introducing myself

Hi, I'm 59 and I have most of my assets at Vanguard. I have a mix of index
and managed funds. I'm retired.

Two things I have noticed seem to be overlooked in all the discussions I've
read here and on the Morningstar boards.

The first is, that although a mutual fund manager may rarely be able to
outperform the market, an individual investor can and does more often than
the indexers care to admit, for the simple reason that his buys and sells
are too small to affect the price. I think many individuals have done so,
but they have no reason to advertise their success, so you don't hear about
them. They would not be included in any statistical studies. Their financial
affairs are private. Most individuals underperform it is true, but I think
psychological factors play a big part in that.

Second, it seems that for a while after you hear that an asset class is due
for a correction or reversion to the mean, it keeps doing well for quite a
while. We were reading about the real estate bubble for a long time before
any markets showed signs of trouble (starting about a month ago or so).
Ditto energy and small caps and emerging markets.

So maybe there is money to be made in "being stupid" and following a trend
at the same time that you are reading everywhere that you are "too late."
But do it *consciously* and watch it carefully, knowing that most likely the
people who are writing "too late" and "overbought" are probably right, but
premature.

I'm interested in your reactions to these ideas, particularly Ed and Steve
but all are welcome to join in. Knowing my own weaknesses, I will probably
continue to "diversify" and look for "low cost funds" just like everybody
else. But I would put the second idea to the test with a small portion of my
retirement savings just as an experiment if I had any "play money" to gamble
with.

BB

Re: introducing myself

If you want some insights into trends & signals look at following.

1)
2)
3)

All are free.

Re: introducing myself

"Blind Broccoli" <> wrote

> Hi, I'm 59 and I have most of my assets at Vanguard. I have a mix of index
> and managed funds. I'm retired.
>
> Two things I have noticed seem to be overlooked in all the discussions
> I've read here and on the Morningstar boards.
>
> The first is, that although a mutual fund manager may rarely be able to
> outperform the market,

I spent some time at Fidelity, Vanguard, and T Rowe Price websites and it
was clear that their managed funds were beating the index funds, at least at
the time. The further you went out, the more money you had vs. the index.

> Second, it seems that for a while after you hear that an asset class is
> due for a correction or reversion to the mean, it keeps doing well for
> quite a while. We were reading about the real estate bubble for a long
> time before any markets showed signs of trouble (starting about a month
> ago or so). Ditto energy and small caps and emerging markets.

True. Now everyone is looking for a natural resource fund and a reit fund.
Time to sell those if you haven't already.
Oil & gas services might be the exception.

> So maybe there is money to be made in "being stupid" and following a trend
> at the same time that you are reading everywhere that you are "too late."
> But do it *consciously* and watch it carefully, knowing that most likely
> the people who are writing "too late" and "overbought" are probably right,
> but premature.

> I'm interested in your reactions to these ideas, particularly Ed and Steve
> but all are welcome to join in. Knowing my own weaknesses, I will probably
> continue to "diversify" and look for "low cost funds" just like everybody
> else. But I would put the second idea to the test with a small portion of
> my retirement savings just as an experiment if I had any "play money" to
> gamble with.
>
> BB

Re: introducing myself

Blind Broccoli wrote:

> Hi, I'm 59 and I have most of my assets at Vanguard. I have a mix of index
> and managed funds. I'm retired.
>
> Two things I have noticed seem to be overlooked in all the discussions I've
> read here and on the Morningstar boards.
>
> The first is, that although a mutual fund manager may rarely be able to
> outperform the market, an individual investor can and does more often than
> the indexers care to admit, for the simple reason that his buys and sells
> are too small to affect the price. I think many individuals have done so,
> but they have no reason to advertise their success, so you don't hear about
> them. They would not be included in any statistical studies. Their financial
> affairs are private. Most individuals underperform it is true, but I think
> psychological factors play a big part in that.
>
> Second, it seems that for a while after you hear that an asset class is due
> for a correction or reversion to the mean, it keeps doing well for quite a
> while. We were reading about the real estate bubble for a long time before
> any markets showed signs of trouble (starting about a month ago or so).
> Ditto energy and small caps and emerging markets.

Let me give you my common-sense rules of thumb for investing:

1. Be value-oriented, never momentum-oriented. Try to avoid buying
anything that's overpriced, and don't chase a trend that's already been
in place for years--you'll likely be the unlucky one to jump in at the
start of a correction or even bear market. There will always be better
bargains elsewhere soon. There are studies that show that over the long
haul, value investing is best.

2. For a broad market with zillions of stocks to choose from, a
low-cost index fund or ETF is fine. I've always suggested to newbies
looking to get into the broad Wall Street market that they just go with
an index fund or ETF, set up automatic investment if possible and then
just enjoy their life. I think trying to eke out a little better return
from just the right actively managed fund is not cost-effective. And
theory now suggests it doesn't work over the long haul either.

3. But no one says you have to limit yourself to one market. A
diversified portfolio can take advantage of different markets that are
poorly correlated to each other. We all know when the long-term
secular-bull markets in the S&P 500 were: 1950's; 1980's; 1990's. But
what about commodities, hard assets? The best bull markets for
commodities were: 1929-1950; and 1963-1980. Very different performance
from the S&P 500. You should always looking for new or young bull
markets, anywhere on earth.

4. The world doesn't turn on a dime. There are definite, but gradual,
long-term sea changes in political economy and geopolitics. Global
conditions change, but over periods of a decade or two. And spotting
those trends and investing with them can be profitable. The Vietnam War
brought America a decade of stagflation, and savvy investors invested to
take advantage of that. The nomination of inflation-hawk Volcker in
1979 to head the Fed and the election of President Reagan in November
1980 were indications that times were indeed changing. And as an
investor you had to make appropriate changes.

5. Don't buck the strong central banks (such as the Federal Reserve in
the U.S.). Invest to take advantage of their actions, not to try to
buck their actions. The yield curve is a very useful tool. In early
2000, the Fed had jacked up short-term interest rates to the point that
we had an inverted yield curve. That was a major indicator of bearish
conditions ahead on Wall Street. It was time to bail out. Well, in the
last month or two, we've got an inverted yield curve again. And again
it's time to bail out. Unless you want to ride thru the bear market to
come. I don't, becausse given rule number 1, I would much rather sit in
cash and wait for a better bull market to appear somewhere else on earth.


That's about it. It doesn't take rocket science.



--
Steven D. Litvintchouk
Email:

Remove the NOSPAM before replying to me.

Re: introducing myself

Index funds generally outperform actively managed funds:




"Ed" <> wrote in message
news:
>
> "Blind Broccoli" <> wrote
>
>> Hi, I'm 59 and I have most of my assets at Vanguard. I have a mix of
>> index and managed funds. I'm retired.
>>
>> Two things I have noticed seem to be overlooked in all the discussions
>> I've read here and on the Morningstar boards.
>>
>> The first is, that although a mutual fund manager may rarely be able to
>> outperform the market,
>
> I spent some time at Fidelity, Vanguard, and T Rowe Price websites and it
> was clear that their managed funds were beating the index funds, at least
> at the time. The further you went out, the more money you had vs. the
> index.
>
>> Second, it seems that for a while after you hear that an asset class is
>> due for a correction or reversion to the mean, it keeps doing well for
>> quite a while. We were reading about the real estate bubble for a long
>> time before any markets showed signs of trouble (starting about a month
>> ago or so). Ditto energy and small caps and emerging markets.
>
> True. Now everyone is looking for a natural resource fund and a reit fund.
> Time to sell those if you haven't already.
> Oil & gas services might be the exception.
>
>> So maybe there is money to be made in "being stupid" and following a
>> trend at the same time that you are reading everywhere that you are "too
>> late." But do it *consciously* and watch it carefully, knowing that most
>> likely the people who are writing "too late" and "overbought" are
>> probably right, but premature.
>
>> I'm interested in your reactions to these ideas, particularly Ed and
>> Steve but all are welcome to join in. Knowing my own weaknesses, I will
>> probably continue to "diversify" and look for "low cost funds" just like
>> everybody else. But I would put the second idea to the test with a small
>> portion of my retirement savings just as an experiment if I had any "play
>> money" to gamble with.
>>
>> BB
>
>
>

Re: introducing myself

"NoEd" <> wrote in message
news:
> Index funds generally outperform actively managed funds:

That's why YOU should stick with them.

Re: introducing myself

Ed wrote:
> "NoEd" <> wrote in message
> news:
>> Index funds generally outperform actively managed funds:
>
> That's why YOU should stick with them.
>
>

I know, your correct, Ed.
Index funds are perfect for dumb shits like me.

Re: introducing myself

"NoEd" <> wrote in message
news:UXpFf.30079$
> Ed wrote:
>> "NoEd" <> wrote in message
>> news:
>>> Index funds generally outperform actively managed funds:
>>
>> That's why YOU should stick with them.
>
> I know, your correct, Ed.
> Index funds are perfect for dumb shits like me.
>
>
Hmmm... Well, you are ahead of Ed and of the S&P500 in the mimf2006 contest
so far. But is Ed paying attention to his unofficial portfolio, which has
remained unchanged since setting up?

Re: introducing myself

I WILL stick with them. I have the data. You are very predictable in that
reality is not an important ingredient to your daily life.


"Ed" <> wrote in message
news:
>
> "NoEd" <> wrote in message
> news:
>> Index funds generally outperform actively managed funds:
>
> That's why YOU should stick with them.
>

Re: introducing myself

The problem with Ed is that he has invested so much time and energy in
"knowing" about legions of funds that he can't bring himself to admit that
it was basically a waste of time. It looks like PMPIX has returned 55%+ for
the last three months. I wonder if Ed dumped everything he had and placed
his bet on this fund on 11/1/2005? If one could really pick funds, why
would one not go for the very top performing fund?


"David Wilkinson" <> wrote in message
news:ds5dda$llt$
>
> "NoEd" <> wrote in message
> news:UXpFf.30079$
>> Ed wrote:
>>> "NoEd" <> wrote in message
>>> news:
>>>> Index funds generally outperform actively managed funds:
>>>
>>> That's why YOU should stick with them.
>>
>> I know, your correct, Ed.
>> Index funds are perfect for dumb shits like me.
>>
>>
> Hmmm... Well, you are ahead of Ed and of the S&P500 in the mimf2006
> contest so far. But is Ed paying attention to his unofficial portfolio,
> which has remained unchanged since setting up?
>

Re: introducing myself

"NoEd" <> wrote in message
news:
> The problem with Ed is that he has invested so much time and energy in
> "knowing" about legions of funds that he can't bring himself to admit that
> it was basically a waste of time.

I disagree but I wouldn't expect you to understand.

> It looks like PMPIX has returned 55%+ for the last three months. I wonder
> if Ed dumped everything he had and placed his bet on this fund on
> 11/1/2005?

I don't do leveraged funds or gold, at least not in a big way.

> If one could really pick funds, why would one not go for the very top
> performing fund?

I don't need the top fund, I just want to beat the SP500. I think this is
the 1,463rd time I've told you this.
Your mind is like a sieve.

Re: introducing myself

"David Wilkinson" <> wrote

> Hmmm... Well, you are ahead of Ed and of the S&P500 in the mimf2006
> contest so far. But is Ed paying attention to his unofficial portfolio,
> which has remained unchanged since setting up?

Not really, but I have thought about selling. The SP500 worst month
historically is September followed by February.
So far it looks like this month won't disappoint the record keepers.
Remember, my goal here is to beat the index. I need only sell once and buy
back at a lower price and I win.

I have no interest in how NoEd is doing in the mimf2006 contest.

Re: introducing myself

"NoEd" <> wrote in message
news:
>I WILL stick with them. I have the data. You are very predictable in that
>reality is not an important ingredient to your daily life.

Atta boy.

Re: introducing myself

"Steven L." <> wrote in message
news:QMaFf.6061$

><snipped>

Thank you for your excellent and detailed reply.

BB

Re: introducing myself

"Blind Broccoli" <> wrote

> "Steven L." <> wrote

>><snipped>
>
> Thank you for your excellent and detailed reply.
>
> BB

I think Steven is great but I do disagree with one part:
"I think trying to eke out a little better return
from just the right actively managed fund is not cost-effective. And
theory now suggests it doesn't work over the long haul either."

This just isn't true. If you want proof just go to any of the major mutual
fund sellers and compare.
It's not even true for buy and holders. It's not even true for Jack Bogle.

A quote from Bogle:
I invest in Vanguard Growth & Income because I want to do a little better
than the index."

Re: introducing myself

"Ed" <> wrote in message
news:
>
><some quoted verbiage snipped>

> I think Steven is great but I do disagree with one part:
> "I think trying to eke out a little better return
> from just the right actively managed fund is not cost-effective. And
> theory now suggests it doesn't work over the long haul either."
>
> This just isn't true. If you want proof just go to any of the major mutual
> fund sellers and compare.
> It's not even true for buy and holders. It's not even true for Jack Bogle.
>
> A quote from Bogle:
> I invest in Vanguard Growth & Income because I want to do a little better
> than the index."
>
I'm still undecided on this issue. I prefer to compare returns after all
taxes, expenses and trading costs, and I prefer that dividends and capital
gains not be reinvested because I do not automatically reinvest them (so I
can keep easier track of cost basis). Is there anywhere I can find the
returns expressed in this way so I am doing a fair comparison of the returns
I would actually get from the various funds? And even if I could fairly
compare them, I take it you disagree with the statement that past returns
are not a good basis for predicting future results?

I am not an indexer by nature. I just am not sure I have whatever it takes
to select the right active funds to give me that outperformance in the
future. So I tend to go with the index funds unless I like a particular
manager and so want to entrust some money to him. Such as Marty Whitman
while he's still available.

BB

Re: introducing myself

"Blind Broccoli" <> wrote in message
news:oCuFf.1765$
>
> "Ed" <> wrote in message
> news:
>>
>><some quoted verbiage snipped>
>
>> I think Steven is great but I do disagree with one part:
>> "I think trying to eke out a little better return
>> from just the right actively managed fund is not cost-effective. And
>> theory now suggests it doesn't work over the long haul either."
>>
>> This just isn't true. If you want proof just go to any of the major
>> mutual fund sellers and compare.
>> It's not even true for buy and holders. It's not even true for Jack
>> Bogle.
>>
>> A quote from Bogle:
>> I invest in Vanguard Growth & Income because I want to do a little better
>> than the index."
>>
> I'm still undecided on this issue. I prefer to compare returns after all
> taxes, expenses and trading costs, and I prefer that dividends and capital
> gains not be reinvested because I do not automatically reinvest them (so I
> can keep easier track of cost basis). Is there anywhere I can find the
> returns expressed in this way so I am doing a fair comparison of the
> returns I would actually get from the various funds? And even if I could
> fairly compare them, I take it you disagree with the statement that past
> returns are not a good basis for predicting future results?

Morninstar will give you the after tax returns. Just keep in mind that the
returns are calculated for the maximum marginal tax bracket.
If you keep high payout funds in a qualified account it's not an issue.

> I am not an indexer by nature. I just am not sure I have whatever it takes
> to select the right active funds to give me that outperformance in the
> future.

Nobody does. All you have is history to use when making a choice.

> So I tend to go with the index funds unless I like a particular manager
> and so want to entrust some money to him. Such as Marty Whitman while he's
> still available.
>
> BB

That's fine and it's what I do. I think the fund company has more than a
little to do with it too.

Re: introducing myself

But why? Don't you want to maximize you return?


"Ed" <> wrote in message
news:
>
> "NoEd" <> wrote in message
> news:
>> The problem with Ed is that he has invested so much time and energy in
>> "knowing" about legions of funds that he can't bring himself to admit
>> that it was basically a waste of time.
>
> I disagree but I wouldn't expect you to understand.
>
>> It looks like PMPIX has returned 55%+ for the last three months. I
>> wonder if Ed dumped everything he had and placed his bet on this fund on
>> 11/1/2005?
>
> I don't do leveraged funds or gold, at least not in a big way.
>
>> If one could really pick funds, why would one not go for the very top
>> performing fund?
>
> I don't need the top fund, I just want to beat the SP500. I think this is
> the 1,463rd time I've told you this.
> Your mind is like a sieve.
>

Re: introducing myself

> That's fine and it's what I do. I think the fund company has more than a
> little to do with it too.

Can you quantify that for the group, i.e. how much of the return has to do
with the fund company and the manager?

T(t+1) = Tt + (Random Error) It's still just a random walk.


"Ed" <> wrote in message
news:
>
> "Blind Broccoli" <> wrote in message
> news:oCuFf.1765$
>>
>> "Ed" <> wrote in message
>> news:
>>>
>>><some quoted verbiage snipped>
>>
>>> I think Steven is great but I do disagree with one part:
>>> "I think trying to eke out a little better return
>>> from just the right actively managed fund is not cost-effective. And
>>> theory now suggests it doesn't work over the long haul either."
>>>
>>> This just isn't true. If you want proof just go to any of the major
>>> mutual fund sellers and compare.
>>> It's not even true for buy and holders. It's not even true for Jack
>>> Bogle.
>>>
>>> A quote from Bogle:
>>> I invest in Vanguard Growth & Income because I want to do a little
>>> better than the index."
>>>
>> I'm still undecided on this issue. I prefer to compare returns after all
>> taxes, expenses and trading costs, and I prefer that dividends and
>> capital gains not be reinvested because I do not automatically reinvest
>> them (so I can keep easier track of cost basis). Is there anywhere I can
>> find the returns expressed in this way so I am doing a fair comparison of
>> the returns I would actually get from the various funds? And even if I
>> could fairly compare them, I take it you disagree with the statement that
>> past returns are not a good basis for predicting future results?
>
> Morninstar will give you the after tax returns. Just keep in mind that the
> returns are calculated for the maximum marginal tax bracket.
> If you keep high payout funds in a qualified account it's not an issue.
>
>> I am not an indexer by nature. I just am not sure I have whatever it
>> takes to select the right active funds to give me that outperformance in
>> the future.
>
> Nobody does. All you have is history to use when making a choice.
>
>> So I tend to go with the index funds unless I like a particular manager
>> and so want to entrust some money to him. Such as Marty Whitman while
>> he's still available.
>>
>> BB
>
> That's fine and it's what I do. I think the fund company has more than a
> little to do with it too.
>

Re: introducing myself

Ed wrote:

> "Blind Broccoli" <> wrote
>
>
>>"Steven L." <> wrote
>
>
>>><snipped>
>>
>>Thank you for your excellent and detailed reply.
>>
>>BB
>
>
> I think Steven is great but I do disagree with one part:
> "I think trying to eke out a little better return
> from just the right actively managed fund is not cost-effective. And
> theory now suggests it doesn't work over the long haul either."
>
> This just isn't true. If you want proof just go to any of the major mutual
> fund sellers and compare.
> It's not even true for buy and holders. It's not even true for Jack Bogle.

Actually, I used to do that. What I found is that an actively managed
fund can outperform for several years. But market leadership constantly
rotates, so Fidelity FooBar Fund may outperform a few years and then
underperform while American Century Blah-Blah Fund outperforms next,
even though the funds are of the same type (say small-cap value).

This is borne out by the high-performing newsletter No*Load Fund*X.
They have managed to beat the S&P 500 in 1, 5, 10, 20 and 25 year time
frames--an unusually good performance for a newsletter. How? By
constantly rotating to the top funds. Their model portfolios churn
furiously. But I don't want to be bothered.

It's a question of investment style, Ed. I'm a slow conservative
investor. My portfolio shifts over time very slowly.


--
Steven D. Litvintchouk
Email:

Remove the NOSPAM before replying to me.

Hey Thanx, Ed. Re: introducing myself

Ed wrote:

> "Blind Broccoli" <> wrote
>
>
>>"Steven L." <> wrote
>
>
>>><snipped>
>>
>>Thank you for your excellent and detailed reply.
>>
>>BB
>
>
> I think Steven is great but I do disagree with one part:
> "I think trying to eke out a little better return
> from just the right actively managed fund is not cost-effective. And
> theory now suggests it doesn't work over the long haul either."

Hey Ed, thanx for the compliment. It means a lot to me, because I've
seen how ruthless you can be with some of the other characters on this
NG like Herb and Elle.


--
Steven D. Litvintchouk
Email:

Remove the NOSPAM before replying to me.

Funny

"Steven L." <> wrote
> It means a lot to me, because I've seen how ruthless you can be with some
> of the other characters on this NG like Herb and Elle.

What are you talking about? There's no "ruthless" to it. He's a temper
tantrum throwing child obviously in need of professional help. Who else, out
of spite and vindictiveness, would publish the address of a fellow
Usenetter? Sociopath city.

Ed's math is poor and his addiction to gambling, high. Hence he chases
returns and seeks validation for his weak plumber's ego. Now watch him have
a cow over this post. That's just more proof. <shrug>

Re: Funny

"Elle" <> wrote

> Ed's math is poor and his addiction to gambling, high. Hence he chases
> returns and seeks validation for his weak plumber's ego. Now watch him
> have a cow over this post. That's just more proof. <shrug>

How could I "have a cow", I don't even know you. Don't want to either.
I don't gamble. Went to Foxwood once, don't understand why people just keep
feeding those machines.
Plumber is a very highly paid profession. If it wasn't for the
apprenticeship I would have thought about doing it.
I know two plumbers that live pretty well, they don't even take new
customers. From what you've writen over the past couple of years you have a
way to go before you catch up with these plumbers. Won't happen.

Re: introducing myself

I think I'm going to start calling you, Doh.
1464, I just want to beat the SP500.

"NoEd" <> wrote

> But why? Don't you want to maximize you return?

Re: introducing myself

Hi BB,

Note Ed or Steve, but I am a momentum investor in the mold of Gary
Smith (How I Trade for a Living) and have been for quite a while. And,
I only invest this way with a portion of my funds while the rest remain
essentially in a b&h core holding.

My feeling is that while over the very long term, the market is
efficient and does revert to the mean, in the short to intermediate
term (say 1-5 years), it can be and often is anything BUT efficient and
therein lies an opportunity to exploit. And by doing so, you can
improve your returns over that of the basic market.

Before you invest any money this way, it is crucial that you establish
exit criteria and you ALWAYS obey them. Some folks use mental stop
losses with funds, some use Technical Analysis signals, whatever. I
set a trailing mental stop of say 5-10% depending upon the volatilty of
the sector, segment, region, country. Should it drop 5%, I may reduce
25% of my position, should it drop another 5%, I may exit completely.

OK. If you're still with me and after I've thoroughly upset the b&h
index efficient frontier types, let's talk about finding trends and
playing them. I look for longer term trends that are generally
smoother than others. I also have a personal bent to invest in things
that I'm familiar with - at least somewhat. I think this is important
and you don't have to ride every single trend that's working - one or
two is sufficient to improve your overall returns.

Identifying trends. I study everything. Pony Express Bob's
is a nice place to start. I don't
use his momentum ranking per se, but look thru the listings to see what
types of funds are working, what are not and what is changing and might
start working.

I also read the weekend (monday edition actually that you can buy
either sat or sun) of IBD and Barrons to look thru all the fund
listings and see what has been working, what has not and what might be
moving. This is not for individual funds, but for types of funds. I
watch the market closely to see what is actually working and I
particularly look for divergences. This is key and is where some index
or sector, segment, etc, diverges from the rest of the market. For
example, it could be up on days when the rest of the market is down and
up more when it's up. This happended back before the holidays with
gold when it diverged with the dollar. Historically, they are
inversely related - dollar up = gold down and vice versa. Well, what
was happening was dollar up = gold up, dollar down = gold up. Well,
this was so bullish I almost had an accident.

You're looking for trends. Once you find something that is or is
starting to, you watch it. If it continues, you make a small purchase
- say 25% of your intended stake. And you watch it for a week or so
and see if you make money. If you do, you buy some more. If you don't
YOU DO NOT. This is called scaling in. I do this until I've
established my intended position and then I continue to watch it
closely -- for a break or reversal in the trend. This is where you
exit strategy comes in to play. However, if you're in a volatile area,
you want to careful and not get yourself stopped out by normal
choppiness. When the trends does seem to be breaking down and violates
your exit strategy, then you start scaling out - just like you scaled
in. Or, in the case, if really bad stuff, you can simply exit and
start looking for another trend to play.

Current scenario: Small caps have been working since after the dotcom
implosion - and still are. Emerging mkts have been working - eastern
europe, asia (japan, korea, china, india), etc. Natural resources have
been on a tear. Oil may be a little toppy and vulnerable, but I still
like energy services and I'm a huge fan of precious metals where I've
been long for several years. Folks keep touting large cap growth and
tech, but to date, I have not seen anything worth playing. Look for
fall perhaps in these segments and when they do start, look for a
rotation out of small caps. As for natural resources, asia and
emerging mkts, I really don't see anything on the horizon that will
break these down. Sure, something could happen this afternoon, but at
this point, they look solid for a few years if not longer.

I would suggest you buy Gary's book listed above. Also, in addition to
Bob's site, and fundvision (chartists and technicians that are very
active), check out the discussion board at www.fundalarm.com.

Lastly, if you attempt to trade vanguard funds any more often than
quarterly rebalancing - and in some cases, annual rebalancing, they
will get extremely upset, send Guido out to break your knees and poison
your dog. They positively despise anyone who is even slightly active
as an investor. Be very careful. Now, it can be done and I do it with
wifey's rollover IRA. However, you must be prudent and stick to
quarterly moves. For instance, you want to own their pac index VPACX
and their emerging mkt index VEIEX. You want to own their Mining fund
VGPMX (just closed) and you might want their energy fund. In our case,
we simply overweighted these four funds/areas and call it good. And
realize that she's retired and this is the acct from which she's taking
SEPP distributions, so it is imperative that it be very conservatively
invested. To this end, it only did 9% last year - largely due to mining
and emerging mkts.

just some thoughts,

rono

Re: introducing myself

"rono" <> wrote in message
news:
> Hi BB,
>
> Note Ed or Steve, but I am a momentum investor in the mold of Gary
> Smith (How I Trade for a Living) and have been for quite a while. And,
> I only invest this way with a portion of my funds while the rest remain
> essentially in a b&h core holding.
>
> My feeling is that while over the very long term, the market is
> efficient and does revert to the mean, in the short to intermediate
> term (say 1-5 years), it can be and often is anything BUT efficient and
> therein lies an opportunity to exploit. And by doing so, you can
> improve your returns over that of the basic market.
>
> Before you invest any money this way, it is crucial that you establish
> exit criteria and you ALWAYS obey them. Some folks use mental stop
> losses with funds, some use Technical Analysis signals, whatever. I
> set a trailing mental stop of say 5-10% depending upon the volatilty of
> the sector, segment, region, country. Should it drop 5%, I may reduce
> 25% of my position, should it drop another 5%, I may exit completely.
>
> OK. If you're still with me and after I've thoroughly upset the b&h
> index efficient frontier types, let's talk about finding trends and
> playing them. I look for longer term trends that are generally
> smoother than others. I also have a personal bent to invest in things
> that I'm familiar with - at least somewhat. I think this is important
> and you don't have to ride every single trend that's working - one or
> two is sufficient to improve your overall returns.
>
> Identifying trends. I study everything. Pony Express Bob's
> is a nice place to start. I don't
> use his momentum ranking per se, but look thru the listings to see what
> types of funds are working, what are not and what is changing and might
> start working.
>
> I also read the weekend (monday edition actually that you can buy
> either sat or sun) of IBD and Barrons to look thru all the fund
> listings and see what has been working, what has not and what might be
> moving. This is not for individual funds, but for types of funds. I
> watch the market closely to see what is actually working and I
> particularly look for divergences. This is key and is where some index
> or sector, segment, etc, diverges from the rest of the market. For
> example, it could be up on days when the rest of the market is down and
> up more when it's up. This happended back before the holidays with
> gold when it diverged with the dollar. Historically, they are
> inversely related - dollar up = gold down and vice versa. Well, what
> was happening was dollar up = gold up, dollar down = gold up. Well,
> this was so bullish I almost had an accident.
>
> You're looking for trends. Once you find something that is or is
> starting to, you watch it. If it continues, you make a small purchase
> - say 25% of your intended stake. And you watch it for a week or so
> and see if you make money. If you do, you buy some more. If you don't
> YOU DO NOT. This is called scaling in. I do this until I've
> established my intended position and then I continue to watch it
> closely -- for a break or reversal in the trend. This is where you
> exit strategy comes in to play. However, if you're in a volatile area,
> you want to careful and not get yourself stopped out by normal
> choppiness. When the trends does seem to be breaking down and violates
> your exit strategy, then you start scaling out - just like you scaled
> in. Or, in the case, if really bad stuff, you can simply exit and
> start looking for another trend to play.
>
> Current scenario: Small caps have been working since after the dotcom
> implosion - and still are. Emerging mkts have been working - eastern
> europe, asia (japan, korea, china, india), etc. Natural resources have
> been on a tear. Oil may be a little toppy and vulnerable, but I still
> like energy services and I'm a huge fan of precious metals where I've
> been long for several years. Folks keep touting large cap growth and
> tech, but to date, I have not seen anything worth playing. Look for
> fall perhaps in these segments and when they do start, look for a
> rotation out of small caps. As for natural resources, asia and
> emerging mkts, I really don't see anything on the horizon that will
> break these down. Sure, something could happen this afternoon, but at
> this point, they look solid for a few years if not longer.
>
> I would suggest you buy Gary's book listed above. Also, in addition to
> Bob's site, and fundvision (chartists and technicians that are very
> active), check out the discussion board at www.fundalarm.com.
>
> Lastly, if you attempt to trade vanguard funds any more often than
> quarterly rebalancing - and in some cases, annual rebalancing, they
> will get extremely upset, send Guido out to break your knees and poison
> your dog. They positively despise anyone who is even slightly active
> as an investor. Be very careful. Now, it can be done and I do it with
> wifey's rollover IRA. However, you must be prudent and stick to
> quarterly moves. For instance, you want to own their pac index VPACX
> and their emerging mkt index VEIEX. You want to own their Mining fund
> VGPMX (just closed) and you might want their energy fund. In our case,
> we simply overweighted these four funds/areas and call it good. And
> realize that she's retired and this is the acct from which she's taking
> SEPP distributions, so it is imperative that it be very conservatively
> invested. To this end, it only did 9% last year - largely due to mining
> and emerging mkts.
>
> just some thoughts,
>
> rono
>
Rono

This could all be fairly sensible but it would mean more if we had some
audited evidence of it working. Have you thought of entering the mimf2006
contest or Ed's contest? This would show whether it works in the future.

David

Re: introducing myself

Hi David,

You wrote,

"This could all be fairly sensible but it would mean more if we had
some
audited evidence of it working. Have you thought of entering the
mimf2006
contest or Ed's contest? This would show whether it works in the
future."

No thanks. I'm not trying to convince anyone and frankly, don't really
care. This is what I do and it works for me and I'm comfortable with
my results - although I'm still trying to do better.

BB asked a specific question about investing in trending sectors and I
explained how I do it. Anyone reading my postie can take it with
however many grains of salt that they wish.

best,

rono

Re: Funny

With Ed there is no debate. He shuts that off very quickly by calling his
"opponent" names. To Ed, the other guy/gal who he differs with is not just
wrong but is inherently a bad person who is trying to hurt him in some way.
This is a very powerful defensive mechanism since it enables him to avoid
admitting that he is wrong.




"Elle" <> wrote in message
news:OuBFf.1933$
> "Steven L." <> wrote
>> It means a lot to me, because I've seen how ruthless you can be with
>> some of the other characters on this NG like Herb and Elle.
>
> What are you talking about? There's no "ruthless" to it. He's a temper
> tantrum throwing child obviously in need of professional help. Who else,
> out of spite and vindictiveness, would publish the address of a fellow
> Usenetter? Sociopath city.
>
> Ed's math is poor and his addiction to gambling, high. Hence he chases
> returns and seeks validation for his weak plumber's ego. Now watch him
> have a cow over this post. That's just more proof. <shrug>
>
>

Re: introducing myself

It doesn't seem to make any sense to say something works for me yet be
opposed to a little group and/or intellectual scrutiny. To me that is like
saying I have found a new energy source, but when I am asked to show proof I
say I am not interested but it works for me. It's like alien abduction.





"rono" <> wrote in message
news:
> Hi David,
>
> You wrote,
>
> "This could all be fairly sensible but it would mean more if we had
> some
> audited evidence of it working. Have you thought of entering the
> mimf2006
> contest or Ed's contest? This would show whether it works in the
> future."
>
> No thanks. I'm not trying to convince anyone and frankly, don't really
> care. This is what I do and it works for me and I'm comfortable with
> my results - although I'm still trying to do better.
>
> BB asked a specific question about investing in trending sectors and I
> explained how I do it. Anyone reading my postie can take it with
> however many grains of salt that they wish.
>
> best,
>
> rono
>

Re: introducing myself

FWIW, you're correct. OTOH, so is Rono. IMO he's realized rarely does true
debate on Usenet occur. For example, David W. has a numerologists' approach
to stock etc. picking which undisputably has been working pretty well for a
few years now, according to the MIMF contest results. If Rono entered and
didn't do as well, some lunatic would say his approach is wrong. But it's
not wrong. The lunatics forget that past performance is no guarantee of
future performance, and that most people don't invest for a one-year period;
we're investing for a lifetime--twenty etc. year periods.

He's doing something that falls within his risk tolerance. He's right,
afaic, to say simply he's comfortable enough with his approach--a long-term
approach, most likely--that doesn't need scrutiny by god-awful unmoderated
Usenet.

Besides, it's not like Rono doesn't post some of his personal guidelines for
investing. He does.

Lastly, a message like his does help others here: Be comfortable with your
own method of investing.

"NoEd" <> wrote
> It doesn't seem to make any sense to say something works for me yet be
> opposed to a little group and/or intellectual scrutiny. To me that is
> like saying I have found a new energy source, but when I am asked to show
> proof I say I am not interested but it works for me. It's like alien
> abduction.
>
>
>
>
>
> "rono" <> wrote in message
> news:
>> Hi David,
>>
>> You wrote,
>>
>> "This could all be fairly sensible but it would mean more if we had
>> some
>> audited evidence of it working. Have you thought of entering the
>> mimf2006
>> contest or Ed's contest? This would show whether it works in the
>> future."
>>
>> No thanks. I'm not trying to convince anyone and frankly, don't really
>> care. This is what I do and it works for me and I'm comfortable with
>> my results - although I'm still trying to do better.
>>
>> BB asked a specific question about investing in trending sectors and I
>> explained how I do it. Anyone reading my postie can take it with
>> however many grains of salt that they wish.
>>
>> best,
>>
>> rono
>>
>
>

Re: Funny

I guess it's "powerful" in the sense it's consuming him, agreed. I tend to
call it simply "transparent." I am sure we're about on the same page.

Regardless, it is important to call a spade a spade. Edward posts some
useful info. One just has to know when to separate the dreck from the gems.
I say that not to be nice, but so newbies continue to read this group
critically, with an eye towards getting at the truth through robust debate
(on the rare occasions true debate occurs here). You post some useful info,
too, of course. Right now, there's only one person who posts here who I
think is a full-time clown.

"NoEd" <> wrote
> With Ed there is no debate. He shuts that off very quickly by calling his
> "opponent" names. To Ed, the other guy/gal who he differs with is not
> just wrong but is inherently a bad person who is trying to hurt him in
> some way. This is a very powerful defensive mechanism since it enables him
> to avoid admitting that he is wrong.

Re: Funny

Ed wrote:

> "Elle" <> wrote
>
>
>>Ed's math is poor and his addiction to gambling, high. Hence he chases
>>returns and seeks validation for his weak plumber's ego. Now watch him
>>have a cow over this post. That's just more proof. <shrug>
>
>
> How could I "have a cow", I don't even know you. Don't want to either.
> I don't gamble. Went to Foxwood once, don't understand why people just keep
> feeding those machines.
> Plumber is a very highly paid profession. If it wasn't for the
> apprenticeship I would have thought about doing it.

It's also a profession with a long and honorable history:




--
Steven D. Litvintchouk
Email:

Remove the NOSPAM before replying to me.

Re: introducing myself

Bob's site & Fundvision's site are suitable for traders.

If you're not chartist use Fundalarm board:


If you're chartist use Fundvision board:


If you're in between use both!

Re: introducing myself

I guess I expect others to be as completely open as I am, esp. on an
anonymous NG. All that is needed to see how I invest is to look at my MIMF
portfollio.


"Elle" <> wrote in message
news:M1LFf.2112$
> FWIW, you're correct. OTOH, so is Rono. IMO he's realized rarely does true
> debate on Usenet occur. For example, David W. has a numerologists'
> approach to stock etc. picking which undisputably has been working pretty
> well for a few years now, according to the MIMF contest results. If Rono
> entered and didn't do as well, some lunatic would say his approach is
> wrong. But it's not wrong. The lunatics forget that past performance is no
> guarantee of future performance, and that most people don't invest for a
> one-year period; we're investing for a lifetime--twenty etc. year periods.
>
> He's doing something that falls within his risk tolerance. He's right,
> afaic, to say simply he's comfortable enough with his approach--a
> long-term approach, most likely--that doesn't need scrutiny by god-awful
> unmoderated Usenet.
>
> Besides, it's not like Rono doesn't post some of his personal guidelines
> for investing. He does.
>
> Lastly, a message like his does help others here: Be comfortable with your
> own method of investing.
>
> "NoEd" <> wrote
>> It doesn't seem to make any sense to say something works for me yet be
>> opposed to a little group and/or intellectual scrutiny. To me that is
>> like saying I have found a new energy source, but when I am asked to show
>> proof I say I am not interested but it works for me. It's like alien
>> abduction.
>>
>>
>>
>>
>>
>> "rono" <> wrote in message
>> news:
>>> Hi David,
>>>
>>> You wrote,
>>>
>>> "This could all be fairly sensible but it would mean more if we had
>>> some
>>> audited evidence of it working. Have you thought of entering the
>>> mimf2006
>>> contest or Ed's contest? This would show whether it works in the
>>> future."
>>>
>>> No thanks. I'm not trying to convince anyone and frankly, don't really
>>> care. This is what I do and it works for me and I'm comfortable with
>>> my results - although I'm still trying to do better.
>>>
>>> BB asked a specific question about investing in trending sectors and I
>>> explained how I do it. Anyone reading my postie can take it with
>>> however many grains of salt that they wish.
>>>
>>> best,
>>>
>>> rono
>>>
>>
>>
>
>

Re: introducing myself

"NoEd" <> wrote

>I guess I expect others to be as completely open as I am, esp. on an
>anonymous NG. All that is needed to see how I invest is to look at my MIMF
>portfollio.
>
>
> "Elle" <> wrote
If Rono
>> entered and didn't do as well, some lunatic would say his approach is
>> wrong.

She has you pegged.

Re: introducing myself

"Ed" <> wrote in message
news:
>
> "NoEd" <> wrote
>
>>I guess I expect others to be as completely open as I am, esp. on an
>>anonymous NG. All that is needed to see how I invest is to look at my
>>MIMF portfollio.
>>
>>
>> "Elle" <> wrote
> If Rono
>>> entered and didn't do as well, some lunatic would say his approach is
>>> wrong.
>
> She has you pegged.
>
She is still trying to work out how what she calls my "numerology" methods
beat the index every time. So far in contest portfolios I had two that beat
the index in 2003, two in 2004 and three in 2005, all using different
strategies. That's 7 out of 7. If I was using "numerology" the results would
be random and the probability of success for each portfolio would be about
0.5 without costs or, say, 0.45 with costs. The probability of 7 successes
in a row would be 0.45^7 = 0.0037 or 1 in 268. Count in the three 2006
portfolios that are also all beating the index and that gives a probability
of 0.45^10 = 0.0003 or 1 in 2,937.

Of course, if I actually used "numerology", whatever that is, the results
would be approximately 5 portfolios beating the index and 5 losing to it or
slightly worse due to costs. Even someone without any statistical background
must see that the actual results are unlikely to be due to chance or luck.

Re: introducing myself

"David Wilkinson" <> wrote
> She is still trying to work out how what she calls my "numerology" methods
> beat the index every time. So far in contest portfolios I had two that
> beat the index in 2003, two in 2004 and three in 2005, all using different
> strategies. That's 7 out of 7. If I was using "numerology" the results
> would be random and the probability of success for each portfolio would be
> about 0.5 without costs or, say, 0.45 with costs. The probability of 7
> successes in a row would be 0.45^7 = 0.0037 or 1 in 268. Count in the
> three 2006 portfolios that are also all beating the index and that gives a
> probability of 0.45^10 = 0.0003 or 1 in 2,937.
>
> Of course, if I actually used "numerology", whatever that is, the results
> would be approximately 5 portfolios beating the index and 5 losing to it
> or slightly worse due to costs. Even someone without any statistical
> background must see that the actual results are unlikely to be due to
> chance or luck.

You, and others, have her interested in experimenting with timing. She has
indicated that recently in her posts.
If she doesn't use 'numerology' I hope she at least let's us know what she's
doing and if it's working.

Of course, nothing she claims will count unless NoEd can see it in a
contest.

Re: introducing myself

"Blind Broccoli" <> wrote in message
news:PK6Ff.10199$
> Hi, I'm 59 and I have most of my assets at Vanguard. I have a mix of index
> and managed funds. I'm retired.
>
> Two things I have noticed seem to be overlooked in all the discussions
> I've read here and on the Morningstar boards.
>
> The first is, that although a mutual fund manager may rarely be able to
> outperform the market, an individual investor can and does more often than
> the indexers care to admit, for the simple reason that his buys and sells
> are too small to affect the price. I think many individuals have done so,
> but they have no reason to advertise their success, so you don't hear
> about them. They would not be included in any statistical studies. Their
> financial affairs are private. Most individuals underperform it is true,
> but I think psychological factors play a big part in that.

Individuals--especially in IRA's with mutual funds--have the ability to
capture profits from funds that are doing well by transferring with little
or no transaction costs...we can exchange into an international fund on days
the U.S. markets soar but the European markets didn't, in hopes that the
U.S. surge will transfer over to world markets the next trading day.

> Second, it seems that for a while after you hear that an asset class is
> due for a correction or reversion to the mean, it keeps doing well for
> quite a while. We were reading about the real estate bubble for a long
> time before any markets showed signs of trouble (starting about a month
> ago or so). Ditto energy and small caps and emerging markets.

Yup.

> So maybe there is money to be made in "being stupid" and following a trend
> at the same time that you are reading everywhere that you are "too late."
> But do it *consciously* and watch it carefully, knowing that most likely
> the people who are writing "too late" and "overbought" are probably right,
> but premature.
>
> I'm interested in your reactions to these ideas, particularly Ed and Steve
> but all are welcome to join in. Knowing my own weaknesses, I will probably
> continue to "diversify" and look for "low cost funds" just like everybody
> else. But I would put the second idea to the test with a small portion of
> my retirement savings just as an experiment if I had any "play money" to
> gamble with.
>
> BB


D

Re: introducing myself

"Dave Hannes" <> wrote in message
news:pmuGf.8161$
> "Blind Broccoli" <> wrote in message
> news:PK6Ff.10199$
><snip>

> Individuals--especially in IRA's with mutual funds--have the ability to
> capture profits from funds that are doing well by transferring with little
> or no transaction costs...we can exchange into an international fund on
> days the U.S. markets soar but the European markets didn't, in hopes that
> the U.S. surge will transfer over to world markets the next trading day.

Even if I thought that was a viable strategy I don't think I could do it for
long at Vanguard with their policies against frequent trading and "timing
the market."
>
>> Second, it seems that for a while after you hear that an asset class is
>> due for a correction or reversion to the mean, it keeps doing well for
>> quite a while. We were reading about the real estate bubble for a long
>> time before any markets showed signs of trouble (starting about a month
>> ago or so). Ditto energy and small caps and emerging markets.
>
> Yup.

Wow! One person in the world sees what I see! Thanks Dave! For a second
there I thought I was crazy...
>
>> So maybe there is money to be made in "being stupid" and following a
>> trend at the same time that you are reading everywhere that you are "too
>> late." But do it *consciously* and watch it carefully, knowing that most
>> likely the people who are writing "too late" and "overbought" are
>> probably right, but premature.
>>
So Dave, would you try to take advantage of a "lingering trend" by making a
*new* investment in an asset class when everyone is saying its winning days
are numbered?

That was the contrarian strategy I was suggesting that noone responded to.

Which brings up another subject. Say most of the market is getting into an
asset class at the wrong time as usual, and that asset class is getting
hyped all over the place in the popular media. At the same time, the "more
sophisticated" investors like the ones on this newsgroup <cough> are getting
out because they think the asset class is overvalued. Would the "contrarian"
strategy be to buy or sell that asset class?

Is being a contrarian a function of who you hang out with? Is it better to
be an anti-contrarian? And how does that differ from being the greater fool,
since at that point in time you would be making the same bet as the "idiots"
who chase performance?

Keeping the ball rolling,

BB