Something’s Always Going Up

[Finster]

Re: Something’s Always Going Up

you did say your statements about "investing" v. "speculating" was a first approximation. in a second approximation it might be noted that buying puts, for example, is a way playing the short side without borrowing. similarly, one might think that stocks were undervalued [i don't think this] but the dollar overvalued. then futures would allow you to hedge the dollar basis of your u.s. stock portfolio.

my point- i think it is misleading to worry about what is "investing" and what is "speculating." what's important is always thinking about the risks involved in anything you do with your assets. "think about risk" is the important message to get out.

It's a fair point too, JK. My comments might be a little misleading in light of the fact that we've long since lost the context that prompted them - way back in the parent thread. They occur now in response to a PM question, but one that highlighted a point that was unclear and merited an on-the-record rectification.

No argument with your point about options either. It could be fairly asserted they are speculative vehicles. On the other hand, we could quibble that using them as, say, a hedge of a long position that the investor wants to hold long term but views as short-term vulnerable (yet may not want to sell for tax reasons) is a conservative tactic.

btw finster, your current allocation in stocks seems to indicate only slight overvaluation, while looking at e.g. price/revenues, p/book, p/record earnings, etc says this market is way overvalued. so why do you think otherwise?

Yep. They are quite overvalued by all those measures. The rub goes back to the "relativity" point. As overvalued as stocks may be, bonds - the principal alternative - are even more so. You could go to cash, but then the dollar bears would quickly point out that the dollar is overvalued and at risk of crashing. As pointed out earlier, there is no such thing as being invested in nothing - so with everything looking overvalued, what's the poor investor to do?

Gold and other commodities are the about the only alternative left. But do you want to put everything in a single, highly volatile asset class? I enjoy sleep a little too much for that. So my tack is to weight by relative valuation and assign a strong overweight to gold and commodities. 36% is pretty high by almost any standard, and about as far as I'm willing to go.

[bart]

Re: Something’s Always Going Up

Yep. They are quite overvalued by all those measures. The rub goes back to the "relativity" point. As overvalued as stocks may be, bonds - the principal alternative - are even more so. You could go to cash, but then the dollar bears would quickly point out that the dollar is overvalued and at risk of crashing. As pointed out earlier, there is no such thing as being invested in nothing - so with everything looking overvalued, what's the poor investor to do?

Gold and other commodities are the about the only alternative left. But do you want to put everything in a single, highly volatile asset class? I enjoy sleep a little too much for that. So my tack is to weight by relative valuation and assign a strong overweight to gold and commodities. 36% is pretty high by almost any standard, and about as far as I'm willing to go.

Here's a rather extreme analogy on relative stock valuation, and I only post it to show that there are worse things than having stocks in a portfolio.

[Finster]

Re: Something’s Always Going Up

I'm no expert in the area, and also don't know what Barrons has but ...

WHAT?!!!

You don't read Barron's? Savvy investors that don't read Barron's must be rarer than responsible central bankers. What're ya doing, watching Tout TV? You know that a steady diet of Kuddly and Crabby will rot your financial teeth out. Or are you munching down US Government, Grade A, Ministry Of Plenty BLS BS?

Good thing you stumbled on iTulip, EL BARTOS, 'cause it's probably the only thing that's kept you solvent. The rest of your menu is nothing but financial junk food otherwise guaranteed to give you a flabby, diabetic, 300 pound portfolio of clogged arteries, hepatic cirrhosis, and arthur-itis.

[bart]

Re: Something’s Always Going Up

WHAT?!!!

You don't read Barron's? Savvy investors that don't read Barron's must be rarer than responsible central bankers. What're ya doing, watching Tout TV? You know that a steady diet of Kuddly and Crabby will rot your financial teeth out. Or are you munching down US Government, Grade A, Ministry Of Plenty BLS BS?

Good thing you stumbled on iTulip, EL BARTOS, 'cause it's probably the only thing that's kept you solvent. The rest of your menu is nothing but financial junk food otherwise guaranteed to give you a flabby, diabetic, 300 pound portfolio of clogged arteries, hepatic cirrhosis, and arthur-itis.

We don't need no steenking non tree hugging papers in our daily gruel.
http://www.nowandfutures.com/grins/steenking_badges.mp3 ;)


And fie on you for trying to remove Kramer - one of my daily humor sources - from my daily dose. And anyhow, I prefer solvents from the agave & silimar... ;)

[jk]

Re: Something’s Always Going Up

They are quite overvalued by all those measures. The rub goes back to the "relativity" point. As overvalued as stocks may be, bonds - the principal alternative - are even more so. You could go to cash, but then the dollar bears would quickly point out that the dollar is overvalued and at risk of crashing. As pointed out earlier, there is no such thing as being invested in nothing - so with everything looking overvalued, what's the poor investor to do?

Gold and other commodities are the about the only alternative left. But do you want to put everything in a single, highly volatile asset class? I enjoy sleep a little too much for that. So my tack is to weight by relative valuation and assign a strong overweight to gold and commodities. 36% is pretty high by almost any standard, and about as far as I'm willing to go.

we are not limited to stocks, bonds, cash or commodities. there are other options- absolute return oriented investments [under which i'd categorize hussman's fund], spreads [e.g. afbix- a mutual fund short junk bonds, against short term treasuries], commodity stocks as opposed to commodities per se, foreign currency bonds.

btw- i gather there's a fair amount of chaos in toronto. ouch! i've got about 12% in canadian trusts, mostly energy, but the loss of the tax advantage has to drop prices. i guess that will make yields even higher for the next 4 yrs -til 2011- while current trusts maintain their tax status.

[Finster]

Re: Something’s Always Going Up

we are not limited to stocks, bonds, cash or commodities. there are other options- absolute return oriented investments [under which i'd categorize hussman's fund], spreads [e.g. afbix- a mutual fund short junk bonds, against short term treasuries], commodity stocks as opposed to commodities per se, foreign currency bonds.

That's where'd we'd disagree. So-called "absolute return" just means return relative to cash, which is not absolute at all. Moreover, those presumed "absolute returns" are derived from playing with none other than stocks, bonds, cash and commodities.

Sorry, no free lunch here, either. Reminds me of the paraphrased third law of thermodynamics. First law: You can't win. Second law: You can't break even. Third law: You can't get out of the game.

[Finster]

Chaos In Toronto

btw- i gather there's a fair amount of chaos in toronto. ouch! i've got about 12% in canadian trusts, mostly energy, but the loss of the tax advantage has to drop prices. i guess that will make yields even higher for the next 4 yrs -til 2011- while current trusts maintain their tax status.

More than a little chaos right here in the Haunted Manor, too! I have about 14% in Canadian trusts - and that's after they crashed.

The Canadian pols seem hell-bent on killing the goose that laid the golden egg. They must've been the only major economy that allowed for the trust structure outside of real estate. Why real estate should be singled out is beyond me. Just always seemed to me the better approach would be just to declare dividends paid out by corporations as deductible to the corporations, just like the interest they pay on bonds, and then tax them to the investors that receive them the same way. Level the whole playing field. But pols and bureaucrats are evidently not any smarter north of the border than they are here.

[Jim Nickerson]

Re: Something’s Always Going Up

btw- i gather there's a fair amount of chaos in toronto. ouch! i've got about 12% in canadian trusts, mostly energy, but the loss of the tax advantage has to drop prices. i guess that will make yields even higher for the next 4 yrs -til 2011- while current trusts maintain their tax status.

I don't own anything Canadian, but regarding to what you and Feinsteiner are alluding, are there any news links.?

[bart]

Re: Something’s Always Going Up

I don't own anything Canadian, but regarding to what you and Feinsteiner are alluding, are there any news links.?

http://www.canada.com/nationalpost/s...2-7a6438a941d5

[Jim Nickerson]

Re: Something’s Always Going Up

http://www.canada.com/nationalpost/s...2-7a6438a941d5

Thanks, Bart.

Does anyone know 5 or 6 symbols I can put into my trusty trading platform watchlist to see what sort of hits these trusts are taking?

[Finster]

Re: Something’s Always Going Up

Thanks, Bart.

Does anyone know 5 or 6 symbols I can put into my trusty trading platform watchlist to see what sort of hits these trusts are taking?

Here's something even better, Jim. It's a big story in today's Globe And Mail, first link below.

http://www.theglobeandmail.com/business/

http://www.investingforincome.com/in...1064306760642/

[jk]

Re: Something’s Always Going Up

jim, some of the canadian trusts are also listed in the u.s., so they are easier to track. try erf, hte, pwe, pvx, pds.

[Jim Nickerson]

Re: Something’s Always Going Up

jim, some of the canadian trusts are also listed in the u.s., so they are easier to track. try erf, hte, pwe, pvx, pds.

I put them in and WOW!
Thanks jk, and Finster for the links. Looking just at those reminds me of early in the day of the Oct. 87 debacle.

[Jim Nickerson]

Re: Something’s Always Going Up

For you guys that have some understanding of intermarket reactions, is the Canadian trusts event likely to start a tumble in the house of cards, financially speaking?

[Finster]

Re: Something’s Always Going Up

For you guys that have some understanding of intermarket reactions, is the Canadian trusts event likely to start a tumble in the house of cards, financially speaking?

I don't think so, Jim. It's really just another example of the vulnerability of investors to governments. Our efforts to save and invest always leave us with assets exposed to government confiscation, either overtly through taxes or covertly through inflation.