Author Topic: Lending Club Results - NEGATIVE RETURNS  (Read 2534 times)

rawraw

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Re: Lending Club Results - NEGATIVE RETURNS
« Reply #30 on: July 17, 2017, 12:01:15 PM »
Brief update to my post of 6/12. On Friday 7/14/2017 the US stock market Cyclically Adjusted PE Ratio (CAPE Ratio, also called Shiller PE Ratio, or PE 10) surpassed 30.00 for the first time since 1929. Okay,so what. I found the following paper a very interesting read that attempts to provided an answer to that question. Spoiler alert; CAPE's predictive value is only over the long term (10-15 years), but at this level the long term isn't looking too good.

http://www.starcapital.de/files/publikationen/Research_2016-01_Predicting_Stock_Market_Returns_Shiller_CAPE_Keimling.pdf

If you are interested in keeping up with the CAPE ratio see http://www.multpl.com/shiller-pe/

Finally, in an oversight, I didn't mention that I also owned and then sold WDC at the same time as MSFT, NVDA and SPY mentioned previously. I forgot; my bad.

This thread really went off the rails somewhere.  :)
StarCapital research is top shelf.  I reached out to see if they took American investors but unfortunately they do not.  With my passive investing, I try to view the world the same way they do.  Avoid expensive countries, buy cheap countries. 

AnilG

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Re: Lending Club Results - NEGATIVE RETURNS
« Reply #31 on: July 17, 2017, 12:37:52 PM »
What countries are you overweighing right now?

Just read in last week's Barron's that rest of the world stocks did almost twice as better as US stocks last quarter.

StarCapital research is top shelf.  I reached out to see if they took American investors but unfortunately they do not.  With my passive investing, I try to view the world the same way they do.  Avoid expensive countries, buy cheap countries.
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rawraw

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Re: Lending Club Results - NEGATIVE RETURNS
« Reply #32 on: July 17, 2017, 12:43:43 PM »
What countries are you overweighing right now?

Just read in last week's Barron's that rest of the world stocks did almost twice as better as US stocks last quarter.

StarCapital research is top shelf.  I reached out to see if they took American investors but unfortunately they do not.  With my passive investing, I try to view the world the same way they do.  Avoid expensive countries, buy cheap countries.
It's an imperfect attempt because some countries its next to impossible to get index exposure. But I use the ranking on Stars website as a guide. They have a section on the English part of the website that ranks each country. Last year's results were particularly strong. Star published a graphic showing how valuation almost ranked order returns perfectly. It won't be nearly that good each year.

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rawraw

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Re: Lending Club Results - NEGATIVE RETURNS
« Reply #33 on: July 17, 2017, 12:53:54 PM »
Here is the picture

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Rob L

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Re: Lending Club Results - NEGATIVE RETURNS
« Reply #34 on: July 17, 2017, 08:41:59 PM »
I worry about the exchange rate. If I make x% on the equity side I could (make or lose) y% on the currency exchange side.
I would much appreciate any comments regarding this dilemma.

rawraw

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Re: Lending Club Results - NEGATIVE RETURNS
« Reply #35 on: July 18, 2017, 06:27:42 AM »
I worry about the exchange rate. If I make x% on the equity side I could (make or lose) y% on the currency exchange side.
I would much appreciate any comments regarding this dilemma.
I haven't done extensive research into this, because what I found on my initial read was that over the long term this really isn't a factor (washes out given the diversification and long holding periods). I think it's more important when making short term calls. Of course currency and stock returns are likely related, but it's been a while since I studied the economics of how forex works. It's a hard subject to Google, because instead you get results for currency ETFs but found this which may help you find the source

"In theory, long-term investors shouldn’t worry about currency fluctuations, as research has shown that identical portfolios, hedged and unhedged, will have the same returns over time."


http://www.barrons.com/articles/new-reasons-for-currency-hedged-etfs-1485582270





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Rob L

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Re: Lending Club Results - NEGATIVE RETURNS
« Reply #36 on: July 18, 2017, 09:23:35 AM »
I worry about the exchange rate. If I make x% on the equity side I could (make or lose) y% on the currency exchange side.
I would much appreciate any comments regarding this dilemma.
I haven't done extensive research into this, because what I found on my initial read was that over the long term this really isn't a factor (washes out given the diversification and long holding periods). I think it's more important when making short term calls. Of course currency and stock returns are likely related, but it's been a while since I studied the economics of how forex works. It's a hard subject to Google, because instead you get results for currency ETFs but found this which may help you find the source

"In theory, long-term investors shouldn’t worry about currency fluctuations, as research has shown that identical portfolios, hedged and unhedged, will have the same returns over time."


http://www.barrons.com/articles/new-reasons-for-currency-hedged-etfs-1485582270



This article provides sheds a bit of light too:

https://www.weforum.org/agenda/2015/07/whats-the-relationship-between-stock-returns-and-exchange-rates/

rawraw

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Re: Lending Club Results - NEGATIVE RETURNS
« Reply #37 on: July 18, 2017, 09:28:58 AM »
Yeah I found some abstracts on Google scholar discussing the fact exchange rates are mean reverting over time. That seems to agree with that

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Rob L

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Re: Lending Club Results - NEGATIVE RETURNS
« Reply #38 on: July 18, 2017, 09:30:15 PM »
That same StarCapital Research paper I mentioned above also addressed price to book as a long term predictor of stock market returns.
The S&P 500 PB is now at 3.20, its highest since mid-2002.

http://www.multpl.com/s-p-500-price-to-book