Posts filed under “Investing”

Keeping Tabs on the Market

If its Saturday, then its time for the latest from Barron’s Alan Abelson. He references a stealthy market watcher who is none-too-sanguine about 2006:

"Where does that leave the market? Probably right where it was — namely, shaky. But since that has been our diagnosis for it seems like an eternity, we thought it might be worthwhile getting a second opinion. So we did, from an old pal who has been keeping tabs on the market ever since he was a pup (and that was quite a few years ago). Not the least of his virtues is that he shuns publicity, which means that only his clients (a select, savvy and rich bunch) and the occasional accidental kibitzer (like us) are privy to what he thinks.

OK, OK — we hear you — what does he think? We should note, incidentally, that he’s the last of the great contrarians (while just about everyone else was beating the drums for a burst upward, he cautioned that September would see a weak rally — and so it did). Our friend is one of those strange people with the capacity to read the entrails of the market — new highs, 200-day moving averages, that sort of arcana — and what he sees is a mean shakeout this month, followed by a rally that might carry into next year.

But that rally, he feels, will be just another of the bear-market rallies of various intensity and duration we’ve been witness to these past several years and, at some point in ’06, stocks will begin to go down again big time and the bear market resumes in earnest. Keep in mind, he urges, if and when you choose to play the rally, that big investors, a famously edgy crew, likely have taken a lot of short-term profits this year, which means that they could be eager for offsetting losses to shield those profits from the grasp of the tax collectors. Hence, any number of beaten-down stocks that seem like raging bargains may get even more beaten down as the pachyderms unload."

(OUR PROPHETIC OLD PAL, as intimated, likes to dabble in the black art of technical analysis.)

Sounds about right to me . . .


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Source:
Paging Jane Doe
ALAN ABELSON
Barron’s, MONDAY, OCTOBER 10, 2005      
UP AND DOWN WALL STREET 
http://online.barrons.com/article/SB112872694630463336.html

Category: Investing, Markets, Technical Analysis

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Category: Investing, Technical Analysis

Yale Endowment Manager: Index

Among individual investors, David Swensen isn’t a household name. But he is an icon in the world of big institutional money managers such as endowments and pension funds.

Mr. Swensen’s fame comes from his oversight of Yale University’s $15 billion endowment fund, which, since he was hired 20 years ago, has returned an average of 16% a year, far outpacing the market and other funds run for universities. Before arriving, Mr. Swensen had never overseen an institutional portfolio, and he brought to the job an unconventional approach for dividing up the portfolio among different asset classes. He is now Yale’s chief investment officer.

Five years ago, Mr. Swensen set out to write a book that would bring the lessons he learned to individual investors. Instead, he says he found that the option most accessible to individuals — mutual funds — often makes it impossible to beat the market. And even when they do find good managers, individuals end up shooting themselves in the foot, he says.

So while Yale relies on actively managed portfolios, Mr. Swensen says individuals should just stick to index funds, especially those run by not-for-profit companies. He also likes exchange-traded funds, which trade on exchanges like stocks, but says "buyer beware."

Excerpts from an interview with Mr. Swensen follow:

WSJ: You had hoped to give small investors a road map for beating the market based on Yale’s approach to investing. What happened?

Mr. Swensen: I found when I started down that path that individuals just don’t have the same set of investment opportunities available to them that we do here at Yale. In fact, the evidence showed me that the mutual-fund industry has completely failed to provide reasonable active-management returns to individuals.

WSJ: To say that it completely failed — that’s a pretty harsh statement to make.

Mr. Swensen: I think the evidence is there. The crux of the failure is with the for-profit management of funds for individuals. Mutual-fund managers have a fiduciary responsibility to investors. Obviously, if they are operating in a for-profit mode, they have a profit motive. When you put the profit motive up against fiduciary responsibility, that fiduciary responsibility loses and profits win.


continued below . . .

Source:
Yale Manager Blasts Industry
TOM LAURICELLA
THE WALL STREET JOURNAL, September 6, 2005

http://online.wsj.com/article/0,,SB112597100191832366,00.html

 

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Category: Investing, Markets

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