolio returned 6.57% from 1990-2010 with a std dev of 10.26%, sharpe of 0.29 and max drawdown of -36.4%.

Add a 20% allocation to global macro and the return jumps to 8.0% with a std dev of 9.18%, sharpe of 0.48 and max drawdown of -30.5%.

So Mr. Financial Advisor, wouldn't you agree the portfolio with the 20% global macro allocation has outperformed the traditional portfolio in every single metric?

Take a look at a chart of the stock market over 25,50 or 100 years and let me know if there are more bull markets or more bear markets