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First Pacific Advisors (FPA) Bob Rodriguez: Another Crash Coming

 June 10, 2011 05:06 PM

Robert Rodriguez is the CEO of First Pacific Advisors (FPA). He managed the famed FPA Capital (FPPTX) and FPA New Income (FPNIX). He was twice named Morningstar's fixed-income manager of the year (2001 & 2008).

After taking a one year sabbatical in 2010, he came back to find that the world was still the same: problems that caused the financial crisis in 2008 had not been resolved. Here are some key points he made in a recent Fortune Magazine's article on Rodriguez:

  • U.S. debt as a percentage of GDP ratio (currently 64%) is massively underreported because it doesn't count off-balance-sheet entitlements such as Medicare, and debt owed by Fannie and Freddie. If you factor in those liabilities. Factor in these, the ratio will be over 500%!
  • The situation isn't irreparable: both parties are not willing to take drastic measures, let alone we are approaching to the election year. 
  • FPA Capital (FPPTX) is now 30% in cash (he had that before 2008) and 38% in energy sector (XLE). He refused to buy other sectors and even long term or intermediate term bonds (LQD) (TLT), (IEF).

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At the end, as what the article stated: " A former Republican, he describes himself as a "fiscal conservative but social moderate" who has grown disgusted with both parties: "I say, 'A pox on both their houses.'""

The following is the chart of FPPTX vs. VFINX (Vanguard 500 Index):

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The following is the performance comparison between FPPTX and Six Core Asset ETFs Tactical Asset Allocation Moderate.

Portfolio Performance Comparison

Portfolio/Fund Name1Yr AR1Yr Sharpe3Yr AR3Yr Sharpe5Yr AR 5Yr Sharpe
Six Core Asset ETFs Tactical Asset Allocation Moderate16%128%9%79%15%104%



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