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
******************************************
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.
******************************************
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
******************************************
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?
******************************************
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.
*************************
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.
I was very glad after talking with you about using SPX and VIX as a guide to gage if the market is becoming toppy and one should be more cautious or stay on the sideline. I went back a few years and found SPX and VIX really helped to put caution sign up for market downturn. Thanks.
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? ******************************************
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". ******************************************
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
******************************************
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?
******************************************
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.
*************************
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.
DR.SCOTT BROWN
I HAD TO STOP READING WHEN I GOT TO CHAPTER THREE.I WAS A FRIEND OF SAM WALTON WHEN I WORKED AT CITY PRODUCTS IN
What is your gut prediction of the direction of the market over these next 6-12month? I have been building cash recently and am more interested in not losing than trying to win big right now. How much precious metals do you hold in your personal portfolio(as a percentage of total)?
First off the VIX is at 17.5 which is low. Says stock market is not primed for a crash.
http://finance.yahoo.com/q?s=^vix
Second the S&P 500 is above the 12 month moving average.
Prognosis is continued rise.
The Gone Fishing Portfolio gives you an investment in metals.
That said the April Gold Futures contract is above the 12 month moving average.
Dr. Brown,
I have been following IPO offerings since January when I joined the course. So far, I found only one IPO that looked promising - and it withdrew before its expected offering date. I've also noticed that IPO pricing seems conservative for those that are going forward. Is this a rocky time for IPOs given the ping pong nature of the markets the last several months?
Also, one company, Broadsoft Inc gave as one use of its IPO money - redeeming preferred stock to cancel it all out. Is this a good sign?
The IPO market waxes and wanes according to market conditions. When markets crash and public sentiment is very negative it is hard for underwriters to get a high price for newly issued shares.
Just wait and as the market keeps rising you’ll see the IPO market come back. Alternatively you could enroll in Lou Basanese’s Hot IPO newsletter.
I've read many articles about Berkshire Hathaway B share stocks after it split. Most say it isn't a good buy at the current price. I'm also worried about when Warren Buffet is gone. What will happen to the shares of Berkshire Hathaway company.
Now that they have split BRKB the stock must be traded like any other stock. Don’t buy it in a downtrend. Buy in an uptrend. The stock is currently in an uptrend.
Is it a good idea to use margin account to buy stocks that pay dividends above what i pay for the margin interest?
No, if you buy stocks on margin you are trading. If you want to trade on margin go somewhere with a real bang for your buck like Forex or futures. Margin is very dangerous and requires great skill and training.
And I have to give this Disclaimer just for saying this… http://www.tradementors.com/disclaimer.htm
Surely you can do better than The Ivy Portfolio and Worrry Free Wealth for a
I just finished the following books:
My question for you is what are your top five favorite investing books of all times?
What are the best 5 books to read for this course?
There’s no really good books specific to what I teach in this course. It’s spread around the university system and Wall Street.
Name your favorite books on Forex, technical Analysis and options. Maybe include a book on technical trading.
