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Dany Heatley sues former agent & financial manager for embezzlement

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08-19-2012, 01:41 AM
  #26
thrillhouse99
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Originally Posted by Fugu View Post
I'm not grinding any axes. I actually liked your disclaimer.

I was curious to see why you felt 7% return was reasonable (and you qualified that with a time consideration).

I believe that any market driven mainly by speculative participants is basically a zero sum game. Your odds of always placing the correct bet will be governed by the same probability as any other participant with equal access to information and opportunity.
I cited the rule of 72 because it is an industry practice used to determine how long it will take to double your money given a certain average annual return. I used 7% as an example because it is thought of as a reasonable return given a reasonable amount of risk. The DJIA has an average annual return of roughly 9.5% since 1975 not including dividends, as you can see assuming an average annual return of 7% is reasonable.

As far as your statement about how you believe securities markets work goes. A securities market is not a zero sum game where money is taken from the loser and given to the winner. Securities markets are constantly flooded with new capital from new investors. Increase in the value of a security can therefore be tied to the introduced capital rather than purely tied to the capital that already exists in said market. If no new capital was allowed to enter the market then your assesment of "a zero sum game" would be accurate, but that isnt how it works.

The information is all online for you to go read for yourself. I think you would be better served to go read it for yourself than you would be to argue with me about it on a message board.

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08-19-2012, 01:46 AM
  #27
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Quote:
Originally Posted by thrillhouse99 View Post
I cited the rule of 72 because it is an industry practice used to determine how long it will take to double your money given a certain average annual return. I used 7% as an example because it is thought of as a reasonable return given a reasonable amount of risk. The DJIA has an average annual return of roughly 9.5% since 1975 not including dividends, as you can see assuming an average annual return of 7% is reasonable.

As far as your statement about how you believe securities markets work goes. A securities market is not a zero sum game where money is taken from the loser and given to the winner. Securities markets are constantly flooded with new capital from new investors. Increase in the value of a security can therefore be tied to the introduced capital rather than purely tied to the capital that already exists in said market. If no new capital was allowed to enter the market then your assesment of "a zero sum game" would be accurate, but that isnt how it works.

The information is all online for you to go read for yourself. I think you would be better served to go read it for yourself than you would be to argue with me about it on a message board.
So new capital only enters the market but no[existing] capital leaves the market? Markets don't decrease in size/volume?

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08-19-2012, 02:22 AM
  #28
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Originally Posted by Fugu View Post
So new capital only enters the market but no[existing] capital leaves the market? Markets don't decrease in size/volume?
In general, yes. While obviously there is some money that leaves these markets, in the modern era there has always been more money flowing in than flowing out, as should be expected considering the general makeup of investments, investors, and populations. While it's not necessary that this continue indefinitely, thus far that has generally been the case.

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Originally Posted by Fugu
I think in aggregate this may be the case, but most investors pick a limited number of stocks. Furthermore, a long period of time--- 5 yrs? 10? The shares of a stock your grandfather bought for you when you were born that sat in a drawer for 30 yrs?
That's why I used the statement "index funds." But as for the time period, IIRC it's around 15 years.

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08-19-2012, 02:35 AM
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Yeh, In world is ****ed these days. Can't trust anyone when it comes to money.

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08-19-2012, 07:17 AM
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Originally Posted by broinwhyteridge View Post
Buy gold bulion and hold it. Problem solved.
Not always. Any commodity runs real risks. If you would have bought gold at about the start of 1980, you would have doubled your money at todays prices. Thats probably a return of about 2% a year when you probably could have made that in 6 years by buying T bills at that time, and have 24 years left to look forward too.

Very few investments are guaranteed Looks like Heatley got stuck in one of those promises of high returns. Real Estate, gold, oil, it fluctuates up and down .....

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08-19-2012, 07:35 AM
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First, all these players should be required to take a basic investing course. Topics should be risk/return, what it means to give power of attorney/signature authority, diversification, etc.

As for the stock returns, it all depends on the period of time you looks at. Year over year since the Dow started, stocks do not yield that much over inflation. The market is now at a level it was at what, 12-15 years ago? 5 years ago? So in 5 years, you gained nothing.

10 year US Government bonds right now are paying under 2%.

Typically the higher the risk the higher the return. The one thing these players need to remember that if it sounds too good to be true it usually is and do not invest in risky investments more than you can afford to lose.

Also, he might be able to go after those that honored the withdrawal if they did not properly verify the request.


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08-19-2012, 08:10 AM
  #32
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Originally Posted by thrillhouse99 View Post
A qualified portfolio manager can put together a package of bonds, t bills, mutual funds, individual stocks etc that can generate that kind of return. There are mutual funds out there that generate that kind of return (im not a fan personally, but they do exist and some historically have exceeded 7% a year). If you have the capital to qualify and they are currently open there are many hedge funds that have generated returns that meet or exceed the 7% threshold.

Long story short there are plenty of options. If you are not happy with the returns you are getting it might serve you to consult with different professionals in your area.
In today's markets, 7% (around 6% real) is an exceptional return and hardly something that most portfolio managers can easily come by. If you're getting a 7% annual return at this time on a consistent basis, you'd be doing very very well.

Quote:
I cited the rule of 72 because it is an industry practice used to determine how long it will take to double your money given a certain average annual return. I used 7% as an example because it is thought of as a reasonable return given a reasonable amount of risk. The DJIA has an average annual return of roughly 9.5% since 1975 not including dividends, as you can see assuming an average annual return of 7% is reasonable.
The DJIA since 1975 is a ridiculous timeframe to look at. The market returned completely unsustainable average returns during that time frame as it was at a sky-high level of prosperity and now we are at the opposite. Most academic studies suggest that 4-5% real return in the long run is what one can reasonably expect. At this time, even a return of 4% is unrealistic in the short-run until investor confidence stabilizes and the Eurozone crisis rectifies itself and the U.S. economy continues to recover.

Aside from hedge fund managers of course which I noticed you mentioned , I think it's pretty safe to say anyone on HFboards does not have the capital requirements to qualify for hedge fund investments. I don't remember the exact numbers at this time, but I think you need roughly $1,000,000 in order to be considered eligible for hedge fund investing - otherwise the hedge fund in question is legally not allowed to serve you because the industry is so unregulated that it's far too complex for average investors.

Finance aside though, sucks for Heatley but if there's anyone in the NHL that it had to happen to, I'm glad it was him.


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08-19-2012, 11:39 AM
  #33
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Originally Posted by Sureves View Post
In today's markets, 7% (around 6% real) is an exceptional return and hardly something that most portfolio managers can easily come by. If you're getting a 7% annual return at this time on a consistent basis, you'd be one of the best investors in the world.



The DJIA since 1975 is a ridiculous timeframe to look at. The market returned completely unsustainable average returns during that time frame as it was at a sky-high level of prosperity and now we are at the opposite. Most academic studies suggest that 4-5% real return in the long run is what one can reasonably expect. At this time, even a return of 4% is unrealistic in the short-run until investor confidence stabilizes and the Eurozone crisis rectifies itself and the U.S. economy continues to recover.

Aside from hedge fund managers of course which I noticed you mentioned , I think it's pretty safe to say anyone on HFboards does not have the capital requirements to qualify for hedge fund investments. I don't remember the exact numbers at this time, but I think you need roughly $1,000,000 in order to be considered eligible for hedge fund investing - otherwise the hedge fund in question is legally not allowed to serve you because the industry is so unregulated that it's far too complex for average investors.

Finance aside though, sucks for Heatley but if there's anyone in the NHL that it had to happen to, I'm glad it was him.
You are free to hold whatever opinion you wish, however:

1) 7% is not an abnormal average annual return. It just isn't, you can exceed that by putting together a basket of blue chip high dividend yield stocks and selling when the opportunity arises. Sorry, but you are misinformed, and the best portfolio managers are far exceeding this even in this climate.

2) the DJIA averaged 9.5%, over this timeframe, I used 7%, so obviously to a certain degree I agree that the returns from 1975 are probably not going to be met moving forward. You can cite the academic studies you found if you want to discuss this further.

3) in Canada the minimum investment to qualify for a hedge fund is $150,000.

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Last edited by Fugu: 08-19-2012 at 01:04 PM. Reason: let's stick to the actual discussion points
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08-19-2012, 12:35 PM
  #34
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Quote:
Originally Posted by thrillhouse99 View Post
You are free to hold whatever opinion you wish, however:

1) 7% is not an abnormal average annual return. It just isn't, you can exceed that by putting together a basket of blue chip high dividend yield stocks and selling when the opportunity arises. Sorry, but you are misinformed, and the best portfolio managers are far exceeding this even in this climate.

2) the DJIA averaged 9.5%, over this timeframe, I used 7%, so obviously to a certain degree I agree that the returns from 1975 are probably not going to be met moving forward. You can cite the academic studies you found if you want to discuss this further.

3) in Canada the minimum investment to qualify for a hedge fund is $150,000. I don't know what that number is in the united states because I have never held a securities license in the united states.

Fine, use 7%. When comparing that to the same time frame for inflation, the 7% doesn't top that. The late 70's and early to mid 80s saw double digit inflation, prime of over 20%. Real return compared to inflation is not 7%. No where close.

CPI Index for your reading
ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt

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08-19-2012, 12:40 PM
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You mean to tell me that players, who by and large barely have a high school education, might not make the best decisicions with complicated financial matters? Whoda thunk?

Working with trustworthy agents is critical for pro athletes, because they're vey easy targets for scams. Young with sudden wealth and nowhere near the education to know how to handle it well. Good agents are critical for most all these guys, there really isn't much of an option. Which makes crap like this even more reprehensible.
What about all those smart educated people that got taken for a ride with Bernie Madoff

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08-19-2012, 12:41 PM
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Originally Posted by Tommy Hawk View Post
Fine, use 7%. When comparing that to the same time frame for inflation, the 7% doesn't top that. The late 70's and early to mid 80s saw double digit inflation, prime of over 20%. Real return compared to inflation is not 7%. No where close.

CPI Index for your reading
ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt
i think you are confused, 7% is my average annual return, not total return. 9.5% was the average annual return of the DJIA from 1975-2011.

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08-19-2012, 12:48 PM
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Originally Posted by Tommy Hawk View Post
Fine, use 7%. When comparing that to the same time frame for inflation, the 7% doesn't top that. The late 70's and early to mid 80s saw double digit inflation, prime of over 20%. Real return compared to inflation is not 7%. No where close.

CPI Index for your reading
ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt
average annual inflation between 1975 and 2011 is 4.23%, so a 7% average annual return most certainly beats it.

http://www.inflationdata.com/inflati...inflation.aspx

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08-19-2012, 12:50 PM
  #38
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Quote:
Originally Posted by thrillhouse99 View Post
You are free to hold whatever opinion you wish, however:

1) 7% is not an abnormal average annual return. It just isn't, you can exceed that by putting together a basket of blue chip high dividend yield stocks and selling when the opportunity arises. Sorry, but you are misinformed, and the best portfolio managers are far exceeding this even in this climate.

2) the DJIA averaged 9.5%, over this timeframe, I used 7%, so obviously to a certain degree I agree that the returns from 1975 are probably not going to be met moving forward. You can cite the academic studies you found if you want to discuss this further.

3) in Canada the minimum investment to qualify for a hedge fund is $150,000. I don't know what that number is in the united states because I have never held a securities license in the united states.
First of all, why are using the DJIA as your proxy for overall returns? It's a price-weighted index, just curious as to why you chose that.

First, on future expected real returns:



Charles P. Jones, “Analyzing and Estimating Real Stock Returns”, Journal of Portfolio
Management, Spring 2008, p12-21 BSC

Second, on the current state of P/E in the markets:

My summary from (13*) Barry White, “What P/E Will the U.S. Stock Market Support?” Financial Analysts Journal,Nov.
/Dec. 2000 V.56(6), p30-38 BSC:

"After having made the required inputs to predict the P/E at the time of the article, the author obtained a P/E equal to 22.86 which was drastically lower than the prevailing P/E of 35 in the market, with the model having an R-squared of 88%. However, predicting the input variables is based on inherently unpredictable (at least perfectly) inputs and thus does not necessarily reflect reality. In any event, this suggested that, based on past trends, the P/E ratio occurring was not justifiable and that it was rather artificially high. Furthermore, the author illustrated that in previous studies it was a constantly reoccurring trend that when P/E got artificially high, soon after there would be a corresponding crash that would bring the P/E to a justifiable level. The author concludes that P/E is not representative of reality at the time of the article..."

Essentially P/E is expected to decrease because its current level is unsustainable rendering returns even lower than the previous article predicts.

Do you have access to Jstor? If so I can post some more research based articles as well but if you don't, this one should be a starting point that everyone has access to:

Quote:
Let me summarize what I've been saying about the stock market: I think it's very hard to come up with a persuasive case that equities will over the next 17 years perform anything like--anything like--they've performed in the past 17. If I had to pick the most probable return, from appreciation and dividends combined, that investors in aggregate--repeat, aggregate--would earn in a world of constant interest rates, 2% inflation, and those ever hurtful frictional costs, it would be 6%. If you strip out the inflation component from this nominal return (which you would need to do however inflation fluctuates), that's 4% in real terms. And if 4% is wrong, I believe that the percentage is just as likely to be less as more.
- Warren Buffett

http://money.cnn.com/magazines/fortu.../11/22/269071/

Essentially everything above addresses #1 that you listed above in the quote, but also #2. The past is not representative of the future, especially when you're only looking at returns from 1975 where there were lengthy periods of people getting returns of 18-22% throwing all those statistics out of whack.

To #3,

Quote:
Accredited investors are individuals and institutions that meet certain net worth or income requirements. In particular, qualified individuals must have
income in excess of $200,000 in each of the two most
recent years, or joint income with a spouse in excess
of $300,000 in each of those years, and a reasonable
expectation of reaching the same income level in the
current year; or they must have a net worth, or joint
net worth with a spouse, that exceeds $1 million at
the time of purchase.
http://www0.gsb.columbia.edu/student...dustryinfo.pdf

I find it difficult to believe that Canada has such a different eligibility for hedge funds, you have a source for that by any chance?

I believe it is you who is misinformed my good man.


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08-19-2012, 12:55 PM
  #39
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Originally Posted by Sureves View Post

I find it difficult to believe that Canada has such a different eligibility for hedge funds, you have a source for that by any chance?
"There are rules about minimum investments for hedge funds. In Ontario, you must have $150,000 to invest in the fund, or be an accredited investor. This rule exists because if you can afford to buy a hedge fund, you can likely afford the possible losses. You can also afford to get expert advice, and good advice is key to understanding the potentially higher risk of investing in a hedge fund."

http://www.theglobeandmail.com/globe...rticle4210121/

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08-19-2012, 01:08 PM
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Originally Posted by thrillhouse99 View Post
"There are rules about minimum investments for hedge funds. In Ontario, you must have $150,000 to invest in the fund, or be an accredited investor. This rule exists because if you can afford to buy a hedge fund, you can likely afford the possible losses. You can also afford to get expert advice, and good advice is key to understanding the potentially higher risk of investing in a hedge fund."

http://www.theglobeandmail.com/globe...rticle4210121/
Interesting, you'd think that I'd know that given that I go to school in Canada and have lived here my whole life , but our curriculum seems to stress the importance of the American way of doing things.

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08-19-2012, 01:19 PM
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Originally Posted by Sureves View Post
First of all, why are using the DJIA as your proxy for overall returns? It's a price-weighted index, just curious as to why you chose that.

First, on future expected real returns:



Charles P. Jones, “Analyzing and Estimating Real Stock Returns”, Journal of Portfolio
Management, Spring 2008, p12-21 BSC

Second, on the current state of P/E in the markets:

My summary from (13*) Barry White, “What P/E Will the U.S. Stock Market Support?” Financial Analysts Journal,Nov.
/Dec. 2000 V.56(6), p30-38 BSC:

"After having made the required inputs to predict the P/E at the time of the article, the author obtained a P/E equal to 22.86 which was drastically lower than the prevailing P/E of 35 in the market, with the model having an R-squared of 88%. However, predicting the input variables is based on inherently unpredictable (at least perfectly) inputs and thus does not necessarily reflect reality. In any event, this suggested that, based on past trends, the P/E ratio occurring was not justifiable and that it was rather artificially high. Furthermore, the author illustrated that in previous studies it was a constantly reoccurring trend that when P/E got artificially high, soon after there would be a corresponding crash that would bring the P/E to a justifiable level. The author concludes that P/E is not representative of reality at the time of the article..."

Essentially P/E is expected to decrease because its current level is unsustainable rendering returns even lower than the previous article predicts.

Do you have access to Jstor? If so I can post some more research based articles as well but if you don't, this one should be a starting point that everyone has access to:

- Warren Buffett

http://money.cnn.com/magazines/fortu.../11/22/269071/

Essentially everything above addresses #1 that you listed above in the quote, but also #2. The past is not representative of the future, especially when you're only looking at returns from 1975 where there were lengthy periods of people getting returns of 18-22% throwing all those statistics out of whack.

To #3,



http://www0.gsb.columbia.edu/student...dustryinfo.pdf

I find it difficult to believe that Canada has such a different eligibility for hedge funds, you have a source for that by any chance?

I believe it is you who is misinformed my good man.
I used the DJIA because it was a quick and easy way to answer somebody else's question from a general point of view. My answer might not be highly scientific, but thats why I used it.

Im not going to dispute your Charles P. Jones snippet, thats a fair quote to use to prove your point and it is recent enough that I think we can consider it relevant. Please keep in mind that I am not saying that in order to achieve a 7% return all one needs to do is purchase an index fund, I am saying that with the correct package of investments a 7% average annual return is achievable and realistic.

As far as your PE statement goes, I can just as easily say that the reason for low PE ratios in the current climate is simply due to a lack of investors in the market at the current point and time. If there were more investors in the market PE ratios would be higher, as it is a lot of people who would normally have money invested in the market are sitting on the sidelines due to what has happened in recent years and a fair amount of fear that it may happen again. Im not saying that what you posted is irrelevant (although I would consider 2000 slightly out of date for the purposes of this discussion, but as a jstor user myself I understand that you can't always find recent articles), I'm just saying that it is highly debatable.

I still find it strange that you contend that 7% is a completely unrealistic annual return. Is this based on your academic research? Is this based on your real world experience? Based on my experience 7% is completely reasonable as an annual average, of course there is risk involved and it is not "easy" but I haven't found it to be unreasonable. If you could explain I would be interested to hear your thoughts.

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08-19-2012, 01:23 PM
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Interesting, you'd think that I'd know that given that I go to school in Canada and have lived here my whole life , but our curriculum seems to stress the importance of the American way of doing things.
Isn't that the truth? Im back in school in Canada as well (economics and political science) after working for a few years, and you know the only reason I knew that? It was the answer to a question on a licensing exam. Otherwise I would have thought the same thing that you posted, that the minimum would be closer to $1,000,000.00.

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08-19-2012, 01:43 PM
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He shouldn't be walking the streets yet he's suing his former agent over money.


Last edited by Killion: 08-19-2012 at 02:40 PM. Reason: Opinion fine, name calling not so much...
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08-19-2012, 01:45 PM
  #44
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I used the DJIA because it was a quick and easy way to answer somebody else's question from a general point of view. My answer might not be highly scientific, but thats why I used it.

Im not going to dispute your Charles P. Jones snippet, thats a fair quote to use to prove your point and it is recent enough that I think we can consider it relevant. Please keep in mind that I am not saying that in order to achieve a 7% return all one needs to do is purchase an index fund, I am saying that with the correct package of investments a 7% average annual return is achievable and realistic.

As far as your PE statement goes, I can just as easily say that the reason for low PE ratios in the current climate is simply due to a lack of investors in the market at the current point and time. If there were more investors in the market PE ratios would be higher, as it is a lot of people who would normally have money invested in the market are sitting on the sidelines due to what has happened in recent years and a fair amount of fear that it may happen again. Im not saying that what you posted is irrelevant (although I would consider 2000 slightly out of date for the purposes of this discussion, but as a jstor user myself I understand that you can't always find recent articles), I'm just saying that it is highly debatable.

I still find it strange that you contend that 7% is a completely unrealistic annual return. Is this based on your academic research? Is this based on your real world experience? Based on my experience 7% is completely reasonable as an annual average, of course there is risk involved and it is not "easy" but I haven't found it to be unreasonable. If you could explain I would be interested to hear your thoughts.
Well if you are saying 7% nominal then we aren't worlds apart since that could theoretically fall as low as 5% real after adjusting for inflation and what I'm saying (based strictly off of academic literature to answer your question: I'm too young and poor to have any practical experience yet ) really isn't that large.

What I mostly think is unreasonable expectations is 8-9% nominal since I believe it's fair to say that that's faster growth than the market will sustain in the next few years as an overall total due to the economic uncertainty and lack of investor confidence you eluded to as well as the already hyper-inflated P/E which is pretty much unjustifiable given current GDP/growth rates.

It's very difficult to beat the market (as I'm sure you know) consistently as well, with something like 50% of mutual fund managers missing the mark every year. Again as you said, you'd need to pursue an aggressive strategy to get those kind of returns, and with that comes higher risk and volatility and thus less consistency.

Of course, I shouldn't be acting like what I am saying is law, I'm certainly not qualified enough to be making those kind of statements, and there are many who agree with you that 7% real is easily sustainable in the long run. I personally am more conservative and have a more gloomy outlook on the current economic conditions and am a big Buffett reader.

I'm actually an accountant (halfway through the CA process) by profession, so naturally I'm a little more conservative by default than a finance-man like yourself so it's probably more a difference in opinion than it is one of us being right.

Interesting conversation though, nice to discuss finance on a hockey messageboard.

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08-19-2012, 02:39 PM
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... yes, its all fascinating, really truly is, but c'mon here Happy Gang, um, back on topic mebbe?.

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08-19-2012, 02:47 PM
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... yes, its all fascinating, really truly is, but c'mon here Happy Gang, um, back on topic mebbe?.
I let it slide. We all tried to act like experts on message boards while we were in college. In actuality, they know very little but when you read those text books and sit in those classes you think you know everything.

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08-19-2012, 03:00 PM
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Originally Posted by Matt Cooke View Post
He shouldn't be walking the streets yet he's suing his former agent over money.
What has he done,since he shouldn't be walking the streets?

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08-19-2012, 03:09 PM
  #48
xlnc66
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Originally Posted by fredrikstad View Post
What has he done,since he shouldn't be walking the streets?
Was speeding, lost control of his vehicle and ended up killing a teammate of his who was a passenger in his car.

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08-19-2012, 03:13 PM
  #49
Melnyks Mirage
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Originally Posted by cptjeff View Post
You mean to tell me that players, who by and large barely have a high school education, might not make the best decisicions with complicated financial matters? Whoda thunk?

Working with trustworthy agents is critical for pro athletes, because they're vey easy targets for scams. Young with sudden wealth and nowhere near the education to know how to handle it well. Good agents are critical for most all these guys, there really isn't much of an option. Which makes crap like this even more reprehensible.
My mother doesn't even have a high school education, being raised in a small town in QUebec with a huge family and she's insanley smart with money, taught herself how to keep a financial ledger, can balance a budget and never makes a large financial purchase without vetting it first.

Education =/ wisdom or financial acumen.
Heatley needed better friends/advice/information, that's about all there is to it.

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08-19-2012, 03:17 PM
  #50
thrillhouse99
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Originally Posted by SensFanDan View Post
My mother doesn't even have a high school education, being raised in a small town in QUebec with a huge family and she's insanley smart with money, taught herself how to keep a financial ledger, can balance a budget and never makes a large financial purchase without vetting it first.

Education =/ wisdom or financial acumen.
Heatley needed better friends/advice/information, that's about all there is to it.
It's tough for these guys. There are a lot of people out there with stupid ideas looking to raise capital. Professional athletes are a huge target for people like that.

You're right, heatley needed better advice. I'd be interested to see what kind of information these guys are given at rookie symposiums and the like.

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