The Motley Fool Discussion Boards
Investing/Strategies / Bonds & Fixed Income Investments
|Subject: Re: MBIA Bonds?||Date: 12/22/2012 11:16 AM|
|Author: globalist2013||Number: 34579 of 35400|
Good morning, and thanks for the clarification. I'll have to rerun my numbers to see who really is the more 'scaredy-cat' investor. (LOL) But here's a quick summary of how I would allocate any portfolio, made up of any combo of asset-classes. I'd bet no more than 8% of AUM on the best of the best, and I'd keep bets on the best of the worst at around 1/8 of 1%. In other words, I spread money across seven 'risk/uncertainty tranches', halving my individual exposures at each step.
Yeah, I changed my handle, because 2013 is a new year, offering new investing challenges. Plenty of respected market observers are forecasting that US stocks won't offer more than 4%-5% per year for the remaining decade, but that decent money could be made overseas. If that's the map, then that's also the plan. In short, I've gotta go global if I want make decent money, meaning, a real rate of return after taxes have been paid and inflation has been subtracted, or a nominal 8%, and 12%-13% would be better.
As I mentioned to you by PM, I've been poking around in commodities and currencies as possible diversifiers. But I haven't yet come up with a gig as simple as what I do with bonds, and my thinking is this. It's not the asset-class that matters, but the combo of the investor and his game plan. That's what makes the money, as Van Tharp has clearly demonstrated with his experiments. Even when given a game with a 60% expectancy, two-thirds of players will lose money. Why? Because they don't make good bets. That's all that 'investing' is, a betting game, and the key to winning isn't winning each hand --or even most of the hands --but betting each hand correctly.
That's why most investors walk away from markets with less after-tax, after-inflation money than they bring to them. It's not their lack of basic math skills that cause them to lose money, but their unwillingness to use those basic skills. Instead, they prefer to believe the myth that money can be won just by showing up at the front door of the securities casino. Well, "No", things are a bit more complicated than that. First, a game has to be found that offers a positive expectancy, and then that expectancy has to be exploited efficiently. For a dozen years, I was able to so in bonds. But that gig is winding down, and I need to find a new one. In time, I will. The games are out there, or can be invented. That, I'm sure of. As long as there are viable markets --no matter the asset-class-- disciplined players can make decent money.
Best wishes for a prosperous 2013,
|Copyright 1996-2014 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us|