^ By market are you referring to the bond market? Or stock market? Or both?
If I recall you have wall street experience. I don't understand why a small investor would want to prop up any market in the first place. All an investor needs to care about is valuations. Let the hedge funds and global players do whatever they want. If they are artificially propping up the markets, good for small investor. He simply takes some profit, knowing eventually valuations determine market direction. As the saying goes - in the short term the market is unpredictable (or something similar) in the long term it is a weighing machine.
Hedge funds if I am not mistaken have underperformed the market. Buy low sell high should be every small investor's mantra.
I hear most smart fund managers are hedge fund managers. However, I also hear there are several duds among hedge fund managers also.
The good ones probably are value oriented. With sufficient jewels to short overvalued assets and being long undervalued ones. Most of the times they get it right and probably beat the market.
Taken together, about 75 pct of all fund managers underperformed the market. It is probably true that a small investor who keeps it simple - boys undervalued assets with strong balance sheet, revenues profit and cash flow should be able to beat them. At the least he can simply be in market index funds and beat 75 pct of these suits.
Speaking of hedge funds may 27 wsj article states these funds as a whole have returned 72 pct over last 10 yrs. While mkt is up 100 pct. As expected assets under management also increased from 865 billion 10 yrs ago to 2.4 trillion. Just in time for poor performance. To add insult to injury the top 25 paid hedge fund managers made 21 billion dollars. Which translates to heavy fees to add to underperformance.
and the market keeps making new records (stock market that is), apparently it will continue to do so for another few months until any big hurdle is identified.
First it was Mr. Slims who made an off topic post - mentioning the stock market in a bond market thread. Now it is the extremely senior member committing the cardinal sin. We forgive. But don't forget.
That is what the pundits say. When mkt goes up they say it will keep doing so till a major hurdle comes up.
In reality in the short term the market is a casino but long term its a weighing machine. As a long term investor it serves no purpose to buy into such theories of hurdles etc. Simply look at valiations. If it appears extremely stretched on the upside sell a little. And vice versa.
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You may note that in spite of bond mkt rally yields r still higher than when we called the bottom. Of course all credit to Annadorai and Alamelu.
The honorable gentleman in post 40 mentioned hedge funds. David Abrams manages 8 billion for his namesake hedge fund. And has posted 15 pct annual returns since 1999 twice of hedge funds and thrice of market. His film "uses no leverage". It currently holds 40 pct in cash. This was the amount, coincidentally, that we had indicated in the Whither the Markets thread. So this investment expert probably feels market is fully price at least.
Abrams is patient. And is known to not make a move for months. Gives new meaning to the Jack Bogle Phrase "Don't just do something. Stand there".
Contents from June 3 WSJ.
The article talks abt central banks public pension funds and sovereign funds owning assets equivalent to 40 pct of "world output" I assume world output is synonymous with world assets?
Let's assume it is. Article states there is a trend towards increasing ownership of assets by these organizations. But provides no data. Except for this - the equity allocation has increased by 1 trillion dollars in "recent years". Now what
^ Total capitlization of world’s equity markets is $65 trillion. Central banks own around $30 trillion now.
Means, you have an investor who can literally print money to buy stocks. Those “investors” do not care about return or fundamentals. Drops in value can easily be compensated by printing more money and buying more.
How long can this go on? Some pessimistic predictions can be found on the comments sections here: “Cluster Of Central Banks” Have Secretly Invested $29 Trillion In The Market | Zero Hedge](ZeroHedge)
Now what does this mean. They have 29 trillion in equity today. So they had 28.2 trillion a "few" years back. That is 3.3 pct increase. They don't specify number of yrs in question. Let's assume 5 yrs. Market has exploded nearly 3X in 5 yrs. Surely equity portion would go up EVEN IF these organizations made no special effort to jack up their equity allocation.
This article appears to be searching for an explanation for markets rise. Whatever be the reason market appears 10 to 15 pct overvalued at least.
Continuation of previous post..system had slowed down
The key here is article only states these central banks public pension funds and sovereign funds own 40 pct of assets - equity plus some gold. Doesn’t say the growth rate of the assets pct for these give orgs. Without this data how do we conclude if this is in line with the past or not?
Read the latest link. I recall central banks also stocked up on gold at its peak of abt 18 op dollars per ounce. Now at 1250!
The party will end one day. As a small investor such inefficiencies in the mkt r ur best friend. Simply rebalanced and get ur asset allocation back on line. Let the janta come up with explanation for what has happened and why.
Several large central banks never had equties in portfolio. It is not their job to invest in there! The ‘trend’ started at the beginning of this decade.
For the record, both of us have been off topic. This is a bond market thread. OP may not appreciate.
One theory suggests that central banks have been investing in equities to reduce returns on stocks for 'other investors' and keep bonds as relatively attractive investments vis-a-vis equities. Can't say how credible it is.
