Gyroscopic Investing

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We see that Berkshire loads significantly on the [low beta] and [quality] factors, reflecting that Buffett likes to buy safe, high-quality stocks. Controlling for these factors drives the alpha of Berkshire’s public stock portfolio down to a statistically insignificant annualized 0.1%, meaning that these factors almost completely explain the performance of Buffett’s public portfolio.

What does Jim Henson have to do with investing?

dragoncar wrote: What does Jim Henson have to do with investing?

Internally, some people at Goldman Sach's have called their less sophisticated clients "muppets."

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I find this interesting.  After the huge drawdown during the Great Depression, all portfolios basically move in lock-step.  I would have expected that excluding the worst months would have resulted in a steeper trajectory upwards and vice versa for excluding the best months.  They should have diverged over time, so the chart doesn't make sense to me. 

rocketdog wrote: I find this interesting.  After the huge drawdown during the Great Depression, all portfolios basically move in lock-step.  I would have expected that excluding the worst months would have resulted in a steeper trajectory upwards and vice versa for excluding the best months.  They should have diverged over time, so the chart doesn't make sense to me.

They did diverge over time, except all started diverging right at the 1929 peak where the return series starts rather than the trough which is a bit misleading.  Also, the chart looks logarithmic so it probably understates the trajectories experienced at any point-in-time.

melveyr wrote:

dragoncar wrote: What does Jim Henson have to do with investing?

Internally, some people at Goldman Sach's have called their less sophisticated clients "muppets."

Wow I must have missed that memo :-)

Re: post great depression diversion, isn't that mostly due to the timing of the best and worst 10  months mostly occurring near that timeframe?  If you used the 10th-20th best and worst months maybe it would diverge more later on

melveyr wrote:

dragoncar wrote: What does Jim Henson have to do with investing?

Internally, some people at Goldman Sach's have called their less sophisticated clients "muppets."

Ah!  I've actually been wondering about all the muppet references around here lately.  Now it finally makes sense.

MangoMan wrote: Muppet: A person who is ignorant and generally has no idea about anything.

I think it was used even earlier by Wall Street, i.e. the 1960's, back when the term was "moppet".

The point of the divergent returns chart was to show that both good and bad months are clustered together.  The good months follow right after the bad months due to mean-reversion as emotional sanity retakes hold, so you are better off being in the market and achieving that upside than missing out on the best ten months.  Likewise, you are better off avoiding the ten worst month than being in the market.  In other words, the upside will take care of itself as long as you control your losses which is not what the muppets do, they ride their losses all the way down and avoid the market all the way up (like now).

Muppet is also New Zealand (and Australia?) slang for someone that is ignorant.

MachineGhost wrote:

rocketdog wrote: I find this interesting.  After the huge drawdown during the Great Depression, all portfolios basically move in lock-step.  I would have expected that excluding the worst months would have resulted in a steeper trajectory upwards and vice versa for excluding the best months.  They should have diverged over time, so the chart doesn't make sense to me.

They did diverge over time, except all started diverging right at the 1929 peak where the return series starts rather than the trough which is a bit misleading.  Also, the chart looks logarithmic so it probably understates the trajectories experienced at any point-in-time.

Ah, it's the logarithmic scale that threw me off. 

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From 16 countries, excludes Germany.

Will these blanket deragortary threads or posts about muppets help people coming to these forums feel welcome and increase returns?

I really enjoy your threads MG, but this is starting to get old.

All righty, I'll put a kibosh on it.

MachineGhost wrote: All righty, I'll put a kibosh on it.

I think the karma gods struck me back for being grumpy.  Upstairs bathroom decided to spring a leak. 

Me, I want all the Machine Ghost posts I can get.

Also don't think newcomers are that fragile.

Liz L. wrote: Also don't think newcomers are that fragile.

Agree.  And they probably won't know what muppets means either. 

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Well okay, those are the top federal tax rates you could pay. For most of us, things aren't changing right now.

TennPaGa wrote:           2012  2013  % increase
          ----  ----  ----------
OASDI Tax  4.2%  6.2%      48%

Well that's true, and it sucks. But I thought we were talking about capital gains tax rates, not the taxes levied on wages.

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