Jonathan Clements: Are You Prepared For A Stock Selloff ? Hi Guys,
Recently, a bunch of MFOers have posted negative assessments of financial writers and their current crop of articles. You fellows are tough consumers of financial advice. It’s perfectly legitimate to have high standards and high expectations. Many business journalists do disappoint.
However, I don’t count Jonathan Clements in that cohort. He rarely disappoints, although, on occasions, I’m sure a sophisticated and experienced veteran investor would not learn much from any given article. Remember, Clements writes for the general investing public. I grant him a little slack on these infrequent occasions. Not even Warren Buffett or John Bogle offers brilliant insights every time they take pen to paper.
Jonathan Clements has a storied career as a financial writer that is equaled by few. He has been a columnist for the WSJ for almost two decades, and has composed thousands of pieces. I agree that not all carry equal weight.
The Japanese have a saying that a protruding nail must be hammered down. Not always. For some of us the nail might well need the hammer; for others, it might well be a place to hang a picture. Some investors benefit from the solid advice proffered by Clements. For those who don’t need that advice, at worse it is innocuous and will do no harm.
I’m sure we are all aware that editors design article titles to capture attention. Fear is a proven motivator and attention gatherer. I really did not think that the title of the referenced Clements’ article was all that frightening. The article’s Clements byline immediately added credibility and trustworthiness to the work. He is universally respected within the industry.
I too was rather dissatisfied with the referenced text; it was pedestrian, standard stuff. It was not one of Clements’ top writings. They all can not claim that exalted position. I’m certain that a legion of his loyal readers would disagree with me. Given our diverse needs and goals, we are likely all right in our individual judgments.
In general, I too conclude that current US journalism skills, research, and ethics have eroded over time. Far too often, journalists have become advocates. They distort their information reporting not by providing misinformation, but rather by carefully selecting only facts that support their positions while totally ignoring disconfirming evidence.
One easy answer to that deficiency is to seek many alternate sources of information. But if I only had one choice for a hitter, I would choose Ted Williams every time, Ted.
Best Regards.
Jonathan Clements: Are You Prepared For A Stock Selloff ? Totally agree. Fear is a powerful motivator for selling newspapers. It is particularly troubling to see the decline of financial journalism among major papers including WSJ and Barrons.
Jonathan Clements: Are You Prepared For A Stock Selloff ? Yak Yak Yak! Agree with everybody. But, there's been this type of jabber in the mainstream press for decades. Probably hit a peak during the bull market of the 90s. Helps sell papers or they wouldn't do it. Costs them real money to do hard hitting investigative reporting - and money is something most major news organizations are pitifully short of. (The plight of our major newspapers and other news outlets is a totally different story, but one that saddens me to no end.)
Keep in mind, too, that the MFO audience is quite financially sophisticated and has become more so in recent years. Heck, we have several here from the financial industry, and the "casual" investors are no sloughs either. So, an article telling us to assess our risk appetite and think a little about the pounding many took in '08 is going to seem superfluous to most. However, if you're just starting out investing and looking for guidance, it's not bad advice - and probably cost the writer and Journal little in time or money to churn out.
Bill Gross's Farewell Lettet To Pimco Guys, first that article is claiming it is the REAL letter. Second if it is wasnt then we have to accept this is financial pron, if not pure fiction. Something we already know in our hearts and minds about the financial press, but keep clicking links making them money.
As a society, it is incumbent upon all of us to make sure our dollars dont fund the wrong kind of business. This is not about freedom of expression. Lets not make MFO a marketing avenue for ad revenue. Wish there was some way to link otherwise.
Second Oldest Stock Fund Is As Nimble As A Teenager
DFA anyone? I agree with those above. In addition I did not have a good experience with them and find them to egotistical and not nice people.
Were you investing thru a financial advisor? How did you get access to the funds?
FAIRX-drops down -9.6 today VF, so I am not an expert but here is my thought. FAIRX owns preferred. So if preferred won't pay a dividend, my guess is that it is worthless and was priced as such. However, FAIRX and others bought preferred a while ago hoping to sue the gov and restore dividend. I guess others pilled in the trade hoping to make some money and thus driving price of preferred up. when suit against gov failed and the gov will keep all profits/dividends from fannie and fredie, people sold their preferred shares driving shares down again.
"The Obama Administration wants to wind down the mortgage giants that have been operating in conservatorship since receiving $188 billion from the Treasury Department amid the financial crisis. But Fannie and Freddie paid the bailout out money back and are now hugely profitable.
Perry and Berkowitz bought Fannie and Freddie junior preferred securities a long time ago in the hopes that some of those profits would eventually flow to them. "
Government response: "Yeah....that would be a no."
http://www.zerohedge.com/news/2014-10-01/ackman-berkowitz-slammed-after-fannie-mae-plunges-60-court-ruling"Pershing Square has about 11 percent economic exposure to Fannie Mae and Freddie Mac shares based on common stock outstanding, a stake first disclosed last year. While lawmakers are weighing methods to wind down the companies, Ackman said mortgage rates would jump without the government-sponsored enterprises.
“There is no viable alternative,” to Fannie Mae and Freddie Mac, Ackman said today in a Bloomberg Television interview with Stephanie Ruhle after the Sohn presentation. “Preserving the 30-year prepayable fixed-rate mortgage -- it’s like the bedrock of the housing system -- is critical."
We think the only way to do it is by preserving Fannie and Freddie.”
$23 to $47... or zero. Because while there may be no viable alternative, Ackman forgot one key thing: his adversary is the US government... "
Question re: Sarofim and SPHQ ETF Thank you, David, for your Oct 2014 profile of Sarofim Equity - SRFMX.
Link:
http://www.mutualfundobserver.com/2014/10/sarofim-equity-srfmx-october-2014/What do those who share David's enthusiasm for Sarofim, and Sarofim's enthusiasm for
Quality Stocks, as identified by the S&P High Quality Index [1], think about the Powershares exchange traded fund, SPHQ ?
Also - the E.R. on SPHQ is currently 29 bps.
[1] Links with info on Quality Stocks and ETF:
[2] Note: There is a similar document on the Dreyfus site:
FAIRX-drops down -9.6 today email I got: Fairholme has been receiving inquiries about yesterday's D.C. District Court decision regarding Fannie Mae and Freddie Mac. I want to make sure that all shareholders have the relevant facts.
While we strongly disagree with the court's conclusions, we remain steadfast in our belief that – at a minimum – shareholders are due just compensation for the Taking that has occurred.
That is, the D.C. District Court judge is either wrong or the law is unconstitutional – the issue is now quite simple.
In this respect, our ongoing litigation in the Court of Federal Claims seeks to remedy this matter.
We will continue to pursue our legal rights with the same conviction held in our other G-SIFIs (global systemically important financial institutions) – AIG and Bank of America – deemed essential to our way of life.
PTTRX closed flat, PIMIX/PONDX closed -.47% Hmmm. I'd also guess cme is the exchange where the interest rate swap is held/was purchased.
Bingo! Chicago Mercantile Exchange. From the intro to the Wikipedia entry for 'CME Group':
"CME Group Inc. (Chicago Mercantile Exchange & Chicago Board of Trade) is an American futures company and is one of the largest options and futures exchanges. It owns and operates large derivatives and futures exchanges in Chicago and New York City, as well as online trading platforms. .... The exchange-traded derivative contracts include futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, rare and precious metals, weather, and real estate. It has been described by The Economist as "The biggest financial exchange you have never heard of"."
Maybe MFOers should group-author
The Rough Guide to Unbelievably Arcane Financial Minutiae.
P.S. Anyone ever heard of weather futures?
Who Is Dan Ivascyn ? Oh great. Upcoming: the financial media reports breathlessly that Ivascyn shifted his allocation from 43.1 to 43.2% mortgages last month! (Like they did every month with Gross ...)
Janus Unconstrained Bond Fund
That Financial Times site is a bear when it comes to access. Wasn't able to read that article
Pimco Moving Away from Bill Gross Model PIMCO is, and has been for a few years, MUCH more than Bill Gross. They already have, and have had, a team approach on the investment committee that sets the macro outlook for the firm's funds, a top-notch analyst staff, and a solid group of fund managers whose initials aren't BG. I think there's WAY too much of the heroic-CEO-uber-alles POV being expressed in the financial media and here at MFO about Gross's move out. It's a GOOD thing for PIMCO, maybe not for the TR fund and etf for now, but for the firm as a whole.
Josh Brown: Do We Need To Fire Pimco ?
Chuck Jaffe: Forget Investing Apps---Take A Nap, Instead Old set it and forget it Chuck. He needs to get out more often.
What does a financial app do for me? I can track my investments, read news stories that correspond to my investments, compare my investments with others in the same category to see how I am doing, and much more.
It's more information for me. I can make better decisions. Chuck reads his MW which could be a shameful plug or it explains his one sided vision of investing. MW is a horrible place to get news of good information and balance.
I'll stick with my apps along with a variety of sources both in print and on television. That is how one gets educated.
Bill Gross Joins Janus Capital "Up to 30 percent of Pimco's assets could now leave the firm, Sanford Bernstein estimates. "
Would that be the 30% give or take that left Pimco Total Return ($292B to $221B in the 16 months ending 8/31) because Gross was managing it, or the 30% that may leave because he will no longer be managing it?
As the article points out, people look not only at the name but at the performance. When Gundlach left TCW, he was at the top of his game; Gross has been at best mediocre for several years. So what I expect to see in columns is evidence of confirmation bias - each writer will read into the numbers whatever he or she wants. It won't be easy to sort out the root causes of money movement, and the financial "reporters" won't even be trying.
My own personal bias is that I believe good performance (to the extent it is based on skill) is due to a combination of skills of the whole team - analysts as well as the fund manager(s). They serve different roles all of which are needed. Gundlach took a good chunk of his team with him (or so I understand). I don't expect Gross to have as much success with that.
I look at Mutual Series - many people expected it to fall apart after it was acquired by Franklin and Michael Price gradually faded away then left. But the funds performed quite admirably, especially in the first several years after the Price era. The organization seemed to hold together.
And speaking of Mutual Series, how did another wonderkind fare - David Winters? He was supposed to do great things and draw all sorts of money. His fund has subpar performance. He has drawn over $1B in investment, which gets him into the top quintile of World Stock funds by assets. But he didn't seem to draw money from his old charges at Mutual Series (MDISX - $26B, MQIFX - $6B).
Where I think Gross does have an advantage is curiously where most commentators criticize him - management experience. When these other fund managers left, they had to form whole new organizations - using skills that for them were untested. Gross, though he's joining an existing family (Janus), is being given his own playpen to build. So he still needs to apply organization building skills. That's something he has experience doing - having built PIMCO.
I keep writing because I think there are a lot of different facets here, and everyone (including myself) is going to pick and choose. Raw numbers (outflows, inflows, performance) alone won't tell the story. Anecdotes won't either. We need to keep everything in mind when guessing what will transpire, or analyze what did happen six months down the road.
Fairholme Fund's Bruce Berkowitz On This Weekend's Wealthtrack "Why is the market only valuing AIG at 0.7x book value?"
Maybe they're still thinking in the manner that Berkowitz did in 2009.
"Maybe it's because I don't invest in things I can't understand. Eighteen years ago, after the financial stocks got killed, I was a big buyer of Wells Fargo, Freddie Mac and MBIA. They were simpler businesses then -- and they were cheap and understandable. You could read an annual report or a 10-K and you knew what you were getting.
Or take American International Group. If you looked at an AIG annual report six or seven years ago, you saw one paragraph on derivatives. You look at an AIG annual report today and you see 15 pages on derivatives. I don't think company insiders fully understand what's going on, let alone outsiders. So if I don't understand something, I've learned to walk away." (
http://www.kiplinger.com/article/investing/T041-C000-S002-a-bargain-hunter-stands-tall.html)
From the same interview:
"What's the worst that could happen to Sears, one of your biggest holdings?
It gets slowly liquidated, or Eddie Lampert, its chairman, takes the company private. But I don't think he'd do that to shareholders.
"We didn't buy Sears based on the business.
There's too much retail in the U.S. (note: my emphasis, and my curiosity as to where the demand for retail space will come from for large Sears spaces if there's already too much retail in the US, which is something I agree with....)If the retail works, then it's a grand slam home run. We invested because of the company's real estate holdings. It has some fabulous locations -- a Kmart in Bridgehampton, N.Y., and a Sears on PGA Boulevard in West Palm Beach, Fla., for instance. The real estate alone is conservatively -- and I mean conservatively -- worth $90 per share [the stock traded at $53 in mid November]."
