Food Inflation will continue and accelerate

I have written several times about my belief in a movement towards higher food prices in the future, perhaps much higher than in the past. Some commodity experts like the renowned Jim Rogers have stated this belief too.

While I normally enjoy helping investors think about long-term trends that'll help fatten their portfolios, because of the implication this trend has for people everywhere, especially poor people, this posting gives me absolutely no joy.

Nevertheless, here's several ways to invest in what I believe is a long-term trend towards higher food prices:

Van Eck Global's fifth ETF, Market Vectors Agribusiness (AMEX:MOO), which recently debuted and is already up nearly 20% since then. The ETF includes subsectors of the agriculture, such as agricultural chemicals at 34.3% of the index, agriproduct operations, 33.5%, agricultural equipment, 24.3%, livestock operations, 5.6%, and ethanol/biodiesel, 2.3%.

The 40 companies from 13 countries in the index must have a market cap of at least $150 million and a monthly trading volume of 250,000 shares. These companies are primarily engaged in the business of agriculture, and must derive at least 50% of their total revenues from agribusiness. According to information on the fund sponors site (Van Eck), as of Sept 2007, the fund had a PE of ~27, a PB of ~3.5, and a dividend yield of 1.06%.

There are also several ways to invest more directly in the foodstuffs, either through ETFs or ETNs. Two recent products from Barclays (ipathetn) are as follows:

"JJA" tracks the Dow Jones–AIG Agriculture Total Return Sub-Index. The Index is currently composed of seven futures contracts on agricultural commodities traded on U.S. exchanges. The weightings are currently as follows: Coffee 8.0%; Sugar 7.0%; Soybeans 28.0%; Wheat 23.6%; Soybean Oil 9.9%; Cotton 9.3%; Corn 14.3%. According to the information provided by the sponsor, the annual return from the index looks like this: 1yr = 44%; 3yr = 12%; 5 yrs = 6.2%; 10 yrs = -(minus)1.7%.

As you can see, owning the index constituents would have been very good during the past year, and very lousy over the past 10 years.

"JJG" tracks the Dow Jones–AIG Grains Total Return Sub-Index, which has an underlying composition of three futures contracts on grains traded on U.S. exchanges. They are weighted as follows: Soybeans 42.6%; Corn 21.6%; Wheat 35.8%. According to the information provided by the sponsor, the annual return from the index looks like this: 1yr = 64%; 3yr = 14.9%; 5 yr = 6.4%; 10yr = -(minus)1.4%.

Judging by the return differences between the two products over the past year, it appears that the Grains component of the "JJA" ETN (which is 66% of that ETN) has provided almost all of the 44% annual return; in fact, my calculation shows that it's responsible for 41 points of the 44% return.

PowerShares also offers a foodstuff type ETN, DB Agriculture; "DBA".

It tracks the Deutsche Bank Liquid Commodity Index - Optimum Yield Agriculture Excess Return. The index is a rules-based index composed of futures contracts on some of the most liquid and widely traded agricultural commodities – corn, wheat, soy beans and sugar, in equal weightings (i.e. 25% each). However, the weightings in the fund are only periodically rebalanced, and as of October 25 2007, the weightings had changed to as low as 17% for sugar and as much as 31% for soybeans. Index return history as of September 28 2007; 1Yr = 36%; 3yrs = 15%; 5yrs = 11% and 10yrs = 1.6%.

This ETF started trading in January 2007 at $25 and closed at $29.28 on October 26 2007, providing a 17% return since that date.

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Finally, according to recent press releases and web-articles, ProShares is going to be offering a leveraged ETF tracking the Dow Jones-AIG Agricultural Index. When they start trading, this will offer the opporunity to track the index, but on a double-leveraged basis. The release date of the ETF isn't known at this time. Expect a one to four month delay as typically seen.

I have written previously about the food inflation issue, and it's worth re-visiting two of my postings, here and here for more background.


JW

The Confused Capitalist

Thinking Ahead: Ten Years Out

One of the themes I've tried to engage readers in here, is that by playing some fairly obvious trends, and coupling those with reasonable valuations, is a relatively easy way to outperform the market.

One theme I've pounded on over the past one-and-a-half years is the emerging market theme. It doesn't take too much heavy lifting in the thinking department to realize that with soaring GDP growth rates of 8-12% annually in some of these countries, expecting their stock valuations to follow isn't much too much of a mental stretch, even for weak thinkers like me.

So, thinking ahead, and about 10 years out is a good target, it becomes much easier to think that an overweighted emerging markets position is likely to be both prudent, and very profitable. Now, the graphic above showing firestroms in California (currently displacing one million people) obviously suggests that this posting isn't about emerging markets.

That's correct - this is about alternative energy production. While climate change and global warming have been warned about and was easily readable in the popular media 20 years ago(Time Magazine, for instance, awarded Planet Earth as "Man of the Year" in 1989, due primarily to concerns about global warming), it's only recently that most people are finally waking up to the severity of the problem.

As the problem continues to grow in the public mind, so too will the demand for solutions. These will be invoked on a political and individual basis. As the negative consequences of inaction become more and more and more visible and the predictions more dire, many will begin making personal change AND demanding societal change. This is inevitable.

Note: If you're on a blog aggregator, you can visit The Confused Capitalist here (or here: http://confusedcapitalist.blogspot.com/) for additional articles and exclusive content!)

What is also inevitable is major changes to our type of energy consumption and to the pattern of use. For instance, emerging economies will begin to use far more energy than in the past. This is good for them, but not good for the planet. The energy hogs of the planet - that's us in the western world - will finally begin to reduce consumption outright - not just on GDP weighted basis. Since we were "first in" to this pattern of inefficient energy use, it also is right that we strive to be "first out" of the pattern.

This brings us to our investment opportunity. Looking ten years, does anyone see a world in which the general populace isn't pressuring the politicians to fund alternative energy, to create incentives/disincentives to change energy use, and possibly even to restrict certain types of energy use? Perhaps rationing, a popular method for "spreading the pain" and acknowledging that we're all in this together, will become popular.

In any case, I personally cannot envision a world in 10 years where alternative energy isn't a significantly larger economic sector than it is today.

Of course, my much beloved ETFs provide a way to play this trend while avoiding single company risk. The recent launch of three ETFs targeting this sector might lead some to utter the usual cliques and say that this is a clear sign that this market segment has "topped". Yet the reasonable valuations, societal trends, and my common sense, tell me "no", that is not the case at all. And that is why I am willing to significantly overweight my portfolio to this segment.

While I do not pretend this is a comprehensive list, here are three ETF names in this sector:

Market Vectors Global Alternative Energy ETF (GEX) started trading on the New York Stock exchange. The fund, tracks the Ardour Global index (Extra Liquid), which is comprised of stocks in 30 publicly traded companies engaged in alternative energy production. These stocks are selected from a stable of 250 companies in this space. At least 30% of the names are not US-domiciled companies, and may therefore be attractive to those wishing some diversification out of the US currency. It is however, a relatively concentrated ETF, with 60% of the value being held in the top ten positions. Yahoo Finance shows the current PE as ~30.

Power Shares Global Clean Energy Fund (PBD) is based on the WilderHill New Energy Global Innovation Index. The Index seeks to deliver capital appreciation and is composed of companies that focus on greener and generally renewable sources of energy and technologies facilitating cleaner energy. The modified equal weighted portfolio is rebalanced and reconstituted quarterly. It currently holds 84 positions. It also has limited exposure to US companies, with only 26% of the ETF having US domiciled companies. Yahoo Finance shows the current PE as ~26, while information from PowerShares says the PE is ~42.

Finally, an all US domiciled companies is the First Trust NASDAQ Clean Edge ETF (QCLN)which started trading in February, covers five sub-sectors of the alternative energy industry: renewable power generation, renewable fuels, energy storage and conversion, energy intelligence, and advanced energy-related materials. The investment has above average concentration, with the top ten positions holding 55% of the value. It seeks to track the NASDAQ Clean Edge U.S. Liquid Series Index. Yahoo Finance reports the PE as ~25.

One caution with all of these ETFs is that they are presently quite small, none having assets of more than $100 million. But I predict that will change dramatically by the time 2017 has rolled around. Clean energy - a future whose time is now for the investor.



JW

The Confused Capitalist

WallSt.Net Podcast

Welcome to everybody from WallSt.net who came over here because of the podcast interview with Dennis Olson (Haven't heard it? Go here; it'll be on their site on Wed. Aug. 15th). Thanks to Dennis and WallSt.net.

This posting is essentially related to some stuff I talked about on the podcast.

Firstly, anyone interested in buying my book can go here.

Secondly, in terms of some of the stuff I talked about in the podcast about why this blog is a bit different than many out there, I mentioned specifically, dividend investing, and long-tail investing. Here's a couple of articles I've posted that kind of give you a bit of the flavor of these topics, here, here and here. And for those who know me and my bent towards value investing, I re-submit this evidence ...

Now, in terms of stuff I specifically recommended (either avoiding, or moving towards) ...

AVOID

Real estate stocks, especially home-builders (see the reasons why, in an article I wrote in my other life) and avoid sub-prime lenders; the first for three to five years; the second for two plus years. Pessimism after that will be prevalent and then would be the time to buy. There's still too much optimism in the market.

BIG BANKS

Conversely, the really big banks are getting tarred with the "sub-prime" brush, which isn't warranted, in my view. Many of these institutions are tremendously strong, with great balance sheets and will easily weather this storm, and perhaps come out of it with better than ever opportunities. They're also paying great dividends right now, and most have raised their dividend recently. This is another sign that they are probably being mis-priced in the market. Some to look at would include:

• CITIGROUP - yielding about 4.6%



• Wells Fargo - yielding about 3.4%



• Bank of America - yielding about 4.6%



• Wachovia - yielding about 4.6%



• US Bancorp - yielding about 5.0%

Of course, those risk-takers might wait for the next mini-plunge which, if it occurs, might raise these yields by another 50 to 100 basis points (i.e. prices might fall by another 10-20%). However, I think they're good enough deals as they sit. Don't delay too long on these folks - "on sale" today!

EMERGING MARKETS
Emerging markets remain a very-long-term theme that investors will be able to successfully play for a decade at least (provided the stocks don't get overpriced). On a purchasing power parity (PPP) basis, these economies currently account for about 20-25% of world trade, yet most conventional financial advisers suggest a 5% weighting or so. This is a serious backward-looking mistake. No investor with a 20 year horizon can afford to take such a light weighting in these strong growth markets.

While the conventional BRIC countries have been bandied about as "the" emerging country investment destinations, other countries also have strong profiles too. A personal favourite of mine remains South Korea, with nearly an "emerged" economy, yet very cheaply priced.

Here's some ways to play the emerging markets theme, via ETFs, in my personal order of preference:

• Wisdom Tree's ETF - "DEM" - a dividend-weighted emerging market ETF. This ETF should prove more resilient than many emerging market investments during market corrections, while retaining most of the upside during exuberant bull markets.


• The Claymore Investments ETF - "EEB", which is designed to provide exposure to the BRIC countries, through ADRs. Because ADR issuers tend to be large, liquid companies, this also reduces some risk.


• The iShares S.Korea ETF, "EWY" - a narrow singly country focussed ETF.


• The iShares Emerging Market ETF, "EEM" - a very broadly-based emerging market ETF.

AGRICULTURAL COMMODITIES

I think this sector is going to have a huge tailwind going forward, something I've written about here. In later postings, I'll elaborate on how to play this trend.

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INFRASTRUCTURE BUILD OUT

This is tied in with several other trends, including the re-building of the industrialized world's infrastructure to make it greener (using mass transit for instance, to replace the crappy aging stock of roads and bridges).

Also, the infrastructure build out in the emerging markets is something that's going to continue to occur during the next several decades. For instance, the Chinese GDP per head is about 1/4 of what it is in the US (on a PPP basis), while in India it's about 1/10 (PPP basis). These economies will also obviously be building out their infrastructure. Accordingly, I like some of the very large manufacturers, like General Electric ("GE") & Siemens AG ("SI"), but I especially like the engineering firms that'll obviously be beneficiaries of the design and over-sight work needed here. Some names in this sector include:

• Fluor Corp. - FLR


• Foster-Wheeler - FLWT


• Jacobs Engineering - JEC


• Stantec Inc. - SXC


• SNC Lavalin - SNC (on Canada's Toronto Stock Exchange)
  

Well, that's about all for right now - if you're new to the site, feel free to poke around. If you're a regular, thanks for coming by.

JW

The Confused Capitalist

Thinking About ETFs

As many readers here are aware, I'm a pretty big fan of ETFs, particularly as a solid foundation for a portfolio. However, I think that you have to drill down into the particular ETFs to consider what their chances of outperformance are.

Obviously, buying ETFs that have constituent companies with a high return on capital (or equity) and a low price (as in a low PE ratio), are likely to return greater capital to your wallet over the long term. That's why I try to drill down into these ETFs before I personally buy them.

One research firm that does this for you is AIR AltaVista Independent Research Inc. Its' methodology was recently highlighted in an interview with AltaVista Research President Mr. Michael Krause, by fellow blogger (here) James Picerno.

One thing that definitely caught my attention was ... statement in the later part of the interview relating to fundamentally-indexed ETFs ...

I am quite a fan of fundamental indexing. We’re getting new flavors and gimmicks in indexing all the time, but I think fundamental indexing is one of the most genuine and promising developments in a long time.

I have blown this horn fairly often in the past ... they appear to simply be a better way to invest. But whether you choose these fundamentally-indexed ETFs, or one of the many ETF allocations which still aren't fundamentally indexed, then researching your choices in relation to price and value measures is almost certain to improve your investing outcomes.



JW

The Confused Capitalist

ETFs - Blow your horn

I've read a few articles around the net yakking it up about how many ETFs are, essentially, replicas of other ETFs already out there. And that the 200 or so, should be enough for anyone, right? Many have really puckered up to that trumpet, and are blowing hard.

There's about 8,000 mutual funds out there, and people think that 2.5% of that in ETFs is enough? Pulleeze!

I don't hear too many financial advisor's saying that the doors should be shuttered on the 90% of mutual funds which are essentially replica's of each other AND underperform the market. Would their silence on this issue be because of the juicy trailer fees that accrue with mutual fund recommendations, and their squawking about ETFs due to the limited to no trailer fees?

Before you believe those puckered up to blow on the "200 is too many" sheet music, check their knowledge, motives and whether they're protesting the outrageous number of mutual funds.

When I see an ETF for every industry type, for every single country, for every capitalization size, and for every type of outperforming back-tested fundamental and enhanced indexing style there is, using rules-based entry strategies, and virtually every combination thereof, TIMES TWO, then I might start to agree with those already puckered up on the "there are too many" trumpet.

Until then, ETFs, until then, blow your own horn baby. Blow sweetly and with all the range of melodies available in the investment world.


JW

The Confused Capitalist

Proxy Investing - ETFs

Given what I believe will be phenomenal growth in ETFs over the next decade, particularly those specializing in some sort of fundamentally-based ETFs (or enhanced ETFs), would an investment in Wisdom Tree Investments (the stock) as a purveyor of fundamental ETFs be a wise proxy investment decision?

The industry probably has a huge tailwind, as ETFs generally, and fundamental ETfs in particular, begin rapidly draining money away from both mutual funds and, perhaps, to some extent, individual stocks (which themselves were often previously used as an industry proxy).

Unfortunately, there are no recent SEC filings, so by buying this pink-sheet stock, you're buying a bit of a pig in a poke. Nontheless, given the heavy hitters joing this company (Siegel, Levitt) as owners and advisors, one has to think they wouldn't want to sully their reputation on a business without a viable future. Undoubtedly, provided this stock is at a reasonable valuation now, its return will be a leveraged bet on the ETF market generally.

Value, as always however, remains the key to a decent return.

JW

The Confused Capitalist

Investing via themes ... or via financial statements

Over at Random Rogers, (Roger Nusbaum), a fellow blogger I read nearly every day, he's really big on investing in themes.

Given that Roger is a big proponent of ETF investing, that stands to reason. Roger's forte is obviously trying to enhance returns by not just investing in low-cost investment vehicles like ETFs, but then trying to sweeten those returns by looking at other big sweeping factors that'll influence values: investment themes.

I've learned a considerable amount from Roger and using his ideas to broaden my own thinking, portfolio holdings, and returns; in fact, my propensity to recommend emerging markets as a huge, long-term and reasonably-priced theme, owes much to Roger's thinking style.

Having said that, however, I also think that thematic investing requires a certain amount of patience and isn't necessarily suited to every investor. For instance, being right about the theme of commodities being underinvested in, in the late 1980s and early 1990s, would have been completely right, but far too early to make any money from it.

Sometimes, the theme is right, but the market is wrong: a situation of theoretical low risk, but also of low/no/negative returns. By the time the market realizes you were right - you could well have exited the theme: who's got the patience to wait ten years to be proven right?

For some investors with the appropriate skill set (an ability to read financial statements chief amongst them), an idea needing less patience is investing by value situations. What "value" means is finding the right combination of value and growth, at a favorable price. In fact, at a price that you think is completely unfair to the seller. Hence, you become a buyer.

When you can find appropriate situations like that, you don't have to wait around for the theme to unfold.

For instance, the legendary value investor Marty Whitman discusses in his book, The Aggressive Conservative Investor, investing in Japanese non-life insurance companies for years during the brutal Nikkei decline from 1997 to 2004 (a decline in the index that cut the index value in half). Yet, because of his ability to ferret out value, his Third Avenue fund was able to earn an annual 10% compound return on those Japanese assets over that period. No need for the "Japanese" theme to unfold. Instead, a hunt for value provided a decent return, without requiring the patience of Job.

At times, value investors are able to combine the idea of thematic investing with ordinary value investing to achieve extraordinary results.

So don't forget to check your own toolbox as an investor, and attempt to put more tools in there that you can use during your investing years. Thematic and value investing: a potent (but infrequent) combination.



JW

The Confused Capitalist

Portfolio Construction - As easy as 1,2,3 - A,B,C

The other day I talked about portfolio outperformance, suggesting one method to outperform the broader market. This method, a "focused portfolio", has plenty of academic support for its effectiveness and rationale. Yet, it doesn't suit every investor. It's time intensive and requires at least average investing skills (i.e. the ability to read a balance sheet, earnings and cash-flow statements). So it's definitely not for everyone.

But the great thing about investing is that there is more than one way to "skin a cat", as the saying goes. That means you can outperform the broader market (which I define as the S&P 500), by doing other things well. One way is through asset allocation and the use of low-cost ETFs to build a portfolio.

A way to enhance these returns is by investing with history on your side - in other words, finding the type of investments that have historically produced above average returns. Of course, also investing with an eye to what the world might be like in ten to twenty years, is another way to boost your returns.

So, having said that, what are some practical ways to build a low-maintenance outperforming stock-market based ETF portfolio for the next ten to twenty years?

Firstly, to acknowledge that so-called "value" stocks and "value indices" produce better market returns - on average - than so called "growth" stocks and "growth indices".

Secondly, to consider that small company stocks traditionally produce better returns than large company stocks.

Thirdly, to see the rapid rise of the emerging markets, and to acknowledge they are likely to be far larger in twenty years than today (they are producing about 20% of global goods today, yet their stock markets only hold about 5% of the capitalized value of stocks in the global economy).

Fourthly, that these advantages should also be stabilized with some large company stocks and broad-based market exposure, that will produce relatively reliable returns over a longer period.

Fifthly, to consider that the US trade and fiscal deficits are likely to continue impairing the currency for a while longer, and therefore willingly have greater than average exposure to other markets.

Finally, to consider your particular own thoughts and ideas, and to add these into the mix somewhat. This might be the idea that health-care stocks will prosper into the future, or perhaps that technology stocks now appear reasonably priced, or that commodities appear to have a bright future for the next five to ten years. Whatever - the point is is to add one or two of those themes into your overall investing mix, if you feel comfortable doing that.

Now, here is a sample portfolio I've constructed that I think would be suitable for an investor with a twenty year horizon (this is the all-stock market portion of the portfolio), and with a willingness to overload promising positions, as discussed recently. For the twenty year investor, this is the type of portfolio that probably needs only to be re-visited and re-balanced every five years or so. So remembering our themes of:

1. Value orientation;
   
2. Small companies orientation;
3. Emerging Markets exposure;
4. Some Broad-based;
   
5. Consideration of currency implications (ie more exposure to international);
   
6. Your own ideas (in this case, mine);

here's the low-maintenance ETF portfolio I'd construct with an eye to the next twenty years:

1. 20% Broad-based international - EFV - $64.91 - ishares product tracks the MSCI EAFE Value Index, which tracks European, Australian, and Far Eastern markets. This index has outperformed the broader (non-value) index MSCI EAFE index by about 2% annually over the past five year. Five year return on the index is 11.7% annually.
2. 20% Small company - IWN - $74.99 - ishares product tracks the Russell 2000 Value Index (US small cap). It has outperformed the broader (non-value) Russell 2000 Index by about 3.4% annually over the past five years. Five year return on the index is 16.2% annually.
   
3. 25% Emerging markets - EEM - $105.45 - a broadly-based (for emerging markets) ishares product tracks the MSCI Emerging Markets Index. Five year return on the index is 23.2% annually.
4. 20% S&P 500 - IVE - $70.62 - an ishares product tracking the value portion of the S&P500. Produced a 5.0% annual return over the past five years, beating the broader based S&P500 by 1.0% annually.
5. 15% Own Ideas (in this case, my belief that commodity-oriented countries will do well for the next five to ten years). I'd equally weight a Canadian ETF (EWC) - $24.86 - and a Brazilian ETF (EWZ) - $44.25 - or Australian ETF (EWA) - $21.94. Five year returns on these indices have ranged from a low of 18.2% to 27.9% annually.
   

Now, you lose a little bit due to the management expense ratios but, over a decade or so, this looks to me like a portfolio that should significantly outperform the S&P500. By comparison, SPY is trading at $131.47.

Of course, you can always tinker with this, but this is a simple, pretty well-balanced stock portfolio, constructed with the aforementioned moderately overweighting themes in mind. I personally would sleep very easy with this portfolio. We'll check back in with this model portfolio in six months to a year.



JW

The Confused Capitalist

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ETFs - Some guides to the enlarging smorgasbord!

The world of ETFs is expanding, but there is a dearth of sites dedicated to some basic research (i.e. valuation tools) on them.

I find ETFs are a very useful portfolio risk management and return enhancement tool: unfortunately, it takes a lot of digging to uncover favorable valuation metrics that underlie wise choices. The following are some links I've been able to uncover to date.

Some of these leads have been provided by my internet friend, portfolio manager Roger Nusbaum. He definitely uses these a lot for his clients.

The following are some links that may prove useful in your search for basic information relating to them:

1. Index Universe (has some good screening and charting features, including international ETFs).
2. Morningstar's offerings on ETFs (as always, something useful on this site).
3. Fund Super Mart (not really about ETFs, but useful if you're trying to uncover emerging market PE ratios).
4. ETF Connect (basically more charting tools).
5. ETF Trends (Mostly opinion/commentary about ETFs).
   
6. ETF Investor (Mostly opinion/commentary about ETFs).

and some of the actual ETF providers:

1. iShares (Useful PE and PB screening tool)
2. Select Sector Spyders (has value metrics on the various sector SPDRs).
   
3. PowerShares (not much there re: valuation tools)
4. Bldrs Funds (not much there re: valuation tools)
5. Hldrs Funds (not much there re: valuation tools)
6. Rydex Funds (not much there re: valuation tools)
7. State Street Global Advisors (not much there re: valuation tools)
8. Vanguard (not much there re: valuation tools)
   

Well, that's about it for now. I'll add more to this later as I gather further information, and will put a link to this on the right hand side of my site. If you have some particular site that you've found useful, please post a comment and I'll add it later to these.



JW

The Confused Capitalist

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The Rise (and Fall?) of Indexers

Indexing the market, primarily through ETFs and other passive index-matching investment vehicles has clearly been in ascendancy through the last decade or so.

Just about anyone who reads the financial papers on a regular basis is aware of the dismal record of most actively-managed mutual funds. Very few manage to beat the index they are competing against for any sustained period of time; typically, over a 10 year period, it would be less than 20% beating the index.

So investors around the world have asked the same question and are generally arriving at the same conclusion: If you can't beat the index, then join it (through ETFs or low cost index mutuals).

Recent research by Indiana University professors Bhattacharya & Galpin, confirm this as a world-wide phenomenon - of 39 national markets viewed, only in 4 of them was stock-picking (ie non-index trading) on the rise compared to previous periods analyzed. In the US market, stock-picking peaked at about 70% of all trading activity in the 1960s, and has steadily declined to today's level of just 24% as actively chosen stocks.

The good professors further conclude that the markets can remain efficient to as low a level as 11% actively picked stocks, for index funds to persist on at least an equilibrium level with an actively chosen comparable portfolio.

However, given the continued explosion of index funds of various descriptions, the question arises as to:

• Exactly when will the typical actively-managed mutual fund begin to consistently outperform index funds? (I can tell you, that you'll see mutual fund sales people dancing in the streets in their Armani suits that day, however) and;
• How much of an advantage will begin to accrue to the the serious do-it-yourself stock-picker as that day of market inefficiency gets closer and closer?
  

A couple of thoughts worth pondering as that day draws closer and closer ...



JW

The Confused Capitalist