Machine Learning Engine Says S&P 500 Is 8 Times More Likely To Drop 5% In A Month Than To Rise 10%
https://www.forbes.com/sites/greatspeculations/2019/08/09/60-years-of-raw-data-say-sp-500-is-8-times-more-likely-to-drop-5-in-a-month-than-to-rise-10/#7410a5f27958
Did you know if you’re investing in S&P 500, over the next month it’s roughly 8 times more likely you’ll lose 5% or more, than rack up gains greater than 10%?
Specifically, based on Trefis analysis of many decades of data:
... Anyone think going short for next 30days?

https://www.journalnow.com/business/the-hunt-for-yield/article_5fc7b62b-fae5-5a40-8de4-adcd2d11e5eb.html
The hunt for yield
I’ve got an investment idea for you. How about you loan me money and 10 years from now I will give your money back, less than one-half percent per year. But, no worries, it’s guaranteed. You will lose exactly one-half percent per year: no more, no less.
Anyone has DSL in their portfolio
Thx

Homes that were purchased for $30,000 in the 60’s are now worth over a million.

Zip 91011. My son's grandparents. My first wife moved back in with them, all those years ago, following divorce. They bought at $20,000 in early 1960s and made small expansions through the years. Selling price 2 months ago: $1.9M

As in the past 30 years, demographics will determine the best investments. Millennials outnumber boomers now, and will continue to, even more so in the next decade as the boomers kick the bucket. My picks are: online shopping - Amazon, phones - Apple. Starbucks and Netflix round out my picks.

Ten years? Debt, equity, and private equity in renewable energy, electric vehicles, the subset of utilities that comprehend the times we live in, energy efficiency, batteries, materials needed for an energy economy makeover, possibly grid managers ... you get the drift.

8 Top Stocks From the World's Largest Hedge Fund
https://money.usnews.com/investing/stock-market-news/slideshows/top-stocks-from-the-worlds-largest-hedge-fund?slide=5
Ray Dalio’s Bridgewater Associates is the largest hedge fund in the world with more than $160 billion in assets, and its Pure Alpha fund has averaged an annual gain of about 12% since 1991 and has logged just three down years in that stretch. Thanks to quarterly 13-F filings, any investor can track Dalio’s latest moves.
Here are Bridgewater’s eight largest stock holdings.
1. Biogen (ticker: BIIB). Biogen develops drugs for treatment of cancer and inflammatory diseases, and its multiple sclerosis business holds about an 18% share of the $18 billion global market. Dalio owns 240,378 shares of BIIB stock worth about $56.8 million.
2. Bristol-Myers Squibb Co. (BMY). Dalio started accumulating his stake in Bristol-Myers in the second quarter of 2018 but raised his stake by 78% in the first quarter to 989,293 shares worth about $47.2 million. Investors emulating Dalio should be buying Bristol-Myers on the dip after the stock dropped 22.2% in the past year in part on concerns about opioid litigation. – Wayne Duggan
Biogen (BIIB)
Bristol-Myers Squibb Co. (BMY)
Alliance Data Systems (ADS)
Eastman Chemical Co. (EMN)
United Rentals (URI)
Macy’s (M)
Nucor Corp. (NUE)
Royal Bank of Canada (RY)

@johnN said:

so what is the best plans? buy all these vehicles?

There is a saying a carpenter told me about 15 years ago when he was helping my wife and I build our first retirement home. It goes "Its kind of hard saying without really knowing." A decade is a long time. So, that saying pretty well answers Mark Hulbert's question about the single best investment for that period of time. Having said that, I would pick my largest portfolio holding, RPGAX, to answer the question. It has a broad multi-asset mandate, a fair amount of investment flexibility, and a top notch management team. That seems like a good mix for facing all the unknowns a decade's worth of crystal ball gazing brings to mind. Thinking more short term and small scale with a "Its A Low Interest Rate World" frame of reference, I just took a small, speculative nibble at MNR a few days ago.

OREAX tops FRIFX at: 1, 5 and 10 years (per Lipper). I wasn’t touting the fund, just commenting on the asset class overall. As you might recall, I have no brokerage accounts, Just some money directly with a few houses. Actually, now that Oppenheimer has been taken over by Invesco it appears my investment options have broadened quite a bit.

yes, my bad, I shoulda stuck w FRESX only

@hank You commented...

I’ll say I continue to be amazed by the performance of real estate funds. Maintain a small “nibble” in OREAX - and the danged thing is up 19% YTD (20% after today) - following on the heels of several other good years. I keep expecting it to fall off a cliff - but hasn’t yet.

It looks like OREAX lost about 6% in 2018 when there was increased concern about rising interest rates. That concern has faded this year. Maybe REITS will continue to make sense as long as we remain in a low interest rate world.....

@davfor - Thanks for the dose of reality. I’d overlooked the nasty 2018 swoon in many markets. Also, I tend to use Price’s TRREX interchangeably with Oppenheimer’s OREAX. Nothing to do with which is better - but dictated more by logistics, since I invest directly with both companies. Looks like on March 6 of this year I shifted 100% from TRREX to OREAX (by moving funds around at each house).
Wish I hadn’t deleted my running list of exchanges from about 5-6 years ago. However, I did buy into OREAX (umm ... maybe 2012 or 2013) after it had sustained a nasty licking. Was really in the cellar at the time. Yes - the falling rates have helped REITS. Personally I suspect they’re overvalued - but sticking to my normal allocation is the plan. You never can call the markets exactly right.
Regards

Pardon me if I’m wrong. But isn’t that the reason we buy mutual funds? To hire someone else to do our investing for us? I don’t know if I’d be any good at investing or not. Never bought or sold an individual stock or bond. I do know that some fund managers are better than others and some fund houses run a better shop than some others.
I’ve been in and out of more fund houses in my near 50 years in the markets than I care to think about. Some that failed to satisfy me for one reason or another: Franklin/Templeton, Strong Funds, American Century, Calimos, TIAA-Creff, Hussman, Gateway, James Funds, Janus, Delaware, and most recently Oakmark.
The company I trust most to do it right and to do it with integrity is T. Rowe Price. However, Dodge & Cox is also a favorite.

@hank You commented...

I’ll say I continue to be amazed by the performance of real estate funds. Maintain a small “nibble” in OREAX - and the danged thing is up 19% YTD (20% after today) - following on the heels of several other good years. I keep expecting it to fall off a cliff - but hasn’t yet.

It looks like OREAX lost about 6% in 2018 when there was increased concern about rising interest rates. That concern has faded this year. Maybe REITS will continue to make sense as long as we remain in a low interest rate world.....

OREAX tops FRIFX at: 1, 5 and 10 years (per Lipper). I wasn’t touting the fund, just commenting on the asset class overall. As you might recall, I have no brokerage accounts, Just some money directly with a few houses. Actually, now that Oppenheimer has been taken over by Invesco it appears my investment options have broadened quite a bit.

Sorry - but the 10-year time horizon mentioned renders such comparisons useless. Anything can happen over such a short (and random) time span. Everything runs in cycles, and the cycles can be very long. Since they were basically polling investor “expectations”, however, the article has value from that standpoint.
I’ll say I continue to be amazed by the performance of real estate funds. Maintain a small “nibble” in OREAX - and the danged thing is up 19% YTD (20% after today) - following on the heels of several other good years. I keep expecting it to fall off a cliff - but hasn’t yet.

Hank, to address your question below, here is my perspective: The return of bond funds since the mid-Dec 2018 lows are primarily price-appreciation. Go take a look at the charts of quality bond funds/ETFs. Its like a rocket, and approaching (or at) long-term resistance levels. I don't find it probable that appreciation like we have seen can be extrapolated much further. At least not without some type of correction.
OTOH, as I scan current SEC yields of various quality bond ETFs today, I note AGG's yield is 2.47%, while ICSH's yield (an ultra-low duration bond ETF) is 2.62%. Meanwhile, AGG's duration is 6.0, while ICSH is 0.3.
Based on bond prices here and now (not from 8-9 months ago), cash & near-cash instruments look like a better risk/reward proposition at this time. Obviously, if Treasury yields head to 0%, I will be kicking myself.

Is there a link here?

I’m curious what the reasons for the surge in money market funds might be. The return seems paltry. Over past year, money market mutual funds returned an average 1.97%. VG’s did slightly better at 2.35%. https://investor.vanguard.com/mutual-funds/profile/overview/VMMXX (Need to click on “Price & Performance”.)
Geez - Give me anything but one of these .... A night in Vegas? Online poker? Clean the attic and sell some antiques?
A couple alternatives to money market funds for folks with at least a few years time horizon and able to live with some principal fluctuation: TRBUX- one year 3.51%, DODIX - one year 8.17%

Is there a link here?
I’m curious what the reasons for the surge in money market funds might be. The return seems paltry. Over past year, money market mutual funds returned an average 1.97%. VG’s did slightly better at 2.35%. https://investor.vanguard.com/mutual-funds/profile/overview/VMMXX (Need to click on “Price & Performance”.)
Geez - Give me anything but one of these .... A night in Vegas? Online poker? Clean the attic and sell some antiques?
A couple alternatives to money market funds for folks with at least a few years time horizon and able to live with some principal fluctuation: TRBUX- one year 3.51%, DODIX - one year 8.17%

FYI: “For money you wouldn’t need for more than 10 years, which ONE of the following do you think would be the best way to invest it—stocks, bonds, real estate, cash, gold/metals, or bitcoin/cryptocurrency?”
That question was recently asked of more than a thousand investors in a recent Bankrate survey, and the winner—by a large margin—was real estate. For every two respondents who answered stocks there were more than three who said real estate is the way to go.
Are these investors onto something? Have financial planners been wrong all these years? For this column I mine the historical data for answers.
On the face of it, the respondents to the survey need to go back to their history books, as pointed out in a recent column by my colleague Catey Hill. Since 1890, U.S. real estate has produced an annualized return above inflation of just 0.4%, as judged by the Case-Shiller U.S. National Home Price Index and the consumer-price index. The S&P 500 SPX, +1.53% (or its predecessor indexes) did far better, outpacing inflation at a 6.3% annualized rate (when including dividends).
Even long-term U.S. Treasury Bonds outperformed real estate, producing an annualized inflation-adjusted total return of 2.7%. Check out the chart below:
Regards,
Ted
https://www.marketwatch.com/story/the-single-best-investment-for-the-next-decade-2019-08-08/print

FYI: Two financial ratios Wall Street uses to rate different portfolios’ risk-adjusted performances have come under sharp criticism, including from one of the ratio’s own inventors.
The better-known of the two, the Sharpe ratio, was first published in 1964 by William (Bill) Sharpe. It ranks portfolios by their “excess” return above holding low-yielding but safe Treasury bills. The ratio is adjusted for the amount a portfolio’s value deviates from a constant growth rate. In 1990, along with other economists, Sharpe won the Nobel Prize in Economics for this and additional formulas.
A competing measure, the Sortino ratio, was announced in 1980. Developed by Frank Sortino, then a finance professor at San Francisco State University, it was considered an improvement for several reasons.
Most notably, the Sortino ratio only counts a portfolio’s downside deviation against it. A portfolio is not penalized for upside surprises, which the Sharpe ratio does.
In a rather shocking turn of events, Sortino has turned against both the Sharpe ratio and the formula that bears his own name. He’s developed an entirely new risk-adjusted ranking system that shows promise.
In his latest book, “The Sortino Framework for Constructing Portfolios” (Elsevier), the now-retired professor announced an improved ratio named Desired Target Rate-alpha (DTR-a).
Sortino and his book’s collaborators ranked the risk-adjusted returns of scores of mutual funds using all three ratios. The results are eye-opening.
Regards,
Ted
https://www.marketwatch.com/story/widely-followed-risk-return-measure-for-stock-portfolios-is-debunked-after-55-years-2019-08-07/print

Howdy folks,
The Chinese do not want to lose face. The Fed raising rates 25 bps, gave Trump cover to raise the tariffs on the Chinese. They must respond or lose face. Weaponizing the currency and stopping the purchase of Roundup ready Soybeans enables them to save face. Now Trump loves this because he WANTS to devalue the dollar because in his economic world view this would be a good thing - sort of like trade wars and higher tariffs are good things.
We're spiraling down the rat hole and hopefully, all y'all realize the Chinese nuclear option is to sell Treasuries . . . of which they own a whole steeenking pot full. Geez, that might also devalue the dollar.
Tariffs are a tax on your people and trade wars have ALWAYS ended in economic disaster - at least for the last 2,500 years or so. Read the Frogs some time about a government debasing their currency.
Idiots,
and so it goes,
peace,
rono

"Cheap composite is competitive with wood on price, but not very attractive."
Our neighbor here in Guerneville replaced his original redwood deck with cheap(er) composite after some thirty years of wear. When the composite failed after some three years he then replaced it with redwood again. The composite manufacturer did recompense him to some extent for the failed product.

@hank : Did you happen to price out composite decking vs treated ? Composite has low maintenance.

Yes - My builder priced it. Cheap composite is competitive with wood on price, but not very attractive. The cost of top quality composite would have been about 3X more than treated lumber. The old surface was cedar. Climate (ice and snow) played a part in the issues that arose. Also, the great wood preservatives / finishes from years ago have been taken off the market due to health and environmental concerns.