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Cyprus Bailout and possible volatile days ahead...
Reply to @scott: BWEL is notoriously private. Hard to find info on them. The Yahoo Finance board is filled with spammers/pumpers. However, there is a members only Yahoo group that has decent info: http://finance.groups.yahoo.com/group/jgboswellgroup/
Reply to @BWG: L's hotel expansion is interesting - I'm curious if that eventually becomes more than the fairly minimal part of the business it is now.
As for LUK, I'm waiting to see how the hilariously named new CEO from Jefferies does running it.
US markets seem to handle it OK, although just about everything in my portfolio was down, expect RNSIX, FOCIX and DODIX. I liked the way AQRIX held, down only slightly. SIGIX, FAAFX, GE biggest losers today.
Stops were not reached on other equity holdings, which is good, but it meant I was unable to reload and catch BAC 2% dip at open.
Flack, Ted, JoeNoEskimo...let's hope you are right and our reluctant bull shrugs Cyprus off too and continues to climb.
We'll see how EU reacts this week:
Russian President Vladimir Putin called the proposed levy "unfair, unprofessional and dangerous", and Moscow has expressed frustration Russia was not included in European decision-making on Cyprus.
I’m more than a bit intrigued by this ongoing Cyprus drama. In the US, this seizure of private bank deposits would be explicitly an illegal government operation; it would be in violation of our property rights.
Is that a possibility in the US (or Great Britain or Germany or France)? I suppose some minuet probability always exists, but I would never expect it to happen in either my lifetime or my son’s lifetimes.
If you accept that assertion, I’m puzzled and baffled by all the time and ink that you are committing to what is highly likely a very transient incident that only roiled the world marketplaces because of public fear overreactions.
Your composite surfeit worry over the developing Cyprus issue flummoxes me especially because it seems to be at odds with mutual fund ownership philosophy. And the MFO website is committed to fostering a better understanding of mutual fund characteristics and behavior. I fully recognize that some of our folks also dabble in individual stocks and some even probe exotic alternate investment options.
Traditionally, mutual fund owners are often long term investors, not speculators. So daily events should not impact our longer time horizons. As Archimedes said: “Give me a long enough lever, and a place to stand, and I can move the earth”. In the investment universe, time is equivalent to Archimedes powerful lever. We all value the significance of Einstein’s “compound interest” observation.
In aggregate, I suspect most MFO participants favor a risk control fund management approach in contrast to a maximizing annual return or excess returns strategy. I surely know from a few member submittals that some shorter term trading is a deployed tactic and that their portfolios include a mix of individual stocks, sector funds, and other investment opportunities. I always thought that this active group was a minority on this website. Perhaps, I’m mistaken.
But I never expected that any MFO board members were anywhere near the mentality of day-traders. That doesn’t seem to be compatible with the typical philosophy and policy restrictions of the mutual fund industry like only end-of-day pricing. Mutual funds were designed to satisfy longer term investor needs who were not motivated to respond to daily price fluctuations. By way of analogy, my model of mutual fund investors never pay much attention to the current weather, but are mostly influenced by broad climate considerations.
So, I am befuddled by the huge readership and active response to the Cyprus calamity posting. The calamity itself is very small, made complex by suspected heavy Russian mafia involvement, and is far off the world’s dominant financial centers. Its impact should be temporal.
The apparent concern from MFO participants is startling. In the many exchanges, MFO contributors dutifully reported Futures market opening prices as well as 4 temporal Japanese market pricing scores (in bold headline format). This outsized overreaction is characteristic of either a high fear quotient, or outright panic.
Why? What am I missing?
In reality, this Cyprus episode is only noise to a world economy and marketplace for mutual fund investors; it’s a small bump in the road. The story is different for short term speculators.
Reply to @MJG: "Is that a possibility in the US (or Great Britain or Germany or France)? I suppose some minuet probability always exists, but I would never expect it to happen in either my lifetime or my son’s lifetimes."
It's not something I'm concerned about, but I'd say the possibility is a tad more than minute that it happens somewhere else; if not savings, then the much-discussed going after IRAs or something else. If it goes through in Cyprus without too much protest, it would not surprise me to see it be used as a tactic somewhere else down the road.
"If you accept that assertion, I’m puzzled and baffled by all the time and ink that you are committing to what is highly likely a very transient incident that only roiled the world marketplaces because of public fear overreactions."
As I noted above, it could be a nothingburger. However, it's a nothingburger that's hard to walk back if people in other countries nearby start thinking that the same could happen to them (edited to add: see soupkitchen's post below). Whether or not this has long or very short-term effects, you would agree that it's rather unprecedented, no?
Additionally, even if it is short-term in effect, I think it's an event that is worth studying and discussing. Those who shout about how it's not going to be anything and to just move on are welcome to do so. However, there's a quote I like: "We learn from history that we do not learn from history." If people think there's nothing to take away from this whatsoever, that's fine and they are welcome to their opinion.
"So, I am befuddled by the huge readership and active response to the Cyprus calamity posting. The calamity itself is very small, made complex by suspected heavy Russian mafia involvement, and is far off the world’s dominant financial centers. Its impact should be temporal."
People talk about things on message boards. It's an interesting event.
It is estimated that about one half to a third of all Cyprus bank deposits are of Russian origin. (http://www.bbc.co.uk/news/business-21831943) One: people are really acting like it's all Russian money, which it's not. Two, if they really wanted to go after Russian money (bad idea, although it would not surprise me if Russia bailed out Cyprus in exchange for energy exploration rights) or that this was even about Russian money (which I really don't think it is), there would be better ways to go about it than going after everyone in the country - they could likely have just gone after non-residents or taken some other tactic.
Additionally, either way, they've just now scared away any foreign inflow that they were having. Whenever the banks there open, you can bet that any foreign money heads for zee hills. Any which way, I see the possibility for at least a mild run (a jog, perhaps?) on the country's banks. How much European money in general (beyond just Cyprus) goes to Singapore/Hong Kong? As many have said in the past - money goes where it's treated best. (until it's not.)
"This outsized overreaction is characteristic of either a high fear quotient, or outright panic. "
Really? Can't just find Euro movements as a result of what happened of interest? What you somehow find as panic is more along the lines of boredom on a Sunday afternoon. Geez. I think you're managing to take general chatter about this as something considerably larger than it is.
"But I never expected that any MFO board members were anywhere near the mentality of day-traders."
Anyone writing, "OMG I'm selling!" No, they're not. People are just talking. Well, typing.
I actually did a bit of buying yesterday.
"Traditionally, mutual fund owners are often long term investors, not speculators. "
I've become increasingly long-term in my view, but you have to admit that you live in a world where investing is not the same as it was years ago (maybe it is for you, but I disagree regarding the world at large.) As I've quoted on a number of occasions, the average holding period of a stock decades ago was several years. Now it's several days. Whereas mutual fund holders do and should have a longer-term horizon, I'd be curious how long the average holding period a mutual fund is versus a couple of decades ago - I'd almost guarantee it's not what it once was, and it wouldn't surprise me if the average holding period is not nearly what it once was.
Traditionally, mutual fund holders are long-term in their view. Stockholders used to be long-term in their view, too.
MJG, It is a pretty big deal for those of us living in the EU. Our bank accounts are supposedly insured up to 100,000 euros by the gov't. Each country has it's own agency which is responsible for guaranteeing each depositor's account. When a gov't is encouraged by the EU to steal from an account that it is supposed to be protecting, then you know that the banking system can not be trusted. I have started to move my euros out of Europe, and back into dollars. I can't believe that this is legal here. But all a government has to do is change the laws to make it legal. Like Rono mentioned, if it can happen here, it could happen anywhere.
Cyprus is home to a progressive and high-income economy. It has a very high Human Development Index.
The economy is thriving and has branched out over the last few decades. As laid down by the most recent IMF figures, the per capita GDP (modified for purchasing power) of the country is $28,381, just more than the mean of the European Union’s. Major industries include tourism, food and beverage processing, ship repair and renovation, cement and gypsum production, textiles, light chemicals, and metal products.
Cyprus exports citrus fruits, pharmaceuticals, potatoes, garments, cement, dairy, and textiles. It imports petroleum and lubricants, intermediate goods, consumer goods, transport machineries, automobiles, fuel, and cigarettes.
Thank you for taking time to react to my posting. It was designed to provoke some thoughtful responses. Your informed reply did not disappoint in that regard. You develop some stimulating alternate interpretations to those that I advanced. I would be shocked if we agreed on every financial detail. Divergent opinions are what make markets viable, otherwise we would not trade.
You asked some pertinent questions with regard to the time variation of investor’s mutual fund holding period behavior, and by extrapolation, to the patience of fund managers as reflected in their turnover rate history. Studies of these characteristics are easily located, and among my favorite posting subjects.
DALBAR issues a yearly report (its QAIB) that surveys individual investors fund holding periods. Here is a Link to their 2012 report (the 2013 update will be released shortly) that will download to your computer:
The report shows specific retention data for the last 20 year period for equity, bond, and balanced mutual funds. Although the numbers change each year, they form an impressively tight pattern around 3.29, 3.09, and 4.42 years for equity, bond, and balanced funds, respectively. Year-by-year data for the same 20 year period are given for the three fund categories for your detailed examination.
Additionally, you will find the academic work of Brad Barber and Terrance Odean helpful. They have been doing this type of research for a long time. I often cite their “Trading is Hazardous to Your Wealth” 2000 study. Concurrently, their team generated a report titled “Behavior of Mutual Fund Investors”. This too you might find to your liking. Here is a Link to their work:
I will not quote directly from the paper since the authors specifically wanted permission. But here is an accurate summary of some of their discoveries. Investors are reluctant losers; mutual fund investors sell about twice as many winning funds than losing selections. I suppose that hope springs eternal to recover losing positions.
In their conclusions section, the authors analyze their investor decision making findings in terms of a behavioral context. They chase performance, they are overwhelmingly over-optimistic, they believe in trend-line persistence, and they fail to recognize the eroding impact of high expense ratios. These authors love the pioneering work of Daniel Kahneman and Amos Tversky.
Finally, your question could also be interpreted as challenging the trading frequency history of mutual fund managers. A great source for that type of data is the Investment Company Institute (ICI). Chapter 2:” Recent Mutual Fund Trends” in the ICI 2012 Fact Book contains data that will satisfy your curiosity. Here is a Link to that grand data source:
From that document, Figure 2.7 presents turnover rate plotted as a function of time, but also weighted by fund size. The data is presented from 1974 to the present. It does show an increasing turnover rate from 1974 to 1981, but it also demonstrates a rather tight hovering around the 60 % size weighted level from the early 1980s until today.
An additional piece of data that I find compelling is that Index investing has continually risen since 1997 (see Figure 2.12). From that date, equity index investing has increased from 6.6% of equity holdings to 16.4 % in 2011. Although passive investing is gathering steam, it still does not threaten the efficient market pricing mechanism that active market participation affords and almost guarantees.
I hope these references help quenched your thirst for current mutual fund ownership tendencies. They are instructive.
To better calibrate my understanding and my interpretation of your comments, it would be useful to me if you graciously identify yourself as either an amateur individual investor or as a member of the active financial community. Your candor on this matter would be genuinely appreciated. It does make a distinction in terms of influences, perspectives, and incentives.
Although our individual interpretations of the Cyprus calamity might differ sharply, it still is merely a small matter. And as Caesar duly noted: “De minimus non curat praetor!”; Don’t be concerned with small matters! That might not be a guiding principle for short term market gamblers, but it is definitely a rule to survive and to thrive by for us longer term investors.
Reply to @MJG: >>>> But here is an accurate summary of some of their discoveries. Investors are reluctant losers; mutual fund investors sell about twice as many winning funds than losing selections. I suppose that hope springs eternal to recover losing positions.
In their conclusions section, the authors analyze their investor decision making findings in terms of a behavioral context. They chase performance, they are overwhelmingly over-optimistic, they believe in trend-line persistence, and they fail to recognize the eroding impact of high expense ratios. These authors love the pioneering work of Daniel Kahneman and Amos Tversky.<<<<<
Don't we see that on this very forum? Investors holding onto their losers while selling their winning positions? Trend persistency? Sounds good to me especially if instead of combining it with being "overwhelmingly over-optimistic" you substitute it for overwhelmingly pessimistic. As Max Gunther related in his most excellent book The Luck Factor, one trait of those lucky in love, life, business, investing, etc is they nurture a basic core of pessimism "so dense and tough and prickly that it startles you when you first come upon it."
Indeed, most of the academic studies mentioned produced mostly pedestrian conclusions. But I found one finding to be totally unexpected: Investors sell winners at a two-to-one ratio over losers.
I never anticipated that investors would bail so precipitously. Following that conservative tactic, they assure themselves a very limited end wealth. They do not allow Einstein’s powerful compounding law to operate fully. That’s a wealth destroyer.
Another factoid that may or may not be known is that Cyprus is divided between two communities. The south is the Greek Cypriot and the North is Turkish Cypriot. The island has been divided since 1970s though only the south (Greek side) is officially recognized by most of the world.
Reply to @Anna:Thanks for your tongue in cheek observations. Also exported by Cyprus according to MJB,is surfeit (that's excessive in everyday language) worry as depicted by his post concerning this entire thread,now viewed 970 times and counting.Like Scott stated,not one poster or commenter on this thread has yelled the proverbial "fire" or advised any observer that he or she is selling everything in a panic and so should you! On the contrary,the observations and links provided should give most people pause as to what governments and central banks may resort to as the unwinding of the excesses of the 2000's and the European style social democracy comes under continuous pressure. Can a central committee or a government confiscate private property,private savings,or private investment in the U.S, well, as MJB states,doubtful in his or his son's lifetime.Let's hope so.But let us also hope that the street rioting and subsequent torching of private property that killed several innocent people,including a young expectant mother in Greece,not spread as governments try to sort out their promises and the available resources to pay for them.
Comments
http://finance.groups.yahoo.com/group/jgboswellgroup/
Info on how to join is here:
http://finance.yahoo.com/mbview/threadview/;_ylt=AqOwXOqvqENco.HHPltL2RLeAohG;_ylu=X3oDMTB2cjFqb3UxBHBvcwM0NgRzZWMDTWVkaWFNc2dCb2FyZHNYSFJVbHQ-;_ylg=X3oDMTBvaWppbXYzBGxhbmcDZW4tVVMEdGVzdANUZXN0X0FGQw--;_ylv=3?&bn=856fe0df-69f9-3ce5-aec8-661145686ccc&tid=1306442763000-e27c95e6-1b10-3475-9e55-bf19e5f9b8d8&tls=la,d,9,0
Please do your DD.
BWG
As for LUK, I'm waiting to see how the hilariously named new CEO from Jefferies does running it.
Nothing to see here,
sheeppeople. The U.S. market can resume its ascent. Move along.US markets seem to handle it OK, although just about everything in my portfolio was down, expect RNSIX, FOCIX and DODIX. I liked the way AQRIX held, down only slightly. SIGIX, FAAFX, GE biggest losers today.
Stops were not reached on other equity holdings, which is good, but it meant I was unable to reload and catch BAC 2% dip at open.
Flack, Ted, JoeNoEskimo...let's hope you are right and our reluctant bull shrugs Cyprus off too and continues to climb.
We'll see how EU reacts this week:
Move along...
I’m more than a bit intrigued by this ongoing Cyprus drama. In the US, this seizure of private bank deposits would be explicitly an illegal government operation; it would be in violation of our property rights.
Is that a possibility in the US (or Great Britain or Germany or France)? I suppose some minuet probability always exists, but I would never expect it to happen in either my lifetime or my son’s lifetimes.
If you accept that assertion, I’m puzzled and baffled by all the time and ink that you are committing to what is highly likely a very transient incident that only roiled the world marketplaces because of public fear overreactions.
Your composite surfeit worry over the developing Cyprus issue flummoxes me especially because it seems to be at odds with mutual fund ownership philosophy. And the MFO website is committed to fostering a better understanding of mutual fund characteristics and behavior. I fully recognize that some of our folks also dabble in individual stocks and some even probe exotic alternate investment options.
Traditionally, mutual fund owners are often long term investors, not speculators. So daily events should not impact our longer time horizons. As Archimedes said: “Give me a long enough lever, and a place to stand, and I can move the earth”. In the investment universe, time is equivalent to Archimedes powerful lever. We all value the significance of Einstein’s “compound interest” observation.
In aggregate, I suspect most MFO participants favor a risk control fund management approach in contrast to a maximizing annual return or excess returns strategy. I surely know from a few member submittals that some shorter term trading is a deployed tactic and that their portfolios include a mix of individual stocks, sector funds, and other investment opportunities. I always thought that this active group was a minority on this website. Perhaps, I’m mistaken.
But I never expected that any MFO board members were anywhere near the mentality of day-traders. That doesn’t seem to be compatible with the typical philosophy and policy restrictions of the mutual fund industry like only end-of-day pricing. Mutual funds were designed to satisfy longer term investor needs who were not motivated to respond to daily price fluctuations. By way of analogy, my model of mutual fund investors never pay much attention to the current weather, but are mostly influenced by broad climate considerations.
So, I am befuddled by the huge readership and active response to the Cyprus calamity posting. The calamity itself is very small, made complex by suspected heavy Russian mafia involvement, and is far off the world’s dominant financial centers. Its impact should be temporal.
The apparent concern from MFO participants is startling. In the many exchanges, MFO contributors dutifully reported Futures market opening prices as well as 4 temporal Japanese market pricing scores (in bold headline format). This outsized overreaction is characteristic of either a high fear quotient, or outright panic.
Why? What am I missing?
In reality, this Cyprus episode is only noise to a world economy and marketplace for mutual fund investors; it’s a small bump in the road. The story is different for short term speculators.
Best Regards.
It's not something I'm concerned about, but I'd say the possibility is a tad more than minute that it happens somewhere else; if not savings, then the much-discussed going after IRAs or something else. If it goes through in Cyprus without too much protest, it would not surprise me to see it be used as a tactic somewhere else down the road.
"If you accept that assertion, I’m puzzled and baffled by all the time and ink that you are committing to what is highly likely a very transient incident that only roiled the world marketplaces because of public fear overreactions."
As I noted above, it could be a nothingburger. However, it's a nothingburger that's hard to walk back if people in other countries nearby start thinking that the same could happen to them (edited to add: see soupkitchen's post below). Whether or not this has long or very short-term effects, you would agree that it's rather unprecedented, no?
Additionally, even if it is short-term in effect, I think it's an event that is worth studying and discussing. Those who shout about how it's not going to be anything and to just move on are welcome to do so. However, there's a quote I like: "We learn from history that we do not learn from history." If people think there's nothing to take away from this whatsoever, that's fine and they are welcome to their opinion.
"So, I am befuddled by the huge readership and active response to the Cyprus calamity posting. The calamity itself is very small, made complex by suspected heavy Russian mafia involvement, and is far off the world’s dominant financial centers. Its impact should be temporal."
People talk about things on message boards. It's an interesting event.
It is estimated that about one half to a third of all Cyprus bank deposits are of Russian origin. (http://www.bbc.co.uk/news/business-21831943) One: people are really acting like it's all Russian money, which it's not. Two, if they really wanted to go after Russian money (bad idea, although it would not surprise me if Russia bailed out Cyprus in exchange for energy exploration rights) or that this was even about Russian money (which I really don't think it is), there would be better ways to go about it than going after everyone in the country - they could likely have just gone after non-residents or taken some other tactic.
Additionally, either way, they've just now scared away any foreign inflow that they were having. Whenever the banks there open, you can bet that any foreign money heads for zee hills. Any which way, I see the possibility for at least a mild run (a jog, perhaps?) on the country's banks. How much European money in general (beyond just Cyprus) goes to Singapore/Hong Kong? As many have said in the past - money goes where it's treated best. (until it's not.)
"This outsized overreaction is characteristic of either a high fear quotient, or outright panic. "
Really? Can't just find Euro movements as a result of what happened of interest? What you somehow find as panic is more along the lines of boredom on a Sunday afternoon. Geez. I think you're managing to take general chatter about this as something considerably larger than it is.
"But I never expected that any MFO board members were anywhere near the mentality of day-traders."
Anyone writing, "OMG I'm selling!" No, they're not. People are just talking. Well, typing.
I actually did a bit of buying yesterday.
"Traditionally, mutual fund owners are often long term investors, not speculators. "
I've become increasingly long-term in my view, but you have to admit that you live in a world where investing is not the same as it was years ago (maybe it is for you, but I disagree regarding the world at large.) As I've quoted on a number of occasions, the average holding period of a stock decades ago was several years. Now it's several days. Whereas mutual fund holders do and should have a longer-term horizon, I'd be curious how long the average holding period a mutual fund is versus a couple of decades ago - I'd almost guarantee it's not what it once was, and it wouldn't surprise me if the average holding period is not nearly what it once was.
Traditionally, mutual fund holders are long-term in their view. Stockholders used to be long-term in their view, too.
Finally, interesting article from Felix Salmon on alternatives for Cyprus.
http://seekingalpha.com/article/1285121-a-much-better-alternative-for-cyprus
And, to add some humor - because their timing remains wonderful - Fitch places 3 Cyprus banks on negative watch.
http://www.marketwatch.com/story/fitch-places-three-cyprus-bank-on-negative-watch-2013-03-19?reflink=MW_news_stmp
And US looking up slightly this morning.
interest in this story.
http://seekingalpha.com/article/1286141-why-cyprus-does-matter?source=feed
http://www.realclearpolitics.com/articles/2013/03/19/cyprus_and_the_death_of_deposit_insurance_117513.html
http://www.scoop.co.nz/stories/PA1303/S00306/national-planning-cyprus-style-solution-for-new-zealand.htm
Some facts on Cyprus http://gogreece.about.com/od/cyprus/a/fastfactscyprus.htm
Greek mythology creatures http://10steps.sg/inspirations/greek-mythology-creatures-with-pictures/
http://www.mapsofworld.com/cyprus/
Hi Scott,
Thank you for taking time to react to my posting. It was designed to provoke some thoughtful responses. Your informed reply did not disappoint in that regard. You develop some stimulating alternate interpretations to those that I advanced. I would be shocked if we agreed on every financial detail. Divergent opinions are what make markets viable, otherwise we would not trade.
You asked some pertinent questions with regard to the time variation of investor’s mutual fund holding period behavior, and by extrapolation, to the patience of fund managers as reflected in their turnover rate history. Studies of these characteristics are easily located, and among my favorite posting subjects.
DALBAR issues a yearly report (its QAIB) that surveys individual investors fund holding periods. Here is a Link to their 2012 report (the 2013 update will be released shortly) that will download to your computer:
http://www.google.com/search?hl=en&source=hp&q=dalbar+2012+qaib&gbv=2&oq=DALBAR+2012+&gs_l=heirloom-hp.1.1.0l2j0i22i30l3.1346.6876.0.10626.12.11.0.1.1.0.245.1544.0j10j1.11.0...0.0...1c.1.ALMzKkivuJo
The report shows specific retention data for the last 20 year period for equity, bond, and balanced mutual funds. Although the numbers change each year, they form an impressively tight pattern around 3.29, 3.09, and 4.42 years for equity, bond, and balanced funds, respectively. Year-by-year data for the same 20 year period are given for the three fund categories for your detailed examination.
Additionally, you will find the academic work of Brad Barber and Terrance Odean helpful. They have been doing this type of research for a long time. I often cite their “Trading is Hazardous to Your Wealth” 2000 study. Concurrently, their team generated a report titled “Behavior of Mutual Fund Investors”. This too you might find to your liking. Here is a Link to their work:
http://faculty.haas.berkeley.edu/odean/papers/MutualFunds/mfund.pdf
I will not quote directly from the paper since the authors specifically wanted permission. But here is an accurate summary of some of their discoveries. Investors are reluctant losers; mutual fund investors sell about twice as many winning funds than losing selections. I suppose that hope springs eternal to recover losing positions.
In their conclusions section, the authors analyze their investor decision making findings in terms of a behavioral context. They chase performance, they are overwhelmingly over-optimistic, they believe in trend-line persistence, and they fail to recognize the eroding impact of high expense ratios. These authors love the pioneering work of Daniel Kahneman and Amos Tversky.
Finally, your question could also be interpreted as challenging the trading frequency history of mutual fund managers. A great source for that type of data is the Investment Company Institute (ICI). Chapter 2:” Recent Mutual Fund Trends” in the ICI 2012 Fact Book contains data that will satisfy your curiosity. Here is a Link to that grand data source:
http://www.ici.org/pdf/2012_factbook.pdf
From that document, Figure 2.7 presents turnover rate plotted as a function of time, but also weighted by fund size. The data is presented from 1974 to the present. It does show an increasing turnover rate from 1974 to 1981, but it also demonstrates a rather tight hovering around the 60 % size weighted level from the early 1980s until today.
An additional piece of data that I find compelling is that Index investing has continually risen since 1997 (see Figure 2.12). From that date, equity index investing has increased from 6.6% of equity holdings to 16.4 % in 2011. Although passive investing is gathering steam, it still does not threaten the efficient market pricing mechanism that active market participation affords and almost guarantees.
I hope these references help quenched your thirst for current mutual fund ownership tendencies. They are instructive.
To better calibrate my understanding and my interpretation of your comments, it would be useful to me if you graciously identify yourself as either an amateur individual investor or as a member of the active financial community. Your candor on this matter would be genuinely appreciated. It does make a distinction in terms of influences, perspectives, and incentives.
Although our individual interpretations of the Cyprus calamity might differ sharply, it still is merely a small matter. And as Caesar duly noted: “De minimus non curat praetor!”; Don’t be concerned with small matters! That might not be a guiding principle for short term market gamblers, but it is definitely a rule to survive and to thrive by for us longer term investors.
Best Wishes.
In their conclusions section, the authors analyze their investor decision making findings in terms of a behavioral context. They chase performance, they are overwhelmingly over-optimistic, they believe in trend-line persistence, and they fail to recognize the eroding impact of high expense ratios. These authors love the pioneering work of Daniel Kahneman and Amos Tversky.<<<<<
Don't we see that on this very forum? Investors holding onto their losers while selling their winning positions? Trend persistency? Sounds good to me especially if instead of combining it with being "overwhelmingly over-optimistic" you substitute it for overwhelmingly pessimistic. As Max Gunther related in his most excellent book The Luck Factor, one trait of those lucky in love, life, business, investing, etc is they nurture a basic core of pessimism "so dense and tough and prickly that it startles you when you first come upon it."
Hi Hiyield007,
Indeed, most of the academic studies mentioned produced mostly pedestrian conclusions. But I found one finding to be totally unexpected: Investors sell winners at a two-to-one ratio over losers.
I never anticipated that investors would bail so precipitously. Following that conservative tactic, they assure themselves a very limited end wealth. They do not allow Einstein’s powerful compounding law to operate fully. That’s a wealth destroyer.
Best Wishes.
Another factoid that may or may not be known is that Cyprus is divided between two communities. The south is the Greek Cypriot and the North is Turkish Cypriot. The island has been divided since 1970s though only the south (Greek side) is officially recognized by most of the world.
This picture should illustrate the division line.
Here is a good write up from BBC.
http://www.bbc.co.uk/news/world-europe-17217956
On the contrary,the observations and links provided should give most people pause as to what governments and central banks may resort to as the unwinding of the excesses of the 2000's and the European style social democracy comes under continuous pressure. Can a central committee or a government confiscate private property,private savings,or private investment in the U.S, well, as MJB states,doubtful in his or his son's lifetime.Let's hope so.But let us also hope that the street rioting and subsequent torching of private property that killed several innocent people,including a young expectant mother in Greece,not spread as governments try to sort out their promises and the available resources to pay for them.
Cyprus lawmakers reject bank tax; bailout in disarray
http://www.reuters.com/article/2013/03/19/us-cyprus-parliament-idUSBRE92G03I20130319