BADFISH II
11-20-2006, 04:08 PM
I work with a little known company (which happens to be one of the least known and absolutely the best management firm BAR NONE in my opinion) in most circles called Dimensional Fund Advisors. It's a multinational Santa Monica based firm. They have a commentary that comes out once in a while and I've asked their approval to share it with clients - you're all friends, and I think if you read a few of these things you'll learn an amazing amount of information - more than your broker (I mean "B-R-O-K-E R") knows most likely:eek3:
Here's one, if there's interest, I'll post more - it's fascinating stuff, usually quite short, and too the point.
November 20, 2006Climbing a Wall of Worry
Many investment professionals have watched the rally in stock prices over the past few months with increasing discomfort, and last week's trading did nothing to relieve the anguish: the Dow Jones Industrial Average set a new record high every day last week and the S&P 500 Index closed above the 1,400 level for the first time in six years on Friday, November 17. The Dow Industrials have jumped 14.9% since July 21, despite a belief by many investment professionals that a significant downturn in home sales and residential construction would send a chill over both consumer spending and stock prices. Veteran market observer Alan Abelson has been one of the skeptics, arguing in his weekly column that stocks were unlikely to advance against such a stiff headwind. Explaining his gloomy outlook for stocks, he noted in mid-September that "the impact on jobs and corporate profits has only just begun to be felt. Come the full collapse of home sales, demand, and prices, we expect the economy to be headed helter-skelter for recession."
The surge in prices has apparently caught many money managers off guard, leaving them struggling to keep up with broad-based market indexes and setting the stage for another round of explanations why a simple buy-and-hold strategy once again outsmarted so many experts. A Wall Street Journal article appearing last week focused on lagging results at Fidelity Magellan fund, but Fidelity deserves no special criticism; underperformance among major funds this year is pervasive. For the year-to-date period ending Friday, November 17, not one of the twenty-four actively managed US equity mutual funds listed among the industry's fifty largest funds by the Wall Street Journal has managed to outperform an appropriate benchmark such as the S&P 500® Index or the Russell 1000 Value Index.
Here's one, if there's interest, I'll post more - it's fascinating stuff, usually quite short, and too the point.
November 20, 2006Climbing a Wall of Worry
Many investment professionals have watched the rally in stock prices over the past few months with increasing discomfort, and last week's trading did nothing to relieve the anguish: the Dow Jones Industrial Average set a new record high every day last week and the S&P 500 Index closed above the 1,400 level for the first time in six years on Friday, November 17. The Dow Industrials have jumped 14.9% since July 21, despite a belief by many investment professionals that a significant downturn in home sales and residential construction would send a chill over both consumer spending and stock prices. Veteran market observer Alan Abelson has been one of the skeptics, arguing in his weekly column that stocks were unlikely to advance against such a stiff headwind. Explaining his gloomy outlook for stocks, he noted in mid-September that "the impact on jobs and corporate profits has only just begun to be felt. Come the full collapse of home sales, demand, and prices, we expect the economy to be headed helter-skelter for recession."
The surge in prices has apparently caught many money managers off guard, leaving them struggling to keep up with broad-based market indexes and setting the stage for another round of explanations why a simple buy-and-hold strategy once again outsmarted so many experts. A Wall Street Journal article appearing last week focused on lagging results at Fidelity Magellan fund, but Fidelity deserves no special criticism; underperformance among major funds this year is pervasive. For the year-to-date period ending Friday, November 17, not one of the twenty-four actively managed US equity mutual funds listed among the industry's fifty largest funds by the Wall Street Journal has managed to outperform an appropriate benchmark such as the S&P 500® Index or the Russell 1000 Value Index.