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December 9, 2013 ? Quote of the Day
?China has been doing everything right for the last ten years. Our government is made up of ?C? students that were political science majors, whereas, the Chinese government is made up of PhD?s that were educated at Cambridge and Harvard,? said one Washington observer.
What a Difference a Decade Makes for Investors
Run, don?t walk, to read the related story from the latest issue of Fortune Magazine about how much has changed for investors from 2003 to 2013.
Source:
A decade of markets, mayhem, and investing (Fortune)
Tales from Stratton Oakmont
I showed a lot of initiative, and I stayed late. I was now in Armani suits, Ferragamo shoes, Valentino ties. I would stay all night. I would adjust my hours to call potential customers at home. All you had to do was get past the wife. The guys were more relaxed to talk at home. They were willing to listen a little more.
Danny offered to buy a car if I opened up 30 accounts in a month. I ate dozens of Quaaludes, pounded my clients, and got the 30 accounts ? but two wound up not paying. So Danny said, ?I?ll lease you whatever sports car you want.?
I picked a red Porsche 911 ? I still didn?t have a driver?s license.
All of us brokers who started in the 1990′s on Long Island or in NYC can relay similar stories to this one, although the majority of brokers did not work for The Wolf at Stratton Oakmont. Stratton, the firm Jordan Belfort founded on the North Shore of LI is history?s most notorious boiler room, the Ground Zero of cold-calling fraud, the place where it all began. It didn?t last long, but the legends you?ve heard are almost all true.
Josh Shapiro returned home to Long Island from the Marines at 22 and wanted to make some money. It was 1993, there was no such thing as internet brokerage and the markets were booming. The telemarketing brokers of LI were in their heyday, dialing for dollars with no competition, little regulation and nothing to stop them.
Today in the New York Post, Josh tells his tale of working for Jordan Belfort at Stratton?
Read the whole thing:
Welcome to my life working for the real ?Wolf of Wall Street? (NYP)
More on The Wolf of Wall Street here
The Reformed Broker
Joshua Brown is a New York City-based financial advisor at Fusion Analytics. Josh helps people invest and manage portfolios. Clients range from individuals to corporations to retirement plans to charitable foundations.
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?Why Bother?? Will investors take the wrong lessons from 2013?
Thinking back on a great year for investing in the US stock market but a hard year on market participants overall.
US stocks went wild this year but almost nothing else kept pace ? any attempt to hedge or diversify now looks have been anywhere from futile or foolish here at year?s end.
Consider:
The Global Dow Jones Index is up about 20% on the year, but the Global Dow ex-US is only up 9%.
Why bother with international exposure at all?
Long-term Treasurys are down 15% this year and their corporate bond counterparts are down 7%. Munis, agencies and mortgage-backeds are all in the red, REITs are flat.
Why bother diversifying at all?
There are only 40 stocks in the S&P 500 that have a negative return on the year. There are more stocks in the S&P 500 with gains of over 60% YTD.
Why bother hedging at all?
The US stock market has spent over one full year above its 200-day moving average and hasn?t been negative for a calendar year since 2011.
Why bother being tactical at all?
In hindsight, there was only one way to ?win big? this year and ?beat the markets?: Buy and hold, long and strong, US stocks only. More importantly:
No bonds, no shorts, no hedges, no diversification, no tactics.
No wonder trillions have been pouring into the passive products of Vanguard, iShares and State Street. It?s the only game in town! Investors are now preparing for the coming Battle of 2014 by exaggerating the posture and behavior that?s worked for 2013. This is called the Recency Effect ? believing the environment we?ve just been in is somehow a permanent one, extrapolating the just-was to construct an outlook for the soon-to-be.
They do it every year.
Many will throw away the portfolio playbook that didn?t give them the best of all possible results this year. Diversification is broken. They?ll move their chips into position solely on black, after all the roulette wheel just landed on black the last ten times ? it?s practically a can?t-lose proposition.
At this time of year I?m more interested in whatever hasn?t worked. The good news is that there?s plenty of that around (via Capital Spectator, through Nov 2013):
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Sunday links: history of bubbles
?Tis the season: the Daniel Kahneman classic Thinking Fast and Slow is on sale for the Kindle.
Quote of the day
Morgan Housel, ?If the history of bubbles teaches us anything, it?s to be humble.? (Motley Fool)
Chart of the day
HYG Total Return Price data by YCharts
US corporate bond spreads are at a six-year low. (Sober Look)
Markets
The trend remains intact. (Dynamic Hedge)
High dividend stocks are expensive. (Mebane Faber)
The January effect is shifting to December. (StockCharts Blog)
There is still plenty of room for investors to shift from bond to equity funds. (Horan Capital)
Futures traders continues to cut gold positions. (The Short Side of Long)
Strategy
Should you settle for mediocrity in investing? (NYTimes)
Why risk-adjusted returns matter. (Oblivious Investor via @monevator)
A review of Bonds Are Not Forever: The Crisis Facing Fixed Income Investors by Simon Lack. (Aleph Blog)
Exchanges
There is a bear market in stock splits. (Jason Zweig)
Stock exchange listings keep shrinking. (Unexpected Returns)
ETF stats for November 2013. (Invest With an Edge)
Wall Street
Sunday links: history of bubbles
?Tis the season: the Daniel Kahneman classic Thinking Fast and Slow is on sale for the Kindle.
Quote of the day
Morgan Housel, ?If the history of bubbles teaches us anything, it?s to be humble.? (Motley Fool)
Chart of the day
HYG Total Return Price data by YCharts
US corporate bond spreads are at a six-year low. (Sober Look)
Markets
The trend remains intact. (Dynamic Hedge)
High dividend stocks are expensive. (Mebane Faber)
The January effect is shifting to December. (StockCharts Blog)
There is still plenty of room for investors to shift from bond to equity funds. (Horan Capital)
Futures traders continues to cut gold positions. (The Short Side of Long)
Strategy
Should you settle for mediocrity in investing? (NYTimes)
Why risk-adjusted returns matter. (Oblivious Investor via @monevator)
A review of Bonds Are Not Forever: The Crisis Facing Fixed Income Investors by Simon Lack. (Aleph Blog)
Exchanges
Top clicks this week on Abnormal Returns
Thanks for checking in with us this weekend. Here are the items our readers clicked most frequently on Abnormal Returns for the week ended Saturday, December 7th, 2013. The description reads as it does in the relevant linkfest:
Ten buys (and sells) from the ultimate stock pickers. (Morningstar)
There?s never been a better time to be an individual investor. (Jason Zweig)
Meet the world?s biggest investor in hedge funds. (Dealbook)
European markets are rolling over. (The Short Side of Long)
A must-read piece from James Montier on why there is nothing new in investing. (GMO)
Seven reasons from Doug Kass why the market is overvalued. (Pragmatic Capitalism)
Ten themes for 2014 from Rich Bernstein. (Business Insider)
Simple models work better. (Mebane Faber)
2014 stock performance will have nothing to do with 2013. (Mark Hulbert)
Wall Street strategists have not yet jumped on the market bandwagon. (The Reformed Broker)
What other stuff you may have missed on the site this week:
What books Abnormal Returns readers purchased in November. (Abnormal Returns)
Simplify your investing to avoid ?opportunities for failure?. (Abnormal Returns)
Thanks for checking in with Abnormal Returns. You can follow us on StockTwits and Twitter.
The post Top clicks this week on Abnormal Returns appeared first on Abnormal Returns.
Abnormal Returns
need moar corporate welfare
McDonalds did $27 billion in worldwide sales in 2012, finished the year with $15 billion in shareholder?s equity and over $2 billion in cash.
The company had $5.5 billion available to return to shareholders in the form of stock repurchases and dividends last year.But they?d like their US employees to receive financial assistance from taxpayers and the government.
Pigs.
Read Also:
Saturday links: nothing new under the sun
?Tis the season and for the budding entrepreneur on your list check out Hatching Twitter: A True Story of Money, Power, Friendship and Betrayal by Nick Bilton, an Economist book of the year.
Investing
A must-read piece from James Montier on why there is nothing new in investing. (GMO)
Cliff Asness? top ten pet peeves. (Financial Analysts Journal)
Shots fired. Buffett?s alpha is not all that. (Frazzini, Kabiller and Pedersen)
A high frequency trading bibliography. (Themis Trading)
Technology
The epic rise (and fall) of Demand Media ($DMD). (Variety)
The rise and fall of Blackberry ($BBRY): an oral history. (Businessweek)
A profile of Marissa Mayer one year plus into running Yahoo ($YHOO). (Vanity Fair)
Business
Comparing Europe?s Ryanair to America?s Southwest ($LUV). (flightfox via @thebrowser)
Merck ($MRK) is in hot pursuit of the next Ambien. (New Yorker)
Startups
How to become an angel investor. (WSJ)
Don?t start a company, kid. (Big Nerd Ranch)
On the value with sticking with struggling investments. (A VC)
Eighteen lessons for founders on raising money. (Medium)
Robots
Delivery by drone is not a big joke. (Farhad Manjoo)
Do we really want robots occupying more of our personal space? (FT Alphaville)
Google ($GOOG) wants to be a player in robotics. (NYTimes)
2014 is going to be the year of the ?Internet of things.? (Quartz)
Content
How a Gawker editor identifies viral content. (WSJ)
How to burst your own ?filter bubble.? (Technology Review)
A list of reasons why our brains love lists. (New Yorker)
On the economics of ghostwriting. (Priceonomics Blog)
Health
Walk faster, people. (Well)
Are allergy shots a thing of the past? (NYTimes)
Health care spending is slowing. (James Surowiecki)
Food
Does intermittent fasting help you lose weight? (WSJ)
How to get the most out of your bowl of pho. (Medium)
The 20 best craft breweries of 2013. (Paste)
Movies
The 13 best movies you didn?t see in 2013. (Wired)
The Coen Brothers movies ranked. (Slate)
How binge-watching Netflix-style will change our culture. (New Republic)
The highest grossing movies in the US are declining in quality. (Priceonomics Blog)
Excerpts
An excerpt from Scott Adams? How to Fail at Almost Everything and Still Win Big: Kind of the Story of My Life. (BoingBoing via @timharford)
An excerpt from Glen Berger author of Song of Spider-Man: The Inside Story of the Most Controversial Musical in Broadway History. (Slate)
Love and Math: The Heart of Hidden Reality by Edward Frenkel is a book about ?mathematical love.? (Farnam Street)
Ben Bradlee Jr.?s The Kid: The Immortal Life of Ted Williams looks to be the ultimate biography of the greatest hitter. (Slate, WSJ)
An interview with Malcolm Gladwell author of David and Goliath: Underdogs, Misfits, and the Art of Battling Giants. (Knowledge@Wharton)
Barchart.com's Chart of the Day - Micron Technologies (MU) for Dec 6, 2013
The Chart of the Day is Micron Technologies (MU). I found the stock by sorting the New High List for frequency, and then used the Flipchart feature to review the charts skipping over those that didn't have positive gains for the last week and month.
It provides semiconductor memory solutions. The company's memory solutions serve customers in a variety of industries including computer and computer-peripheral manufacturing, consumer electronics, CAD/CAM, telecommunications, office automation, network and data processing, and graphics display. The company's mission is to be the most efficient and innovative global provider of semiconductor memory solutions.
