I looked, however, further using VIX and SPX to predict when the bottom of the market is turned, I was unable to do so. My first question is how can one tell when to start buying stocks again at or near the bottom?
My second question is what should a small investor do to protect his portfolio when the inevitable coming of the high inflation? Of course, many people said to buy gold or silver. But this is not the total portfolio (as all the planners suggest that one should only hold 5 to 10% of gold or silver) – What is?
Thank you!
p.s. You also mentioned, Dr. Brown, in your last call that we can get a DVD from Jack about the subject on VIX by Bob Waley (?) - how can we get a copy of it?
Here are some videos that will help you:
http://www.tradementors.com/chartbooks
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All my IRA is invested in the Gone Fishing Portfolio.
As i see our government printing money and spending with little thought of responsibility.
It appears we are heading for a ship wreck as soon as the bills all come due.
How is the best way to protect my investment?
I can see the market going to hell and inflation making nothing of any thats left.
When and if the price of oil is tied to another currency this can sink the ship. ******************************************
Dear IU Course Staff & Doc Brown,
I have only one question request this month and I have already mentioned
that one before, but since it didn't "stick" I will ask again... and again...
I would like to move to introduce a short analysis (max. 10min) and prognosis
of the EUR/USD at the beginning of each call as a regular part of your open
calls, since this is a topic which I trust you know by heart and I (we) am (are)
very much interested in this increasingly important topic. Maybe it is even be
possible to also add a few comments about other relevant or current
developments and news in other currencies or the currency market as awhole.
(e.g. "currency wars", ...)
If you are not sure if this topic is of general interest to your
callers (it should!),
you could ask them in the open call on Thursday. I would obviously like to see
it implemented in the call as a permanent enrichment to the course.
Well, I believe you will remember that request since I already sent it to you in
October and you explained the current situation in the next call, but
what I was propossing was to make that analysis a permanent part of your
conference calls (see above).
It would surely be very helpful if that could be arranged so I (we) could
compare my (our) own analysis and conclusions to those of a professional.
And again, if you don't think or are not sure that this proposal is of interest
to your students, just ask them. ;) That's what these calls are for, right?
Since I can't participate at this calls due to the time difference I hereby vote
with "YES".
Take a trial of the TnT Forex Platform:
http://www.tradementors.com/options
Tell Gecko you want to switch the package to Forex if you don't want to analyze through futures.
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After submitting my questions on capm (crapm) I ran across Fama: My life in Finance. A great read.
http://www.dimensional.com/famafrench/2010/03/my-life-in-finance.html
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In your book Worry Free Wealth Guide, on page 56 you seem to dismiss Markowitz’s theory of stock diversification by quoting Warren Buffett. “An excuse for not thinking.” Going on to argue that fewer well thought through investment have less risk that diversification.
Buffett also stated that “Diversification is protection against ignorance. It makes little sense for those who know what they are doing.”
Is you advise that we put 70% into diversified passive portfolio like the Gone Fishin suggesting that we will do better if we admit our ignorance? Louis Basenese suggests 80%. I have done very well with the majority of funds in the Oxford trading portfolios and Chairman Circle recommendations. I recognize my ignorance, but have tried to trade off the good ideas of others. I don’t want to take on stupid amounts of risk, but I also don’t want to use fear a an excuse for not thinking. Do you now love Markowitz and am I correct that in Worry Free Wealth you weren’t a big fan?
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Back in May I asked about your comments in the pre-session of the 2010 Investment U conference you praise the merits of the mean variance portfolio and trashed capital asset pricing model (CAPM) calling it CrapM. I am still interested in what parts of Modern Portfolio Theory are crap. Specifically I would like to understand is a mean variance portfolio and how it differs from CAPM. You also offered to go into explaining Sharpe Ratios.
I read a book recommended by Martin Hutchinson by the father of fractal geometry, Benoit Manelbrot called “The (Mis)Behavior of Markets”. He spends a great deal of time reviewing what he sees as Crap in CapM. As I understand it, Modern Portfolio Theory views market is considered in as efficient. Current price is an accurately value based on the sum of all known information. The risks are modeled bases of the random walk of a fair coin toss following a Gaussian distribution . And that there are no discontinuities in pricing.
Manelbrot argues that the market are not efficient. That that are discontinuities in pricing that cannot be model with a Gaussian distribution call the Noah effect, catastrophic events that have fat tails. The market is risker than believed. He states that the coin has memory title The Joseph effect, 7 fat years followed by 7 lean. Trends that work until the change. He also sees a wrapping of time. Pricing tends to slow down and speed up.
Have you read The (Mis)Behavior of Markets and are these the issues that cause you to call it CrapM? You mentioned that Fama-French 3 factor model was introduced to correct the errors in CapM. Could you talk more about how the Fama-French model works? Apparently Fama was a doctoral student of Manelbrot.
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I'm interested in purchasing the stock of potential takeover targets and was wondering if there was a website or some place to find a listing of such companies.
