"DSK" wrote in message
...

... My mother in law was always reading financial stuff and she insisted
that I find her some of those bonds. Everybody else needed to be
educated.


Did your wife inherit her mom's acumen?

No. My ex is amazing at creating budgets that aren't painful, and she's a
brilliant woman in other ways. But, it took forever to get her to understand
how a bond with a 7% coupon could end up yielding only 6%. I'm talking
years.



One of our technical analysts, a guy named Ed Kerschner, ran an asset
allocation model that was brilliant. Not asset allocation as it's usually
thought of, adjusting portfolios to match your current goals, but a model
which predicted with uncanny accuracy which assets were more attractive
at the moment in terms of price (stocks, bonds or cash). Early in 1987,
his model began moving toward 90% bonds, 5% stocks and 5% cash, the
breakdown in early October. Few people listened in the time leading up to
October 19th. The model didn't expect every investor to shuffle their
portfolio completely to match his numbers, but it would've been a great
idea to do something rather than nothing.


What would this model suggest now, with stocks doing nothing much and
bonds already bid down, interest rates low and little or no upward
pressure?

Today's investing climate reminds me of that that old Chinese curse: "May
you live in interesting times."


Last time things were like this, the model was something like 60 stocks, 20
bonds, 20 cash.



I was still studying for the series 7 exam in that time period. On
October 19th, mid-morning, the branch manager literally ran to my desk,
said "You passed your test- I can't talk now - go hang out with Jack
so-and-so & see if he can use any help talking to clients", and flew back
to his office. Around 5:00 PM, he handed me a bunch of cash, and asked if
I'd mind going out for a couple of bottles of scotch. :-) Learning about
margin and risky options trading in a book is one thing. Seeing real
people's accounts turn to crap (or even negative crap) in 4 hours is much
different.

Haven't had an account turn to crap, but I have had a professionally
managed "low risk" investment account lose 40% and got no intelligent
explanation. At the same time, my account of stocks chosen by my dropped
only a few percent and I had a gain overall for the year (no thanks to
them). Where is Mr Kerschner working now?

Looks like here, unless they haven't updated the page and he's gone.
http://www.smithbarney.com/products_...oup/asset.html


2 were outright crooks.

That's why my manager eventually threw in the towel and went back to just
being a broker. The oversight responsibilities were extremely stressful, and
he was the most ethical guy imaginable.


Sometimes I wonder if if I went into the wrong business. Engineering is
for chumps!

Nah...engineering's far better than running investment seminars where 100
old people show up just for the free coffee, and you end up with a few more
people like the guy who used to call me every day, twice a day, and ask "So
how's big MO doin'?" (MO was Philip Morris, now Altria Group) He thought
MO was the perfect barometer for everything, including how much he'd enjoy
his next visit to the bathroom.