While writing this article, I am reminded of Alan Greenspan’s comment about “irrational exuberance” in 1996 and Ben Bernanke coining the phrase “global savings glut” in 2005. Roughly three years later we had the bursting of the Technology Bubble and the Housing Crisis. We now have inflated asset prices due to nearly of decade of “Quantitative Easing”. The CNN Fear and Greed Index is a Continue reading
Capture ratio is a sort of “bang for your buck” summary. It’s calculated by dividing a fund’s upside capture (a fund that typically rises 1.1% when the market rises 1% has an upside capture of 1.10) by its downside capture (a fund that typically falls 1.1% when the market falls 1% has a downside capture of 1.10). Capture ratios greater than 1.0 reflect funds that produce more gains than losses; all other things being equal, high capture ratio funds are offering you the greatest reward for every unit of risk you’ve been subjected to.
Capture ratios even the playing field for cautious and aggressive investors. A cautious investor might look for a fund with a downside capture of no more than 0.80. Given that constraint, anything above Continue reading
Dear friends,
Welcome to the New Year. May it be blessed and joyful, full of mirth and mischief (really, what’s life without a bit of mischief?) for us all.
As I finish this essay on New Year’s Eve Day, the stock market is handing out returns with the enthusiasm (and responsibility) of a politician handing out tax cuts or a central banker handing out liquidity boosts. The Vanguard Total Stock Market Index (VTSMX) stands to end the year with a 30% gain.
Heck, it was almost impossible Continue reading
When I first started writing regularly about funds and investing, it was as an analyst for FundAlarm, a site whose publisher proclaimed
Our view of the mutual fund industry is slightly off-center. We help you decide when it’s time to sell a fund, instead of when it’s time to buy. The mutual fund industry is full of broken promises, arrogance, greed, hypocrisy — the list goes on. We try to shine a light in the darker corners, and poke holes in balloons that could use some poking.
In honoring that heritage, we routinely Continue reading
On 9 December 2019, the longest-tenured member of the MFO Discussion Board passed away. Theodore J. Didesch, universally known as “Ted” though he dearly wished for the sobriquet “The Linkster,” died of congestive heart failure.
We mourn his passing even as we celebrate his life. I’d like to share a few words about Ted, interspersed with the comments left by other members of our community on a memorial thread.
FundAlarm launched its “moderated Bulletin Board” in 1998. Ted arrived Continue reading
Ah, Rules Based Investing, the magic elixir to investing success! It is the answer to the gloomy conclusions of both behavioral finance scholars and Pogo. Guys with PhDs have taken reams of paper and thousands of hours of computing time to document what Continue reading
By Ira Artman, December 2019
Do we pay attention to the competitive environment? Absolutely. Are we reactive to what one competitor does? Absolutely not…
Investors always have to ask themselves when they see an offering like this [zero fee expense ratio mutual funds], ‘What’s the catch?”‘ The question becomes what else are investors going to be charged in other products? … Continue reading
On December 2, 2009, Harbor Funds launched six new offerings, including four overtly “conservative equities” funds. Those funds are:
All four are being advised by a team from Continue reading
Dear friends,
Welcome to the last 2019 issue of Mutual Fund Observer. Thanks for being here.
There’s rather a lot going on with this month’s issue whose theme might be “get some perspective while it’s still possible.” We’ll talk a bit about preparing for less hospitable markets. Vanguard’s Total Stock Market Index is up 27% YTD without a notable stumble along the way; it simply doesn’t get more hospitable. Since the economy, earnings and CPI didn’t grow by anywhere near that much, most of the gain comes from “multiple expansion,” the willingness of investors to pay more today than they did yesterday for the same thing. Vanguard itself is not Continue reading
We’re near year’s end, decade’s end, and quite possibly the bull market’s end and the economic expansion’s end. It’s been easy to be a bad investor for the past 10 years: the market’s relentless rise, fueled by enormous amounts of fiscal (hello, trillion-dollar deficits!) and monetary (hello, negative real interest rates!) stimulus, had made it likely that even a badly constructed portfolio booked acceptable – perhaps even double-digit – returns.
Do not bet your future on a repeat of that happy pattern.
The Observer’s core beliefs are (1) valuations Continue reading