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Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
  • DSEEX Explanation
    CAPE cannot be traded at ML and maybe not at some other brokers, not sure, which irks me.
    Fwiw, DSEEX / DSENX profile is interesting to compare w/ say TWEIX (MFO Premium), and they have the same UI....
  • DSEEX Explanation
    This is very helpful @LLJB. There are two ways to invest in the CAPE strategy, through the OEF or through the Barclays ETN, CAPE. I don't think I understand fully why there are warnings about investing in ETNs; it seems to boil down to assessing the stability of the issuer of the debt instrument (Barclays). For the investor, there is an essential difference, in my opinion. ETNs pay no income or capital gains, but OEFs do. In the case of DSEEX/DSENX, distributions are monthly and there are annual CG payouts. I don't see any notable difference in the overall returns of the two instruments. The ETN acts like a growth stock that pays no dividend, but CAPE is not that. Trading CAPE can be a bit of a challenge as the spreads are wide and the bid/ask prices reflect current market sentiment and are often at variance with the last price quoted. Maybe others know more about the ETN structure as it pertains to this strategy. I like it for a taxable account if I don't need regular income from it.
  • Six Magic-Potion Funds From Vanguard
    Thank the Lord these factor articles never mention CAPE and the fund based thereon, which handily outperform all of the above (or appear to; could not find graphs for some).
  • Q&A With Scott Minerd, CIO, Guggenheim Partners: "The Bull Market’s Days Are Numbered"
    But as you like to tutor us, averages can be so misleading. (And rates mean little.) The tax on my old 3ksf ranched-out cape worth a little over $1M in a town next to Weston Mass. is within a few percent of the average of the NJ towns listed above
    You wrote that taxes in eastern Mass suburbs were very close to the NJ level. I'm fine discussing whatever metric you had in mind when observing that the levels of taxes were close.
    Rates mean little when they're just the "official" figures. The state rates given in the USA Today article were "effective" rates, i.e. actual percentages after exemptions, abatements, whatever chicanery goes into one's tax bill. For example, the official rate for California is 1% (Prop 13), while the effective rate in the article is 0.77%. That's because Prop 13 caps annual increases, so the effective rate of each home is reduced over time. (California is the oddball state where property taxes are standardized.)
    Geographically, you must be right on the Weston border: "Danoff my neighbor in Weston"
    https://mutualfundobserver.com/discuss/discussion/comment/92578/#Comment_92578
  • Q&A With Scott Minerd, CIO, Guggenheim Partners: "The Bull Market’s Days Are Numbered"
    Oh, I know; there are worse. But as you like to tutor us, averages can be so misleading. (And rates mean little.) The tax on my old 3ksf ranched-out cape worth a little over $1M in a town next to Weston Mass. is within a few percent of the average of the NJ towns listed above (just under $19k compared w/ just over $20k). Everything will be higher this year, of course. I must ask my NJ friends in some of the above towns about the reality of "losing their tax base as high income earners flee". One argument is that this will be a good thing in the long run.
  • Robert Shiller: America, The World’s Priciest Stock Market
    FYI: The level of stock markets differs widely across countries. And right now the U.S. is leading the world. What everyone wants to know is why—and whether its stock market’s current level is justified.
    We can get a simple intuitive measure of the differences between countries by looking at price/earnings ratios. I have long advocated the cyclically adjusted price/earnings ratio, or CAPE, that John Campbell, now at Harvard University, and I developed 30 years ago.
    Regards,
    Ted
    https://www.barrons.com/articles/america-the-worlds-priciest-stock-market-1517019872
  • Recommend any long short funds with good track record?
    I looked at alternatives ( L/S, Merger, futures, even market neutral) a year or so ago, because I thought stocks and bonds were overpriced even then and cash paid so little. I came to the same conclusion about L/S funds as David but BPLSX was closed (somehow SFHYX escaped my radar) so I started a position in it's global cousin BGLSX/BGRSX. It has done pretty well and seems to be positioned to avoid huge draw downs.
    All of the other alternatives are reasonable, ie more cash, options etc, although the performance of FPACX has not inspired confidence in the last three years ( it lost more than the SP500) in Jan 2016, making me wonder what was involved.
    One of the problems with mutual funds is you are investing in someone else's ideas about returns, safety and risk. Usually they are consistent, and reliable but not always. Of course the farther away from "bread and butter" diversification ( major asset classes, cash as ballast etc ) the more of a black box.
    Certainly a portfolio with 30 to 50% cash will be significantly less volatile, but your returns will lower. There is a greater argument to made for cash with a 25 return now than a year ago
    The key is 1) know what return you need and be sure you won't stick your neck out and get burned and 2) know exactly what you will do when a crunch comes and the market is down 20 % . If you can't stand the heat...
  • Anyone Recommend a Decent Large-Cap Value Fund?
    Yes, am also looking hard at DGRW, wondering about it vs CAPE for placement of some burning cash. Although Malkiel now has me thinking about IEMG and ESGE....
  • thoughts on keeping or ditching DLEUX?
    I moved some DSENX into DLEUX a few months ago, a small amount to start. My thought was; I like the CAPE theory, so if there is better value in Europe then CAPE should work well there. Maybe better than US.
    If I compare the US version to Europe, The U.S version has done better, but not by a lot. But I take that with a grain of salt because domestic stocks have all been on a tear. so maybe not a good comparison. If I compare it to FEU, a broader Europe ETF, it under performs substantially over the last 3 months, 1.7% to 6.1% for FEU and by about 5% over one year, 23% for DLEUX versus 28% for FEU.
    I don't know what it all means over this short time, but I don't have a huge stake in DLEUX to give it much worry. I don't plan to move any more DSENX to DLEUX at this point, but I'm not going to sell either. Still an experiment.
  • thoughts on keeping or ditching DLEUX?
    @davidmoran: are you the only one on this board who owns this fund? I own a lot of DSENX, but I have been unimpressed with the European version of CAPE. What I did buy last year were BCVSX and MOTI.
  • Funds PRGTX and DSENX?
    As it should have. He was talking about stocks, and there's a big difference between being a customer of a company and knowing a company. It's the latter sense in which he meant one should know what (company) one is investing in.
    Still, when it comes to industries, knowing means something different. Working in an industry can give you a good sense of the health of that industry if you are attentive.
    I was wondering whether you had any thoughts about how the CAPE index model will be adjusted for the new sector since this is a thread about DSENX. When real estate was carved out of financials, the CAPE index was modified to use a non-SPDR index fund, IYR.
    I imagine that was done because it needed an index fund with a ten year history, and by definition, XLRE was a new fund without a history. Though IYR might have been chosen because it was more inclusive, holding mortgage REITS such as NLY that XLRE excludes.
    However, that might mean that the CAPE index added a new group of companies (mortgage REITs) that it had not tracked before. A discontinuity. Regardless, another imprecision arose - the old history of the financial sector included real estate, while the sector itself no longer did. Was any attempt made to correct for this (e.g. recalculating the financial index history after pulling out the real estate component)?
    This time things are even more interesting. The CAPE index tracks XLK for technology, but XLK combines technology and telecom. That's why there are ten "sectors" that the CAPE index uses, while there are eleven S&P sectors.
    It is possible that State Street will decide to keep XLK as it is, in which case the CAPE index won't have to do a thing (other than watch the technology+communications "sector" continue to grow in weight). But what if State Street does finally create a communications Select Sector SPDR? There won't be any history for the new SPDR (just as there was no history for XLRE). Would the CAPE index turn again to a non-Select Sector SPDR? Also, as happened with XLF, the history for XLK will no longer precisely represent the new XLK after communications companies are carved out.
    DSENX in turn will need derivatives that track whatever index or indexes the CAPE index chooses to track. Will they exist?
    And they say that a machine can run an index fund.
  • Forget CAPE Ratio, Peter Lynch Tool Has S&P 500 Getting Cheaper
    @Ted, Thanks for the article.
    Last line from the article say it all:
    CAPE tends to be too pessimistic and PEG may be too optimistic,” Yardeni said by phone. “The truth may lie somewhere in between.”
  • Forget CAPE Ratio, Peter Lynch Tool Has S&P 500 Getting Cheaper
    FYI: By virtually any measure, U.S. stocks are expensive. Under one especially harsh lens, the cyclically adjusted price-earnings ratio popularized by Robert Shiller, equities relative to 10 years of profits are more stretched than any time in a century, save the dot-com era.
    But there’s still a methodology that bulls can take comfort in -- price not just to earnings, but to earnings growth. Favored by legendary investor Peter Lynch and known as the PEG ratio, the technique takes the standard valuation snapshot and adds time -- time for a stock to grow into its price.
    Regards,
    Ted
    https://www.fa-mag.com/news/forget-cape-ratio--peter-lynch-tool-has-s-p-500-getting-cheaper-36555.html?print
  • Buy -- Sell -- Ponder -- January 2018
    @Old_Skeet, your sector momentum strategy sounds exactly like that momentum news letter you used to link a few years ago. Are you copying that guy's strategy? Can't remember the name of the letter or the guy who ran it. Invest in the 3 leading sectors and replace sectors based on current strength.
    Kind of why I like the CAPE strategy of DSENX albeit the opposite strategy. They do do it better than I could.
  • Investment advice for disable person
    I avoided mentioning PONDX because I was trying to envision worst-case scenarios going forward. I concur in the take that the longterm future is unlikely to be like the bull past we have enjoyed. Looking chiefly at GOs' UI in Premium, I still think trying to achieve the $24k/y would entail over half but hopefully not two-thirds in DODIX or Vanguard equivalent, with the rest --- as much as comfort-bearable --- in TWEIX / SPLV / CAPE or a combo of them. 40% or more.
    Else VWINX, though I do not think it will quite hit the almost 5%-withdrawal mark.
    Or this might do best, since security is paramount:
    https://personal.vanguard.com/us/funds/snapshot?FundId=1263&FundIntExt=INT&ps_disable_redirect=true
    or
    https://www.fidelity.com/annuities/immediate-fixed-income-annuities/compare
  • Investment advice for disable person
    The other problem is this. VWINX is an excellent fund because of low fees and good management. These facts will likely continue into the future. But to project its past performance into the future is a mistake. Consider the author of the aforementioned seekingalpha article's premise regarding backtesting. He looks back to January 1, 1992.
    These were the conditions for the market in January 1992:
    Dividend yield of the S&P 500: 3%
    multpl.com/s-p-500-dividend-yield/
    10-Year Treasury yield 7%
    macrotrends.net/2016/10-year-treasury-bond-rate-yield-chart
    10-year Shiller P/E ratio 19
    https://dqydj.com/shiller-pe-cape-ratio-calculator/
    Here is where we are today
    S&P 500 Dividend yield: 1.77%
    10-Year Treasury yield: 2.4%
    10-year Shiller p/e: 34
    To back-test and assume the past from January 1992 is prelude for the future today based on these numbers I think is a mistake. We have lived through a historic period of falling interesting rates and rising stock valuations from 1982 onward. That period as far as interest rates goes is over and I'm not sure how much longer the rising valuations will continue. Creative thinking is necessary.
  • Investment advice for disable person
    @LB, by equity-aggressive I meant proportionally, not the holdings themselves. I would avoid foreign for this person.
    VWINX looks like the choice, yes. Interesting its UI is high-ish (greater than VOOG and DSENX, e.g.).
    If someone was 'managing' >1 fund, I would consider a mix of TWEIX and DODIX if FPURX dents comfort level. SPLV or CAPE could be the equity position instead of TWEIX, of course.
  • Does a Reversion To The Mean Follow Big Up Years?
    Hi Guys,
    Thanks one and all for a very stimulating and detailed discussion exchange.
    Forecasting equity returns is an extremely challenging assignment. Separating "The Signal and the Noise"' is not easy work. The Signal and the Noise is an excellent book authored by Nate Silver. Here is a Link that accesses the full text:
    http://www.stavochka.com/files/Nate_Silver_The_Signal_and_the_Noise.pdf
    Developing some method to reasonably predict upcoming market returns from numerous historical data correlation candidates has escaped just about everyone, including industry giants like Vanguard.
    Here is a Link to a rather exhaustive and comprehensive attempt reported by Vanguard that explored a wide array of potential correlating parameters:
    https://personal.vanguard.com/pdf/s338.pdf
    Vanguard does honest work. All correlation attempts failed, including the use of last year's returns to project next year's equity rewards. See Figure 2 in the referenced document. I suppose one response to these forecasting failures is to accept prediction defeat and simply stay invested for the long haul.
    Best Wishes for a happy and prosperous New Year.
  • M*: Fight Inflation With This Low-Cost ETF: (STPZ)
    Not much inflation fighting happening with STPZ; but if one can handle the big swings and have a feel for the markets; go play with the big dog/cousin LTPZ. Have played in this area before and escaped with a decent return, but one has to pay close attention. One could make a living playing this area.
    http://stockcharts.com/freecharts/perf.php?stpz,ltpz
  • Buy, Sell and Ponder December 2017
    I am bullish for the upcoming year, but have just sold a patch of DSENX (post-runup) in a Roth just to be able to think clearly about cash needs (dau wedding) next fall and possible dip buying prior (CAPE vs NOBL vs QUAL vs DGRO).
    Also about $200k <4% heloc with interesting nondeductibility looming. Do I care whether it is 3.75% deductible, or a bit higher?
    Am tracking SOI to buy in Jan, maybe.
    Will be running ORP several times w new tax situations to see about where to fund non-SS cashflow for the year too.