Time Horizon

This is a major topic as I introspect about portfolio allocations. I usually make fun of Peter Schiff about being right about future calamity but losing 80% of his clients money. While that is a major lost if in 10 years, his year over year return is 1000% I should be writing him a check. The issue is time frame, investors are extremely short sighted, look at the rush to bond funds. While bonds deserve a place in every portfolio the large exodus into bond funds is showing investors short sightedness. Even if rates in the US stay low worldwide they will steadily increase. Who does not want 1000% return in two days, however trying to capture large moves in short time spans will lead to 100% losses.

New Year, Same Profits

Its been a while but hope everyone is having a good new year. Lately, I have been listening to Econ Talk with Russ Roberts after Accrued Interest gave it a shout out. The host is a Chicago School economist and has many guests that are of proponents of Milton Friedman. While I do not have the quantitative or qualitative ammunition to go head to head I want to present a thought that will be beneficial for the market participant. While I agree with the weak form of efficient market hypothesis, the concern I have is information or data which every you prefer. ABC buying XYZ for 50 percent premium will quickly close because of efficient markets but the news that XYZ is taking a corporate action can be interpreted in many different ways. I am a big fan of Jesse Livermore and recommend all of his books. But in "Reminiscence of a Stock Operator", he mentioned his first million dollar profit during the crash of 1907. He went broke trying to short the market to early and one day he went downtown picked up a newspaper about a railroad issuing more shares to investors. That was the trigger that caused him to get back in the market and start shorting again. This was not in a trading or financial newsletter but a general daily and I am sure thousands picked up the paper read the story and received a different interpretation. Likewise market participants hear a conference call, some walk away reassured in the strength of the firm, while others buy puts and open short positions. This year, our focus is to provide you with profitable ideas in any market: CDs, checking accounts, insurance, bonds, equities, taxes etc. However we will try to present information and leave interpretation to the reader.