Search found 242 matches

by BenSolar
Wed May 12, 2004 8:27 am
Forum: SWR Research Group
Topic: From Chapter 1
Replies: 10
Views: 12590

In terms of the Gordon equation and its adjustments, what I have seen is generally related to the middle term, in the neighborhood of ten years. I would be very concerned about its accuracy over longer time periods because dividend payout ratios vary with time and because the dividend yield is depe...
by BenSolar
Wed May 12, 2004 5:48 am
Forum: SWR Research Group
Topic: From Chapter 1
Replies: 10
Views: 12590

Say that five years from now, the consensus is that Modern Portfolio Theory is not dead, but has evolved into something very different from what most people understand it to be today. Shouldn't we be grateful to mannfm11 for having brought us that insight before it was being published in the newspa...
by BenSolar
Wed May 12, 2004 5:32 am
Forum: SWR Research Group
Topic: From Chapter 1
Replies: 10
Views: 12590

The 4.89% number applies only when you look at 2033 (specifically at 1998 and 2033). And that is just because you chose 1982 as the start date for your thought experiment: from 1982 you asserted that 7% real returns were expected for the long term, and as an example of that long term you chose 50 y...
by BenSolar
Tue May 11, 2004 12:47 pm
Forum: SWR Research Group
Topic: From Chapter 1
Replies: 10
Views: 12590

Remember that John Bogle's observation was for the really long-term. As are predictions from the Gordon Equation. How about this scenario? Stocks face one really bad decade that brings P/E10 below its typical level, possibly to 12 or lower. Follow that by another bad decade, but not quite as bad. F...
by BenSolar
Tue May 11, 2004 11:11 am
Forum: SWR Research Group
Topic: From Chapter 1
Replies: 10
Views: 12590

Assuming that John Bogle's observation that the stock market's real total return is predictable over the very long-term (i.e., 50 years or more) still holds, one should plan on using 4.89% when making projections for 1998-2033. One should not plan on using anything close to 7.2%. The 4.89% you deri...
by BenSolar
Tue May 11, 2004 4:29 am
Forum: FIRE Board
Topic: Stock Price Behavior Conundrum
Replies: 13
Views: 19656

I still believe the demand for dependable income-paying assets, like real estate and REITs, will increase as the boomers flee the regular salaries of the workplace and as their US-based employers desert them. I agree. I think the recent peak in valuations won't be the highest one for this asset cla...
by BenSolar
Mon May 10, 2004 4:28 pm
Forum: FIRE Board
Topic: Stock Price Behavior Conundrum
Replies: 13
Views: 19656

Good news is bad news, bad news is good news. Part of what is going on is that news announcers rarely know all of the factors that make the market move up or down on any given day. They are just guessing as to which factors are important. Another influence is that many traders tend to make bets on ...
by BenSolar
Mon May 10, 2004 12:41 pm
Forum: SWR Research Group
Topic: Financial Statistics
Replies: 11
Views: 12660

I believe that you are engaging in a logical inconsistency common among those who slice and dice their allocations. You are comparing predictions from before the fact with market behavior that occurred after the fact. Slice and dice comparisons are quite useful in terms of explaining what has happe...
by BenSolar
Mon May 10, 2004 5:38 am
Forum: FIRE Board
Topic: Stock Price Behavior Conundrum
Replies: 13
Views: 19656

I like John Mauldin's quote that the benchmark in this environment is is a mmkt fund. My colleagues, barely chastened victims of the late 90s gogo nonsense think I'm nuts for saying that. They rode the NT express from $1 a share (if you believe all their purchase point claims - I don't) to $8.60. I...
by BenSolar
Mon May 10, 2004 5:17 am
Forum: SWR Research Group
Topic: Financial Statistics
Replies: 11
Views: 12660

I Comparing them to the S&P 500 is just bad benchmarking. This is certainly correct. I suspect that not only would they need to be compared to a value index, but to a small-mid cap value index. I can guarantee the results of such a comparison won't be so striking as when compared to the S&P...
by BenSolar
Sun May 09, 2004 4:53 am
Forum: SWR Research Group
Topic: Financial Statistics
Replies: 11
Views: 12660

Yet, I continue to read assertions that skill does not exist because some insensitive statistical test fails to show significance. I've rarely or never seen someone say that they thought Buffett's performance was due to luck. The common argument is that picking the next Buffett is very difficult to...
by BenSolar
Sun May 09, 2004 4:32 am
Forum: FIRE Board
Topic: Stock Price Behavior Conundrum
Replies: 13
Views: 19656

I admit to being somewhat puzzled by REIT returns. In light of their 'clear' (90%+ agreed they were) overvaluation (say 20%) relative to NAV, their bond like rents (they move upward but slowly), the recent sell-off makes some sense. And some market irrationality coming to its senses. They sure did ...
by BenSolar
Sat May 08, 2004 2:56 pm
Forum: FIRE Board
Topic: Stock Price Behavior Conundrum
Replies: 13
Views: 19656

only explanation I have is that high dividend payers like reits and bonds have to be adjusted down to make up for the rising interest rates. So if, say, to attract reit investors, reits have to offer 4% real, and inflation looks like it will run 6%, then prices have to go down so that noiminal will...
by BenSolar
Fri May 07, 2004 7:55 am
Forum: FIRE Board
Topic: Stock Price Behavior Conundrum
Replies: 13
Views: 19656

1) I have an asset allocation that I am comfortable with and makes sense to me 2) I am in the accumulation phase, saving a substantial percentage of my (meager) income 3) I believe in periodic reballancing, and can take advantage of this due to nearly all my investments being in tax-advantaged acco...
by BenSolar
Fri May 07, 2004 6:23 am
Forum: FIRE Board
Topic: Stock Price Behavior Conundrum
Replies: 13
Views: 19656

Stock Price Behavior Conundrum

Since I've been a relatively close observer of the stock market one thing has vexed me. Reports like this one : U.S. stocks open down after strikingly strong jobs report NEW YORK, May 7 (Reuters) - U.S. stocks opened sharply lower on Friday, after a report showing strikingly strong jobs growth in Ap...
by BenSolar
Fri Apr 30, 2004 9:52 am
Forum: SWR Research Group
Topic: Inflation vs. Deflation debate
Replies: 9
Views: 11457

[I've long considered this as somewhat counter-intuitive, since we basically have the fed promising to drop money from helicopters if needed. Greetings, Oso Travieso :) Welcome to the board(s) I agree with you that it seems the Fed can likely find a means to prevent deflation since they can print a...
by BenSolar
Thu Apr 29, 2004 12:38 pm
Forum: SWR Research Group
Topic: The Death of Portfolio Theory
Replies: 7
Views: 10376

I think you missed my point No, I didn't. Thanks for the analysis. I agree that the S&P 500 is grossly overpriced, and I wouldn't retire on a portfolio that rested mainly on that asset class at this time. Though long term bonds at a fixed nominal rate of 5.5-6.5% don't look good to me either, g...
by BenSolar
Thu Apr 29, 2004 5:27 am
Forum: SWR Research Group
Topic: The Death of Portfolio Theory
Replies: 7
Views: 10376

Greetings, mannfm11 :) That was an interesting read. The main point that I got out of it was that at today's valuation the S&P 500 is priced so that there is basically no risk premium over expected returns from quality long bonds. I think this seems about right. :( I have seen a lot of talk abou...
by BenSolar
Thu Apr 29, 2004 4:56 am
Forum: SWR Research Group
Topic: I just wrote a post and I don't see it.
Replies: 2
Views: 6242

I recommend that you compose just about everything on Microsoft Word, WordPad or equivalent. Copy and paste it when you post. If you are composing a post directly and something bad happens, sometimes you can use your back arrow to come back to the Post a reply area. Then you can select all and copy...
by BenSolar
Sat Apr 24, 2004 5:03 am
Forum: FIRE Board
Topic: jwr has a good point about switching thresholds
Replies: 13
Views: 20325

Re: jwr has a good point about switching thresholds

[Right, the implication in the threads I looked at was that the switching strategies were viable for future use which I think is dangerous. If there was a recommendation not to follow them then it was pretty well hidden and I missed it. I will note that it seemed to me that pretty much any time Joh...