Title: Retirement Savior

Quantitative Approach to Football

Published on Wed, 02 Dec 2009 21:25:00

It seems football coaching is like investing....Irrational.To maximize the expected scoring for your offense, teams should much more often go for it on 4th down. See below for recommended 4th down actions:For a detailed explanation from the Advanced NFL Stats site, see here. read more..

Eight Centuries of Financial Crises

Published on Fri, 20 Nov 2009 17:59:00

What an interesting paper, via Simoleon Sense. Reinhart and Rogoff from Harvard wrote a paper titled "This Time is Different: A Panoramic View of Eight Centuries of Financial Crises," analyzing the causes and outcomes.Check it out here. read more..

Investment Fads and Bubbles

Published on Thu, 19 Nov 2009 16:29:00

I don't particularly understand this casual use of the word "bubble." It describes every asset class or fad that comes along where the prices or beliefs exceed the facts and fundamentals. In fact, bubble in many cases is more dramatic term for fad or theme. Are we in a Twilight bubble? Is this a gold bubble? What about a healthcare legislation bubble? Most every investment theme has its day in the sun. They are not all bubbles, or unrealistic, but there are always people that get more exc read more..

The Dow vs. Gold

Published on Thu, 12 Nov 2009 13:00:00

Check out the long term chart of gold vs. the Dow. Notice that long term buys take place a long way from here. But with gold in such an uptrend, that may get here quicker than you think.Source: Rolfe Winker, via Paul Kedrosky read more..

Links - Early Derivatives

Published on Wed, 11 Nov 2009 13:00:00

A study of early stock derivatives in London (Economic History Blog)Developing an active trading strategy (Falkenblog)How mutual fund investors underperform their benchmarks - old but good (CXO Advisory) Soros explains his Theory of Reflexivity (My Investing Notebook) The story of McDonald's (Future Blind) Sharpe ratios doesn't forecast fund returns (All About Alpha)Market timing beats buy and hold in an academic test? (Barry Ritholtz) read more..

Non-US Dollar Portfolio

Published on Sat, 07 Nov 2009 13:00:00

Via Morningstar, here is an idea for an ETF investment portfolio that doesn't rely on the dollar:The projected cost of the portfolio is 30bps. I think that while agriculture has attractive prospects, you don't need to buy anything with a 2% allocation in your portfolio. Also, I think the bearish dollar index could be redundant, as any foreign or hard asset investments out there are de facto dollar bears.If you enjoyed this post, get the latest investment tips through RSS feed or email feed! Yo read more..

Beat the Market 3%/yr. Using a Stock Screener

Published on Thu, 05 Nov 2009 12:00:00

I love academic papers. Most people back up assertions through observations, anecdotal evidence and recent history, but white papers allow you to see the data and objectively criticize the methods and conclusions. One paper by Haugen and Baker speaks to the inefficiency of the stock market based on many factors. Stocks exhibiting these factors are less risky and provide higher returns, and those that don't have more risk and give lower returns. The outperformance differed in the 4 optimized read more..

October Trend Model Update

Published on Wed, 04 Nov 2009 19:35:00

The investment models I created were down a bit last month, similar to the market.The Flagship model was down .791%. It is up 5.02% for the year.The Long model was down 2.459%. It is up 8.58% for the year.The Aggressive model was down .967%. It is up 5.13% for the year.For comparison, a normal 60/40 portfolio is down .95% for the month, while being up 12.92% for the year.The Aggressive and Flagship models have very similar performance because many asset classes are moving together this year. read more..

Investor Risk Appetite

Published on Mon, 02 Nov 2009 12:07:00

According to one measure from UBS, risk appetite for investors is at or near the decade's highs. This is not necessarily a signal that the market has hit the top. However, it is a contrarian signal showing that market momentum is likely peaking. In football terms, our team isn't moving between the 20's, but we are now in the red zone, meaning it won't be as easy to move forward from here.Risk is high. If using buy and hold, consider rebalancing. And as always, when trading don't let a bad trad read more..

A Better Way to Buy the Stock Market

Published on Sat, 31 Oct 2009 11:00:00

Do you want to get exposure to the stock market, but are worried about losses, volatility, and picking the wrong time to invest? If you don't want excessive risk, but have access to a margin account, here is an option - synthetic long exposure.You can:Buy the inverse S&P 500 ETF with the ticker symbol SH, andShort the double inverse S&P 500 ETF with the ticker symbol SDS.If you put an equal dollar amount in both of these trades, this creates an unleveraged long exposure that benefits fr read more..

Understand How the Wall Street Game is Played

Published on Fri, 30 Oct 2009 12:49:00

Many people claim that Wall Street is a rigged game, where salesmen are more concerned with their profits than yours. Two of the most common examples are mutual funds and stock research.Numerous studies conclude that mutual funds outperform their ETF cousins, because managers cannot outperform the market after fees. Because markets are efficient. Efficient market research aside, what is the purpose of a mutual fund? Fund companies maintain mutual funds to gain as much revenues as possible, Of read more..

Beating Inflation in an ETF

Published on Tue, 27 Oct 2009 18:48:00

This should be interesting, per Index Universe:IndexIQ launched a new exchange-traded fund today designed to capitalize on investors’ fear of inflation.The new IQ CPI Inflation Hedged ETF (NYSEArca: CPI) is designed to provide a “real return” of 2-3 percent above the rolling 12-month Consumer Price Index.CPI is an ETF of ETFs. Component ETFs are chosen by a rules-based strategy that considers the historical performance of various asset classes during inflationary environments. For instance read more..

Stock Profit Margins and Fairy Tales

Published on Mon, 26 Oct 2009 14:00:00

The current stock market prices are discounting a return to peak corporate profit margins. As you can see from the picture, the margins of the last 15 years have spent most of their time above the normal trend. This exuberance is no indication of what stock prices will do in the next few months, but over the next 30 years, it will be difficult for corporate profit margins to meet current expectations. In an era of rising interest rates, though, this will likely not affect the return premium of s read more..

Protect your Shriveling Assets

Published on Fri, 23 Oct 2009 12:43:00

Much has been made of gold increasing and dollar declining, both here and on other sites. However, for the majority of investors, this focus on precious metals and commodity plays is shortsighted. Once a person takes notice of the purchasing power of their assets, and how to preserve it, they should move to find ways to diversify and maintain an all-weather portfolio. As the picture above notes, the purchasing power of the S&P 500 has not recovered much in this recent rally. In fact, it has read more..

Linkfest - Emerging Markets, Banking Crises, Gold and Bailouts

Published on Thu, 22 Oct 2009 13:00:00

There are many great articles this week about possible misdeeds at the highest levels during our banking crisis, and how the end of a financial crisis is not the typical fast recovery. Learn the investment implications for today's market, be it emerging markets, precious metals, or just protecting your portfolio in an overbought market scenario.Discussing investments in emerging markets and their risk (Steadfast Finances)The historical aftermath of banking crises - hint: it's not like a typical read more..

Economic Indicator Showdown - WSJ Style

Published on Wed, 21 Oct 2009 11:00:00

In a recent WSJ article, two journal writers face off on whether this is a redux of the 1930's, or whether it's sunshine and roses as far as the eye can see.First off is Brett Arends, who believes we are in for more tough times for the following reasons:1. Historically low yielding long-dated Treasuries2. Slumping dollar and surging gold prices3. Debt laden households4. Jobs moving overseasThe rebuttal comes from Dave Kansas, who shows traditional American optimism with his all-American name. H read more..

Covered Call Funds - Just like Junk Bonds

Published on Tue, 20 Oct 2009 11:00:00

You've probably heard of covered calls as a great way to earn extra income in your investment portfolio. They aren't exotic, it just involves selling options on your stock or index to guarantee small, frequent returns while cushioning your downside.The more gradual the move, the better your relative performance. During steep market moves, your losses will be nearly the same during a crash, and your gains during a fast moving rally will lag by a large margin.One example covered call fund is PBP. read more..

Dollar Reserve Currency Status Update

Published on Mon, 19 Oct 2009 14:24:00

Actions speak louder than words. During the last three months, foreign central banks put 63% of their new currency reserves into the yen and euro deposits, and only 37% into US dollars. This is an incredible departure from the past, when up to two-thirds of new reserves went into dollars.Investors see that the US is stuck between the rock of high inflation and the hard place of deep recession, with no easy exit strategy. Previously, foreign countries limited their actions to vigorous talk and read more..

Investors are Bad Market Timers

Published on Sat, 17 Oct 2009 12:00:00

Investors in the nation's best mutual fund have performed over 30% worse per year than the fund's advertised return. How could this happen? It's all because of market timing, and how bad investors are at it.Do you want to see hard evidence? Look at the CGM Focus fund run by the excellent Ken Heebner. This fund has the best returns of any fund out there over the last 10 years. Ken correctly rode the commodity bull for most of this decade, taking his fund to compounded returns of 19.59% for the read more..

Top Articles - Week of 10/16

Published on Fri, 16 Oct 2009 13:16:00

Here is some food for thought with some top articles of the past few days for wrapping up this week:InvestmentsDow hits 10,000. Do bloggers think it matters? (Financial Highway)Bond fund managers don't add value over indexes and ETFs (CXO Advisory)The best low cost index funds (Oblivious Investor)Big reasons to consider overweighting agriculture stocks in your portfolio (Market Folly)Personal Finance7 blogger financial mistakes you can learn from (Bill Shrink)Top 50 jobs in the US (Debt Hawk)If read more..

Competition for Yahoo Finance Stock Data

Published on Thu, 15 Oct 2009 15:00:00

If you are a fundamental investor, you no doubt have looked for company statistics on Yahoo. It can be difficult to compare the fundamentals of several companies, unless you compare whole sectors and industries. Yahoo shows most of the information you need to know, but it takes a lot of clicking and searching.Wolfram Alpha makes it easier to look up particular fundamentals, as it shows them on the front page of all the stock data. In addition, it lets you plug in several stock tickers, and it read more..

Bond Fund Outperformance

Published on Wed, 14 Oct 2009 18:00:00

This just in, bond fund managers do not outperform their indexes after fees. According to Chen, Ferson and Peters via CXO Advisory, there are 9 main factors that influence bond returns. These include interest rates, equity returns, spreads, etc. While managers can outperform significantly before all fees, the fees themselves erase all of the excess returns.The data shows that (via CXO):Across all bond mutual funds over the entire sample period, the mean monthly return is 0.62% and the standar read more..

Where Will GDP Growth Come From?

Published on Wed, 14 Oct 2009 13:02:00

What makes the economy grow? What contributes to a positive GDP? Well, it is corporate profits, and personal savings and investment. What we see now is that corporate America is battered, along with the consumer. The government has done a good job of picking up the slack, but at some point, for any recovery to be real, the private sector must rebound.The above chart shows the consumer battening down the hatches, wary of making new investments or large purchases. Do you think the government read more..

Going Broke During Retirement is Not an Option!

Published on Tue, 13 Oct 2009 12:00:00

Yes, of course stocks have higher returns than bonds in the long run. Over a lifetime, there is no question. Stockholders demand a higher return from the corporation in exchange for no claim on the assets if the company goes bankrupt. During a 100 year span, it is fairly certain that stocks will beat bonds by several percentage points.While this is all true in the long run, what does it mean for the average person investing for retirement? Not much. Like we have seen in the past 10 years, a read more..

Today's Bear Market vs. the 1970's

Published on Mon, 12 Oct 2009 13:00:00

Have we seen correlated markets to our current one? While history doesn't repeat, it often rhymes. What could happen when the US government makes a risky bet that a loose monetary policy and low interest rates will kick start the economy, helping us to grow our way out of the recession?This kick start isn't likely due to the already overspending consumer, but this market has a high correlation with the 1970's, where high inflation during a secular bear market led to negative real returns over a read more..