Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : The Justa & Lars Honors Bob Brinker Investment Club -- Ignore unavailable to you. Want to Upgrade?

To: Kirk © who wrote (14654)	6/22/2000 1:08:00 PM
From: Trebor	Read Replies (1) \| Respond to of 15132

>I think we all agree that Bob gives good advice on the radio he has helped thousands of people get out of shark infested waters He is entertaining Has good insight and is well worth listening to... No argument there, but what about his golf game? Mediocre at best.

To: Kirk © who wrote (14654)	6/22/2000 2:06:00 PM
From: Justa Werkenstiff	Read Replies (3) \| Respond to of 15132

Kirk: Re: "Let's not shoot others that happen to agree with the facts." Portfolio 3 started on 3-1-90. The portfolio did not exist prior to that date. So your inclusion of that portfolio back to 1988 is erroneous. Portfolio 3 should not even be listed as it is 50% in bonds which should never be compared to the stock market. The notion of risk is never mentioned in any of the comparisons. Portfolios I and II have taken far less risk than the market over the period. Risk matters. Also, comparing these portfolios without risk adjustment to the benchmarks benchmarks like the Naz is silly.

To: Kirk © who wrote (14654)	6/23/2000 7:30:00 PM
From: Rillinois	Respond to of 15132

Kirk, Bob made reference to his Model Portfolio I and II respective YTD performance numbers in the March issue of his newsletter. Interestingly, the end of February coincides with the period in the market where the S&P was at a relative low and the Nasdaq was at a relative high. The numbers according to the newsletter were as follows: Model Portfolio I was up 3.8% Model Portfolio II was up 1.8% S&P 500 was down 6.8% Wilshire 5000 was down 1.7% In the June issue of the newsletter, a time where the Nasdaq was at a relative low, Bob decided to make reference to the "extaordinary returns" of the Model Portfolios for the past 12 months with no reference to the YTD numbers. I don't know why he decided to switch to the trailing 12 month performance numbers, but the YTD numbers were as follows: Model Portfolio I was down .5% Model Portfolio II was down .5% S&P 500 was down 3.3% Wilshire 5000 was down 5.0% It seems that two funds that are in Model Portfolio I were down in excess of 20% from the end of February to the end of May. These two funds made up 18% of Model Portfolio I and 50% of the equity portion of the portfolio as of the end of February . No doubt the equity portion of the portfolio was impacted heavily by the decline in Nasdaq from the end of February to the end of May. Best Regards. Rillinois

To: Kirk © who wrote (14654)	6/23/2000 8:37:00 PM
From: Rillinois	Read Replies (2) \| Respond to of 15132

Kirk, *Critical Beta Calculation of Model Portfolio I* The beta of Model Portfolio I was 1.0 per MARKETIMER as of December 31, 1999. Initially, I was surprised at the market equivalent beta of the portfolio given the two high octane funds in the portfolio. These funds have betas of 1.2 est. and 1.13 and made up over 60% of the portfolio as of 12/31/99. (The 1.20 beta fund represented 37.5% and the 1.13 beta fund represented 23.5%). Also, there is another fund with a beta of 1.15 that made up another 10% of the portfolio. So, these three funds that have high betas made up over 70% of Model Portfolio I. Furthermore, there is yet another fund that has a beta of 1.0 that made up 17% of the portfolio. So, these four funds made up 88% of Model Portfolio I as of 12/31/99. Now there are 3 international funds with relatively low betas: .55, .72, and .72, but they made up only 12% of the portfolio as of 12/31/99. So how can it be that MARKETIMER calculates the beta of this portfolio as 1.0? Well, after further analysis, it seems that the calculation of beta for the portfolio might be calculated in a way that might give a false impression as to the true beta of the portfolio in its current state. It seems that the respective betas are given the weight of the original allocation (or the allocation that one would use if they were initiating a new portfolio) and not the current weighting in the portfolio. For example, the 1.20 est. beta fund that had a 37.5% weighting in the portfolio as of 12/31/99 was only 20% originally. MARKETIMER chooses to calculate the beta of Model Portfolio I as if the fund was still only 20% of the portfolio. Also, the 3 low beta funds which represented only 12% of the portfolio as of 12/31/99 carry a 25% weighting in the calculation. This calculation is flawed in that it gives more weight to the low beta funds than should be given and give less weight to the high beta funds than should be given. If calculated correctly to show the true beta of the actual portfolio in question the beta of Model Portfolio I is north of 1.7! Thus, the argument that Model Portfolio I takes on less risk than the broad market is bogus. Not only did Model Portfolio I underperform the the S&P 500 and Wilshire 5000 over the period you showed, it is very likely that it did so with MORE risk. Best Regards. Rillinois