A Post to Close The Year

I’ve had some readers post a couple of questions that I will address over the weekend. For now I wanted to close out 2004 with a kind of state of blogging/what this blog’s purpose is type of article. I came up with this idea a couple of days a go and then I saw yesterday a similar idea floated on Bill Cara’s new site. I should disclaim that Bill is a very smart guy and seems to be much more intellectual than I am, by a mile. Stock market blogs have received a lot of attention in the last couple of months and I think that will continue to evolve in a good way. This will hopefully draw more smart people into the blogosphere which will benefit bloggers and investors. We should all hope this happens. Back to Bill’s posting. Someone emailed in asking Bill for a blog review. The writer just started a new blog is my guess. Bill’s reply was to ask why the person was blogging before doing a review. Honestly I don’t know why that was important to Bill in order to do a review, but its a good question for any blogger to ask himself. I maintain this blog for several reasons. I enjoy writing. Its a lot of fun to explore different concepts in the investing realm, take in the occasional comment and then figure out what went right and what went wrong. I learn from this process. I hope that my writings help people become more informed investors. Whether I am smart or dumb, I think its fair to say I have...

Broken Record

Early last week I put up a quick post about whether the covered call CEFs might have some sensitivity to the VIX index. While any relationship is hard to see on a chart, we did have an 8% spike today in VIX while MCN was up 2% and FFA was up 1%. Somehow I think there is a connection but this will take some more...

Blog Value Added

Sticking with BusinessWeek. There were two articles that are from the year end issue that I just stumbled across during our power outage. The first one was about getting extra yield with a section about Master Limited Partnerships (MLPs) being a way to achieve this. I wrote about these the other day (I swear this was a coincidence) and wondered if we are closer to the end than the beginning for these. A major media tout is also a sign of a top, along with the CEF I profiled the other day. The thing with some of these is they went up so much, more than I would have expected for two of the ones I used to own, that they could go down more than anyone expects. The one remaining MLP I have for clients is only up about 10% during this run so I don’t believe I am taking extreme risk by holding on to it. For new readers, I don’t often name names so to avoid the oh he’s just talking his book comments. There is no shortage of low beta MLPs to choose from if this area of the market interests you. This section in B-Week about MLPs was very lacking in detail and gave no what might go wrong words of caution. I say Blog Value Added because if you spend time reading the right blogs you will get much more insight than you will by relying solely on something like BusinessWeek or SmartMoney. I could be dead wrong about these topping out but the questions asked here and on other blogs can be...

Harvard Endowment

There was an interesting article in the year-end BusinessWeek about Harvard’s massive endowment fund and an interview with the management’s CEO, Jack Meyer. You may need a subscription to read those links. What wasn’t in the online articles was the table of Harvard’s unique asset allocation. 15% US equities 13% Commodities (about 3/4 of this part is in timber) 13% Private Equity 12% Hedge Funds 11% US Bonds 10% Foreign Equities 10% Real Estate 6% Inflation Index Bonds 5% Emerging Markets 5% High Yields 5% Foreign Bonds -5% Borrowed Money Some of these things are not very accessible to most folks, like the Private Equity and Hedge Funds. Timber can be accessed through a couple of different REITs, my clients have owned one of these for a long time and I continue to add the same name now for new clients. One of the interesting things about this allocation is the, effectively, 40% equity weight in Foreign stocks. I am a big believer in foreign, my clients have about 30% of their equity exposure in foreign these days. One thing I wish would have been addressed is why they feel the need to borrow money. Anything you can read about what Harvard is doing is good stuff. We have our electricity back so I’ll be able to catch up on emails today and post again...

Just A Quick Post

Due to extreme weather on the mountain where I live we have no power and just got phone service a few minutes ago. The battery on the lap top only lasts for so long so this will be short. I caught up on some reading. Forbes had an article about choosing a planner over a big firms planning products. The planner featured, apparently, uses open ended funds (we’re not talking Vanguard funds with 20 beep expenses) for the long part of her clients’ equity exposure (we’re also not talking about people with $20,000 in assets, if you catch my meaning). For the life of me I don’t understand how a planner can use open end funds for wealthy people. It is wasteful on several levels. Funds always have fees and sometimes loads. On top of the fees to the fund the planner gets a fee. Also too many open end funds have very mediocre returns. It really shocks me the this goes on. Using the occasional fund as a tool is one thing, building a portfolio of mutual funds is ridiculous. But maybe its just me. I have had some emails pile up that I will answer when the power comes back on. It is important to me to answer emails so please bare with me and my utility...