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  • narrog commented on Robert Abbott's article 16 hr ago
    Warren Buffett vs. Hedge Funds: And the Winner Is…
    “Bogle’s Folly, as the first index fund was derisively described, seems to have morphed into Buffett’s Revenge.” --Barry Ritholtz On the...
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    narrog 01-15 23:57
    • @LwC. Thank you for your clarifying comment and the very welcome additional information. I think the problem is mainly in the wording. According to Seides' telling, in a recent interview with The Investors' Podcast, he was fully convinced at that time that he would win the bet. And he still believes that the main reason for losing it was timing (the S&P going on an almost unprecedented roll in the next ten years). On the other hand, with respect to the choice of funds, he also mentioned that he had to go with funds-of-funds because of legal issues with the bet arising if he had picked individual funds. Presumably these were issues like the evaluation of the outcome if one or more of the funds had closed shop during the period of the bet.

      So Seides was surely not "forced" to pick funds-of-funds, and he stood behind his picks and his bet, but it seems that he didn't have the choice to pick individual funds either. So,my wording he "had to" is in this sense . It is intriguing to think what would have happened if he had had the option to choose individual funds, and on top of that had actually done so, isn't it? Especially for us as subscribers of GuruFocus. After all, if we would not have the conviction that there ARE individual fund managers who have the ability to outperform a given index over an extended period of time -- and there wouldn't be data that support this conviciton --, we wouldn't be subscribing to this site, and instead put our money into an index fund. That's what I wanted to express.



      (I hope that I am not double posting this. I am trying to upload it for the fourth time.)

       
  • Tiziano Frateschi posts: 01-15 13:42
    5 Real Estate Companies Gurus Are Buying
    According to the GuruFocus <a...
    Comment
  • Carol Nadon commented on page 01-15 10:29
    Shiller P/E Ratio: Where Are We with Market Valuations?
    View all 29 comments
    Carol Nadon 01-15 10:28
    • On PE and forecasting:

      A thermometer doesn't forecast.

      Anyway, at a time of euphoria (January 15, 2018), the Greed & Fear Index is on greed level: 79: http://money.cnn.com/data/fear-and-greed/

      the Shiller PE is 33.8
      http://www.multpl.com/shiller-pe/

      and Price to Sales Ratio: 2.35
      http://www.multpl.com/s-p-500-price-to-sales

      If anyone think the CAPE is not reliable, curent: PE for Standard and Poor: 26.78. That’s not conservative.

      A thermometer does't forecast. It just tell us the fever is quite high.
  • LwC commented on Paul Dykewicz's article 01-15 09:55
    Buffett, Bogle and Siegel Miss Out by Not Using Market-Directional Investing, Portfolio Manager Says
    Warren Buffett (Trades, Portfolio), John Bogle, Jeremy Siegel and many major financial companies are wrong about favoring buy-and-hold investing...
    View all 6 comments
    LwC 01-15 09:55
    • market directional investing = momentum investing? That's what it looks like to me.

       

      So maybe nothing new here, except maybe the quant aspect, which is a very popular ingredient nowadays with promotors who are raising money.

       

      It might be interesting to note that some studies show “momentum” investing can produce above average results over time, but not particularly better than “value” investing.
  • LwC commented on Robert Abbott's article 01-15 09:42
    Warren Buffett vs. Hedge Funds: And the Winner Is…
    “Bogle’s Folly, as the first index fund was derisively described, seems to have morphed into Buffett’s Revenge.” --Barry Ritholtz On the...
    View all 2 comments
    LwC 01-15 09:42
    • @Narrog: AFAIK Seides *chose* his method of investing in fund-of-funds. He didn’t “have” to bet that way. In fact, presumably if he thought that he would lose the bet by investing that way, he would not have made that bet. Buffett wasn’t holding a gun to his head, saying “bet this way or else.”

       

      Here’s what Mr. Buffett has written: 

       

      “In Berkshire’s 2005 annual report, I argued that active investment management by professionals – in aggregate – would over a period of years underperform the returns achieved by rank amateurs who simply sat still. I explained that the massive fees levied by a variety of “helpers” would leave their clients – again in aggregate – worse off than if the amateurs simply invested in an unmanaged low-cost index fund.

       

      Subsequently, I publicly offered to wager $500,000 that no investment pro could select a set of at least five hedge funds – wildly-popular and high-fee investing vehicles – that would over an extended period match the performance of an unmanaged S&P-500 index fund charging only token fees. I suggested a ten-year bet and named a low-cost Vanguard S&P fund as my contender. I then sat back and waited expectantly for a parade of fund managers – who could include their own fund as one of the five – to come forth and defend their occupation. After all, these managers urged others to bet billions on their abilities. Why should they fear putting a little of their own money on the line?

      MP: Specifically, Buffett offered to bet that over a ten-year period from January 1, 2008, to December 31, 2017, the S&P 500 index would outperform a portfolio of funds of hedge funds when performance is measured on a basis net of fees, costs and all expenses.

       

      What followed was the sound of silence. Though there are thousands of professional investment managers who have amassed staggering fortunes by touting their stock-selecting prowess, only one man – Ted Seides – stepped up to my challenge. Ted was a co-manager of Protégé Partners, an asset manager that had raised money from limited partners to form a fund-of-funds – in other words, a fund that invests in multiple hedge funds.

       

      I hadn’t known Ted before our wager, but I like him and admire his willingness to put his money where his mouth was. He has been both straight-forward with me and meticulous in supplying all the data that both he and I have needed to monitor the bet.

       

      For Protégé Partners’ side of our ten-year bet, Ted picked five funds-of-funds whose results were to be averaged and compared against my Vanguard S&P index fund. The five he selected had invested their money in more than 100 hedge funds, which meant that the overall performance of the funds-of-funds would not be distorted by the good or poor results of a single manager.” [Bold emphasis added by me>
  • stephenbaker commented on Paul Dykewicz's article 01-15 09:41
    Buffett, Bogle and Siegel Miss Out by Not Using Market-Directional Investing, Portfolio Manager Says
    Warren Buffett (Trades, Portfolio), John Bogle, Jeremy Siegel and many major financial companies are wrong about favoring buy-and-hold investing...
    View all 5 comments
    stephenbaker 01-15 09:41
    • With all respect, so-called market directional investing looks as if it can be accomplished by placing a portfolio on auto-pilot.  Sounds simple enough in theory, particularly when such a math-based strategy can be contolled by computers.  Has Mr. Turner and his prodigy used the strategy with real investiment capital and published their investment results?  Surely claims of outperfomance such as those suggested by the charts associated with this post should be accompanied by verified performance results as oppsed to theoretical backdating vs. certain indices.  Like some of the prior comments, it seems difficult to differentiate between market timing and market directional investing; both are predictive as to current and upcoming macro trends that may or may not play out.  When and if any market timer (or "directional investor") achieves long term results in the same league as Buffett and/or consistent outperformance of the SPY, I'd be interested to learn more.   
  • Sangara Narayanan posts: 01-15 09:33
    Key Metrics That Show Instagram Could be Bigger Than Facebook
    When Facebook (FB) bought Instagram right before going public, the visual media social site had only 30 million users compared to Facebook’s own 800 million. At the time it was seen as a possible <a...
    Comment
  • Joy Hu posts: 01-15 09:17
    Weekly CEO Buys Highlight
    Dell Technologies Inc. (DVMT) CEO Michael...
    Comment
  • Alberto Abaterusso posts: 01-15 09:12
    Nevsun Resources down 1.7%
     at its Bisha mine in Eritrea in...
    Comment
  • SeaBud commented on Paul Dykewicz's article 01-15 08:53
    Buffett, Bogle and Siegel Miss Out by Not Using Market-Directional Investing, Portfolio Manager Says
    Warren Buffett (Trades, Portfolio), John Bogle, Jeremy Siegel and many major financial companies are wrong about favoring buy-and-hold investing...
    View all 4 comments
    SeaBud 01-15 08:53
    • Do not confuse timing with opportunity.  The Turner band is a reflection of the past.  This may, or may not, represent opportunity.  Opportunity is defined unrelated to timing.  Opportunity is when intrinsic value exceeds price.  Intrinsic value has many indicators (book value, FCF/owner earnings, rev growth).  Substituting "market direction" for analyzing value makes no sense.  If you are going to analyze value, analyze it, not a proxy for it.

      Buffett holding cash illustrates a lack of opportunity, not a conclusion as to timing.  I gaurantee that if a large opportunity was exposed in this currently richly priced market, Buffett would jump. 

      There is zero evidence that market timing (especially based on historical quantitative measures) is effective over time.  This applies to timing based on "value" or "market direction." Take the transaction costs, lost dividends and tax implications into account and see how the author's model does. He says "there are no major losses due to bear markets" - I consider a 20% or 35% (short term tax on gains) hit on my profits a major loss.  Put it this way - where is the actual outperformance of this system rather than charts of historical backdata based on an algorithm tailored to optimize results from said backdata? 

      Very fancy to call something "market directional" as opposed to discredited "market timing".  Despite the label, consider the description: "The key to knowing when to be in the market or out of the market is constantly to measure the market trend and react appropriately when the trend changes. The strategy is aimed at investing bullishly in bull markets, going to cash in transition markets and becoming bearish in bear markets."  Nobody bases "market timing" on "time".  They all use some valuation proxy to justify timed market entry/exit.  This is market timing using a proxy buy/sell signal.

      Personally, I prefer to buy anything when it is cheap and sell when it is expensive.  That means buying more in bear markets and sitting on more cash in bull markets.  That is not timing, but represents opportunity. The most consistent measure of value, in my opinion, is value. If one of my holdings becomes egregiously overvalued with limited further value growth and risk that exceeds tax losses on gains, I sell.  That is a high bar.
  • robertbloch commented on Bram de Haas's article 01-15 08:43
    Are We Heading Into a 50% 'Melt-Up' Like Grantham Thinks?
    GMO's Jeremy Grantham (Trades, Portfolio) just put out a new letter with his viewpoints last week. The firm is well-known for its asset class return...
    View all 1 comment
    robertbloch 01-15 08:43
    • When the bears throw in the towel (Grantham), is that not yet another sign of THE TOP?

       

      I respect Grantham, but this is surely nearly a reversal of opinion. 
  • Paul Dykewicz commented on Paul Dykewicz's article 01-15 08:17
    Buffett, Bogle and Siegel Miss Out by Not Using Market-Directional Investing, Portfolio Manager Says
    Warren Buffett (Trades, Portfolio), John Bogle, Jeremy Siegel and many major financial companies are wrong about favoring buy-and-hold investing...
    View all 3 comments
    Paul Dykewicz 01-15 08:17
    • Thanks for your comment. Warren Buffett (Trades, Portfolio) is an advocate of buying good companies and holding them as they and their share prices grow. Buffett is not alone in watching and waiting for new opportunities to invest for the long haul when valucations warrant, whether a bear market hits or something worth buying emerging before then. 
  • archiebarnes joined: Roulettessgames (Regional) 01-15 07:12

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