HMEZX - Highland Capital Management Still in Bankruptcy Protection? FYI and FWIW, below are excerpts from a somewhat confusing, at least to me, recent M* Quantitative Analysis Report.
On the one hand, M* claims that HMEZX has "a weak portfolio-management team" but, on the other hand, it also states that a "sign of strength at Highland is its management team, which boasts an average asset-weighted tenure of 15 years at the firm. This accumulation of experience builds confidence that the group can navigate a variety of market environments adeptly." Which is it? What am I missing?
"NexPoint Merger Arbitrage Z earns a Morningstar Quantitative Rating of Negative because of negative contributors including a weak portfolio-management team and a questionable investment process. [...]
Despite the portfolio managers with industry-standard experience and its longest-tenured manager's experience, the team managing NexPoint Merger Arbitrage Fund has a considerable number of weaknesses, warranting a Low People Pillar rating. The team is led by James D. Dondero, the longest-tenured manager on the strategy, who brings 23 years of industry experience. They’re also the named manager on eight additional funds, a total of $1.30 billion in assets. The funds have an average Morningstar Rating of 2.3 stars, demonstrating disappointing risk-adjusted performance. The team is small, but adequately equipped, with only two other supporting managers. Together, the three boast an average of nine years in the industry. [...]
Highland has a way to go to become an industry-standard steward, resulting in a Low Parent Pillar rating. Highland products are costlier than similarly distributed funds at other highly-rated asset managers, on average in the second most expensive quintile of category peers. The higher expense profile contributes negatively to the firm's overall stewardship rating and creates a larger performance hurdle. The firm has not had a durable fund lineup. Specifically, its five-year risk-adjusted success ratio demonstrates that only 21% of products both survived and beat their respective category average on a risk-adjusted basis,. A low success ratio not only indicates poor performance but also raises flags about a firm’s discipline around investment strategy and product development. A sign of strength at Highland is its management team, which boasts an average asset-weighted tenure of 15 years at the firm. This accumulation of experience builds confidence that the group can navigate a variety of market environments adeptly.
Mar 22, 2021"
Alibaba The fine is aimed at the monopoly practice that Alibaba is practicing, not the type of business. Alibaba must not discourage or block other BTB companies when offering the same products or services to the consumers. That is considered anti-competitive practices. There must be more details on Alibaba that the public have not seen.
In the past, Microsoft was fine multiple times in Europe and US when they tied the Windows operating system to the Internet Explorer browser while they are other third party browsers, i.e. Netscape and few others. Microsoft went as far as crippling third party browsers and making them inoperable. I personally like Firefox and later Goggle Chrome for their speed and connectivity. After the court ruling, Microsoft has to sell their OS with debundle browser and allow the consumer to choose their preferred browser. Today Windows 10 OS can run multiple browsers including their own new ones, Edge and Blue Edge.
More info:
Beijing wants Alibaba to stop requiring merchants to chose between doing business with it and rival platforms, a practice known as ‘merchant exclusivity’, which critics say helped it become China’s largest e-commerce operation.
Aside from imposing the fine, among the highest ever antitrust penalties globally, the State Administration for Market Regulation (SAMR) ordered Alibaba to make “thorough rectifications” to strengthen internal compliance and protect consumer rights.
“The required corrective measures will likely limit Alibaba’s revenue growth as a further expansion in market share will be constrained,” said Lina Choi, Senior Vice President at Moody’s Investors Service.
“Investments to retain merchants and upgrade products and services will also reduce its profit margins.”
SAMR said it had determined Alibaba, which is also listed in New York, had prevented its merchants from using other online e-commerce platforms since 2015.
The practice, which the SAMR has previously spelt out as illegal, violates China’s antimonopoly law by hindering the free circulation of goods and infringing on the business interests of merchants, the regulator said.
The probe comes as China bolsters SAMR with extra staff and a wider jurisdiction amid a crackdown on technology conglomerates, signalling a new era after years of laissez-faire approach.
The agency has taken aim recently at China’s large tech giants in particular, mirroring increased scrutiny of the sector in the United States and Europe.
https://reuters.com/article/us-china-alibaba/alibaba-shrugs-off-2-75-billion-antitrust-fine-shares-rally-idUSKBN2BZ01PAlibaba's anti-trust practice is no differ than those practices used by Standard Oil and AT&T (MaBell) before the breakup into smaller business units.
Anyone care to venture a guess where S&P ends the year ?! har --- read the MFO discussions --- sober and well-reasoned warnings abound for month after month after month after month.
Studz must be shaking his head even more than the rest of us.
MFool articles about this, well, that hed of theirs must be what is called a standing hed.
Shiller p/e has become less meaningful, evidently, I mean forget its history, and is at 37 this weekend, and while I doubt it will stick at 40 for years, the dip strength and buying penchant are just consistently strong. SP500 is now strongly over 4100. Trivial for it to hit a hundred higher per Derf's BMO cite above, eventually, and not far off.
I think the year will end, if we are all really lucky, with it @ 3800. And many of us buying or having bought prior. And Shiller still really, really high.
Anyone care to venture a guess where S&P ends the year ?! The stock market can't just go up forever. Per the Motley Fool's "A Stock Market Crash May Be Imminent" article (bold added by me).....
"Dating back 150 years, there have only been five instances where the S&P 500's Shiller price-to-earnings (P/E) ratio has surpassed and sustained 30. The Shiller P/E ratio measures average inflation-adjusted earnings from the previous 10 years and is also known as the cyclically adjusted P/E ratio, or CAPE. On April 6, the Shiller P/E ratio for the S&P 500 was nearly 36.7, which is well over double its historic average of 16.8.
Furthermore, in the previous four instances where the S&P 500's Shiller P/E hit 30, the index lost anywhere from 20% to as much as 89% of its value. Although we're unlikely to see Great Depression-like losses of 89% ever again, at least a 20% decline has been the recipe when valuations get extended."
Q&A - Bucket Strategies in Retirement Re 7% ... No certainty of course. One reason we enjoy watching markets is the inherent uncertainty day to day. I tossed the 7% figure out only for some perspective on
@Crash’s reference to not taking withdrawals after a “down year”. The criticality of Crash’s decision in terms of impact on his portfolio would depend, in part, it seems to me upon the severity of the “down year” as well as the % of savings being withdrawn. And, as I noted, it’s unlikely all the money would be withdrawn at the same time and at exactly at the lowest point in the markets.
I’m 22+
years retired. Don’t subscribe to any particular cardinal rule on how much to pull out yearly. Varies based on needs and, to a lesser extent, on the fortunes of the markets (Crash’s point). I’d guess it’s about 7% yearly on an average basis. It’s worked well for me, If it works as well for the next 22
years I’ll be 96 - likely too old to care or fully comprehend.
Best No Load and NTF Funds Available at Fidelity
PRSIX (a 30-50 allocation fund) was listed as one of the top 12 as FMSDX but when I compare the two, FMSDX appears to be the clear winner. PRSIX does have a longer track record but FMSDX has certainly outperformed PRSIX in the last 5 years. I guess PRSIX has a slightly lower ER, though.
EAPCX - "commodities broad basket" Interesting. I've never owned one of these funds.
@JonGaltIII Thanks for the input. FMSDX is a great fund and one of my larger holdings. The oldest share class of FMSDX is FAYZX which is still only 5.5
years. My concern for FMSDX is that it has 18% in High Yield bonds. I have concerns about how it may perform during a recession.
I worry about a 1970's style period of inflation. Home and stock prices are two examples of inflated prices. Food prices are rising. I bought relatively modest amount VCMDX at Vanguard and FSRRX at Fidelity. FSRRX is less volatile than EAPCX. If signs of inflation increase I will consider EAPCX.
Best No Load and NTF Funds Available at Fidelity Interesting share. I'm looking forward to reading Charles post further. I'm in a few of those funds. Quick observations on a few of the 12:
PRBLX seems like a fine fund but it tracks so closely to the S&P 500 Index, why not just invest in an S&P index fund?
PRSIX (a 30-50 allocation fund) was listed as one of the top 12 as FMSDX but when I compare the two, FMSDX appears to be the clear winner. PRSIX does have a longer track record but FMSDX has certainly outperformed PRSIX in the last 5 years. I guess PRSIX has a slightly lower ER, though.
PRGSX is a great fund and deserves to be included. It's outpacing my MGGPX this year and with a lower expense ratio. I had a difficult time deciding between the two. Perhaps I should revisit it.
EAPCX - "commodities broad basket" Interesting. I've never owned one of these funds.
Really appreciate reading the methodology that Charles shared and how his choices compare to Fidelity Picks and M*.
How much dry powder to hold in reserve ? "...conservatively diversified portfolio...cash and cash alternatives are pegged at 12% of portfolio..."
I agree with the use of cash or cash alternatives in a portfolio
@hank. My point was, and when I hear the term "dry powder", to me that means you are holding cash for "timing" when to buy equities. That is lost opportunity cost.
Hmmm. Quite right. That always made sense to me. With mutual funds. But with single stocks, I just would not want to pay a price at current high-flying levels to get in,
initially. I see not many bargains at all. One (and only
one,) lately I've found is BancoMacro out of Argentina. Symbol BMA. What I came across says it's selling at a 19% discount at the moment. So, rather than my favorite Canadian banks, BMA may well be my first single-stock purchase in
years, soon.
How much dry powder to hold in reserve ? @MikeM - All good points. BTW - always glad to see you posting.
Investment
nomenclature changes. Go back 10-15
years and board participants talked a lot about
“stashing away dry powder”, “backing up the truck” and “going all in”. Not sure what’s in vogue today. But it ain’t these.
Cash rubs a lot of people the wrong way. In its defense I’d make two points.
-
Cash alternatives offer slightly better returns. I’m using TLDTX which carries a lower ER than either Price’s money market or ultra-short fund, invests in government backed paper and maintains a fairly stable value. It’s up 1.28% YTD.
- If you
rebalance periodically, after a bad year for your other holdings you’d be glad to have owned even some “0 return” cash to shift into those now depressed sectors. As a % of your portfolio, cash has increased - even while returning 0%.
How much dry powder to hold in reserve ? As the article points out, a younger investor might comfortably remain invested 100% of the time (10 of more
years away from retirement).
You're right,
@bee!
I'm humbly corrected.
The Future of Money Meaty...
Let’s begin with the future of money that no one foresaw.
In 2008, in a wonkish paper that bore no relation to any sci-fi, the enigmatic Satoshi Nakamoto launched Bitcoin, “a purely peer-to-peer version of electronic cash” that allows “online payments to be sent directly from one party to another without going through a financial institution.” In essence, Bitcoin is a public ledger shared by an acephalous (leaderless) network of computers. To pay with bitcoins, you send a signed message transferring ownership to a receiver’s public key. Transactions are grouped together and added to the ledger in blocks, and every node in the network has an entire copy of this blockchain at all times. A node can add a block to the chain (and receive a bitcoin reward) only by solving a cryptographic puzzle chosen by the Bitcoin protocol, which consumes processing power.
Nodes that have solved the cryptographic puzzle — “miners” — are rewarded not only with transaction fees, but also with more bitcoins. This reward will get cut in half every four years until the total number of bitcoins reaches 21 million, after which no new Bitcoins will be created. As I argued here last November, there were good reasons why Bitcoin left gold for dead as the pandemic was wreaking havoc last year. Scarcely over a year ago, when just about every financial asset sold off as the full magnitude of the pandemic sank in, the dollar price of a Bitcoin fell to $3,858. As I write, the price is $58,746.
don-t-let-china-mint-the-digital-currency-of-the-future
How much dry powder to hold in reserve ? As the article points out, a younger investor might comfortably remain invested 100% of the time (10 of more
years away from retirement).
Using Portfolio Visualizer one can back test balance funds such as VBINX or FBALX and analyze their 3 & 5 year rolling returns back to 1994. Their 3-year rolling returns went negative twice (June 2002 - Oct 2003) and (Sept 2008 - Dec 2010). It appears a balance portfolio in retirement might want to avoid withdrawals during these types of time frames. The longest of these time frames being about 2
years. It would seem appropriate to keep two
years worth of spending out of the market so that it could be spent during these negative draw down periods. Maybe more if you are strategically trying to use cash to "buy" when the market swoons.
PV link (click on the rolling return tab)
April commentary, stock light portfolio version 4.0, 65 years ? More about stock light portfolio: I wonder whether solid historic performance of this portfolio is related to gradually decreasing rates.? 40 years ago, in 1981, US treasury yield at its peak was 15.8%. Now it is below 2%. The difference is 14%, which was a tremendous contributor to bond funds returns. One can hardly expect that this trend can continue.
Seeking an hourly fee only financial advisor for a small non-profit I don't see non-LI contact info there and iirc he had retired from all such activity a few years back
all I was thinking is that he would know to refer the querier to someone competent
but yes, I would think vang would be able to help out just fine, and honestly
I just wanted to see if bobc was around and perhaps still reading threads here ...
April commentary, stock light portfolio version 4.0, 65 years ? Thank you
@carew388 I read David's write and posted just prior to traveling. I should have waited until returning home. I'll ponder the 65
years of history and markets as to how relative this is to the dynamic markets in which we play.
April commentary, stock light portfolio version 4.0, 65 years ? While historical data is interesting; I reserved any comment until I clarified the "65
years" description in the below quote. What 65
years period?
Perhaps my 1 year of Covid era sheltering has literally affected my cognitive abilities; a "can't connect the dots anymore" circumstance.
Thank you
@David_Snowball et al, and don't hesitate to point out that I may have begun a cranial-rectal inversion syndrome.
Stock light version 4.0 MFO, April link
In the past, 2004, 2010, and 2014, we’re shared research from T. Rowe Price that illustrates the dramatic rise in risk that accompanies each increment of equity exposure. Below is the data from the most recent of those articles, which looks at 65 years of market history, from 1949 to 1913.
