Showing posts with label VTSMX. Show all posts
Showing posts with label VTSMX. Show all posts

Friday, January 2, 2015

Happy talk from Robert Lenzner of Forbes misses the 180 month bear market in performance

Robert Lenzner of Forbes, here, is only off by an order of magnitude (18 months vs. 180):

Bull markets last on average about 97 months each and gain an average of 440 points in the Standard & Poor’s 500 stock index. By comparison bear markets since the 1930s have an average duration of only 18 months and an average loss in value of about 40 percent.

Let's talk the most recent bear market in performance.

If you invested your nest egg in the stock markets fifteen years ago in a total stock market index fund, your average return annually, say in VTSMX, would be 4.75% through 2014, per Morningstar.

On the other hand, if you had taken the safe route and invested everything in an intermediate term bond index fund, say in VBIIX, your average annual return would be 6.52% through 2014, also per Morningstar.

DESPITE THE PHENOMENAL PERFORMANCE OF STOCK MARKETS SINCE 2011, WHEN THE S&P500 REVISITED THE 2008 CLIFF LEVEL BEFORE THE BOTTOM IN 2009, STOCKS ARE STILL IN A BEAR MARKET. NO ONE REALISES HOW BAD THEIR CONDITION STILL IS.

Only fools are investing in the stock market today. Returns from stocks 10 years from now will be similarly disappointing as they have been since 1999. If you have physical gold, keep it, imho. And if you can, raise cash, imho. Opportunities for riches to agile investors who are prepared to scoop up bargains as in the 1930s are in the offing.

As everyone should know by now but doesn't, 1999 was a blow off top period leading up to the previous inflation-adjusted stock market peak of August 2000.

Valuations today have still not reproduced themselves in comparison to the end of 1999 on a total market cap to GDP basis, but they are way above the 2007 levels and represent an historically exceptionally rarefied level of valuation. Valuation at the end of 2014 based on total stock market cap to GDP will be relatively certain with the second report of 4Q2014 GDP at the end of February.

Stay tuned.

Wednesday, December 31, 2014

15-year total return from popular Vanguard index funds through 12/31/14 shows bonds beating stocks since 1999 except on the short end

Per annum return per Morningstar tonight:

Total international stock index, VGTSX = 2.96%

Short term bond index, VBISX = 4.05%

S&P 500 stock index, VFINX = 4.13%
Total stock market index, VTSMX = 4.75%

Total bond market index, VBMFX = 5.45%
Intermediate term bond index, VBIIX = 6.52%
Long term bond index, VBLTX = 8.37%

Friday, October 31, 2014

Gold miners dive: VGPMX plunged to 8.91 yesterday, hasn't been that cheap since January 2002

The historical low for VGPMX was 5.05 on 8/31/98. The historical high was 40.02 on 5/19/08. The maximum NAV gain was 692.47%.

Alan Greenspan gave gold the kiss of death on Wednesday, suggesting it was a good investment idea going forward. Gold promptly fell out of bed, dropping $21.50 on Thursday and today is down about another $35 so far. Miners say they cannot remain profitable if gold departs much from the $1,200 range. Meanwhile the dollar is soaring toward 87 as the Fed has ended QE.

The maximum NAV gain for VTSMX, by the way, has been 414.31%.

Tuesday, December 31, 2013

Vanguard's VTSMX Makes New All Time High At 46.67 Today, 53rd And Final New High Of 2013

What a year for this fund: an average of one new high a week, plus one.

Saturday, November 16, 2013

Vanguard's VTSMX Posts Record High Of 45.46 Yesterday, The 44th New High In 2013

This fund, Vanguard's Total Stock Market Index, has posted new all time highs in every month this year save June: one in January, six in February, six in March, three in April, NINE in May, six in July, two in August, two in September and six in October. They really bought in May and went away, but only for a month.

Yesterday's new high is the third in November.

Monday, November 4, 2013

Vanguard's VTSMX Now The World's Biggest Mutual Fund, Edging Out PIMCO Total Return

From the story here:

For the year, the Pimco Total Return Fund has had outflows of about $33.2 billion. The fund, which is managed by Pimco co-founder and co-chief investment officer Bill Gross, is still the world's largest bond fund [at $248 billion], Morningstar said.

The Vanguard Total Stock Market Index now holds the title of world's largest mutual fund with $251.1 billion, according to Morningstar.

Wednesday, September 18, 2013

New Stock Market High Based On Nothing But ZI(R)P

The total stock market makes another new high today on mere words from the Federal Reserve.

So what does that have to do with fundamental analysis?

ZI(R)P.


Tuesday, September 17, 2013

5 Years Post-Lehman Bros. Bankruptcy, VTSMX Makes New All Time High

Vanguard's Total Stock Market Index Fund is up 163% since the March 2009 low of 16.43.

On the day Lehman Bros. failed in September 2008, VTSMX closed at 29.24 but proceeded to fall from there another 44% into 2009 despite the passage of TARP in early October 2008, and despite massive short-term discounted loans to just about the whole world by the US Federal Reserve Bank denominated in the trillions of dollars throughout the period.

From the 2007 high to September 15, 2008 this fund had already fallen from 37.80 or nearly 23%. The total decline of the fund from the 2007 high to the March 2009 low was nearly 57%.

A decline of that magnitude from today's new high would land the fund back at 18.81.

Tuesday, May 14, 2013

Rosie May Be Right: Cash May No Longer Be Safe

David Rosenberg points out that financial repression could go on as long as 2018, here:


[T]he Fed said in its December post-meeting press release that it will not budge from its 0% policy rate until the U.S. unemployment rate drops to 6.5%. It is currently around 8%.

We have done estimates based on various assumptions and found that achieving this Holy Grail likely takes us to the opening months of 2018 or another five years of what is otherwise known as financial repression.

People think their money is safe in cash, but it isn’t.

Following on that, just compare cash in the form of Vanguard's Prime Money Market Fund with stocks in the form of Vanguard's Total Stock Market Index Fund over the last five years and you will see that while cash was relatively safe compared to stocks for the four years up to May 2012 with stocks mostly underperforming cash, since then stocks have firmly broken out, as of about May 31, 2012 (the dot on the chart grabbed from Morningstar).

The only problem is that with a Shiller p/e today of 24.26 it's an awfully rich time to be investing in stocks which have reached new all-time highs.

And the alternatives don't look very attractive either.

At this hour the gold/oil ratio stands at 15 indicating that relative to each other their prices may have normalized but both at high levels relative to the long term.

Housing prices also are at the far upper end of the long term trend prior to the bubble.

And the bond market is within 2% of its highest valuations and also remains expensive to buy.

In my humble opinion the smartest thing to buy under these conditions is any long term debt one may be carrying at a rate of interest higher than about 3.5%. To retire it one would have to deploy capital, i.e. savings, but you can hardly lock in say 6.25% for twenty or twenty-five years anywhere else more easily than by retiring a 30yr-mortgage taken out at that rate in 2007. Bonds have returned less than 5% annually over the last ten years, and one year returns have fallen below 3.5%.

Still, there is no substitute for savings.

The surest way to get a 10% return is to save one dollar of every ten earned.

Friday, May 10, 2013

Jim Cramer Sucks: Vanguard's Total Market Index Vaults To 41.02

Up 147% since the March 2009 low of about 16.60.

Don't forget, Jim Cramer told you on NBC, the Obama network, the Monday morning after TARP was signed the previous Friday in early October 2008, to sell if you needed your money in five years.

His statement materially contributed to more panic selling and the market lows. Within weeks the market plunged even though TARP was supposed to restore confidence.  By the following April the percentage of the public claiming to own stocks had fallen a full five percentage points from the previous April before the crisis began, according to Gallup, an unprecedented decline of confidence. And the decline has continued another full five percentage points since then.

Let's look at the lows by year as reported by Vanguard, remembering that on Friday, October 3, 2008 VTSMX, a proxy for the total market, closed at 26.62, before Cramer opened his big yap:

Nov. 20, 2008 = 18.00 (a decline of 32% from October 6 when Cramer said "sell"; thanks Jim)
Mar.  9, 2009 = 16.43 (over 38% down after Cramer opened his yap; what's another 6 points, huh?)
Jul. 2, 2010 = 25.36 (this low is already back up to within less than 5% of the pre-Cramer level)
Oct. 3, 2011 = 27.16 (this low for the year firmly 2% above the pre-Cramer level)
Jan. 4, 2012 = 31.75 (this low for the year almost 20% above the pre-Cramer level).

In other words, you had all your money back in three years to the date, despite the damage Cramer caused.

But what if he had just shut up? And what if we just hadn't listened?

Sunday, February 10, 2013

Thanks for nothing, Jim Cramer


Flashback to Jim Cramer, Monday, 10/06/2008 ("Take Your Money Out Right Now"):

“Whatever money you may need for the next five years, please take it out of the stock market right now, this week. I do not believe that you should risk those assets in the stock market right now.”

-- Jim Cramer, Monday morning, October 6, 2008 (before the market open)

The Friday before that outrageous, irresponsible advice was nationally televised on NBC's Today Show, the Vanguard Total Stock Market Index Fund (VTSMX) had slumped to 26.62 from 30.90 two weeks before, not quite 14%. After his Monday call, however, the fund, a proxy for the whole market, dropped nearly 18% in that one week alone, to 21.85, on its way to its 16.60 low in March 2009. TARP, by the way, was signed into law also on that Friday before Jim opened his BIG mouth the next Monday morning.

Four years and four months since that fateful day in October 2008, VTSMX has bounced back to reach a new all time high of 38.13 as of Friday, February 8, 2013.

Your $36,700 in early October 2008 would be worth $57,300 today, a gain of 56%, if you had ignored Jim's advice.

THANKS FOR NOTHING, JIM. Not only did I need the $36,700, I needed the $20,600 gain.

Of course, Jim technically has until October of this year to be vindicated, but that presupposes a market crash from here of at least 36% to start cutting into that original pile of money I needed. But hey, I needed it, so it's not there, so no worries, right?

And what's Jim saying last week?


Look out below.

Tuesday, January 29, 2013