The “buy and hold” strategy hasn’t worked in a long time (with, perhaps, the exception of Berkshire Hathaway but even their newer acquisitions seem to be lagging) and now the macro-hedge funds are being hammered. Hopeful sellers of high end Greenwich homes might want to reconsider their strategy of waiting for a fall market recovery to flush out those rich Wall Street buyers because, maybe, those people will stay hunkered down for a while.
WSJ:
Global financial markets continue to be whipsawed by policy makers and economic news, leaving even fund managers who focus on profiting from sweeping macroeconomic trends in a difficult spot….
Many so-called macro fund managers—investors who bet on big economic trends and policy decisions—had predicted a scenario where central banks become increasingly ineffective and developed economies remain weighed down by debt.
But even those who made the correct calls are finding it nearly impossible to time the frequent ups and downs of jittery, fast-moving markets where swings are often driven by pronouncements from politicians or central bankers….
One of the largest hedge-fund firms in the world, Bridgewater Associates LP, has posted lackluster returns this year. The Westport, Conn., firm, which manages $125 billion, deftly navigated the post-financial-crisis markets and returned 36.3% in its flagship macro fund last year. But this year the fund is up 2% through July 20, according to a person familiar with the fund.
Berkshire Hathaway B has not been a buy and hold stock for the last 5+years. In 2009 it had a high of about 100 and is 87 today. Warren Buffett has spent too much time playing footsie with Obummer on soak-the -rich taxes and buying things like newspapers, and next in line for chairman is his son, a farmer. It is also so large now that it is really a mutual fund- It looks like it’s glory days are a thing of the past.
So one has to wonder if the CEO of Bridgewater Associates (from Westport) will be at the Obama fundraiser tonight with Harve. And with Bridgewater assets down, that alone probably accounts for the fact that the Obama camp only raised $75m in June to Romney’s $101m.
Remeber the good old days before the tech bubble burst and everyone thought they were investings geniuses, walking around spouting things like “think long term” and “diversify” as if those were the keys to their financial wizardry. Those were the days when if you couldn’t guarantee someone (well fools at least) 25% they didn’t even want to talk to you. My favorite though is “an investment is a day trade gone bad”. I think that holds true today and probably for the next thousand years.
I do like your story of the fellow who sold his house for two something million after turning down your four something million offer a couple of years earlier. That’s an extra two million that could have been sitting in that sellers pocket, and something that will probably eat away at him and make him crazy for the rest of his life if it hasn’t already killed him. I think the investment word for the day should be reality check: it’s probably something a lot of people need to do.
Hedge fund performance has very little to do with the fact that many high priced Grenwich homes that are not selling. Most of these homes are in marginal areas and are overpriced. To take an extreme example, consider the Big Ugly built by failed speculator Stanley Cheslock and his retired school teacher wife.
And the stock market is not that bad. The Dow is about 13,000, only 1,000 off its all time high, and up 6,000 from its low three years ago.
High end houses in good locations are selling. And premiere locations like Riverside, OG, and some of CC are actually back to their all time highs. The market is lousy for brokers because volume is down, but there is a vibrant market for fairly priced houses in good locations.
Apple has been a great buy and hold and continues up today.
Apple is so due for a “correction” . I like their products but that valuation is insane.
Asset allocation explains 70%+ of a portfolio’s performance. Having a properly diversified portfolio of stocks, bonds, commodities and alternative asset classes will still provide reasonable risk-adjusted returns over the long term. As for stocks, buying companies with great products and franchises that pay dividends is probably the way to go. Examples of such companies would include Procter & Gamble, Cisco, McDonald’s, etc. The dividend yields on these companies will continue to grow in the years ahead and easily surpass those of Treasuries.