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Thread: Boghies Account Talk

  1. #673

    Default Re: A Message From the 3rd World Country of Kaleforea...

    maybe that wouldn't happen if they paid their bills.

    and thanks boghie, now my pop up ads are back to wise dehydrated emergency foods again instead of ashley who likes old guys and only is 2.5 miles away from me. anybody else live within 2.5 miles of ashley? either we are neighbors or that gal gets around.
    100g

  2.  
  3. #674

    Join Date
    Mar 2006
    Location
    Raleigh, NC
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    3,416

    Red face A Message From the 3rd World Country of Kaleforea...

    Quote Originally Posted by nnuut View Post
    Cross your circuits!
    California passes power grid test, for now; Mon heat looms
    SAN FRANCISCO | Sat Aug 11, 2012 3:49am IST
    California passes power grid test, for now; Mon heat looms | Reuters
    Nnuut,

    In Kalefornea you can get a 'social' pass. Everybody around here gets an 'A' - even if you are not taking classes. I'm claiming 14 A's this simester (yuk, yuk). So, is it unbelievable that our Summer Socialists Gubmint Managed Power Grid Distributors get a passing grade when there are a large number of power outages throughout the sate? Nah, just a way of life.

    And, Burro, I keep getting introduced to Ashley - and when I reload the page a very similar beauty named Jasmine is beseeching me, and then comes Summer. Ooo laaa laaa...
    Lookin' up at the 'G Fund'!!!

  4.  
  5. #675

    Join Date
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    Cool Re: A Message From the 3rd World Country of Kaleforea...

    I always seem to get burned in August. I'm always too early in to be a market timer. But, since I have a pattern I will stick with it:
    • G: 10% - The 'G Fund' does nothing for growth. I'm earning less than $2 a day on this pig
    • F: 18% - This should be correcting - and it might be.
    • C: 42% - There seems to be migration from F to this.
    • S: 17% - Increased taxation will do these guys wonders
    • I: 13% - Who cares about these PIIGS - ContrarianJeff is in it!!!

    Expected Return: 6%
    Expected Risk (Variance): 8%

    The above are inflation adjusted by 3%.
    Thus, annual return of between -2% through +14%
    Lookin' up at the 'G Fund'!!!


  6.  
  7. #676

    Join Date
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    Exclamation August, September, and October are Ugly. Too Much Politics is being added int

    Gotta move a bit more to safety. Too much politics, too much uncertainty, and the market needs a little bit of correction anyway:
    • G: 12% - The 'G Fund' does nothing for growth. This change should earn me a nickle more a day!!!
    • F: 27% - This should be correcting - and it might be, then again it might not be.
    • C: 37% - There seems to be migration from F to this.
    • S: 13% - Increased taxation will do these guys wonders
    • I: 11% - Black Swan PIIGS are in the air - ContrarianJeff is out!!!

    Expected Return: 5%
    Expected Risk (Variance): 7%

    The above are inflation adjusted by 3%.
    Thus, annual return of between -2% through +12%
    Lookin' up at the 'G Fund'!!!

  8.  
  9. #677

    Join Date
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    Default Re: August, September, and October are Ugly. Too Much Politics is being added int

    Don't like the movement of the 'F Fund' today.

    I think folks no longer care about Helicopter Ben. And, we know that spending will not be cut till interest rates jump. Then, spending will be cut. And quick...
    Lookin' up at the 'G Fund'!!!

  10.  
  11. #678

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    Thumbs down Re: August, September, and October are Ugly. Too Much Politics is being added int

    Too many black swans are taking flight for me to be in my normal conservative allocation.

    • G: 27% - Looking a Capital Preservation
    • F: 27% - Looking at Flight to Safety
    • C: 25% -
    • S: 13% --- Because I'm not Amoeba and do not pretend to know
    • I: 8% -


    Expected Annual Return: 4%
    Expected Annual Risk: 5%

    Took 3% risk deviation off the table for a reduction of 1% in return.

    Black Swans are predictable in hindsight. They are actually the expected result. That means that they can be seen. What has been unpredictable about our economy and our foreign relations? Not much. President Black Swan has been flying about for some time thinking his caws from afar will unite the world and enliven the economy. Instead, crows flock with crows.

    By the way, if this makes no sense or my spelling proves awful please understand that I actually contracted Chicken Pox. Yuk and yowser. If that isn't a personal Black Swan I don't know what is.
    Lookin' up at the 'G Fund'!!!

  12.  
  13. #679

    Default Re: August, September, and October are Ugly. Too Much Politics is being added int

    Quote Originally Posted by Boghie View Post
    By the way, if this makes no sense or my spelling proves awful please understand that I actually contracted Chicken Pox. Yuk and yowser. If that isn't a personal Black Swan I don't know what is.
    Chicken Pox!? Wow-sorry to hear that, Boghie. That is definitely a personal Black Swan! I hope you're okay. I had a bad case of it, but that was in 4th or 5th grade 30 something years ago.

    This market is crazy, isn't it? QE3? With the Fed buying mortgage-backed securities at a rate of $40 billion/month? I didn't think they would pull the trigger on this. I thought it would be more jawboning.

    I like your allocation approach on the tracker--it's working very nicely for you. As my TSP has built up, I'm thinking about using a similar approach in order to reduce the damage from increased volatility (which will inevitably come).
    2 Corinthians 5:21

  14.  
  15. #680

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    Default Re: August, September, and October are Ugly. Too Much Politics is being added int

    Quote Originally Posted by Boghie View Post
    By the way, if this makes no sense or my spelling proves awful please understand that I actually contracted Chicken Pox. Yuk and yowser. If that isn't a personal Black Swan I don't know what is.
    Sorry to hear that. Good luck with the recovery...
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  17. #681

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    Lightbulb Fat Tails and Mighty Black Swans...

    To All,

    Some have asked me about my references to the 'Black Swan' and 'Fat Tails'. I will attempt to summarize the concept from Nassim Taleb's great book 'Fooled by Randomness'. So here goes...

    First of all, you don't really look for 'Black Swans', you look for 'Fat Tails'. Black Swans are the result of misunderstood statistical modeling of financial events. Basically, some Quant or analyst doesn't factor in the proper risk for some investment. The following is a comparison of a standard bell curve with one that has a much higher expectation of outlying events (Fat Tails):

    FatTail.jpg

    When I yammer about 'Risk' this is it. I am using the 'Standard Deviation' of plotted numbers. I think the actual 'Risk' I gather from Quicken adjusts a bit with other data - but the result isn't that different from just using a standard deviation.

    Basically, one can expect that any single event (an investment return) in any single time slice (a year) to fall withing a standard deviation in either the negative direction or the positive direction from the center point (average annual return in this case). For the S&P500 (our 'C Fund') from 1957 to now the numbers are as follows:

    Average Return: 11.12%
    Average Risk: 17.48%
    IRR: 9.62%

    This means that one can expect a normal annual return of -6.36% through +28.60% in any single year centering on 11.12%. One can expect returns in this range 68.5% of the time in a normal bell curve. Thus, BirchTree is rich because he is playing the numbers. He is right, but he accepts a lot of risk. What is that risk.

    It is the risk that the bell curve has 'Fat Tails' with the end result that 'Black Swans' fly overhead and drop a mighty turd right on your head. Yuk, almost as bad as the Pox...

    For example, three standard deviations from the center point should be extremely rare - about 0.3%. But, we had one in 2008 and I think we had a double deviation in 2002. Were our models correct. Nope. The models did not account for the dot.Com risk or the debt risk of those two events. In the first, folks bought up dot.Coms on the belief that we were in a new economy and were no longer held down by valuations and earnings. In the second Black Swan event, folks learned that bad debt affects debt instruments far more than they thought they could. Thus, the outliers were both more expected and more destructive than the brainiacs thought. Not understanding the risk resulted in a Fat Tail distribution of risk which resulted in a Black Swan taking flight and crapping on our heads.

    And both the 'Fat Tails' and the 'Black Swans' are obvious after they occur.

    That is the beauty of it all. It is also the frustrating element of it all. And, it is the reason that folks like Ric Edelman and Ray Lucia and others place your assets in a myriad of asset classes. It is also why BirchTree comes out ahead. He just waits out the Fat Tails and allows the market to normalize. If you do not panic during unlikely crashes you can make lots of mullah by grabbing assets from the panicers. Those $7 to $10 'C Fund' shares that were available during the panic have made me mucho dollars. I can't imagine BT - but then again he retired in that period so his contributions ended.

    Now, do you have to take the full risk during periods of extreme danger or volatility? Nope. You can distribute your assets through the various asset classes and play on the margins. Right now, for example, an unknown Fat Tail event seems more likely to me than earlier this year (or, for that matter, than for the past few years). Why be in one fund? Sitting 100% in the 'S Fund' means you accept the risk of much more prevalent tails based on weird events (for example, one might guess that small to mid-size corporations might be hammered more by the 'Fiscal Cliff' than huge multinationals). Do you want to be all out and sitting in the 'F Fund'? Yowser, not even worth discussing. How about sitting 100% in the 'C Fund' - lots of banks and financials in that one? How about the lovely 'I Fund', yowser. Lots of external sources of variance playing instruments they have no experience in.

    So, that leaves the 'G Fund'. Resulting in losing the gains we made this year and in 2009. Resulting in an 'Alpo Meal Deal Retirement Program'.

    What to do, what to do? Spread your wealth around our funds in a scientific manner and rebalance as things go awry. And, largely stay IN THE MARKET for the VAST majority of time. Having some assets not moving in the negative direction during a correction/crash buffers you and gives you much more time to figure out whether you are in a Black Swan event or in a standard market volatility move. Finally, contribute ONLY to the equity funds and increase those contributions when things are really bad. And, do not support folks who want to spread your wealth around to lops (low output people) and losers. You and your family and maybe your friends and relatives will need your support.
    Lookin' up at the 'G Fund'!!!

  18.  
  19. #682

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    Default Re: Fat Tails and Mighty Black Swans...

    My brain hurts...
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  21. #683

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    Default Re: Fat Tails and Mighty Black Swans...

    Quote Originally Posted by RealMoneyIssues View Post
    My brain hurts...
    Better than your "fat tail" hurting...............

  22.  
  23. #684

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    Default Re: Fat Tails and Mighty Black Swans...

    Quote Originally Posted by Intrepid_Timer View Post
    Better than your "fat tail" hurting...............
    Been peeking in the gym showers again???
    Rules:
    - Trade what you see, not what you believe
    - Don't put stuff in your signature that a Mod doesn't like

    "Government exists to protect all people’s rights, not some people’s feelings." - A. Barton Hinkle

    Great Tools:
    http://www.CreditKarma.com
    http://www.Mint.com
    http://www.SaveUp.com/r/nmJ


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