The old normal allocation between the three most basic classes (Cash, Bonds and Stocks) is currently the new normal.

While the old normal return expectations for U.S. securities, and the allocation between U.S. securities and global securities (particularly emerging market securities) is not likely to be resemble the past; the old normal weighting between cash, bonds and stocks from whatever country is more likely to be used than not.

The last decade was abnormal in the preponderance of equity risk assumed in the aggregate across all households in the United States. The old normal is more balanced, which is something the typical investor advanced in age or wealth accumulation is seeking these days.

Based on Federal Reserve data from 1945, the average allocation between cash, bonds and stocks was approximately 10%, 40% and 50% respectively. The average over the past decade was about

...

ETF short interest provides some great insights into what the market really thinks.

I’m going to ignore Matt’s twitter-length rebuttal of my last post, and instead point to an excellent set of data that just appeared in my inbox. State Street Global Advisors publishes (as many firms do) a monthly report on the ETF industry. What grabbed me this time was the short-interest report.

It should come as no surprise that ETFs are heavily shorted. After all, one of the great things about ETFs is that phrase “exchange-traded.” It means you can fold, twist and mutilate an ETF just like you can any other stock, and that means that if you can find it to borrow, you can short it. And since many ETFs are phenomenally liquid, they can be pretty easy to locate for shorting.

Overall, short interest in ETFs as reported on Oct. 15 was 11.84 percent. This is substantially

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Vladimir Putin has been ranked number 3 in the Forbes list of the most powerful people in the world, President Medvedev comes in 43rd, after Deputy Prime Minister, siloviki chieftain and Rosneft chairman Igor Sechin at number 42. (See the editor's choice for Russia's top seven.) Forbes has got a special feature on the politician the Russian press apparently call 'the scariest person on earth'. There is little solid information about the man. Like many of Putin's cronies, Sechin is a St. Petersburg native. In the 1990s he worked in city government. Before that, it's widely believed he was a spy; Moscow sources confirm that he was a member of the GRU, the KGB's foreign-intelligence arm. ...

Matt may think it’s all about Zecco. I think it’s all about advisers.

Zecco? Really Matt? Honestly, for investors who are holding big accounts at Zecco, Schwab isn’t likely to be an issue in any case. Zecco, for those who don’t know the firm, is a super-low-discount broker, offering everything from bargain basement foreign exchange trading to $5 options. A few ETFs are unlikely to even be on the radar of Zecco customers.

I think the real target for Schwab’s new ETFs is the money Schwab’s existing customers have in ETFs.

Schwab’s huge. They custody $1.3 trillion for their 5.3 million customers, and process over 300,000 trades each and every day. Perhaps most importantly, Schwab acts as the back end for over 6,000 independent advisers in their adviser services business.

It’s a mistake to think that Schwab, as a broker, is in the transaction business. Fundamentally, they’re in the banking business. Schwab makes 35-40

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Nobody has the time or patience to wait 82 years to experience the long-term, but if they did (or if they wanted to bet on the future based on the long-term past), here is how a simple allocation between the S&P 500 index and the U.S. Aggregate Bond index worked out from 1926 through 2008.

Related proxy funds:  SPY and VFINX for stocks; BND and VBMFX for bonds.

Disclosure: We own both SPY and BND.

Richard Shaw QVM Group LLC

Schwab’s new ETFs solve one critical problem in the ETF market, but they won’t take over the world. At least not for a while.

I’ve been thinking about the Schwab ETF launch all week, trying to figure out if it’s a game-changing event or an overblown bit of marketing. I think it’s a bit of both.

The big news, of course, is that Schwab is entering the ETF market and breaking new ground on fees. It has launched four ETFs that offer the lowest expense ratios in the world: As low as 0.08 percent for U.S. broad market exposure. The new Schwab Total Market ETF (NYSEArca: SCHB) and Schwab Large Cap Equity ETF (NYSEArca: SCHX) are now the lowest-cost mutual funds available to retail investors.

What’s more, Schwab is offering zero commissions for Schwab customers who buy or sell the ETFs.

That’s a big deal. Commissions are a huge hurdle

...

TODAY: Opposition activist torture claims; Miliband leaves with no breakthrough regarding diplomatic concerns; meets with rights activists; Putin and Medvedev popularity waning?; President in need of own power structure to realize reforms; Stalin resurrection an identity issue; Gorbachev on Russophobia; alcohol; jokes; artThe Other Russia reports that Konstantin Makarov, a member of the outlawed National Bolshevik Party, and organizer of an opposition rally planned for the 31st October in Voronezh, was detained and beaten by two policeman, one of whom was S. Yemkov of the notorious Interior Ministry's Center for Extremism Prevention.  According to Makarov, his torturers told him that he would face similar treatment after each rally held by the National Bolsheviks.  Foreign Minister Sergei ...

Ever feel like somebodyrsquo;s watching you? If yoursquo;ve traveled to the UK recently, chances are somebody has. An article from Sundayrsquo;s New York Times: ldquo;Britons Weary of Surveillance in Minor Casesrdquo; details some troubling surveillance tactics being used in Britain. According to Londonrsquo;s Evening Standard, more than 10,000 cameras have been set up around the city at a cost of $326 million. These cameras are being used to monitor comings and goings along the streets, nbsp;and to help solve a range of crimes ndash; from pickpocketing and loan-sharking to failing to clean up after a pet. A controversial law enacted in 2000 allows the authorities to install the cameras. The costs are tangible, both in dollar terms and loss of privacy, but the benefit is less clear: The parts of London with the most cameras have a below-average rate of solving crimes, the Evening Standard says. Read ldquo;Britons Weary of Surveillance in Minor Casesrdquo; All opinions ...

Amidst all the soundbites and data tidbits about the condition of the U.S. fiscal and debt situation, it may be helpful to look at the data produced by the Congressional Budget Office.  While they may be way off, it is a good idea to know what figures your government is using to make its spending and tax policy decisions.

The downloadable PDF file provides an historical perspective from 1968 through 2008, and projections for 2018 for taxes, spending and public debt.

click image to download PDF file

On the economic projection front, the CBO sees real GDP growth for 2009, 2010, 2011 and 2018 at: -2.5%, 1.7%, 3.5% and 2.2% respectively.

They see unemployment for the same periods being: 9.3%, 10.2%, 9.1% and 4.8%.

For CPI, the CBO sees -0.5%, 1.7%, 1.3% and 2.0% for

...

There are many good things about being rich, but wealth also brings some problems.  The most obvious problem is how to stay rich in these troubled times.  Less obvious for the wealthy is that they have fewer practical investment vehicles than the average investor.

Just as large institutional investors have a smaller universe of individual stocks they can buy without becoming too big a factor in the security.  Wealthy individual investors and smaller non-profit or institutional investors have a smaller universe of funds they can buy without becoming too big a factor.

There are more established mutual funds of substantial size than there are ETFs of similar size, which argues for mutual funds over ETFs for large investors.  However, for those who wish to be in a listed security for intra-day entry or exit (including using automated stop loss orders to protect against large drops in price), mutual funds don’t work.

With ETFs

...