“You’re Spunky! Quirky… I Hate Spunky Quirky”

I actually don’t hate quirky, I think quirky is great but I thought of that scene from what I believe was the first episode of the Mary Tyler Moore Show when Mary meets Mr. Grant as I read this article from George Fisher who writes regularly about quirky investment niches. Quirky areas that I have written about over the years include farmland stocks, airports, Norwegian fisheries and toll roads. George’s article provides an overview of timber exports to China from various places and brief introductions to quite a few of the companies in the space. Of the names he mentions I have owned Plum Creek Timber (PCL) in the past, mentioned Sino Forest (SNOFF) in other blog posts and researched a couple of other names on the list. Here is an article about rare earth stocks. I read the article and I still don’t know what they are but it is another quirky little space in the stock market that someone might want to learn about and of course there are countless others. While this sort of study and possible inclusion will not be for everyone I continue to believe this is important for several reasons. In the past I have talked stocks like this possibly offering diversification benefits, unique demand elasticity, and also a broader understanding of markets. For example studying the Norwegian fisheries has taught me a couple of things about the Norwegian economy that I might not have picked up just looking at Statoil (STO) which is a client holding. The new, for me, part of the equation is that one of these quirky things (talking...

"You’re Spunky! Quirky… I Hate Spunky Quirky"

I actually don’t hate quirky, I think quirky is great but I thought of that scene from what I believe was the first episode of the Mary Tyler Moore Show when Mary meets Mr. Grant as I read this article from George Fisher who writes regularly about quirky investment niches. Quirky areas that I have written about over the years include farmland stocks, airports, Norwegian fisheries and toll roads. George’s article provides an overview of timber exports to China from various places and brief introductions to quite a few of the companies in the space. Of the names he mentions I have owned Plum Creek Timber (PCL) in the past, mentioned Sino Forest (SNOFF) in other blog posts and researched a couple of other names on the list. Here is an article about rare earth stocks. I read the article and I still don’t know what they are but it is another quirky little space in the stock market that someone might want to learn about and of course there are countless others. While this sort of study and possible inclusion will not be for everyone I continue to believe this is important for several reasons. In the past I have talked stocks like this possibly offering diversification benefits, unique demand elasticity, and also a broader understanding of markets. For example studying the Norwegian fisheries has taught me a couple of things about the Norwegian economy that I might not have picked up just looking at Statoil (STO) which is a client holding. The new, for me, part of the equation is that one of these quirky things (talking...

Oy Vey

Yesterday was quite a day. The problems in Club Med appear to be worsening, the Goldman Sachs hearings went on longer than I expected (had it on most of the day with only one eye on it), stocks went down a lot and bonds and gold went up. For purposes of navigating through with a portfolio it doesn’t matter whether you can correctly predict what happens with bail outs, austerity, biting of bullets and so on. Euroland and the UK have been unhealthy for a long time now. There was plenty of warning ahead of time for anyone who did some reading. As financial issues were first popping up in the US there were commentaries galore suggesting that it would be bad in the US and worse in Europe. Before this really started to take shape any foreign investor should have reasonably learned that Europe already had worse unemployment, worse demographics (probably) and visibility for slower growth. We have all since become more knowledgeable about the debt problems. Whatever the hell is wrong with Euroland it is likely to continue for a while. As for the Goldman hearings, there was a lot there. Do not take my comments as trying to shed a positive light on GS. I have followed this from the viewpoint of a curious onlooker not as someone interested in trying to solve the caper. It seemed very obvious to me that most of the Senators don’t really understand some very basic things. Carl Levin seemed to not understand being short versus being net short and there is a difference. Goldman could be as evil as...

Oy Vey

Yesterday was quite a day. The problems in Club Med appear to be worsening, the Goldman Sachs hearings went on longer than I expected (had it on most of the day with only one eye on it), stocks went down a lot and bonds and gold went up. For purposes of navigating through with a portfolio it doesn’t matter whether you can correctly predict what happens with bail outs, austerity, biting of bullets and so on. Euroland and the UK have been unhealthy for a long time now. There was plenty of warning ahead of time for anyone who did some reading. As financial issues were first popping up in the US there were commentaries galore suggesting that it would be bad in the US and worse in Europe. Before this really started to take shape any foreign investor should have reasonably learned that Europe already had worse unemployment, worse demographics (probably) and visibility for slower growth. We have all since become more knowledgeable about the debt problems. Whatever the hell is wrong with Euroland it is likely to continue for a while. As for the Goldman hearings, there was a lot there. Do not take my comments as trying to shed a positive light on GS. I have followed this from the viewpoint of a curious onlooker not as someone interested in trying to solve the caper. It seemed very obvious to me that most of the Senators don’t really understand some very basic things. Carl Levin seemed to not understand being short versus being net short and there is a difference. Goldman could be as evil as...

I Disagree With William Bernstein

IndexUniverse posted an interview with William Bernstein who is known for strong beliefs in index investing and has written several books. In there he made two points that I would strenuously disagree with. First he reiterated a point that many indexers make that I think is overly academic as he noted that “passive still beats active in the long run because it has to by mathematical certainty.” I believe this ignores way too many variables to be useful for most folks. I have heard versions of this argument that focus on management fees (based on the article this was Bernstein’s point) and other versions that focus on there only being so much alpha out there. It is not clear to me what Bernstein thinks of as long term but most indexers are talking about market cap weighting. If you recall last summer the ALPS Equal Sector Weight ETF (EQL) came out with a ten year back test of beating the regular cap weighted S&P 500. It should be noted that the ten year period backtested for EQL was probably the best possible time for such a thing because of excess and subsequent fallout of the tech sector and then the financial sector. I would also concede that Bernstein probably thinks long run is longer than ten years and I would not disagree with that but ten years of outperformance is a long time. I believe I have made a reasonably compelling case on this site in the last few years for the importance of correctly avoiding a given sector or country. It does not take a lot of acumen...