Five Reasons NOT!

Forbes just published an infuriating article that looks written to save active managers from passive indexing: "5 Reasons You Should Own Stocks Instead of Mututal Funds (Or ETFs)"

When you click the link above, you WILL get the story, original Forbes' link here, but you will also see my comments pointing out the false statements and faulty logic of the author's premises and conclusions. Don't be fooled by false claims and colloquialisms, there is no basis for this story title or arguments made.

There IS a sophisticated argument against indexing which you can find here. And even this story misses much of the systemic risk indexing unavoidably presents. But for practical purposes we are nowhere near its limits and, today, does not apply to individual investors.

So go on and continue to buy and hold passive index funds and earn returns superior to actively managed funds for as long as they last in the foreseeable future.

Feel free to post comments.

Disclaimer: Posts are for education only and not investment advice, may be subject to change without notice, and, while prepared with care, may be subject to omissions and errors.

America vs the World

So many of us live in our own bubble, it's sometimes instructive to look outside and gain perspective. Yesterday's market rally may yet confirm many Americans' view that our markets are the best in the world, with all the suffering we are supposedly imposing on China and Presidential displeasure with European allies. Some also use our market to validate toxic politics and, more importantly, invalidate or mock the politics of our allies.

As is stated here many times, the politics are only a part of the economics of any nation, or, the world for that matter. So, as we look at recent price action, let's compare our returns with those of other nations.

Today's Wall Street Journal print version "Market Digest", clip below, shows year-to-date returns of major stock indexes worldwide. Of course, we can't buy stock indexes, we need tracking ETFs for that, but this is instructive in any case.

The US benchmark Standard & Poors 500 stock index closed Friday up 18.5% year-to-date. Without looking, does anyone want to guess which countries have closed HIGHER than the S&P? Here's the list culled from today's 10/12/19 Wall Street Journal Market Digest pictured above:

France CAC-40               +19.8%
Italy FTSE MIB              +21.0%
Sweden OMX Stkhlm    +18.8%
Switzerland Swiss Mkt   +18.8%
Germany DAX came in even at +18.5%

China, who is supposedly suffering under US Tariff threats is up 19.2%. And don't forget another dictatorship, Russia, up 24.7%.

Very different politics, very different countries, above, meet or beat America's benchmark. This should be instructive the next time we hear anyone who arrogantly and erroneously disparages our allies, dictatorships excepted. Admittedly, we could all do much better without belligerence and this tariff nonsense.

Feel free to post comments.

Disclaimer: Posts are for education only and not investment advice, may be subject to change without notice, and, while prepared with care, may be subject to omissions and errors.

Commodity Market Lab for the Third Quarter 2019

The Third Quarter 2019 Commodity Market Lab_pdf is posted.

Commodity Outlook

The effects of toxic policy and erosion of international norms is finally taking a toll on trade, world economies and prosperity. Commodities, in spite of occasional price spikes, have lost most of their modest gains of the last two years. Instability at the top has lead to unstable markets worldwide. If this continues, we may yet re-learn the brutal lessons of tariffs and jingoism from the Twentieth Century.

Feel free to post comments.

Disclaimer: Posts are for education only and not investment advice, may be subject to change without notice, and, while prepared with care, may be subject to omissions and errors.