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  • #181
    Originally posted by KrazyHorse
    I am interested in the results. I want studies. Specifically, I want studies which pull out the investors who do well in one period, then look at this subset for another period. Previous studies which follow mutual funds like this show that returns as a function of time are white noise. The returns in one period are almost wholly uncorrelated with the returns during any other period.
    Given the nature of the markets, the outliers would be few and far between. I'd guess most of the people who really "beat the market" do so out of luck, or at least a large portion of luck. Also they probably have a greater tendency to avoid risk thereafter.

    That said, a lot of people do get lucky. There is something to be said for younger investors to take some chances, putting a bit of their money into more volatile investments. Not just play indexes.

    Comment

    • #182
      Originally posted by Aeson


      Depends on what you mean by "significantly". As that becomes more and more exclusive, so too will the group of people who can claim to take advantage of it.
      Aeson, again, thank you, I understand price elasticity of demand.

      The point is still that we don't see any significant number of funds with consistent supernormal returns. For the reasons enumerated this means that times when an individual "knows better than the market" for real are few and far between. The knowledge that leads him to that conclusion needs to be highly specific to him and a small group of other investors and difficult to communicate convincingly except through the price mechanism.

      The idea that there are a significant number of people who are just better-than-the-market general-purpose investors is ridiculous, for reasons stated. When they know better it is because of something which cannot be gleaned by the average intelligent person who knows something about finance and who reads through a firm's quarterly report and balance sheet.

      EDIT: changed "supply" to "demand"
      Last edited by KrazyHorse; November 13, 2008, 22:07.
      12-17-10 Mohamed Bouazizi NEVER FORGET
      Stadtluft Macht Frei
      Killing it is the new killing it
      Ultima Ratio Regum

      Comment

      • #183
        Originally posted by KrazyHorse
        Is value investing solely a means of choosing asset classes or is it also a means of differentiating between assets in a class? If it is also a means of differentiating between assets in a class, and it can be practiced successfully then it should be able to beat an index of that asset class.
        After thinking about this some, it's clear to me that you can't separate the two functions from a value investor's standpoint. It just doesn't make sense to separate the two, and from what I have seen, value investors don't.

        I'm well aware of BH. But my classification of their ability would be "idiosyncratic". There are many thousands of fund managers and many millions of private investors. Unusual ability seems to be present at most in tiny fractions of a percent of these and would appear to not be a teachable skill.
        Those involved in BH think that it is a teachable skill and from what I know, Warren Buffett doesn't practice hocus pocus. There's a class of folks -- centered around the Chartered Financial Analyst designation -- that spends its time teaching and learning these skills. It's a fairly small group of folks, about 90,000.
        Last edited by DanS; November 14, 2008, 13:05.
        I came upon a barroom full of bad Salon pictures in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the "free lunch" I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts. ~ Rudyard Kipling, 1891

        Comment

        • #184
          Hmm. Having bought into an S&P Fund (IJH) back when the Dow was ~9200 (I can't remember what the S&P was at, but IJH is down over 10% since we bought it - ~$57 then to ~$50 today), I am pondering putting more $ if the market drops significantly further. I'm trying to pick a number to be my "get in" level.

          7000 would be a 50% drop from peak. It's hard to imagine it getting much worse than that. If it gets down there, we're in "historic opportunity" territory.

          -Arrian
          grog want tank...Grog Want Tank... GROG WANT TANK!

          The trick isn't to break some eggs to make an omelette, it's convincing the eggs to break themselves in order to aspire to omelettehood.

          Comment

          • #185
            My sense is that it isn't worthwhile to time this market too finely. As of 12:20 PM, these are attractive prices -- the S&P 500 is about 44% off the peak.

            Like you, I would be surprised to see it drop more than 50% off the peak. The 1973-74 and 2000-2002 bear markets were both 48% drops.

            But I guess you never know. In the 2000-2002 bear market, I mostly stayed out of the market. I was waiting for 700 on the S&P 500 -- at that point, it was harder to judge what prices were reasonable. Never happened. As it turns out, that cost me a few percent.
            Last edited by DanS; November 14, 2008, 19:04.
            I came upon a barroom full of bad Salon pictures in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the "free lunch" I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts. ~ Rudyard Kipling, 1891

            Comment

            • #186
              Here's a good graph of the various bear markets from the Great Depression onward. For some reason, my numbers disagree somewhat with the NYT's on the 73-74 and 00-02 bear markets.

              How This Bear Market Compares - Interactive Graphic - NYTimes.com
              http://www.nytimes.com/interactive/2008/10/11/business/20081011_BEAR_MARKETS.html


              Edit: Ahh, the NYT adjusts for inflation.
              I came upon a barroom full of bad Salon pictures in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the "free lunch" I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts. ~ Rudyard Kipling, 1891

              Comment

              • #187
                In that case

                Originally posted by DanS


                Sure. I'm a value investor.
                If you've lost less than 40% of your money, you are doing better than some of the more successful value funds out there.
                “It is no use trying to 'see through' first principles. If you see through everything, then everything is transparent. But a wholly transparent world is an invisible world. To 'see through' all things is the same as not to see.”

                ― C.S. Lewis, The Abolition of Man​

                Comment

                • #188
                  I had the benefit of other asset classes, however. I was heavy in cash (money markets).
                  I came upon a barroom full of bad Salon pictures in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the "free lunch" I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts. ~ Rudyard Kipling, 1891

                  Comment

                  • #189
                    Interesting note. The S&P 500 earned an equal dividend yield in the last twelve months as the yield earned on 10-year treasuries.

                    I heard on Bloomberg Radio yesterday that this was the first time it had happened since the 50s.
                    I came upon a barroom full of bad Salon pictures in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the "free lunch" I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts. ~ Rudyard Kipling, 1891

                    Comment

                    • #190
                      The S&P 500 is now 49% off its highs and stands at the low of the 2000-2002 down cycle.

                      These are screaming buys, folks. I wish I had money to invest beyond my normal monthly savings.
                      I came upon a barroom full of bad Salon pictures in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the "free lunch" I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts. ~ Rudyard Kipling, 1891

                      Comment

                      • #191
                        Is it as good a time to buy as AMAT was?
                        "The issue is there are still many people out there that use religion as a crutch for bigotry and hate. Like Ben."
                        Ben Kenobi: "That means I'm doing something right. "

                        Comment

                        • #192
                          Hmm. The wifey and I must ponder. We've got more money sitting in an account earning less than 3% interest we could put in (over and above what we believe we need available as a cushion in case of job loss, etc).

                          Logically, it's a great idea. Psychologically, it's hard not to feel snake bit. All the market has done since we bought in (ignoring our 401ks, of course) is drop. I'm am fully aware that's not an argument - it's not meant to be one. I'm just venting.

                          -Arrian
                          grog want tank...Grog Want Tank... GROG WANT TANK!

                          The trick isn't to break some eggs to make an omelette, it's convincing the eggs to break themselves in order to aspire to omelettehood.

                          Comment

                          • #193
                            Originally posted by Asher
                            Is it as good a time to buy as AMAT was?
                            I bought some more yesterday. Does that count?
                            I came upon a barroom full of bad Salon pictures in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the "free lunch" I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts. ~ Rudyard Kipling, 1891

                            Comment

                            • #194
                              Originally posted by Arrian
                              Psychologically, it's hard not to feel snake bit.
                              Studies have shown that a negative experience has 2x the psychological impact of a positive experience.

                              Fighting those human impulses could prove to be a very profitable exercise for you.
                              I came upon a barroom full of bad Salon pictures in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the "free lunch" I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts. ~ Rudyard Kipling, 1891

                              Comment

                              • #195
                                S&P 500 trailing twelve month dividend yield: 3.59%

                                10-Year treasuries yield: 3.36%

                                According to Bloomberg Radio, this is the first time since the 50s that the S&P is yielding more than the 10-year. Perhaps this is what deep value looks like.
                                I came upon a barroom full of bad Salon pictures in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the "free lunch" I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts. ~ Rudyard Kipling, 1891

                                Comment

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