11/26 newsletter
*** Market
SP500 is advancing quickly to new high amid positive sentiment for the holidays. November gain is easy money... My portfolio has reached +20% with 4 more trading days to go. I have checked several eminent fund manager's reports. None of them are on the sell side. In fact, Southeastern just purchased full load of stocks in exchange of all its cash (DELL is one, guess who is buying when it was down 25%?). However, it is not accepting new investors, this also indicates the market is not hugely undervalued.
*** Comment
I have completed a new screen to track world markets. Instead of tracking mainly in US market, I am now able to track almost any vibrant stock market in the world -- although buying stocks in these markets is another difficult task to overcome. The quest here is that, according to modern portfolio theory, a part of the portfolio should be diversified into other developed countries as well as emerging markets, I guess, in case US market does not work such as in the 70's.
My other reasoning is from Buffett's hint. That is -- a good management in a good economy can grow very satisfactorily. On the other hand, even a smart management can not outpace the constraint of a difficult economy. (Skillful housewife can not cook without rice?) Therefore, my derivation is to find the vibrant economies, then apply my stochastic method, which should give me strong stocks in these markets. The chance of yielding satisfactory result should improve further.
Of course, there is a caveat (just like anything else in stock market). I.e. whether the "vibrant" economy is only a more violent market. Or it is a materially growing market. Sometimes, the two can not be differentiated until the bear market comes (then it is too late). Mathematically speaking, if the volatility is too high, it can not be compensated enough by the perceived high return. The total effect can still be a losing game. Something to take heed.
--Steve
SP500 is advancing quickly to new high amid positive sentiment for the holidays. November gain is easy money... My portfolio has reached +20% with 4 more trading days to go. I have checked several eminent fund manager's reports. None of them are on the sell side. In fact, Southeastern just purchased full load of stocks in exchange of all its cash (DELL is one, guess who is buying when it was down 25%?). However, it is not accepting new investors, this also indicates the market is not hugely undervalued.
*** Comment
I have completed a new screen to track world markets. Instead of tracking mainly in US market, I am now able to track almost any vibrant stock market in the world -- although buying stocks in these markets is another difficult task to overcome. The quest here is that, according to modern portfolio theory, a part of the portfolio should be diversified into other developed countries as well as emerging markets, I guess, in case US market does not work such as in the 70's.
My other reasoning is from Buffett's hint. That is -- a good management in a good economy can grow very satisfactorily. On the other hand, even a smart management can not outpace the constraint of a difficult economy. (Skillful housewife can not cook without rice?) Therefore, my derivation is to find the vibrant economies, then apply my stochastic method, which should give me strong stocks in these markets. The chance of yielding satisfactory result should improve further.
Of course, there is a caveat (just like anything else in stock market). I.e. whether the "vibrant" economy is only a more violent market. Or it is a materially growing market. Sometimes, the two can not be differentiated until the bear market comes (then it is too late). Mathematically speaking, if the volatility is too high, it can not be compensated enough by the perceived high return. The total effect can still be a losing game. Something to take heed.
--Steve
posted by Steve at 8:22 PM
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