Comments on: The Problem With a Well-Diversified Portfolio http://www.dailyreckoning.com.au/the-problem-with-a-well-diversified-portfolio/2009/03/19/ An independent perspective on the Australian and global investment markets Sat, 21 Nov 2009 10:39:45 -0600 http://wordpress.org/?v=2.8 hourly 1 By: Greg Atkinson http://www.dailyreckoning.com.au/the-problem-with-a-well-diversified-portfolio/2009/03/19/comment-page-1/#comment-71007 Greg Atkinson Tue, 24 Mar 2009 02:48:25 +0000 http://www.dailyreckoning.com.au/?p=5441#comment-71007 Pete there is no doubt that DR is much better than most of the rubbish churned up by the mass media. I do like the coverage on Bloomberg though. Pete there is no doubt that DR is much better than most of the rubbish churned up by the mass media. I do like the coverage on Bloomberg though.

]]> By: Fred http://www.dailyreckoning.com.au/the-problem-with-a-well-diversified-portfolio/2009/03/19/comment-page-1/#comment-70943 Fred Mon, 23 Mar 2009 07:09:23 +0000 http://www.dailyreckoning.com.au/?p=5441#comment-70943 Jack, your situation sounds similar to mine, money stuck in a lousy retail super fund, nevertheless working it. Several years ago, told their deaf trustee ears pinned to their dumb heads that they should have int'l cash and gold options. I too climbed onto the cash rock before the tsunami rolled in and washed away all the fancy investment sand-castles. I guess I have a trading-type attitude and reading of the DR and other similar webs to thank. Most DR contributors seem to be flogging gold or something, but that's OK, as any sales pitch can be factored in. If as of March 09 you only get data to June 08, you are really getting shafted. Mine was a few days behind reality. As I don't trust super funds, even so called "cash", as far as I could smear their entrails, I bailed out most of my super money a while ago and set up an SMSF. It takes a bit more effort to move the money around, but at least I don't have them between me and my money. You may not be trapped. I feel many super accumulation funds with "choice" were firstly about creating pretty vehicles that would entice employees out of defined benefit funds, thereby lessening the drain on employers in supporting their legacy defined benefit scheme balances when the share markets did not grow. Secondly when these new accumulation funds lost money, like now, since you had the choice, you also get the blame, while they get the risk free fees. Jack, your situation sounds similar to mine, money stuck in a lousy retail super fund, nevertheless working it. Several years ago, told their deaf trustee ears pinned to their dumb heads that they should have int'l cash and gold options.

I too climbed onto the cash rock before the tsunami rolled in and washed away all the fancy investment sand-castles. I guess I have a trading-type attitude and reading of the DR and other similar webs to thank. Most DR contributors seem to be flogging gold or something, but that's OK, as any sales pitch can be factored in.

If as of March 09 you only get data to June 08, you are really getting shafted. Mine was a few days behind reality. As I don't trust super funds, even so called "cash", as far as I could smear their entrails, I bailed out most of my super money a while ago and set up an SMSF. It takes a bit more effort to move the money around, but at least I don't have them between me and my money. You may not be trapped.

I feel many super accumulation funds with "choice" were firstly about creating pretty vehicles that would entice employees out of defined benefit funds, thereby lessening the drain on employers in supporting their legacy defined benefit scheme balances when the share markets did not grow. Secondly when these new accumulation funds lost money, like now, since you had the choice, you also get the blame, while they get the risk free fees.

]]> By: Pete http://www.dailyreckoning.com.au/the-problem-with-a-well-diversified-portfolio/2009/03/19/comment-page-1/#comment-70907 Pete Mon, 23 Mar 2009 01:52:05 +0000 http://www.dailyreckoning.com.au/?p=5441#comment-70907 The longer you read here the more you figure out who to listen to. Kris is a newsletter salesman - so that is what I expect from him. The only authors I personally find reliably (mostly) unbiased are Bill and Dan, plus some guest articles now and then. But as with anything you read, it is worth considering what the author wants out of the deal too. Find the bias and if it is a problem, then stop reading. Still, this hardly even rates in bias when compared with the normal mass-media :) The longer you read here the more you figure out who to listen to. Kris is a newsletter salesman - so that is what I expect from him.

The only authors I personally find reliably (mostly) unbiased are Bill and Dan, plus some guest articles now and then.

But as with anything you read, it is worth considering what the author wants out of the deal too. Find the bias and if it is a problem, then stop reading.

Still, this hardly even rates in bias when compared with the normal mass-media :)

]]> By: Greg Atkinson http://www.dailyreckoning.com.au/the-problem-with-a-well-diversified-portfolio/2009/03/19/comment-page-1/#comment-70893 Greg Atkinson Mon, 23 Mar 2009 00:56:11 +0000 http://www.dailyreckoning.com.au/?p=5441#comment-70893 Paul I agree with you. Sometimes the DR articles really do not seem very "independent" all all. Paul I agree with you. Sometimes the DR articles really do not seem very "independent" all all.

]]> By: Paul Foye http://www.dailyreckoning.com.au/the-problem-with-a-well-diversified-portfolio/2009/03/19/comment-page-1/#comment-70696 Paul Foye Sun, 22 Mar 2009 02:04:06 +0000 http://www.dailyreckoning.com.au/?p=5441#comment-70696 Kris, I must say that I felt your article had no substance or truth or provided any information worthy of consideration what so ever. The messages I got from your article, was that you want to promote your services because you are obviously better than the planners and fund managers, and secondly, you are just as skilled at jumping on band wagons and playing to investors fears and feeling as all the others. It also reveals to me just how much you don't understand the financial planning or funds management industry, but due to either your ignorance, ego, or insular life, you are more than happy to put them down and most likely at the cost of the investor and their financial well being. This is rather disappointing coming from the dailyreckoning. For example, "Considering that investing is supposed to be about getting wealthier, sticking to the convention of diversifying will only result in your fund manager getting wealthier while you see your investments barely keep pace with inflation." There is absolutely no truth or sense in this statement what so ever and illustrates your attempt to play on investor sentiment which is easy at this time. For your information, I can promise you that investing is about a lot more than just "getting wealthier". How do you think you are going to be able to help people if you think its about "getting wealthier" when most people don't understand what wealth actually is? Lastly, you should not pat yourself on the back ("the facts speak for themselves") because you had a reasonable 3 months in the markets. Just about all markets went up around that time and 3 months is not exactly reliable sample. Kris, I must say that I felt your article had no substance or truth or provided any information worthy of consideration what so ever. The messages I got from your article, was that you want to promote your services because you are obviously better than the planners and fund managers, and secondly, you are just as skilled at jumping on band wagons and playing to investors fears and feeling as all the others. It also reveals to me just how much you don't understand the financial planning or funds management industry, but due to either your ignorance, ego, or insular life, you are more than happy to put them down and most likely at the cost of the investor and their financial well being.

This is rather disappointing coming from the dailyreckoning.

For example, "Considering that investing is supposed to be about getting wealthier, sticking to the convention of diversifying will only result in your fund manager getting wealthier while you see your investments barely keep pace with inflation."

There is absolutely no truth or sense in this statement what so ever and illustrates your attempt to play on investor sentiment which is easy at this time. For your information, I can promise you that investing is about a lot more than just "getting wealthier".

How do you think you are going to be able to help people if you think its about "getting wealthier" when most people don't understand what wealth actually is?

Lastly, you should not pat yourself on the back ("the facts speak for themselves") because you had a reasonable 3 months in the markets. Just about all markets went up around that time and 3 months is not exactly reliable sample.

]]> By: Jack http://www.dailyreckoning.com.au/the-problem-with-a-well-diversified-portfolio/2009/03/19/comment-page-1/#comment-70670 Jack Sun, 22 Mar 2009 00:04:22 +0000 http://www.dailyreckoning.com.au/?p=5441#comment-70670 Couldn't agree more fred. My super fund still has this stupid article plastered over it saying the same thing with Data only up to June 2008. I agree that this sort of thing insults ones intelligence. Every time I ring them I ask them if they have the gaul to update it with the figures since then. I got my super into cash just before the meltdown (after being "advised" not to), and I have since asked them where the cash is actually invested - Govt bonds and the like. I have strongly suggested they come up with some new funds for Gold/Silver and maybe another one targeting shares in companies related to necessities (like toilet paper, I mean US Dollars, no, toilet paper) but they still seem keen on their super diversified clap trap funds which are all investing in pretty much the same things. The result is I am trapped, still, cash is better than nothing at the mo. Couldn't agree more fred. My super fund still has this stupid article plastered over it saying the same thing with Data only up to June 2008. I agree that this sort of thing insults ones intelligence. Every time I ring them I ask them if they have the gaul to update it with the figures since then. I got my super into cash just before the meltdown (after being "advised" not to), and I have since asked them where the cash is actually invested - Govt bonds and the like. I have strongly suggested they come up with some new funds for Gold/Silver and maybe another one targeting shares in companies related to necessities (like toilet paper, I mean US Dollars, no, toilet paper) but they still seem keen on their super diversified clap trap funds which are all investing in pretty much the same things. The result is I am trapped, still, cash is better than nothing at the mo.

]]> By: Fred http://www.dailyreckoning.com.au/the-problem-with-a-well-diversified-portfolio/2009/03/19/comment-page-1/#comment-70584 Fred Sat, 21 Mar 2009 14:21:14 +0000 http://www.dailyreckoning.com.au/?p=5441#comment-70584 My super fund manager recently sent me one of their cute little annual reports, err, I mean idiotic brochures, espousing: stick with it, don't panic & switch now, its bad for all of us so don't you feel so bad, blah, blah, blah. They even had an idiotic analogy about not abandoning a tropical island holiday mid way through because it had been raining for the last few days, and wouldn't you feel like an idiot if after you left, the sun came out for the rest of the vacation? The flaw in their stupid analogy belies the flaw in the investment decision making philospohies they push onto their un-witting customers. The presuppositon being that it is normal for you punters to make decisions without checking the data. In the case of the holiday analogy - the weather charts etc, which would make the decision pretty easy. In the case of investing in the markets; they equally omit to suggest checking price charts etc. It gets worse, rather than offering investements that have charts readily available on the internet, they offer these funky fancy-pants big name funds that are just concoctions of other funds - but importantly have no charts anywhere. Sure they let you download the unit prices, so that they can say to APRA they are not preventing customers from making their own charts, but it is odd that they allow the prices to be downloaded in a laborious manner, one days price at a time. In the holiday analogy that would be like the resort owner letting you read the weather report at a rate of one word per 1/2 hour. The funky-fancy-pants investment vehicles also can not have stop losses applied. No wonder the punters lose. My super fund manager recently sent me one of their cute little annual reports, err, I mean idiotic brochures, espousing: stick with it, don't panic & switch now, its bad for all of us so don't you feel so bad, blah, blah, blah. They even had an idiotic analogy about not abandoning a tropical island holiday mid way through because it had been raining for the last few days, and wouldn't you feel like an idiot if after you left, the sun came out for the rest of the vacation? The flaw in their stupid analogy belies the flaw in the investment decision making philospohies they push onto their un-witting customers. The presuppositon being that it is normal for you punters to make decisions without checking the data. In the case of the holiday analogy - the weather charts etc, which would make the decision pretty easy. In the case of investing in the markets; they equally omit to suggest checking price charts etc. It gets worse, rather than offering investements that have charts readily available on the internet, they offer these funky fancy-pants big name funds that are just concoctions of other funds - but importantly have no charts anywhere. Sure they let you download the unit prices, so that they can say to APRA they are not preventing customers from making their own charts, but it is odd that they allow the prices to be downloaded in a laborious manner, one days price at a time. In the holiday analogy that would be like the resort owner letting you read the weather report at a rate of one word per 1/2 hour. The funky-fancy-pants investment vehicles also can not have stop losses applied. No wonder the punters lose.

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