21:12 he seems too proud, when he should be humble, given his poor return this year. Look up his all asset fund 'PAAIX'; see how it's down -19.4%. And when he says "Everything is down", that's not true. That's self-consoling drivel. Look at the oil companies, a major sector: Exxon is up 43% year to date, and Chevron is up 20%. The mark of a good investor is humility. This guy acts like he knows a lot. He knows nothing about the future; the market schools him every year, yet he seems blind to it all. Oil is a basic commodity, an asset; he runs a "all asset" fund; and oil co's beat him by about 50% so far in 2022 and he's acting all proud? Plus, he's got about 39% allocated to bonds now. Ridiculous. 'Vanity' be thy name. Lose the hubris. Get some results.
Thank you for a fantastic channel, with a very good guest. I'm a value investor and the ideas I got from this video will be helpful for me going forward.
The spectacular level of profits that Oil Company Investors found in the last few years allows some of the profits to be used to insure the illusion that Markets will react in a secure and predictable manner. Taking a temporary loss to insure good economic indicators, seems to provide future profits that have been flowing to the folks who provide the flow of Oil. We may be no where near the bottom of a stock slide that gravity has got a firm grip on?
The Fed totally screwed up. Late to increase rates. Late to QT. Now the Fed will over react the other direction. Excessive Fed balance sheet and QT is why bonds are being hammered worst in history.
The rest of world is fighting deflation. The fed isn't late. Raising rates sooner would have increased the strength of the dollar and made exports even more expensive.
When interest rates have artificially been held at zero for years ... where else is there to go but up. And of course when rates go up, bond values go down ... just a pure mathematical certainty and how yield works. Nobody will pay face value for a low interest bond when they can buy a higher interest rate bond. Which is why bonds are being hammered, as they should be. It would be like you having 2 job offers. One at #20/hour and another at $30/hour (everything else being equal) and somehow thinking that you would take the lower job offer at $20/hour. Of course you would not. And bond investors are not going to take lower interest bonds either .... unless they are discounted to provide higher effective yields.
"asset allocation" and strategic AA funds have been a big part of many financial advisor careers since the late 90's. Unfortunately, EVERY provider has completely FAILED in managing bond risk, despite swearing up and down that a strategic bond allocation will manage foreign/credit/duration risk. In reality, the fund managers do NOTHING and the bond portfolio winds up having a nearly entire correlation with the stock markets. So, in 2000-2002, 2008-2009, and this debacle, you have the Conservative Asset Allocation model with nearly as bad a return as the Strategic Growth Allocation model. So back in October, fully expecting the fed to raise rates like crazy, I fired all the asset allocators and created my own bond allocation of 1/3 tbills, 1/3 2yr average, and 1/3 5-6 yr average....after that declined net 3% earlier this year I decided that the bond markets demise was upon us and moved it all to the tbills, cash. I have since added some CDs. Wall Streets' dirty secret can be explained in the movie Margin Call, the board room scene discussing bond liquidation. You'll see that there is a gentleman's agreement on not tossing a large stone into the fish pond. This means that you and your clients are the bag holders. WS would say, sure, but it's temporary..... Will that loss be temporary this time? Only if rates continue the downward trajectory of the last 41 yrs, and based on the charts, that does NOT appear to be the case. As the guest in this video states, fighting inflation isn't measured in months, it's done so in years. Somewhere in the coming few years, everyone will realize that higher rates are the new norm. The implications on the economy of course are massive, just consider ARM loans in r/e as one example.
![Financial Markets Are Dangerous for Investors: What You Need to Know [2022]](http://i.ytimg.com/vi/-Vjez85LlNE/mqdefault.jpg)
![Financial Markets Are Dangerous for Investors: What You Need to Know [2022]](/img/tr.png)
21:12 he seems too proud, when he should be humble, given his poor return this year. Look up his all asset fund 'PAAIX'; see how it's down -19.4%. And when he says "Everything is down", that's not true. That's self-consoling drivel. Look at the oil companies, a major sector: Exxon is up 43% year to date, and Chevron is up 20%. The mark of a good investor is humility. This guy acts like he knows a lot. He knows nothing about the future; the market schools him every year, yet he seems blind to it all. Oil is a basic commodity, an asset; he runs a "all asset" fund; and oil co's beat him by about 50% so far in 2022 and he's acting all proud? Plus, he's got about 39% allocated to bonds now. Ridiculous. 'Vanity' be thy name. Lose the hubris. Get some results.
Nice... not too positive... not to negative... good ideas for the future... thank you.
Please bring him back more frequently. Excellent.
Thank you for a fantastic channel, with a very good guest. I'm a value investor and the ideas I got from this video will be helpful for me going forward.
The spectacular level of profits that Oil Company Investors found in the last few years allows some of the profits to be used to insure the illusion that Markets will react in a secure and predictable manner.
Taking a temporary loss to insure good economic indicators, seems to provide future profits that have been flowing to the folks who provide the flow of Oil.
We may be no where near the bottom of a stock slide that gravity has got a firm grip on?
Fed continue tighning, MBS zero down from $7.8B last period. Market will continue to crash.
I always enjoy hearing Mr. Arnott's insights.
Great information thanks 😊
Discovered this channel recently. What a treasure trove.
He's been wrong for 15 years
Not according to his fund's performance.
@@bencarter7839 He’s underperformed for 15 years. He’s been clinging to dead factors and it’s embarrassing by this point.
@@conduit242 Underperformed compared to what? Looks to me like the all asset fund has outperformed its category in 12 of the last 18 years.
Whenever he looks down, he has that amused smile as if he's thinking, "I'm the only one who knows I'm wearing Snoopy, flannel-pajama pants."
I'm usually wrong, but I'm starting to ease in every week. Based on the fact I am getting in, you all should wait a bit longer. JS
😀
Great guest. Very thoughtful and logical. He makes eminent sense.
The Fed totally screwed up. Late to increase rates. Late to QT. Now the Fed will over react the other direction. Excessive Fed balance sheet and QT is why bonds are being hammered worst in history.
The rest of world is fighting deflation. The fed isn't late. Raising rates sooner would have increased the strength of the dollar and made exports even more expensive.
When interest rates have artificially been held at zero for years ... where else is there to go but up. And of course when rates go up, bond values go down ... just a pure mathematical certainty and how yield works. Nobody will pay face value for a low interest bond when they can buy a higher interest rate bond. Which is why bonds are being hammered, as they should be. It would be like you having 2 job offers. One at #20/hour and another at $30/hour (everything else being equal) and somehow thinking that you would take the lower job offer at $20/hour. Of course you would not. And bond investors are not going to take lower interest bonds either .... unless they are discounted to provide higher effective yields.
Amazing interview and insights, thank you!
Excellent.
Wonderful video..
Arnott LEGEND 👏
This was a FANTASTIC segment !!
Thank you for your insights!
Always enjoy this podcast to keep that level
"asset allocation" and strategic AA funds have been a big part of many financial advisor careers since the late 90's. Unfortunately, EVERY provider has completely FAILED in managing bond risk, despite swearing up and down that a strategic bond allocation will manage foreign/credit/duration risk. In reality, the fund managers do NOTHING and the bond portfolio winds up having a nearly entire correlation with the stock markets. So, in 2000-2002, 2008-2009, and this debacle, you have the Conservative Asset Allocation model with nearly as bad a return as the Strategic Growth Allocation model. So back in October, fully expecting the fed to raise rates like crazy, I fired all the asset allocators and created my own bond allocation of 1/3 tbills, 1/3 2yr average, and 1/3 5-6 yr average....after that declined net 3% earlier this year I decided that the bond markets demise was upon us and moved it all to the tbills, cash. I have since added some CDs. Wall Streets' dirty secret can be explained in the movie Margin Call, the board room scene discussing bond liquidation. You'll see that there is a gentleman's agreement on not tossing a large stone into the fish pond. This means that you and your clients are the bag holders. WS would say, sure, but it's temporary..... Will that loss be temporary this time? Only if rates continue the downward trajectory of the last 41 yrs, and based on the charts, that does NOT appear to be the case. As the guest in this video states, fighting inflation isn't measured in months, it's done so in years. Somewhere in the coming few years, everyone will realize that higher rates are the new norm. The implications on the economy of course are massive, just consider ARM loans in r/e as one example.