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One of the fund managers I saw on NBR said he believes the risk to reward ratio of equities warrants being actively invested, because of the current lack of interest in fundamentals.
A transition signifying a more robust job growth outlook could quickly turn the market upwards.
But if sentiment turns with it, we could tank.![]()
nation of whiners, nation of doers .....? The 64 billion dollar question.
Do we get back to the business of leading the world in innovation, or do we tuck our tail and go to the corner until China tells us we can come out, flogging each other in the meantime. 10/2/10 -a day to remember.![]()
I think you're trying to equate the market with being an economic barometer when in reality it's a casino. :laugh:
It's been a while since I've posted (because I really have had nothing to offer). I've read many different ideas about investing (here and many other places), and I always enjoy learning. In that spirit, I thought I'd share something that has been helpful to me in this whole investing/market/timing issue. File this under "take it or flush it."
My investing practice starts with identifying a default position, and that is determined by whether we're in a bear market or a bull market. There are many ways to define this, but I simply use the slope of the 200 day moving average. If the 200 dma is up, then we're in a bull market. If it's down, then we're in a bear market. If we're in a bull market, my default position is equities (doesn't really matter whether it's C,S, or I--they all move together). If we're in a bear market, my default position is cash or bonds (G or F, but usually G). The only time I'll move out of the default position is if a lot of indicators that I use (risk/reward ratio) are pointing to a move opposite to the current trend (i.e., bull or bear). I only stay in that countertrending position for a short time, and then I go back to the default position.
For example, right now the 200 dma is still sloping down and it has been for all of 2009, so my default position is G (or F). I have only been in equities for a total of 31 calendar days in 2009 (out of ~207 calendar days). This means that my risk is very low. Of course, I will miss many big up days, like today. But it also means that I will miss many big down days. (My return so far in 2009 is 19.5%.) When the 200 dma begins sloping upward, I will return to C, S, or I as my default.
The "buy and hold" and the "dollar cost averaging" methods just don't produce meaningful gains unless we happen to be in a strong bull market. And in that case, everybody looks like a genius. (See here: http://globaleconomicanalysis.blogspot.com/2009/07/another-nail-in-buy-and-holds-coffin.html )
Anyway, I've found that this simple "default" method eliminates a lot of risk, a lot of stress, and my tendency to "fight against the trend." It has helped me tremendously. As I said--food for thought, and take it, leave it or flush it.![]()
Bump :cheesy:
That was simple, great advice. I actually passed Jeff last year, but couldn't hold him off for the final (I had a respectable 23.54% to his 24.06%), but I got nailed this year trying to gamble. I'm only up 9.2% and sitting in a woeful 71st place. I guess 9.2% isn't terrible, but I'm, definitely feeling jealous of you folk in the top 20.
[dumbquestionfonton]If the system is to follow the 200dma slope, which reflects the trend of the market, why the handle of "Contrarian"Jeff? [dumbquestionfontoff]