A few lines from a movie never leave your mind, I do not always remember the context, but I remember the dialog. "The Big Chill" is one of the few movies that I own (VHS). At dinner, William Hurt, Jeff Goldbloom and Tom Berenger discuss their past as dogs growl for a turkey leg on Thanksgiving. JoBeth Williams brings peace by chastising of men, and that Hurt replied with a grin, "Just try to keep the conversation. Lively" It's one of those "had to be there" moments.
Tire Dealers "keep the conversation lively." Have you noticed that long-term rates fell, while short-term rates have risen? Low long-term interest rates is the housing asset (a positive, perhaps), with the implicit suggestion of a slowing economy (a decrease in long-term loans by corporations suggests a slowdown in the economy). All this happens when the Federal Reserve rates higher torques!
An interest rate anomaly occurs when short-term rates is near than long-term rates. This is known as an "inverted yield curve". Inverted yield curve preceded the last five recessions. "There's something strange going on in the bond market," writes ES Browning (Wall Street Journal, May 31, 2005). Markets have long-term trends right, usually .
Low interest rates encourage positive stock returns, but market volatility seems to defy such optimism. One day stocks are up and the next down. Someone said: "When interest rates are low to grow share." Many market analysts get hit-happy moments with low interest rates. Optimism not move markets, pessimism does. Browning wisely observes' ... the prevailing view in the stock market is one of the celebrations ... "When it should be feared. (WSJ, May 31, 2005)
Some economists expect deteriorating economic conditions. "In the past 35 years, the skeptics say, have Fed rate increases tend to end up with the problems." (WSJ, May 31, 2005) Most recently, the chewing gum market plunged in 2000 left stocks looking like bubble gum pink on the cheeks of a child.
No simple resolution keeps investors against the dangers of an inverted yield curve. Each analyst, economist and expert has an opinion. What matters is the reaction of the bond market, and the current short and long term profits are "keep it interesting."
My point? There is no way to each asset class movement (up or down) to predict. Broad diversification within the bond universe provides overall benefit to your portfolio. This does not mean owning all possible binding, it means integrating bond management consistently to achieve within the context of your risk tolerance, your goals.
* These are the main bond (fixed income) asset classes U.S. government
* International Fixed Income
* Municipals (tax-efficient accounts)
* High Yield
* Emerging Market Debt
"If there is one thing is no longer a subject of controversy, it is no longer an issue of importance." - William Hazlitt, English essayist (1778 - 1830)
Ray Randall serves clients as a registered investment advisor with his firm, Ethos Advisory Services, Essex, Massachusetts. He has extensive experience in financial services, writes a weekly newsletter for Ethos Advisory Services, and coordinates the developments at Echievements . Ray has a Masters Degree from Gordon-Conwell Theological Seminary, Hamilton, MA. You can e-mail him or call
Thursday 30 January 2014
Wednesday 15 January 2014
Guru Focused: Robert Olstein's Short Sells
Although it is quite rare that value gurus sell stocks short, Robert Olstein has been selling short in his Financial Alert Fund. Accountant-turned fund manager spots values by looking behind the numbers. In the second quarter of 2004, Robert Olstein sold short American Italian Pasta Co. (PLB) at $ 31. After about six months he covered for $ 20, quickly made more than $ 1 million for his fund. He is currently short two files: Computer Sciences Corp. (CSC) and Fleetwood Enterprises Inc. (FLE), although things do not always go that smoothly.
Robert Olstein is definitely one of the best money managers (which is why he's Hall of Fame Guru Focus). The strategy of looking behind the numbers has brought his fund a 15.5% average annual return of more than 10 years after all costs. The only downside was the year 2002, from 19%. In 2000, the year of the tech bubble burst, the fund increased by 12%, and in 2001, an increase of 17%.
Robert Olstein began shorting Computer Sciences Corp. (CSC) in the first quarter of 2004 at an average price of $ 41. He said that the accounts of CSC is not in line with economic reality, CSC is worth about $ 30. The price of CSC not down, however. He then shorted more shares. But the price of CSC went up, by the fourth quarter of 2004, the price of CSC was $ 56. It came down to what in the first quarter of 2005, Robert Olstein was confident enough to share again more recently. From the end of the first quarter, his short position in CSC total of 504 500 shares at an average price of $ 42. As of this writing, the price of CSC is $ 46.4.
The other short selling of Robert Olstein is Fleetwood Enterprises Inc. (FLE). He thinks Fleetwood Enterprises Inc. is worth about $ 5-6 per share. He sold short 1.1955 million shares of FLE at about $ 9.2 per share in the first quarter of 2005. Now Fleetwood has a price of $ 9.5 per share.
Remarkably, another highly respected value manager, GuruFocus guru, Robert Rodriguez, disagreed with his colleagues Olstein value. In the fourth quarter of 2004, 269,500 shares of FLE Rodriguez added to his holdings at about $ 14 per share. If the share price dropped to $ 9, 2.2619 million more shares, bringing its total position in Fleetwood makes to 3.7144 million shares he added.
Who is right, Robert vs. Robert?
Dr. Charlie Tian is the Director of Research at GuruFocus.com, a website follows the stock picks and market insight of guru investors such as Warren Buffett, George Soros, etc.
Robert Olstein is definitely one of the best money managers (which is why he's Hall of Fame Guru Focus). The strategy of looking behind the numbers has brought his fund a 15.5% average annual return of more than 10 years after all costs. The only downside was the year 2002, from 19%. In 2000, the year of the tech bubble burst, the fund increased by 12%, and in 2001, an increase of 17%.
Robert Olstein began shorting Computer Sciences Corp. (CSC) in the first quarter of 2004 at an average price of $ 41. He said that the accounts of CSC is not in line with economic reality, CSC is worth about $ 30. The price of CSC not down, however. He then shorted more shares. But the price of CSC went up, by the fourth quarter of 2004, the price of CSC was $ 56. It came down to what in the first quarter of 2005, Robert Olstein was confident enough to share again more recently. From the end of the first quarter, his short position in CSC total of 504 500 shares at an average price of $ 42. As of this writing, the price of CSC is $ 46.4.
The other short selling of Robert Olstein is Fleetwood Enterprises Inc. (FLE). He thinks Fleetwood Enterprises Inc. is worth about $ 5-6 per share. He sold short 1.1955 million shares of FLE at about $ 9.2 per share in the first quarter of 2005. Now Fleetwood has a price of $ 9.5 per share.
Remarkably, another highly respected value manager, GuruFocus guru, Robert Rodriguez, disagreed with his colleagues Olstein value. In the fourth quarter of 2004, 269,500 shares of FLE Rodriguez added to his holdings at about $ 14 per share. If the share price dropped to $ 9, 2.2619 million more shares, bringing its total position in Fleetwood makes to 3.7144 million shares he added.
Who is right, Robert vs. Robert?
Dr. Charlie Tian is the Director of Research at GuruFocus.com, a website follows the stock picks and market insight of guru investors such as Warren Buffett, George Soros, etc.
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