Tuesday, July 6, 2010

Krypto Wants ...

to buy some US stocks. She's sitting next to me with a paw on my lap and is licking her chops and giving me a nudge. She ran her computer model this AM and sees that US stocks are now under allocated significantly. She want some, so we'll buy a good bit of VTI in the morning. VTI is the US Total Market Index Fund offered by Vanguard. The funds will come from cash which she piled up by selling stocks at much higher prices a few months ago.

One intriguing thing about mechanical asset allocation models: they sure like buying when the fear is palpable and they sell when the greed is infectious. And a model run by a dog is even more impervious to human emotions. Krypto doesn't really know what the model is doing. She just presses the button, generates the trade orders, and gets a dog biscuit as a fee.

No machines running machines here - I use my good doggie, Krypto, as a biological cut-out.

Just imagine what a big "wealth management" firm would charge ? They like to get at least 1%, preferably 1.5% or even 2% of "managed" assets. Per $1 million under management, that's $10-20,000 a year. Krypto is beating the benchmark index [the S&P 500] by more than 5% year-to-date. And for what fee ? Dog biscuits. Hence the true value of all those asset management firms is ... zero. And most of that asset management advice is worth ... zero.

Notice I said "most" advice is worthless. A good broker who listens and helps a person who knows nothing about investing and who guides the person to good, diversified investing (and doesn't try to churn) and helps education a person in meeting financial goals and avoiding emotions or foolish moves, is worth a lot. Those are valuable fees for worthwhile services. I have arranged for Mrs. B to have a good broker for her Sky Fund and she's done very well. The fund pays full commissions for its investments. And it's worth it.

BUT all the "wealth management" hype about finding superior performance is utter garbage. Excellent performance can be obtained for almost free. Just follow Krypto and pay dog biscuits. Those firms who want to charge you to find that "superior performance" guarantee nothing. If they fail, you lose, but still pay. If they succeed, you'll like pay more especially if they put you into hedge funds.

Word of the Day

"Equipoise" - noun and verb [$10]
Equipoise means (noun) 1. equilibrium, a balanced state; 2. a counterbalancing thing; (verb) to counterbalance.
Sentence: [joke] Krypto has superior equipoise for her investing. Is that from her biological advantage - viz. having four legs ? Nope. She equipoises moves up with sales, and moves down with buys using a mechanical model.

24 comments:

Bunkerman said...

Helmet contest entires to date for picks for 2nd half S&P 500 high, low, close:

Bman: 1240 1011 1199
Spin: 1090 860 900
Mav: 1119 839 939

Entries must be 15 pts. from prior picks (prevents gaming the prior "brave" pickers).

Prizes are WW II style US army helmets for you own "bunker".

Daily closing prices of cash S&P are the determinant for wins.

I'll keep the contest open for a few more days.

Bunkerman said...

Done, bot the VTI.

Bunkerman said...

2nd half S&P entries to date (based on daily closing prices)

Entry High Low Close

Bman - 1240 1011 1199
Spin - 1090 860 900
Mav - 1119 839 939

Picks must be 15 pts from prior entries to be valid.

Bunkerman said...

prizes are WW II US army helmets.

Bunkerman said...

bot the VTI

[wierd, earlier comments I posted did not appear]

Bunkerman said...

Mav, your helmet is on the way by Fed Ex ground; Friday likely delivery.

Spin-em said...

thats nice of you bunk

Bunkerman said...

it's a fine helmet ... one would think any real "man" would want to try to win one

;)

Spin-em said...

this is where Liz says..."be carefu here".....market reverses.and hes in all the winners......looool

mfl59 said...

Okay here goes Bunkerman....

High 1183
Low 886
Close 1003

Bunkerman said...

ok mfl, you're in.

mfl59 said...

Can they do it today Bunkerman? Can our beloved Dutch advance to the final of the World's Greatest Event?

Bunkerman said...

frosty must be sulking because I wouldn't let him pick within 1 pt of mine.

Bunkerman said...

who are they playing & when ?

Spin-em said...

Mav//mfl MF's cockblockin me on the low..lmaoooooooo

Spin-em said...

sorry Mrs B

Bunkerman said...

well, IF frosty is on a hunting trip and can't post, I guess I'll pencil him in at 981 on the low (20 pts under mine) and at his 1st half #s for high & close - 1256.

Frosty said...

"frosty must be sulking"...LOL...nonono I caught the Krypto fade in my....I win even when you think I've lost fund ;

Frosty said...

high 1182
low 887
close 1002

Bunkerman said...

uh .. frosty ... every one of your picks is withing 1 pt. of mfl's

I can't let you break the rules to screw his picks.

"Entries must be 15 pts. from prior picks (prevents gaming the prior "brave" pickers)."

Bunkerman said...

Hmmm I didn't think frosty was going native ... seems like he's been hitting the bong re these picks.

Frosty said...

low 940
high 1225
close 1175

Frosty said...

Krypto taking stock with both paws into the bell?????????

Bunkerman said...

OK good enough, frosty.

Krypto did her buying around 9:340 this AM.