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Investment Styles, Portflio Decisions
nipper
post Posted: Dec 2 2016, 06:07 PM
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In Reply To: nipper's post @ Dec 2 2016, 11:25 AM

and sometimes the most succinct is the most eloquent ... and accurate

QUOTE
....the perverse investment strategy in the first half of [2016] to snap up equities for yield and bonds for capital gain...

Why November Was a Massive Month for Markets Around the World
https://www.bloomberg.com/news/articles/201...round-the-world



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
nipper
post Posted: Dec 2 2016, 11:25 AM
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time to resuscitate this thread
Recently VOC, HSO, EHE, and today BAL down down, faster than the proverbial, on bad news. And others in asset classes targeted by association

Growth and momentum out of favour; the value investors now claim it is their day in the sun

QUOTE
In May, Perennial stock picker John Murray had grown more frustrated than he'd ever been in his long career as a fund manager. It seemed like nothing could stop the so-called "expensive defensive" stocks like CSL and Transurban from going up, defying the wisdom of "value" investors that prefer cheaper unloved, and undervalued stocks. "How much further could they go? Who else is there to buy them?" he asked in despair.

With some degree of good fortune, Murray, who set up the Perennial Value fund in March 2000, has seen the value approach to investing swing back into favour after many had pronounced it dead.

For the last five years, [low rates and easy money saw] buying "cheap" stocks in the hope they revert to fairer value has once again been written off. The faith and patience of its proponents has been tested. Now it looks like that inflection point may have arrived and the market is asking whether two years from now, the end of 2016 will be known as the moment value returned.

"At points where it seems its darkest there can be reasons for things to turn around," said Murray.

Murray and fellow Perennial portfolio manager Steve Bruce said several triggers that weren't there at the start of the year have been set off, which will help undervalued stocks outperform.

A major signal was the most recent earnings season, which showed the buyers of the so-called expensive defensive stocks had been exhausted, as had the sellers of the cheap and unloved stocks.

"The macro hadn't turned but you saw your Transurbans and CSLs selling off after results that weren't particularly bad and some of the value stuff rallied on results that weren't good, but better than the low expectations," said Bruce.

The pair identified several stocks* they believe represent good value – some of them certainly fit the description of being out of favour.
*BHP. QBE, AMP. MQG among others

And Investors Mutual the same - look at QVE, from sub NTA and unloved to steady buying and above NTA in past few months



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
wren
post Posted: Jun 5 2014, 10:59 PM
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In Reply To: joules mm1's post @ Jun 5 2014, 03:01 PM

An interesting topic.Many(? Most) investors do not appreciate the Risks they are taking.This,or something similar really is essential reading...imo.http://www.incrediblecharts.com/trading/2_percent_rule.php

 
joules mm1
post Posted: Jun 5 2014, 03:01 PM
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In Reply To: kahuna1's post @ Jun 5 2014, 12:47 PM

QUOTE (kahuna)
...where most fall apart on the technical side is execution. STOP LOSS in particular.


yes n no

underfunding, size and leverage are the main culprits, well, the misunderstanding and use of......

partly due to rushing into trading without a proven method...no diff to all the people who dive into buying penny stocks
on a fundamental basis or buying the cycle highs in major stocks only to see a 12% fall then exiting only to see new highs in price

most TT's dont know where to place a stop, again, they havent forward tested a method to know the best place but most importantly
they do not understand the parts of a trend they are playing and do not adjust to the diff "enviroments" theyre in

this is no different to fundamentalists who buy based on readings that project backwards

both traders suffer similar (quantitative and qualitative) values......it makes no difference if you lose 10% fundamentally or
10% technically....the loss is the same.....what's missing in both instance is the repetitive method

either traders can have similar equity curves yet employ completely different methods...the key is the method

in the last decade the data avail and speeds have allowed more traders to tap into technical ideas, but, again, the rush to
get onto a trade supercedes any method......i doubt that this is any different to fundamental traders who buy at the wrong time for the wrong reasons

unlike fundamental traders TT's have the advantage of speed execution as they are not reliant on fundamental causality, or at least,
they should be basing their decisions on price criteria versus anecdotal criteria

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an aside to invoking such names as Warren Buffett....by his own admission in several interviews, he is a fortunate recipient coming out of the 1930's and investing thru the boom years of the 40's and 50's, surrounded by a loyal team who have clear methods of analysis and who's time frame is distinct

how anyone can compare this to a modern technical trader i have no idea.....chalk and cheese but, pretty much, who cares?

i know several prop-shop traders (pro traders) who consider a pos held overnight to be an investment...and they baulk at the idea!!

wink.gif








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. . . . . . . . everything has an art.....in the instance of the auction process, the only thing, needed to be listened to; price

Said 'Thanks' for this post: kahuna1  wren  
 
nipper
post Posted: Jun 5 2014, 01:09 PM
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In Reply To: kahuna1's post @ Jun 5 2014, 12:47 PM

thanks K1; makes sense

On a tangent, or replying to one of the myriad points you raise, and while not advocating the manager, I thought the following link from a Value manager (Tyndall) made a lot of sense, in 'talking their book' about the benefits - specifically 10.9% against 8.9% or 200 bips p.a. - of Value versus Growth investing

http://www.fsitv.com/video/making_the_most

(clip plus slides)



--------------------
"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
kahuna1
post Posted: Jun 5 2014, 12:47 PM
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Hi,

If one looks at say the fortune 500 list, one can see the people there many are of the fundamental bent .... not to say technical trading does not have extreme merits but where most fall apart on the technical side is execution. STOP LOSS in particular.

They fall in love with a trade, and don't treat it like any other and as such do not admit defeat when its clearly there.

All chat sites if you look at the most popular threads, its NOT an indication of what is the best stock either via advances or trading opportunities. Its the total opposite and the worst investment stock has the most posts, or followers.

Some which did 50 fold advances pre GFC were of course popular, but most totally missed the first 25 fold increase. So they gained 100% vs a market that did about the same.

If we go to say the top 200 stocks, the biggest advances, and I mean ones post GFC have done 10 fold increases, even ones with 4-5 fold increases, its hard to find any chat about them.

Each has its MERITS but also limitations. for say someone going short PDN the uranium one at over $10 pre GFC has depending on what they call leverage made many times their stake. Chances of it going to $20- pre GFC I saw as remote, but of course possible. For a mad keen tech guy, he would spot the weakness and act, for most its a one dimensional style we trade with. Always long or no options or no shorts, whilst wary of being short myself due to the fact that UNLIMITED upside exists and LIMITED downside its hard to find actual people who trade or invest with both a short and long bias.

As to returns, a visit to morningstar who follows all funds will be illuminating in the extreme.

THey break it down into Value and Growth investment funds and then index huggers and so on. I watch the advertisments of the LOW cost industry funds in Austrlaia with amusement and alarm to be honest. They charge 1% less each year than the avevrage fund. This of course is a good thing over time !! But when Morningstar actually rates say their balance fund and the types of investments in it they keep coing up as I do with NOT a balanced fund but one which often has some very risky parts to their investments and as such the returns for taking risk SHOULD be more than say taking a low risk option.

In the end, breaking down their performance on even Australian share options, they index hug, make a bit more than the average fund only because they charge less in fee's. Their actual performance vs the top 10 VALUE or GROWTH funds in Austrlaian shares is 5-7% LESS each year and the guys at the top of these sectors seem to be there year in year out. They of course charge 2% vs 1% in fee's but still make 5-7% MORE than the low cost fee options.

As to the other things in the balanced Fund the low cost ones and industry ones here, looking at their BOND performance vs a good bond fund its miles below them. Looking at the overseas share portion, they ARE shocking their results over 5,7 and 10 year spans. This is masked by ultra low fee's and them taking risky investments in UNLISTED things which of course return MORE than listed thing as they should. There is NO EXIT or very rarely an exit for them.

In the end, A good growth but more so VALUE fund whether it be in the USA or UK or Australia seems to well outperform the index huggers year in, year out. The same names head the 3,5,7,10 year returns on the main. There are of course a few speckled in which i would avoid who make one massive return in a single year, but the quality ones stick out very much.

Of course sadly there are no really decent records of more technically proficient funds and hedge funds some of who trade 100% technically are out there but last 5 years with so many its become almost marginal in many regions for them. When you have 100 banks and 100 hedge funds with similar programs which trigger longs and shorts, even ones which learn and get smarter and quicker, its at times a feeding frenzy with everyone's technical indicators trigger at the same time of similar times and if it goes much further the markets would go from totally bid, to totally offered as the buy and sell signals each were turned on and off.

As someone who built one of these systems way back in 1991, and used it in banks for many years, the going the last 10 years has been a diminishing return vs what it used to be for the technical ones. This is NOT high speed ones but they too have faced the same issues as more and more popped up.


Nothing in the end beats that lump of meat we all have on our shoulders that's called a brain.
When markets go to extreme's when the computers without a soul or a brain send a stock, and index, a commodity or a currency to an extreme that if you sat and thought logically about it cannot be sustained or is wrong, thats when I think the best money is to be made. When say Uranium was $125- for a few supply issues, we had BHP with over 1.5 million tons of the stuff in reserve being valued at $40- a LB and we had in some cases small owners of supply say 100,000- tons at MOST, unproven and in LOW grade high cost to produce deposits and there were hundreds in that category if not over 1,000 globally and the stock was realistically being valued at a spot Uranium price of $125 and in some cases $200- ONE of these equations is WRONG and totally wrong.

If BHP was valued the same way its share price in 2007 should have been DOUBLE.

This is one of my issues with being a pure technical side person. I am sure before ONETEL collapsed a chart would have said BUY BUY BUY, but the accounts said run. Sometimes as I said you can do your homework and still be wrong, NOTHING is perfect, hence diversification and why I love it. Its the just in case thing. People lie, being human we make mistakes, if something bad happens and we instead of taking a 20% hit on an investment, they announce they are broke out of the blue and you loose 100% ... it happens. Worst I suppose of all is when the chart is looking GREAT and breaking up, the technical boys and girls are in, the fundamental ones are in if its gone previously to some low that was value and then out of the blue ... its over.

With purely mechanical systems even computer driven ones, they would never have questioned one company being priced off $150- lb Uranium price and another off a $30- price. One has 100 years supply the other has 5 years. One has a cost of production of $20- a LB and the other has a cost of production of $40- a LB some actually close to $100- per LB at the peak were valued close to a billion dollars.

Hence why I try use a bit of this and a bit of that.

Have fun



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All views expressed are my own opinions. While I take every care when posting no guarantee to the absolute veracity of the postings is given or implied. Please do your own reseach and consult a professional investment advisor before investing.
 


joules mm1
post Posted: Jun 5 2014, 10:20 AM
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dont mean to be an utter irrit...but, isnt technical trading something other than an investing style?

anyhoo, this popped up today (rofl)

Monkey Business a link ...between man and animal



1h

QUOTE (The Economist ‏@TheEconomist)
Studies suggest that even the smartest investors struggle to outdo a blindfolded monkey




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. . . . . . . . everything has an art.....in the instance of the auction process, the only thing, needed to be listened to; price

Said 'Thanks' for this post: kahuna1  arty  
 
jacsar
post Posted: Jun 5 2014, 08:47 AM
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In Reply To: triage's post @ Jun 3 2014, 08:16 AM

Hi triage, saw this snippet this morning and smiled when thinking of the elephant as TA or FA in regard to peoples views...such is the human race.

In his book, The Psychology of Science (1966), Abraham Maslow famously wrote: "I suppose it is tempting, if the only tool you have is a hammer, to treat everything as if it were a nail."

The sentiment wasn't new, but this became known as Maslow's Hammer, and it's used to describe the law of the instrument. That is, the over-reliance on a familiar tool.

Maslow's basic idea was that we tend to see the world through our own history and perspective, desperately trying to reduce all information to bits we can understand in our own frameworks.

While Maslow was pointing out the flaws of modern scientists as they tried to describe how the human brain works through physical explanations of composition and physiology, his basic premise can be traced back to a parable from India that discusses blind men and an elephant.

Each man touches the elephant in one spot — the trunk, the tail, the belly, etc. — and comes away with a different description of the creature. Every man is both right and wrong at the same time. All of them failed to see the entire elephant, and none accepted the points of view of the others.

All of this comes to mind as I read different takes on the current state of the economy and the markets.


Said 'Thanks' for this post: kahuna1  arty  triage  
 
Mookie
post Posted: Jun 4 2014, 06:09 PM
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In Reply To: wren's post @ Jun 4 2014, 06:01 PM

wren

I think that perhaps you should break down his performance in years where he knew exactly what was going to happen and those (if any that he did not)?

Let me guess his favourite quote is "Blue Horsehoe loves Anacott Steel"?

Sounds like a genius...


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wren
post Posted: Jun 4 2014, 06:01 PM
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In Reply To: Mookie's post @ Jun 4 2014, 05:49 PM

Yes,knew about that.He is still very successful.

 
 


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