Get Your Money out of the Market (2 Viewers)

[Slapdash]

By real inflation what I mean is the cost of food, energy, healthcare, tuition, and taxes- the things you'll spend a majority of your money on. The Everyday Price Index for 2011 was 8%, and last time I checked for 2012 it is around 12%.

The frequently purchased products in the Everyday Price Index make up only about 39 percent of total household spending

https://www.aier.org/article/7545-everyday-price-index

100% correct. The EPI doesn't account for Healthcare (-perscriptions), Tuition or Taxes. Is your assertion these will rise significantly less than 8% per year, or that the collective of the components of the EPI + Healthcare + Taxes + Tuition does not equal the majority of what a person spends?

My assertion is that it is silly base your spending expectations in retirement on something that excludes so many goods and services that people actually purchase.

What do you think real inflation is for the things people actually purchase? What do you think that will be moving forward?I think you're really missing the point to which is it's silly to base your expected market gains at a rate 3x higher than the average annual rate has been for 13 years, and that even if you were to use Gov't CPI as your base- your purchasing power is negative year over year vs. avg market returns.

My assertion is that one has to have a market return greater than inflation, and buy and holding is just not getting that job done anyway you want to slice it.

I'm totally with you on buy and hold here. I just think the CPI is a better approximation of costs of living than indicies that purposefully exclude large swaths of goods and services or ignores changes consumer behavior.

I would expect stock returns and price inflation to both remain low in the medium term. At the very least, people need to learn to reallocate their 401ks periodically to lock in gains from equities.

If someone is worried about inflation then real estate is the best way to hedge it. Much less complicated than teaching people how to trade, IMO.

 

[NewlyRetired]

#3: Buy and Hold is great. Great for bankers, brokerage firms, fat finger traders etc. Buy and Holders are like KY Jelly...you provide those who really control the market with a nice lubricant. You're being used. And the goal isn't to provide a collective cushy future for you, but to #### you up the ###. The reality is the market isn't for everyone. There are much safer and less volatile places to grow money. If people were being honest, the true hope of any buy and holder is that they are fortunate enough to retire at the exact moment the market is at a peak-which in the end is the epitome of being a market timer. Unfortunately that window is quite narrow and open to very few. I don't know the future, but I am quite certain that in the next 30 years there will be bull markets and there will be bear markets. It doesn't take much savvy to learn how to capitalize in both. People who refuse to recognize that...prepare to bend over.

We used a primarily buy and hold technique and did not retire anywhere near top of market (retired in 2010). Although I will acknowledge that buying and holding in 90's and 00's is likely different than today.

 

[siffoin]

#3: Buy and Hold is great. Great for bankers, brokerage firms, fat finger traders etc. Buy and Holders are like KY Jelly...you provide those who really control the market with a nice lubricant. You're being used. And the goal isn't to provide a collective cushy future for you, but to #### you up the ###. The reality is the market isn't for everyone. There are much safer and less volatile places to grow money. If people were being honest, the true hope of any buy and holder is that they are fortunate enough to retire at the exact moment the market is at a peak-which in the end is the epitome of being a market timer. Unfortunately that window is quite narrow and open to very few. I don't know the future, but I am quite certain that in the next 30 years there will be bull markets and there will be bear markets. It doesn't take much savvy to learn how to capitalize in both. People who refuse to recognize that...prepare to bend over.

We used a primarily buy and hold technique and did not retire anywhere near top of market (retired in 2010). Although I will acknowledge that buying and holding in 90's and 00's is likely different than today.

Ya know I just had an epiphany.For years I've constantly tried to promote and in some cases teach a style of "market timing"...against my best personal interests. What an idiot. I'm perhaps 10 years from retiring (though I like what I do so I don't think I'll stop). The only thing that will stop me is a dry market. I need the lubrication of people buying in and holding through thick and thin. What the hell have I been doing these past years?It's a new day and a new Siffoin. That's right YOU can't time the market so don't even try.As Ron Popiel might say "buy it and forget it.Good luck! Though who needs luck anyways right?

 

[Dentist]

Every time I see the market go up over 100 points I think of this thread. This is one of my favorite threads on the board right now. I do think that LHucks is probably a pretty smart guy. Or maybe a better description is he has seen a lot of things happen. Not able to interpret them, but he has seen them.

It was funny to watch the market dip right after the election when Republicans got pissy since their guy didn't win. OK, we get it. Your mad. And to prove it you took your ball and went home. Meanwhile, all the cool kids just relaxed, picked up another ball and kept playing while they watched out the window like a kid on restriction.

I guess I should make a prediction myself. OK, I predict the DJIA will go up 6% per year from today. And I predict it for any given date in the next 30 years, at which time I'll no longer care. And anyone who tries to time the swings will repeatedly miss the mark due to transaction costs.

I think there are some issues with your prediction.#1: For the past 13 years (close to half of your 30 year expected time frame) the DJIA has not averaged anything close to a +6% return. The average return rate on the Dow is less than 2%. (Dow on Jan 1, 2000= 11,500. DOW on Dec 18, 2012= 13,315. Had we been returning 6% annually DOW should be at 24,500). Your expectation for 6% annual returns seems optimistic.

#2: But lets forget those facts for a second and say that for the next 30 years you can actually exceed the average return from this century by 3x per year...you'll need to account for the effects of inflation and your purchasing power of those invested dollars 30 years into the future. By real inflation what I mean is the cost of food, energy, healthcare, tuition, and taxes- the things you'll spend a majority of your money on. The Everyday Price Index for 2011 was 8%, and last time I checked for 2012 it is around 12%. Perhaps more troubling in a 30 year time frame will be the effects of our current monetary policy, and its inflationary impact, which we have not yet seen. For the sake of conversation lets just say that for the next 30 years real inflation will be 8%. That means for every $100 you invest in the market your annual purchasing power will be $98 after your 6% market return. A -2% return in your buying power compounded over 30 years is going to be quite problematic.

#3: Buy and Hold is great. Great for bankers, brokerage firms, fat finger traders etc. Buy and Holders are like KY Jelly...you provide those who really control the market with a nice lubricant. You're being used. And the goal isn't to provide a collective cushy future for you, but to #### you up the ###. The reality is the market isn't for everyone. There are much safer and less volatile places to grow money. If people were being honest, the true hope of any buy and holder is that they are fortunate enough to retire at the exact moment the market is at a peak-which in the end is the epitome of being a market timer. Unfortunately that window is quite narrow and open to very few. I don't know the future, but I am quite certain that in the next 30 years there will be bull markets and there will be bear markets. It doesn't take much savvy to learn how to capitalize in both. People who refuse to recognize that...prepare to bend over.

Siffoin, are you suggesting the average person who is not going be a skilled trader should probably just spend their money and not bother with the stock market?

Has there ever been a 30-35 year period of time where the stock market didn't return 6% i don't think any buy and holder is only investing over a 10-15 year horizon.

What are the safer and less volatile ways to grow money that you are referring to?

 

[NutterButter]

Siffoin, are you suggesting the average person who is not going be a skilled trader should probably just spend their money and not bother with the stock market?Has there ever been a 30-35 year period of time where the stock market didn't return 6% i don't think any buy and holder is only investing over a 10-15 year horizon.What are the safer and less volatile ways to grow money that you are referring to?

Looks like the lowest 3 consecutive decade return was the 20's, 30's and 40's which was 7.68% not including dividends. I don't really feel like digging that up, but looking at more recent decades, it would be at least 2%. Subtract a percent for maintenance costs and you're at least over 8.5% for that period.

 

[siffoin]

Every time I see the market go up over 100 points I think of this thread. This is one of my favorite threads on the board right now. I do think that LHucks is probably a pretty smart guy. Or maybe a better description is he has seen a lot of things happen. Not able to interpret them, but he has seen them.

It was funny to watch the market dip right after the election when Republicans got pissy since their guy didn't win. OK, we get it. Your mad. And to prove it you took your ball and went home. Meanwhile, all the cool kids just relaxed, picked up another ball and kept playing while they watched out the window like a kid on restriction.

I guess I should make a prediction myself. OK, I predict the DJIA will go up 6% per year from today. And I predict it for any given date in the next 30 years, at which time I'll no longer care. And anyone who tries to time the swings will repeatedly miss the mark due to transaction costs.

I think there are some issues with your prediction.#1: For the past 13 years (close to half of your 30 year expected time frame) the DJIA has not averaged anything close to a +6% return. The average return rate on the Dow is less than 2%. (Dow on Jan 1, 2000= 11,500. DOW on Dec 18, 2012= 13,315. Had we been returning 6% annually DOW should be at 24,500). Your expectation for 6% annual returns seems optimistic.

#2: But lets forget those facts for a second and say that for the next 30 years you can actually exceed the average return from this century by 3x per year...you'll need to account for the effects of inflation and your purchasing power of those invested dollars 30 years into the future. By real inflation what I mean is the cost of food, energy, healthcare, tuition, and taxes- the things you'll spend a majority of your money on. The Everyday Price Index for 2011 was 8%, and last time I checked for 2012 it is around 12%. Perhaps more troubling in a 30 year time frame will be the effects of our current monetary policy, and its inflationary impact, which we have not yet seen. For the sake of conversation lets just say that for the next 30 years real inflation will be 8%. That means for every $100 you invest in the market your annual purchasing power will be $98 after your 6% market return. A -2% return in your buying power compounded over 30 years is going to be quite problematic.

#3: Buy and Hold is great. Great for bankers, brokerage firms, fat finger traders etc. Buy and Holders are like KY Jelly...you provide those who really control the market with a nice lubricant. You're being used. And the goal isn't to provide a collective cushy future for you, but to #### you up the ###. The reality is the market isn't for everyone. There are much safer and less volatile places to grow money. If people were being honest, the true hope of any buy and holder is that they are fortunate enough to retire at the exact moment the market is at a peak-which in the end is the epitome of being a market timer. Unfortunately that window is quite narrow and open to very few. I don't know the future, but I am quite certain that in the next 30 years there will be bull markets and there will be bear markets. It doesn't take much savvy to learn how to capitalize in both. People who refuse to recognize that...prepare to bend over.

Siffoin, are you suggesting the average person who is not going be a skilled trader should probably just spend their money and not bother with the stock market?

Has there ever been a 30-35 year period of time where the stock market didn't return 6% i don't think any buy and holder is only investing over a 10-15 year horizon.

What are the safer and less volatile ways to grow money that you are referring to?

Honestly- there is a new me, and I'm inclined to suggest people just buy and hold. Sure there are other ways to make a buck in the market, but I think the ability to do so requires a level of knowledge and self-discipline, a level of emotional control and lack of attachment to positions. I think few people are really cut out to succeed, and few do.As to the second question: My parents are good examples of buy and holders for 30+ years who were financially decimated in 2008- both in real estate and stock investments. Hindsight is 20:20 of what they coulda woulda shoulda done. Hopefully you retire at a high.

In addition investing in the market today is quite a bit different from 1920-or even from the year 1999. When I first started trading a round trip option play was about $40...today it is $3.20. Stock purchases today are less than $1.00 per 100 shares. I can control $60k of SP500 portfolio in an emini future position for $2500 of margin and trading in and out cost less than $3.20 in commission. You can trade $100k Eur/Dollars for $3.00 round trip commission and margin of less than $1k. Cheap and instant execution from pretty much anywhere in the world. Broker competition, computerized analysis tools, broadcast, internet message boards et al. It's a huge game changer. Information comes faster, reaction is more furious than in yesteryear too. That means upside swings might be greater in magnitude but also downside swings will be greater too. The commodity market of ancient Rome and the Chicago Merc in 1980 probably had more in common in look and style than the Merc in 1980 is to the Merc today. So if you want to base your future returns on that past...more power to you I say. THAT takes guts.

To your final question: Truth is I'm a trader. That is what my knowledge and expertise is in. Perhaps other people here have more knowledge of safer and less volatile ways to grow your money than me. Can people invest in Forever Stamps? Stamps in 2000 cost $.33 today it is $.45, next year $.46. That's about a 3% increase per year...close to double of what the market has returned over the same time. CD laddering? Honestly I don't know.

Most people think I'm an aggressive player in the market. Truth be told...I'm extremely conservative in the positions. Extremely disciplined on entries and exits. Because of that and seeking opportunity through a wide variety of investment tools, gains are high. I can and do lose on any one position...it would be rare to see significant losses over a stretch of time (knock on wood).

The battle of convincing people to recognize what to me is obvious: there are bull markets and bear markets- learn to recognize which is which and invest accordingly- is over. I claim defeat. Take your convictions and what you think to be true and go for it. Analyze your mistakes. Adjust. And go for it again. That's really what I do.

 

[NewlyRetired]

What are the safer and less volatile ways to grow money that you are referring to?

I never invested in a single bond until I retired and my planner moved me into some safe ones to generate the income I live off of. They are averaging around 5.5% return which is pretty good these days for a very safe investment.They are all set up in a short term ladder methodology. Although even if I knew about these before I retired I could not have gotten into them as I think the buy ins are huge (in the millions), so you need to group with others.

 

[Dentist]

Every time I see the market go up over 100 points I think of this thread. This is one of my favorite threads on the board right now. I do think that LHucks is probably a pretty smart guy. Or maybe a better description is he has seen a lot of things happen. Not able to interpret them, but he has seen them.

It was funny to watch the market dip right after the election when Republicans got pissy since their guy didn't win. OK, we get it. Your mad. And to prove it you took your ball and went home. Meanwhile, all the cool kids just relaxed, picked up another ball and kept playing while they watched out the window like a kid on restriction.

I guess I should make a prediction myself. OK, I predict the DJIA will go up 6% per year from today. And I predict it for any given date in the next 30 years, at which time I'll no longer care. And anyone who tries to time the swings will repeatedly miss the mark due to transaction costs.

I think there are some issues with your prediction.#1: For the past 13 years (close to half of your 30 year expected time frame) the DJIA has not averaged anything close to a +6% return. The average return rate on the Dow is less than 2%. (Dow on Jan 1, 2000= 11,500. DOW on Dec 18, 2012= 13,315. Had we been returning 6% annually DOW should be at 24,500). Your expectation for 6% annual returns seems optimistic.

#2: But lets forget those facts for a second and say that for the next 30 years you can actually exceed the average return from this century by 3x per year...you'll need to account for the effects of inflation and your purchasing power of those invested dollars 30 years into the future. By real inflation what I mean is the cost of food, energy, healthcare, tuition, and taxes- the things you'll spend a majority of your money on. The Everyday Price Index for 2011 was 8%, and last time I checked for 2012 it is around 12%. Perhaps more troubling in a 30 year time frame will be the effects of our current monetary policy, and its inflationary impact, which we have not yet seen. For the sake of conversation lets just say that for the next 30 years real inflation will be 8%. That means for every $100 you invest in the market your annual purchasing power will be $98 after your 6% market return. A -2% return in your buying power compounded over 30 years is going to be quite problematic.

#3: Buy and Hold is great. Great for bankers, brokerage firms, fat finger traders etc. Buy and Holders are like KY Jelly...you provide those who really control the market with a nice lubricant. You're being used. And the goal isn't to provide a collective cushy future for you, but to #### you up the ###. The reality is the market isn't for everyone. There are much safer and less volatile places to grow money. If people were being honest, the true hope of any buy and holder is that they are fortunate enough to retire at the exact moment the market is at a peak-which in the end is the epitome of being a market timer. Unfortunately that window is quite narrow and open to very few. I don't know the future, but I am quite certain that in the next 30 years there will be bull markets and there will be bear markets. It doesn't take much savvy to learn how to capitalize in both. People who refuse to recognize that...prepare to bend over.

Siffoin, are you suggesting the average person who is not going be a skilled trader should probably just spend their money and not bother with the stock market?

Has there ever been a 30-35 year period of time where the stock market didn't return 6% i don't think any buy and holder is only investing over a 10-15 year horizon.

What are the safer and less volatile ways to grow money that you are referring to?

Honestly- there is a new me, and I'm inclined to suggest people just buy and hold. Sure there are other ways to make a buck in the market, but I think the ability to do so requires a level of knowledge and self-discipline, a level of emotional control and lack of attachment to positions. I think few people are really cut out to succeed, and few do.As to the second question: My parents are good examples of buy and holders for 30+ years who were financially decimated in 2008- both in real estate and stock investments. Hindsight is 20:20 of what they coulda woulda shoulda done. Hopefully you retire at a high.

In addition investing in the market today is quite a bit different from 1920-or even from the year 1999. When I first started trading a round trip option play was about $40...today it is $3.20. Stock purchases today are less than $1.00 per 100 shares. I can control $60k of SP500 portfolio in an emini future position for $2500 of margin and trading in and out cost less than $3.20 in commission. You can trade $100k Eur/Dollars for $3.00 round trip commission and margin of less than $1k. Cheap and instant execution from pretty much anywhere in the world. Broker competition, computerized analysis tools, broadcast, internet message boards et al. It's a huge game changer. Information comes faster, reaction is more furious than in yesteryear too. That means upside swings might be greater in magnitude but also downside swings will be greater too. The commodity market of ancient Rome and the Chicago Merc in 1980 probably had more in common in look and style than the Merc in 1980 is to the Merc today. So if you want to base your future returns on that past...more power to you I say. THAT takes guts.

To your final question: Truth is I'm a trader. That is what my knowledge and expertise is in. Perhaps other people here have more knowledge of safer and less volatile ways to grow your money than me. Can people invest in Forever Stamps? Stamps in 2000 cost $.33 today it is $.45, next year $.46. That's about a 3% increase per year...close to double of what the market has returned over the same time. CD laddering? Honestly I don't know.

Most people think I'm an aggressive player in the market. Truth be told...I'm extremely conservative in the positions. Extremely disciplined on entries and exits. Because of that and seeking opportunity through a wide variety of investment tools, gains are high. I can and do lose on any one position...it would be rare to see significant losses over a stretch of time (knock on wood).

The battle of convincing people to recognize what to me is obvious: there are bull markets and bear markets- learn to recognize which is which and invest accordingly- is over. I claim defeat. Take your convictions and what you think to be true and go for it. Analyze your mistakes. Adjust. And go for it again. That's really what I do.

1) listen, i don't disagree with you... you sound like you're in angst where you are because people don't believe you.. I BELIEVE you!

2) I'm sorry your parents got owned.. there is no question that retirement does have a timing component... having said that, in 2008 if they were of retirement age, was more than 40% of their money in stocks? if so, why?.. and furthermore since they didn't need ALL of the money immediately hasn't most of their allotment came back?

The only people i'm seeing that really got completely destroyed by the crash were those who got spooked and had never looked at their investments before and then pulled out near the bottom and then missed most or all of the rally... The market timed in the worst way possible.

3) the bottom line though is that what your saying is that buy and hold is dead... that people aren't going to get real returns over the next 20-30 years.. that the game has truly changed. And that the only people that are going to make any real money are going to be fairly active.

a) if this is true, and we can agree that most people aren't cut out for managing their money successfully, nor have the proper time, then should they simply spend their money? should they just forget about their retirement accounts? live for the moment... let the chips fall where they may?

or

b) where would someone with the wherewithal to find someone like yourself TO manage the money even find one? the average person doesn't have access to hedge funds. Heck, I don't even make hedge fund type of money (nor do i have the proper assets).. the things that are available to me are ETFs, Mutual Funds, REITs, commodities, etc... I have a full time job, my EV on filling teeth and root canals is a LOT higher than if I sat at my computer all day trading. What am I supposed to even do?

If i agree with your line of thinking, but don't have the skills to self manage, nor the proper assets to hire someone like you, what am I to do?

 

[Dentist]

What are the safer and less volatile ways to grow money that you are referring to?

I never invested in a single bond until I retired and my planner moved me into some safe ones to generate the income I live off of. They are averaging around 5.5% return which is pretty good these days for a very safe investment.They are all set up in a short term ladder methodology. Although even if I knew about these before I retired I could not have gotten into them as I think the buy ins are huge (in the millions), so you need to group with others.

Yeah, that's the sucky part about Bonds... it's like you need a HUGE pile of dough to get into them.. otherwise your stuck with bond funds or some kind of "let's go in together" thing.. which sounds bond "fund" ish.I guess that's why i've gotten into the poor man's bonds.. preferred stocks.. I can buy 50-200 shares of a $25/share preferred stock no problem... i can get a diversified portfolio of these for under 50 grand..

 

[siffoin]

Every time I see the market go up over 100 points I think of this thread. This is one of my favorite threads on the board right now. I do think that LHucks is probably a pretty smart guy. Or maybe a better description is he has seen a lot of things happen. Not able to interpret them, but he has seen them.

It was funny to watch the market dip right after the election when Republicans got pissy since their guy didn't win. OK, we get it. Your mad. And to prove it you took your ball and went home. Meanwhile, all the cool kids just relaxed, picked up another ball and kept playing while they watched out the window like a kid on restriction.

I guess I should make a prediction myself. OK, I predict the DJIA will go up 6% per year from today. And I predict it for any given date in the next 30 years, at which time I'll no longer care. And anyone who tries to time the swings will repeatedly miss the mark due to transaction costs.

I think there are some issues with your prediction.#1: For the past 13 years (close to half of your 30 year expected time frame) the DJIA has not averaged anything close to a +6% return. The average return rate on the Dow is less than 2%. (Dow on Jan 1, 2000= 11,500. DOW on Dec 18, 2012= 13,315. Had we been returning 6% annually DOW should be at 24,500). Your expectation for 6% annual returns seems optimistic.

#2: But lets forget those facts for a second and say that for the next 30 years you can actually exceed the average return from this century by 3x per year...you'll need to account for the effects of inflation and your purchasing power of those invested dollars 30 years into the future. By real inflation what I mean is the cost of food, energy, healthcare, tuition, and taxes- the things you'll spend a majority of your money on. The Everyday Price Index for 2011 was 8%, and last time I checked for 2012 it is around 12%. Perhaps more troubling in a 30 year time frame will be the effects of our current monetary policy, and its inflationary impact, which we have not yet seen. For the sake of conversation lets just say that for the next 30 years real inflation will be 8%. That means for every $100 you invest in the market your annual purchasing power will be $98 after your 6% market return. A -2% return in your buying power compounded over 30 years is going to be quite problematic.

#3: Buy and Hold is great. Great for bankers, brokerage firms, fat finger traders etc. Buy and Holders are like KY Jelly...you provide those who really control the market with a nice lubricant. You're being used. And the goal isn't to provide a collective cushy future for you, but to #### you up the ###. The reality is the market isn't for everyone. There are much safer and less volatile places to grow money. If people were being honest, the true hope of any buy and holder is that they are fortunate enough to retire at the exact moment the market is at a peak-which in the end is the epitome of being a market timer. Unfortunately that window is quite narrow and open to very few. I don't know the future, but I am quite certain that in the next 30 years there will be bull markets and there will be bear markets. It doesn't take much savvy to learn how to capitalize in both. People who refuse to recognize that...prepare to bend over.

Siffoin, are you suggesting the average person who is not going be a skilled trader should probably just spend their money and not bother with the stock market?

Has there ever been a 30-35 year period of time where the stock market didn't return 6% i don't think any buy and holder is only investing over a 10-15 year horizon.

What are the safer and less volatile ways to grow money that you are referring to?

Honestly- there is a new me, and I'm inclined to suggest people just buy and hold. Sure there are other ways to make a buck in the market, but I think the ability to do so requires a level of knowledge and self-discipline, a level of emotional control and lack of attachment to positions. I think few people are really cut out to succeed, and few do.As to the second question: My parents are good examples of buy and holders for 30+ years who were financially decimated in 2008- both in real estate and stock investments. Hindsight is 20:20 of what they coulda woulda shoulda done. Hopefully you retire at a high.

In addition investing in the market today is quite a bit different from 1920-or even from the year 1999. When I first started trading a round trip option play was about $40...today it is $3.20. Stock purchases today are less than $1.00 per 100 shares. I can control $60k of SP500 portfolio in an emini future position for $2500 of margin and trading in and out cost less than $3.20 in commission. You can trade $100k Eur/Dollars for $3.00 round trip commission and margin of less than $1k. Cheap and instant execution from pretty much anywhere in the world. Broker competition, computerized analysis tools, broadcast, internet message boards et al. It's a huge game changer. Information comes faster, reaction is more furious than in yesteryear too. That means upside swings might be greater in magnitude but also downside swings will be greater too. The commodity market of ancient Rome and the Chicago Merc in 1980 probably had more in common in look and style than the Merc in 1980 is to the Merc today. So if you want to base your future returns on that past...more power to you I say. THAT takes guts.

To your final question: Truth is I'm a trader. That is what my knowledge and expertise is in. Perhaps other people here have more knowledge of safer and less volatile ways to grow your money than me. Can people invest in Forever Stamps? Stamps in 2000 cost $.33 today it is $.45, next year $.46. That's about a 3% increase per year...close to double of what the market has returned over the same time. CD laddering? Honestly I don't know.

Most people think I'm an aggressive player in the market. Truth be told...I'm extremely conservative in the positions. Extremely disciplined on entries and exits. Because of that and seeking opportunity through a wide variety of investment tools, gains are high. I can and do lose on any one position...it would be rare to see significant losses over a stretch of time (knock on wood).

The battle of convincing people to recognize what to me is obvious: there are bull markets and bear markets- learn to recognize which is which and invest accordingly- is over. I claim defeat. Take your convictions and what you think to be true and go for it. Analyze your mistakes. Adjust. And go for it again. That's really what I do.

1) listen, i don't disagree with you... you sound like you're in angst where you are because people don't believe you.. I BELIEVE you!

2) I'm sorry your parents got owned.. there is no question that retirement does have a timing component... having said that, in 2008 if they were of retirement age, was more than 40% of their money in stocks? if so, why?.. and furthermore since they didn't need ALL of the money immediately hasn't most of their allotment came back?

The only people i'm seeing that really got completely destroyed by the crash were those who got spooked and had never looked at their investments before and then pulled out near the bottom and then missed most or all of the rally... The market timed in the worst way possible.

3) the bottom line though is that what your saying is that buy and hold is dead... that people aren't going to get real returns over the next 20-30 years.. that the game has truly changed. And that the only people that are going to make any real money are going to be fairly active.

a) if this is true, and we can agree that most people aren't cut out for managing their money successfully, nor have the proper time, then should they simply spend their money? should they just forget about their retirement accounts? live for the moment... let the chips fall where they may?

or

b) where would someone with the wherewithal to find someone like yourself TO manage the money even find one? the average person doesn't have access to hedge funds. Heck, I don't even make hedge fund type of money (nor do i have the proper assets).. the things that are available to me are ETFs, Mutual Funds, REITs, commodities, etc... I have a full time job, my EV on filling teeth and root canals is a LOT higher than if I sat at my computer all day trading. What am I supposed to even do?

If i agree with your line of thinking, but don't have the skills to self manage, nor the proper assets to hire someone like you, what am I to do?

I hear you Dentist and can understand your frustration.You do know I have a twitter account as well as a blog. I post to the blog every week...the current trend as well as the trend for nearly every major market sector. The goal of the post it to identify the best performing sectors as the trend turns from bull to bear to bull to bear to bull...I'm also willing to help FBG's understand those charts and better position themselves into profitable trades.

The fact of active trading is this. You only need to be active at the major turns in the market. In the past 15 months we've had 3 tradeable bullish trends and 2 tradeable bearish trends. Opening/closing trades on those five key turning days, and participating in the best performing sectors at those turns...and I'm pretty confident you'd have portfolio gains well over 25%...perhaps closer to 50%. There's about 250 trading days in a year...this past year you needed to be active on 5 of those to achieve those gains. For most people that is too much. For most I guess it seems too risky. THEY say you can't time the market. So why try right. Me..I like proving naysayers wrong.

 

[Dentist]

Every time I see the market go up over 100 points I think of this thread. This is one of my favorite threads on the board right now. I do think that LHucks is probably a pretty smart guy. Or maybe a better description is he has seen a lot of things happen. Not able to interpret them, but he has seen them.

It was funny to watch the market dip right after the election when Republicans got pissy since their guy didn't win. OK, we get it. Your mad. And to prove it you took your ball and went home. Meanwhile, all the cool kids just relaxed, picked up another ball and kept playing while they watched out the window like a kid on restriction.

I guess I should make a prediction myself. OK, I predict the DJIA will go up 6% per year from today. And I predict it for any given date in the next 30 years, at which time I'll no longer care. And anyone who tries to time the swings will repeatedly miss the mark due to transaction costs.

I think there are some issues with your prediction.#1: For the past 13 years (close to half of your 30 year expected time frame) the DJIA has not averaged anything close to a +6% return. The average return rate on the Dow is less than 2%. (Dow on Jan 1, 2000= 11,500. DOW on Dec 18, 2012= 13,315. Had we been returning 6% annually DOW should be at 24,500). Your expectation for 6% annual returns seems optimistic.

#2: But lets forget those facts for a second and say that for the next 30 years you can actually exceed the average return from this century by 3x per year...you'll need to account for the effects of inflation and your purchasing power of those invested dollars 30 years into the future. By real inflation what I mean is the cost of food, energy, healthcare, tuition, and taxes- the things you'll spend a majority of your money on. The Everyday Price Index for 2011 was 8%, and last time I checked for 2012 it is around 12%. Perhaps more troubling in a 30 year time frame will be the effects of our current monetary policy, and its inflationary impact, which we have not yet seen. For the sake of conversation lets just say that for the next 30 years real inflation will be 8%. That means for every $100 you invest in the market your annual purchasing power will be $98 after your 6% market return. A -2% return in your buying power compounded over 30 years is going to be quite problematic.

#3: Buy and Hold is great. Great for bankers, brokerage firms, fat finger traders etc. Buy and Holders are like KY Jelly...you provide those who really control the market with a nice lubricant. You're being used. And the goal isn't to provide a collective cushy future for you, but to #### you up the ###. The reality is the market isn't for everyone. There are much safer and less volatile places to grow money. If people were being honest, the true hope of any buy and holder is that they are fortunate enough to retire at the exact moment the market is at a peak-which in the end is the epitome of being a market timer. Unfortunately that window is quite narrow and open to very few. I don't know the future, but I am quite certain that in the next 30 years there will be bull markets and there will be bear markets. It doesn't take much savvy to learn how to capitalize in both. People who refuse to recognize that...prepare to bend over.

Siffoin, are you suggesting the average person who is not going be a skilled trader should probably just spend their money and not bother with the stock market?

Has there ever been a 30-35 year period of time where the stock market didn't return 6% i don't think any buy and holder is only investing over a 10-15 year horizon.

What are the safer and less volatile ways to grow money that you are referring to?

Honestly- there is a new me, and I'm inclined to suggest people just buy and hold. Sure there are other ways to make a buck in the market, but I think the ability to do so requires a level of knowledge and self-discipline, a level of emotional control and lack of attachment to positions. I think few people are really cut out to succeed, and few do.As to the second question: My parents are good examples of buy and holders for 30+ years who were financially decimated in 2008- both in real estate and stock investments. Hindsight is 20:20 of what they coulda woulda shoulda done. Hopefully you retire at a high.

In addition investing in the market today is quite a bit different from 1920-or even from the year 1999. When I first started trading a round trip option play was about $40...today it is $3.20. Stock purchases today are less than $1.00 per 100 shares. I can control $60k of SP500 portfolio in an emini future position for $2500 of margin and trading in and out cost less than $3.20 in commission. You can trade $100k Eur/Dollars for $3.00 round trip commission and margin of less than $1k. Cheap and instant execution from pretty much anywhere in the world. Broker competition, computerized analysis tools, broadcast, internet message boards et al. It's a huge game changer. Information comes faster, reaction is more furious than in yesteryear too. That means upside swings might be greater in magnitude but also downside swings will be greater too. The commodity market of ancient Rome and the Chicago Merc in 1980 probably had more in common in look and style than the Merc in 1980 is to the Merc today. So if you want to base your future returns on that past...more power to you I say. THAT takes guts.

To your final question: Truth is I'm a trader. That is what my knowledge and expertise is in. Perhaps other people here have more knowledge of safer and less volatile ways to grow your money than me. Can people invest in Forever Stamps? Stamps in 2000 cost $.33 today it is $.45, next year $.46. That's about a 3% increase per year...close to double of what the market has returned over the same time. CD laddering? Honestly I don't know.

Most people think I'm an aggressive player in the market. Truth be told...I'm extremely conservative in the positions. Extremely disciplined on entries and exits. Because of that and seeking opportunity through a wide variety of investment tools, gains are high. I can and do lose on any one position...it would be rare to see significant losses over a stretch of time (knock on wood).

The battle of convincing people to recognize what to me is obvious: there are bull markets and bear markets- learn to recognize which is which and invest accordingly- is over. I claim defeat. Take your convictions and what you think to be true and go for it. Analyze your mistakes. Adjust. And go for it again. That's really what I do.

1) listen, i don't disagree with you... you sound like you're in angst where you are because people don't believe you.. I BELIEVE you!

2) I'm sorry your parents got owned.. there is no question that retirement does have a timing component... having said that, in 2008 if they were of retirement age, was more than 40% of their money in stocks? if so, why?.. and furthermore since they didn't need ALL of the money immediately hasn't most of their allotment came back?

The only people i'm seeing that really got completely destroyed by the crash were those who got spooked and had never looked at their investments before and then pulled out near the bottom and then missed most or all of the rally... The market timed in the worst way possible.

3) the bottom line though is that what your saying is that buy and hold is dead... that people aren't going to get real returns over the next 20-30 years.. that the game has truly changed. And that the only people that are going to make any real money are going to be fairly active.

a) if this is true, and we can agree that most people aren't cut out for managing their money successfully, nor have the proper time, then should they simply spend their money? should they just forget about their retirement accounts? live for the moment... let the chips fall where they may?

or

b) where would someone with the wherewithal to find someone like yourself TO manage the money even find one? the average person doesn't have access to hedge funds. Heck, I don't even make hedge fund type of money (nor do i have the proper assets).. the things that are available to me are ETFs, Mutual Funds, REITs, commodities, etc... I have a full time job, my EV on filling teeth and root canals is a LOT higher than if I sat at my computer all day trading. What am I supposed to even do?

If i agree with your line of thinking, but don't have the skills to self manage, nor the proper assets to hire someone like you, what am I to do?

I hear you Dentist and can understand your frustration.You do know I have a twitter account as well as a blog. I post to the blog every week...the current trend as well as the trend for nearly every major market sector. The goal of the post it to identify the best performing sectors as the trend turns from bull to bear to bull to bear to bull...I'm also willing to help FBG's understand those charts and better position themselves into profitable trades.

The fact of active trading is this. You only need to be active at the major turns in the market. In the past 15 months we've had 3 tradeable bullish trends and 2 tradeable bearish trends. Opening/closing trades on those five key turning days, and participating in the best performing sectors at those turns...and I'm pretty confident you'd have portfolio gains well over 25%...perhaps closer to 50%. There's about 250 trading days in a year...this past year you needed to be active on 5 of those to achieve those gains. For most people that is too much. For most I guess it seems too risky. THEY say you can't time the market. So why try right. Me..I like proving naysayers wrong.

I follow you on twitter... although i admittedly haven't followed your blog as closely as i should.

but i don't see all the posts... I'll try to work harder on it.

But heck, I try harder on my investments than the average person... i'm out there making moves, analysing things, rebalancing, etc.

I'm very active in flipping preferred stocks with good success. But what of the people who don't know an ETF from a WTF?

I mean the average person's financial knowledge and wherewithal is completely terrible.. i mean unbelievably bad!

Most people i talk to are in target funds because it means they don't have to pay attention to anything (or so they say).

If you are correct (and i'm not saying you aren't) then is 99% of the population set up to have a massive fail? people dont' save enough as it is... and now you're saying their target funds aren't going to keep up with inflation?

You're talking about a revolution in 10-25 years.

 

[BeTheMatch]

I hear you Dentist and can understand your frustration.You do know I have a twitter account as well as a blog. I post to the blog every week...the current trend as well as the trend for nearly every major market sector. The goal of the post it to identify the best performing sectors as the trend turns from bull to bear to bull to bear to bull...I'm also willing to help FBG's understand those charts and better position themselves into profitable trades. The fact of active trading is this. You only need to be active at the major turns in the market. In the past 15 months we've had 3 tradeable bullish trends and 2 tradeable bearish trends. Opening/closing trades on those five key turning days, and participating in the best performing sectors at those turns...and I'm pretty confident you'd have portfolio gains well over 25%...perhaps closer to 50%. There's about 250 trading days in a year...this past year you needed to be active on 5 of those to achieve those gains. For most people that is too much. For most I guess it seems too risky. THEY say you can't time the market. So why try right. Me..I like proving naysayers wrong.

I would love to understand your advice. I have part of my "portfolio" that I've been trying to actively manage. It started out well, and has been in the toilet lately. I can't coherently tell you what I'm basing my trades on, which, obviously, is part of the problem.When I look at your charts, I have no earthly idea what they mean. None. I would be more than happy to follow your coat tails as someone that clearly knows more than me, but it's all still way over my head. I would take your advice if I only knew what to do with it.

 

[Andrew74]

What are the safer and less volatile ways to grow money that you are referring to?

I never invested in a single bond until I retired and my planner moved me into some safe ones to generate the income I live off of. They are averaging around 5.5% return which is pretty good these days for a very safe investment.They are all set up in a short term ladder methodology. Although even if I knew about these before I retired I could not have gotten into them as I think the buy ins are huge (in the millions), so you need to group with others.

So by 5.5% return are you referring to the coupon on the bonds? Because otherwise I would have to raise a question on how you are getting 5.5% returns with "safe" ones in a short-term ladder strategy.

 

[NewlyRetired]

What are the safer and less volatile ways to grow money that you are referring to?

I never invested in a single bond until I retired and my planner moved me into some safe ones to generate the income I live off of. They are averaging around 5.5% return which is pretty good these days for a very safe investment.They are all set up in a short term ladder methodology. Although even if I knew about these before I retired I could not have gotten into them as I think the buy ins are huge (in the millions), so you need to group with others.

So by 5.5% return are you referring to the coupon on the bonds? Because otherwise I would have to raise a question on how you are getting 5.5% returns with "safe" ones in a short-term ladder strategy.

Yes I am referring to the coupon. If the bond is held until maturity date, we receive ~5.5% per year on the money invested on average over the group of bonds we are in. Sometimes our adviser will sell the bonds early if they will make us more money than the coupon overall, but in general the strategy is to hold until maturity. When the bond matures, we get back the full value that was put in years before. By short term, I am talking about 4-5 years or so. Here is one example of the bonds we hold with a 5% coupon. MASSACHUSETTS ST SCHOOL BLDG ATH DEDICATED SALES TAX REV SER A AGM B/E CPN 5.000% DUE 08/15/15

 

[Maelstrom]

I hear you Dentist and can understand your frustration.You do know I have a twitter account as well as a blog. I post to the blog every week...the current trend as well as the trend for nearly every major market sector. The goal of the post it to identify the best performing sectors as the trend turns from bull to bear to bull to bear to bull...I'm also willing to help FBG's understand those charts and better position themselves into profitable trades. The fact of active trading is this. You only need to be active at the major turns in the market. In the past 15 months we've had 3 tradeable bullish trends and 2 tradeable bearish trends. Opening/closing trades on those five key turning days, and participating in the best performing sectors at those turns...and I'm pretty confident you'd have portfolio gains well over 25%...perhaps closer to 50%. There's about 250 trading days in a year...this past year you needed to be active on 5 of those to achieve those gains. For most people that is too much. For most I guess it seems too risky. THEY say you can't time the market. So why try right. Me..I like proving naysayers wrong.

I would love to understand your advice. I have part of my "portfolio" that I've been trying to actively manage. It started out well, and has been in the toilet lately. I can't coherently tell you what I'm basing my trades on, which, obviously, is part of the problem.When I look at your charts, I have no earthly idea what they mean. None. I would be more than happy to follow your coat tails as someone that clearly knows more than me, but it's all still way over my head. I would take your advice if I only knew what to do with it.

The last paragraph is exactly the "problem" when you (siffoin) say people should be active 5 days a year - I can't decipher your blog posts, where you are trying to explain the charts, much less the charts themselves. (edit: btw, not a slight at you, and I appreciate your blog and posts.) The average person, like myself, has no way to know which 5 days those are. Heck, sometimes I think I couldn't even tell you after the fact which days they were, except to look at total gains/losses charts. But on top of that, I wouldn't know right now how to take advantage of it. If you told me that tomorrow the stock market was guaranteed to go down X points, I would have no idea what to do with that knowledge to turn a profit. And I like to think that of "average" people, I actually have a better understanding than many. I know many of my co-workers are either in target funds or haven't even set up a 401k, and people who know just a little more than nothing like myself are the people that get asked questions about investing (trust me, I tell them I know close to nothing.)Based on what you are saying though, the stock market is a losing proposition over the next 30 years. I really can't spend the time I would need to in order to become a professional investor so while I do continually try to improve my knowledge and my positions in the market, I can't believe my market intelligence is going to all of a sudden get markedly better.So...what options for those in my shoes or similar? I want to know more and invest smarter, even if that means not buy/hold, but I am just as likely to mess it up and cost myself money as I am to make it.

 

[siffoin]

I hear you Dentist and can understand your frustration.You do know I have a twitter account as well as a blog. I post to the blog every week...the current trend as well as the trend for nearly every major market sector. The goal of the post it to identify the best performing sectors as the trend turns from bull to bear to bull to bear to bull...I'm also willing to help FBG's understand those charts and better position themselves into profitable trades. The fact of active trading is this. You only need to be active at the major turns in the market. In the past 15 months we've had 3 tradeable bullish trends and 2 tradeable bearish trends. Opening/closing trades on those five key turning days, and participating in the best performing sectors at those turns...and I'm pretty confident you'd have portfolio gains well over 25%...perhaps closer to 50%. There's about 250 trading days in a year...this past year you needed to be active on 5 of those to achieve those gains. For most people that is too much. For most I guess it seems too risky. THEY say you can't time the market. So why try right. Me..I like proving naysayers wrong.

I would love to understand your advice. I have part of my "portfolio" that I've been trying to actively manage. It started out well, and has been in the toilet lately. I can't coherently tell you what I'm basing my trades on, which, obviously, is part of the problem.When I look at your charts, I have no earthly idea what they mean. None. I would be more than happy to follow your coat tails as someone that clearly knows more than me, but it's all still way over my head. I would take your advice if I only knew what to do with it.

The last paragraph is exactly the "problem" when you (siffoin) say people should be active 5 days a year - I can't decipher your blog posts, where you are trying to explain the charts, much less the charts themselves. (edit: btw, not a slight at you, and I appreciate your blog and posts.) The average person, like myself, has no way to know which 5 days those are. Heck, sometimes I think I couldn't even tell you after the fact which days they were, except to look at total gains/losses charts. But on top of that, I wouldn't know right now how to take advantage of it. If you told me that tomorrow the stock market was guaranteed to go down X points, I would have no idea what to do with that knowledge to turn a profit. And I like to think that of "average" people, I actually have a better understanding than many. I know many of my co-workers are either in target funds or haven't even set up a 401k, and people who know just a little more than nothing like myself are the people that get asked questions about investing (trust me, I tell them I know close to nothing.)Based on what you are saying though, the stock market is a losing proposition over the next 30 years. I really can't spend the time I would need to in order to become a professional investor so while I do continually try to improve my knowledge and my positions in the market, I can't believe my market intelligence is going to all of a sudden get markedly better.So...what options for those in my shoes or similar? I want to know more and invest smarter, even if that means not buy/hold, but I am just as likely to mess it up and cost myself money as I am to make it.

First of all in my defense, I think the very first article on my blog is titled "A Guide to Understanding Steelhedge's Indicators: An Introduction to Chart Reading." I've also stated numerous times on the blog that if you have any questions to email me, and I'd be happy to respond. That article has been up before any chart was ever posted and I've never had anyone send an email asking for greater clarification. I'm sorry that the charts are confusing but assuming you read the article, why haven't you asked for help?Second: last year there were 3 tradable bull trends and 2 tradeable bear trends. 2013 might be different. So it's not "5 days a year" every year. Each trend is unique. You take them as they come. A tradeable trend can last from about 2 months to 8+ months. As to know when the trend changes and when you need to be active... heck I post on the exact date of every trend change...saying "The trend of the market is now bullish (or bearish)." The last trend flip occurred last week. And if you follow the regular weekly updates I'm pretty clear in stating the momentum of the current trend and whether it is getting weaker or stronger. The purpose is to give a heads up of the potential of a trend flip days/weeks in advance. Again if you have a question you'd just need to ask. No one ever has.Honest truth is I don't know everything there is to know about the markets. I'm always learning. What I'm learning now is that I can be just as profitable primarily trading at those turns as I can be when I'm day trading. And I'm shifting my focus in that direction. The results are quite powerful, the method straight forward. I believe there are bull markets and bear markets, and I react to each. I think the average investor can do the same, and I believe their LT results would far exceed the market average if they were do manage their money to the reality of market trends.Finally I do not know the future. While it is certainly possible that your investment yield over the next 30 years will exceed the rate of inflation...for the past 13 years that has not held true. At this point the buy and holder needs to hope that the past 13 years is a market anomaly. Personally I don't want my future to rely solely on HOPE. I'd rather try to make my future successful from my wits, skill, courage and competence with the understanding that I may fail, than rely on anyone telling me "it's all going to be ok...leave it to the "professionals" because you're just not smart enough, and NO ONE can time the market." The concept of buy and hold to me is unacceptable in today's reality.Edit: I plan to write an article and publish before the end of the year about goal setting, and realistically enhancing returns with a conservative approach. I hope I've earned enough clout be be able to show how simple portfolio would have performed in 2012, and how the method could be simply implemented.

 

[Sarnoff]

My problem is I'm too stupid to understand this stuff. I'm just not able to grasp it, it's not in my nature. It's like some people are great on a piano and a guitar and can just pick up an instrument and play, and others are tone deaf. Hell we know not every QB can read a defense as well as Peyton Manning, but there's a lot who can't do it as well as Andrew Luck, either, and they're in the pros too. Figuring out this market-related stuff is a skillset I just do not have and no amount of studying, research, or reading up will ever change that. I just cannot accomplish it. I appreciate those who try and educate, and use small words to do so, but even then I get lost pretty quick. Which is why I'm one of those guys who just has to buy a "retire in 2045" fund and let it sit forever. Because there's nothing else I can really do.

 

[Maelstrom]

First of all in my defense, I think the very first article on my blog is titled "A Guide to Understanding Steelhedge's Indicators: An Introduction to Chart Reading." I've also stated numerous times on the blog that if you have any questions to email me, and I'd be happy to respond. That article has been up before any chart was ever posted and I've never had anyone send an email asking for greater clarification. I'm sorry that the charts are confusing but assuming you read the article, why haven't you asked for help?Second: last year there were 3 tradable bull trends and 2 tradeable bear trends. 2013 might be different. So it's not "5 days a year" every year. Each trend is unique. You take them as they come. A tradeable trend can last from about 2 months to 8+ months. As to know when the trend changes and when you need to be active... heck I post on the exact date of every trend change...saying "The trend of the market is now bullish (or bearish)." The last trend flip occurred last week. And if you follow the regular weekly updates I'm pretty clear in stating the momentum of the current trend and whether it is getting weaker or stronger. The purpose is to give a heads up of the potential of a trend flip days/weeks in advance. Again if you have a question you'd just need to ask. No one ever has.

Thanks, I re-read my post, and I didn't mean to come off as accusatory or offensive. And particularly I tried (but maybe unsuccessfully) to frame it in the bigger picture of "people like me". So sorry if it came across wrong, I do appreciate you taking the time to blog about it and post here about it, and I try to learn as much as I can in the time I have available. And I didn't mean a problem in your posting, but problem in my ability to comprehend, mainly due to not having the background or devoting the time to try and learn these things.And I did completely miss the intro post, never made it back far enough. Bookmarked now to read soon.I think for me personally, by the time I read a post or story about a change in the market (whether from your blog or elsewhere), it is often after the fact cause I'm generally focused on other things. I do have some alerts/emails setup at Seeking Alpha to remind me to watch this stuff closer, and after I read the intro article about charts (and then look back through the other posts to see if I understand it more better afterwards) I may take you up on your offer regarding questions. This is definitely an area for attention in the upcoming year for me.

 

[Leroy Hoard]

Please stop bumping his threads unless it's to mock him.

The only bad thing about him not being around is that there is no fresh advice to bet against.

 

[flranger]

I find it curious that this discussion keeps going back to "13 years". Did you take your money out 14 years ago and put it back in 12? Why not 16 years, or 11 years, or 22 years? We all should know why, because 13 years is the exact market timing that best explains your perspective. Why not pick 22 years ago, when the DJIA was around 1700 points and it is now at +13000? Or 27 years ago when it was at 768? How about 3-4 years ago when it was half what it is today? For that matter pick ANY year, between 15 and 30 years ago, which is the time period I expect to remain in the market.

I'm not going to pretend there aren't those who can consistently time the market. I'll stand by my prediction and investing theory, recognizing there are a very select few who are smarter and will consistently beat the market, and many more who are smarter than me but yet still won't beat the market + transaction costs incurred due to frequent trading.

 

[Andrew74]

What are the safer and less volatile ways to grow money that you are referring to?

I never invested in a single bond until I retired and my planner moved me into some safe ones to generate the income I live off of. They are averaging around 5.5% return which is pretty good these days for a very safe investment.They are all set up in a short term ladder methodology. Although even if I knew about these before I retired I could not have gotten into them as I think the buy ins are huge (in the millions), so you need to group with others.

So by 5.5% return are you referring to the coupon on the bonds? Because otherwise I would have to raise a question on how you are getting 5.5% returns with "safe" ones in a short-term ladder strategy.

Yes I am referring to the coupon. If the bond is held until maturity date, we receive ~5.5% per year on the money invested on average over the group of bonds we are in. Sometimes our adviser will sell the bonds early if they will make us more money than the coupon overall, but in general the strategy is to hold until maturity. When the bond matures, we get back the full value that was put in years before. By short term, I am talking about 4-5 years or so. Here is one example of the bonds we hold with a 5% coupon. MASSACHUSETTS ST SCHOOL BLDG ATH DEDICATED SALES TAX REV SER A AGM B/E CPN 5.000% DUE 08/15/15

So you bought these bonds 2-3 years ago, I am guessing, since you haven't been able to buy 5 handle munis at par in a few years. What are you doing with the proceeds of the maturities in the ladders or ones that are sold b/c you won't be able to sniff 3% yields, much less 5% now.Also, you can buy munis with a couple thousand bucks; you don't need millions. Now granted you don't get as good pricing, especially when trying to sell.

 

[Dentist]

I would love to understand your advice. I have part of my "portfolio" that I've been trying to actively manage. It started out well, and has been in the toilet lately. I can't coherently tell you what I'm basing my trades on, which, obviously, is part of the problem.When I look at your charts, I have no earthly idea what they mean. None. I would be more than happy to follow your coat tails as someone that clearly knows more than me, but it's all still way over my head. I would take your advice if I only knew what to do with it.The last paragraph is exactly the "problem" when you (siffoin) say people should be active 5 days a year - I can't decipher your blog posts, where you are trying to explain the charts, much less the charts themselves. (edit: btw, not a slight at you, and I appreciate your blog and posts.) The average person, like myself, has no way to know which 5 days those are. Heck, sometimes I think I couldn't even tell you after the fact which days they were, except to look at total gains/losses charts. But on top of that, I wouldn't know right now how to take advantage of it. If you told me that tomorrow the stock market was guaranteed to go down X points, I would have no idea what to do with that knowledge to turn a profit. And I like to think that of "average" people, I actually have a better understanding than many. I know many of my co-workers are either in target funds or haven't even set up a 401k, and people who know just a little more than nothing like myself are the people that get asked questions about investing (trust me, I tell them I know close to nothing.)Based on what you are saying though, the stock market is a losing proposition over the next 30 years. I really can't spend the time I would need to in order to become a professional investor so while I do continually try to improve my knowledge and my positions in the market, I can't believe my market intelligence is going to all of a sudden get markedly better.So...what options for those in my shoes or similar? I want to know more and invest smarter, even if that means not buy/hold, but I am just as likely to mess it up and cost myself money as I am to make it.

I do read the tweets and actually can understand what he's saying in the charts.However, I don't know what to do with the information.80% of my investments are in my company 401k. I can a choice of some garden variety mutual funds covering large cap, mid cap, small cap, bonds, foreign... and then a bunch of either target funds, or one choice funds (aggressive, conservative, moderate, etc.).. most of the stuff designed for dum dums.So while i can definitely move in and out of the market as often as i'd like... those are my choice, i can't rotate sectors or short things, or buy futures or any of that.The next 15% of my money is in my Roth IRA.. in there i can generally buy what i want although futures aren't a choice.. i can get ETFs, rotate sectors, bonds, mutual funds, etc.. can't short anything because you can't use margin in Roth IRA's.The last 10% is in my cash account where my main goal is preservation of the money rather than growth.... so most of that is in preferred stocks that throw off 5-7% yields which at least gets CLOSE to making up for inflation.So I just don't know what to do with the charts when i read them... i really don't have that much money in the first place <400K and I don't know how to take what i have available to me and then apply siffoin's advice to my accounts.

 

[BeTheMatch]

First of all in my defense, I think the very first article on my blog is titled "A Guide to Understanding Steelhedge's Indicators: An Introduction to Chart Reading." I've also stated numerous times on the blog that if you have any questions to email me, and I'd be happy to respond. That article has been up before any chart was ever posted and I've never had anyone send an email asking for greater clarification. I'm sorry that the charts are confusing but assuming you read the article, why haven't you asked for help?Second: last year there were 3 tradable bull trends and 2 tradeable bear trends. 2013 might be different. So it's not "5 days a year" every year. Each trend is unique. You take them as they come. A tradeable trend can last from about 2 months to 8+ months. As to know when the trend changes and when you need to be active... heck I post on the exact date of every trend change...saying "The trend of the market is now bullish (or bearish)." The last trend flip occurred last week. And if you follow the regular weekly updates I'm pretty clear in stating the momentum of the current trend and whether it is getting weaker or stronger. The purpose is to give a heads up of the potential of a trend flip days/weeks in advance. Again if you have a question you'd just need to ask. No one ever has.

Thanks, I re-read my post, and I didn't mean to come off as accusatory or offensive. And particularly I tried (but maybe unsuccessfully) to frame it in the bigger picture of "people like me". So sorry if it came across wrong, I do appreciate you taking the time to blog about it and post here about it, and I try to learn as much as I can in the time I have available. And I didn't mean a problem in your posting, but problem in my ability to comprehend, mainly due to not having the background or devoting the time to try and learn these things.And I did completely miss the intro post, never made it back far enough. Bookmarked now to read soon.I think for me personally, by the time I read a post or story about a change in the market (whether from your blog or elsewhere), it is often after the fact cause I'm generally focused on other things. I do have some alerts/emails setup at Seeking Alpha to remind me to watch this stuff closer, and after I read the intro article about charts (and then look back through the other posts to see if I understand it more better afterwards) I may take you up on your offer regarding questions. This is definitely an area for attention in the upcoming year for me.

Agree with everything here. Missed the introductory post. Will go back and look at that. Appreciate all the input you give, Siffoin, I just want to be able to take advantage of it, and it's my own ignorance preventing that. Not your fault.I haven't asked questions because frankly, about the only question I could come up with when I've looked at the charts is, "Can you just tell me what to buy and when?" And I know you don't want to do that and it probably isn't the smartest thing for me to do either. But that's the honest answer to where I'm at. I would love to try to learn this stuff so I could make educated decisions myself, but that prospect just seems so overwhelming, I can't imagine getting to that point. So then I come back to, "Siff, just tell me what to buy!"

 

[Slapdash]

80% of my investments are in my company 401k. I can a choice of some garden variety mutual funds covering large cap, mid cap, small cap, bonds, foreign... and then a bunch of either target funds, or one choice funds (aggressive, conservative, moderate, etc.).. most of the stuff designed for dum dums.So while i can definitely move in and out of the market as often as i'd like... those are my choice, i can't rotate sectors or short things, or buy futures or any of that.

The 401ks at my company don't even settle till after the close. So, even if I knew the stock market would go down tomorrow, I couldn't take advantage of it. Even worse, we have to wait 30 days to trade again.

 

[Andrew74]

By short term, I am talking about 4-5 years or so. Here is one example of the bonds we hold with a 5% coupon. MASSACHUSETTS ST SCHOOL BLDG ATH DEDICATED SALES TAX REV SER A AGM B/E CPN 5.000% DUE 08/15/15

Wow. You can't get anything close to that coupon on a short-term muni now - or a long-term muni for that matter.Was it bought at par or at premium? If bought at premium, you are not netting that 5.5%, but a much lower Yield to maturity that factors in the premium paid.

I wanted to check before being assertive, but these bonds were bought at a premium. According to MMD, the last time you could get 5.5% yield on a 5 year, A GO was 2000. The highest since then was approx 4.5% in 2007. Either that or you aren't in "safe" bonds.

 

[BeTheMatch]

I do read the tweets and actually can understand what he's saying in the charts.However, I don't know what to do with the information.80% of my investments are in my company 401k. I can a choice of some garden variety mutual funds covering large cap, mid cap, small cap, bonds, foreign... and then a bunch of either target funds, or one choice funds (aggressive, conservative, moderate, etc.).. most of the stuff designed for dum dums.So while i can definitely move in and out of the market as often as i'd like... those are my choice, i can't rotate sectors or short things, or buy futures or any of that.The next 15% of my money is in my Roth IRA.. in there i can generally buy what i want although futures aren't a choice.. i can get ETFs, rotate sectors, bonds, mutual funds, etc.. can't short anything because you can't use margin in Roth IRA's.The last 10% is in my cash account where my main goal is preservation of the money rather than growth.... so most of that is in preferred stocks that throw off 5-7% yields which at least gets CLOSE to making up for inflation.So I just don't know what to do with the charts when i read them... i really don't have that much money in the first place <400K and I don't know how to take what i have available to me and then apply siffoin's advice to my accounts.

I've got a lot less money than that, but it's broken down similarly. Most of it, about 80%, is in an IRA in one of those target date funds, and then I've built up what is now the other 20% over the years in a Roth IRA that was previously just holding some USAA mutual funds. I guess it's been about a year now where I decided to use that 20% in the Roth and try to actively manage. So it's not a ton of money, which limits what I can do. I'm looking to do mostly short-term stuff there.I'm going to run down some of the trades I've made just in case someone somehow benefits from my experience. I've always read "buy what you know," in other words, companies that you're familiar with and like.So I spent probably half of that 20% buying Buffalo Wild Wings at $67. Sold it maybe a month or so later at $87. I pay $9 a trade through USAA. So I was obviously feeling pretty good about a nice profit there.I had also swung for the fences on the local horse track because there was talk about a racino passing as part of trying to get a new football stadium built. So that was more high-risk, but I didn't put that much in. Didn't pan out, dumped for not too bad of a loss.Then had bought Target and Coors. Didn't hold either very long. Very small gain on Target, offset by small loss on Coors.Sold because I followed Dodds' advice on EXK. Put about half of my 20% on that and it pretty much stunk. I held it and held it, and while Dodds claimed to be making money hand over fist with his super-secret formula on that stock, and I took it in the shorts. I did buy some more when it had bottomed out at one point, and then at the next mild bounce, I sold it all and was happy at that point with what was still a pretty big loss. I see it really hasn't moved at all since I dumped it, so that's good.Then I also put a decent chunk of this account into PLG on General Malaise's advice. He was clear that it was a long-term hold in his opinion. So I bought it with that in mind, and I'm still holding it, but it's way, way down at this point from where I bought and I'm just holding and hoping.I also took some of the money from my sale of EXK and bought Buffalo Wild Wings again when it dipped to around 70 again, then sold when it bounced back, but this time a much more modest profit.Bought back into some of my conservative mutual fund accounts for a while to just sort of calm down for a while until I found something else to buy. Then bought 3M in an attempt to ease back in for a while, but then sold that very quickly basically breaking even because I wanted to free up all the money in that account (other than the still-holding PLG) when Apple started to dive.I wanted to get back to "buying what you know," and I felt like there was a great opportunity with Apple. So I bought Apple at $590 in late November thinking I was getting a great bargain. It proceeded to plummet. 10 days later, I bought another chunk, about half as much as the initial purchase, at $533. So now my entire Roth account is sitting in PLG (10%) and Apple (90%). And Apple is still below $530 as of this morning.So all of my Buffalo Wild Wings and Target gains and have been wiped out and then some by losses on EXK, and then those that I'm currently sitting on in PLG and AAPL.The point of all of this is to show how dumb I am. Honestly. I followed the advice of strangers on a message board and lost badly.I bought and sold with random emotion, sometimes selling at the bottom while other times refusing to sell and cut my losses, only to see things plummet further.So I really don't know what any of this means, other than I - as I've said - I don't know what I'm doing. Now, knowing that, I'm only using this Roth for this active trading so that I could "afford" to lose this money. But obviously I don't want to. This experience has only further cemented my beliefs that I just don't get the stock market and things go up and down for no reason. And I feel like the only way you can make money is if you're lucky or if you get some inside tip.Again, I'm sure that's my ignorance showing, but I don't even know where to start with trying to start educating myself. It seems like all these so-called "experts" are idiots that swing and miss more often than not, and so you have the Bogleheads saying to buy and hold mutual funds. And then you have Siff saying those days are gone, and I tend to agree with his rationale, but I still don't know what to do about it.And, really, I think the big problem for me personally and many others I'm sure is that I don't have enough money to make money. Dodds is out there buying massive chunks of EXK or whatever, and so when the thing goes up a nickel, he sells and makes a significant amount. Good for him, a guy that already has money. (And, yes, I understand that works the opposite way, too).But for me, a stock has to go up quite a bit at the levels I'm buying in for me to make any worthwhile profit. Buffalo Wild Wings was great, everything else, not so much.I'll stop rambling now.

 

[Mystery Achiever]

By short term, I am talking about 4-5 years or so. Here is one example of the bonds we hold with a 5% coupon. MASSACHUSETTS ST SCHOOL BLDG ATH DEDICATED SALES TAX REV SER A AGM B/E CPN 5.000% DUE 08/15/15

Wow. You can't get anything close to that coupon on a short-term muni now - or a long-term muni for that matter.Was it bought at par or at premium? If bought at premium, you are not netting that 5.5%, but a much lower Yield to maturity that factors in the premium paid.

I wanted to check before being assertive, but these bonds were bought at a premium. According to MMD, the last time you could get 5.5% yield on a 5 year, A GO was 2000. The highest since then was approx 4.5% in 2007. Either that or you aren't in "safe" bonds.

oops, sorry, I deleted that reply after I saw that you had already addressed this issue. You could get 5% a couple of years ago when Meredith Whitney scared people, but not on something that short-term. If bought at a premium, then obviously the yield to maturity that you actually net is much lower than 5%. And you can't take the premium as a capital loss on your taxes. I'm using 3% as a minimum to replace my CT bonds being called and I have to go out to at least 2028 now. And, even then, it is hard to find anything because the premiums are so high that the "Yield To Worst" if the bond is called early is ridiculously low (often 1%)

 

[Andrew74]

By short term, I am talking about 4-5 years or so. Here is one example of the bonds we hold with a 5% coupon. MASSACHUSETTS ST SCHOOL BLDG ATH DEDICATED SALES TAX REV SER A AGM B/E CPN 5.000% DUE 08/15/15

Wow. You can't get anything close to that coupon on a short-term muni now - or a long-term muni for that matter.Was it bought at par or at premium? If bought at premium, you are not netting that 5.5%, but a much lower Yield to maturity that factors in the premium paid.

I wanted to check before being assertive, but these bonds were bought at a premium. According to MMD, the last time you could get 5.5% yield on a 5 year, A GO was 2000. The highest since then was approx 4.5% in 2007. Either that or you aren't in "safe" bonds.

oops, sorry, I deleted that reply after I saw that you had already addressed this issue. You could get 5% a couple of years ago when Meredith Whitney scared people, but not on something that short-term. If bought at a premium, then obviously the yield to maturity that you actually net is much lower than 5%. And you can't take the premium as a capital loss on your taxes. I'm using 3% as a minimum to replace my CT bonds being called and I have to go out to at least 2028 now. And, even then, it is hard to find anything because the premiums are so high that the "Yield To Worst" if the bond is called early is ridiculously low (often 1%)

You might want to check out some of the closed-end funds and ETFs. They've been hammered lately and some are trading at a steep discount to NAV. I bought some HYD (not the safest thing) a couple days ago at 3.5% discount.

 

[Ignoratio Elenchi]

80% of my investments...The next 15% of my money...The last 10%...So I just don't know what to do with the charts when i read them...

I think I may have found the problem.

 

[NewlyRetired]

So you bought these bonds 2-3 years ago, I am guessing, since you haven't been able to buy 5 handle munis at par in a few years. What are you doing with the proceeds of the maturities in the ladders or ones that are sold b/c you won't be able to sniff 3% yields, much less 5% now.

I am not sure what will be done. We have some muni's in the 6.5% coupon range (from Puerto Rico) as well but those mature later. I think the bond I listed matures first in late 2015 so it is hard to predict what will be available at that time.I sucked at predicting/timing the market before I retired so I doubt I am going to be any better now considering it is almost 3 years out before the first one matures and we have to make a decision (which will come from financial adiviser now).

 

[Random]

One of the issues I'm seeing here is that you all want to be like siffion. Dentist, you are a dentist. Figure out how to make more money doing dentist stuff. Don't put so much of your damn money in your 401K/IRA. Put some aside so you can do something you understand and believe in. Siffion understands stock stuff. He has the tools, experience, and system to make money there. I went to a personal finance seminar once where the speaker advised not to put a thing in the market until you have 3 years salary in savings. Sounds stupid, right? Well his reason was so you could seize opportunities that come along. Seriously save some money and take a chance.

 

[Dentist]

80% of my investments...The next 15% of my money...The last 10%...So I just don't know what to do with the charts when i read them...

I think I may have found the problem.

you got me... it meant to say 75, 15, 10my bad!

 

[NewlyRetired]

I think buy and hold is getting a slightly bad rep in here. I will admit that I am not focused on capital appreciation as much now as when I was pushing to retire early.

Buy and hold does not mean buy a mutual fund/stock and hold it for 30 years. I primarily used a buy and hold strategy to help retire early but I was always switching out/adding/subtracting mutual funds as time went on.

There seems to be the thought here that if you buy mutual funds, you only get the market average. Back when I was actively managing my accounts, roughly 25-30% of the funds would beat the market average. Has this changed in recent years?

 

[NewlyRetired]

One of the issues I'm seeing here is that you all want to be like siffion. Dentist, you are a dentist. Figure out how to make more money doing dentist stuff. Don't put so much of your damn money in your 401K/IRA. Put some aside so you can do something you understand and believe in. Siffion understands stock stuff. He has the tools, experience, and system to make money there. I went to a personal finance seminar once where the speaker advised not to put a thing in the market until you have 3 years salary in savings. Sounds stupid, right? Well his reason was so you could seize opportunities that come along. Seriously save some money and take a chance.

I understand this thought process. Although for myself and likely many others, I could never convince myself that I was going to do better on my own than the combination of the 401k match(basically free money) and the small tax benefits of the tax deferred shelter.

 

[Random]

One of the issues I'm seeing here is that you all want to be like siffion. Dentist, you are a dentist. Figure out how to make more money doing dentist stuff. Don't put so much of your damn money in your 401K/IRA. Put some aside so you can do something you understand and believe in. Siffion understands stock stuff. He has the tools, experience, and system to make money there. I went to a personal finance seminar once where the speaker advised not to put a thing in the market until you have 3 years salary in savings. Sounds stupid, right? Well his reason was so you could seize opportunities that come along. Seriously save some money and take a chance.

I understand this thought process. Although for myself and likely many others, I could never convince myself that I was going to do better on my own than the combination of the 401k match(basically free money) and the small tax benefits of the tax deferred shelter.

I couldn't convince myself not to take the 401K match either.

 

[Maelstrom]

One of the issues I'm seeing here is that you all want to be like siffion. Dentist, you are a dentist. Figure out how to make more money doing dentist stuff. Don't put so much of your damn money in your 401K/IRA. Put some aside so you can do something you understand and believe in. Siffion understands stock stuff. He has the tools, experience, and system to make money there. I went to a personal finance seminar once where the speaker advised not to put a thing in the market until you have 3 years salary in savings. Sounds stupid, right? Well his reason was so you could seize opportunities that come along. Seriously save some money and take a chance.

I understand this thought process. Although for myself and likely many others, I could never convince myself that I was going to do better on my own than the combination of the 401k match(basically free money) and the small tax benefits of the tax deferred shelter.

For me right now, I use the 401k due to the company match, but there is definitely value in having cash set aside that can be used to pursue an opportunity should it arise. I know web development - that is really where I should invest my time and effort because the potential return is likely greater than buy/hold in mutual funds. And I do that, I just want to be able to maximize what I can do within the limitations of the 401k (and an older IRA) as well.As for mutual funds/401k allocations - I have pretty much selected a range of the most aggressive fund available, and just deal with the ups/downs, with the thought that I am still relatively young and the aggressive funds will (cough cough...in theory) out-perform the market over time. In my IRA I allocated a small percentage for buying stocks or messing around. No bonds or other conservative investments at the moment (I have had them in the past.) I try to rebalance at least twice a year, more if it seems like something is vastly underperforming.

 

[Buddy Ball 2K3]

My knowledge is extremely limited and I just stick with mutual funds and my Roth 401K. I just checked and as of this morning my Roth account has a return of 12.88% for this year. Should I be happy with this?

 

[siffoin]

I developed an indicator I call the "Perfect Indicator". Essentially it identifies tradeable trends with a high level of accuracy backtested to the late 1990's. I've posted the tuns of the PI here for more about 2 years.

The jist of the PI is to tell us when the market is bullish and when the market is bearish. It doesn't identify absolute tops/bottoms...it identifies a tradeable trend, which can last from between 2 months to 8+ months.

Using the AAII (American Association of Individual Investors) model for asset allocation I put together a simulated FBG Portfolio. Comprised of the following:

20% Large Cap

20% Small Cap

20% Mid Cap

20% Intl

10% Emerging Markets

10% Cash (AAII sugests a Bond fund, but I don't understand bonds and realize most people would want to have some funds in a specific stock)

We use the PI to determine Buys/Sells. Meaning we open positions at the close of the trading day when the PI turns from a Bear to a Bull, and we close those positions at the end of a day when the PI turns from a Bull to a Bear. In tradeable Bear Trends the portfolio is in cash. All of the positions are opened and closed on the same day. No short positions are ever taken. The results are from long positions only.

I ran the numbers from 3/27/09- Present. Basically a 3+ year non-stop bull market. Had I gone back 1 year in time to 2008 the results would be significantly better because the PI is bearish most of 2008 and fully bearish from early September 2008 to March 27, 2009 (the date I began the simulation). Meaning I'm cherry picking dates in favor of the Buy and Holder...not the trend investor. During that time you would have needed to be active in the market for 13 days only- opening the 5 positions 7 times when the market turns Bullish and closing them when the market turns Bearish 6 times. Assuming it takes an hour to do that...a total of 13 hours in about 4 years.

Here's the results:

FBG Portfolio

Edit: I predict in the next 30 years there will be at least 5-6 major bear markets. Not these little dips we've seen over the past 4 years. It is in the major bears where Trend Investing like I suggest will save your ###.

 

[Random]

I would love to use your recommendations for my 401K. If i'm understanding you correctly we should begin to allocate our money as suggested in the above post?

 

[Dentist]

My knowledge is extremely limited and I just stick with mutual funds and my Roth 401K. I just checked and as of this morning my Roth account has a return of 12.88% for this year. Should I be happy with this?

that's about what the market has returned... so if you are in index funds that's fairly accurrate.

 

[siffoin]

I would love to use your recommendations for my 401K. If i'm understanding you correctly we should begin to allocate our money as suggested in the above post?

The asset allocation breakdown is what is recommend by the AAII for investors with a 30+ year investment horizon. It's an aggressive model. I feel I can be aggressive because I pay attention to every bear market, and will be protected when the next big one comes. The most common feedback I get is "Siffs method is too complicated...in my 401k I'm not allowed to trade XYZ..." What ever ETF I pick someone will have an issue with it. If you can't trade SPDR's...I'm sure Vanguard has a similar fund...or Fidelity...or Schwab. The results should be similar, though mileage may vary.

 

[Dentist]

One of the issues I'm seeing here is that you all want to be like siffion. Dentist, you are a dentist. Figure out how to make more money doing dentist stuff. Don't put so much of your damn money in your 401K/IRA. Put some aside so you can do something you understand and believe in. Siffion understands stock stuff. He has the tools, experience, and system to make money there. I went to a personal finance seminar once where the speaker advised not to put a thing in the market until you have 3 years salary in savings. Sounds stupid, right? Well his reason was so you could seize opportunities that come along. Seriously save some money and take a chance.

I get what you mean here. Obviously my EV is highest when i'm working on teeth. I can make more money working on teeth than i can in the stock market where i'm not a pro.I'm not sure exactly what i'd spend my money on dentist wise though. The entire reason i've gotten a lot more involved in the market starting about 24 mo. ago was that i'd finally accumulated enough cash outside 401k/Roth IRA's that I was letting decay in savings accounts that i felt like i had to get something going with my investments.And i had enough money in my 401k/Roth IRA that I felt like the responsible thing to do would be to educate myself on the markets since i had so much in them.

 

[Buddy Ball 2K3]

I would love to use your recommendations for my 401K. If i'm understanding you correctly we should begin to allocate our money as suggested in the above post?

The asset allocation breakdown is what is recommend by the AAII for investors with a 30+ year investment horizon. It's an aggressive model. I feel I can be aggressive because I pay attention to every bear market, and will be protected when the next big one comes. The most common feedback I get is "Siffs method is too complicated...in my 401k I'm not allowed to trade XYZ..." What ever ETF I pick someone will have an issue with it. If you can't trade SPDR's...I'm sure Vanguard has a similar fund...or Fidelity...or Schwab. The results should be similar, though mileage may vary.

Are there any funds you would suggest out side of our 401ks? I am in a vanguard star fund, and two vanguard ETF's (voo & vti) which have not been doing much.

 

[BeTheMatch]

I would love to use your recommendations for my 401K. If i'm understanding you correctly we should begin to allocate our money as suggested in the above post?

The asset allocation breakdown is what is recommend by the AAII for investors with a 30+ year investment horizon. It's an aggressive model. I feel I can be aggressive because I pay attention to every bear market, and will be protected when the next big one comes. The most common feedback I get is "Siffs method is too complicated...in my 401k I'm not allowed to trade XYZ..." What ever ETF I pick someone will have an issue with it. If you can't trade SPDR's...I'm sure Vanguard has a similar fund...or Fidelity...or Schwab. The results should be similar, though mileage may vary.

So I wanted to clarify something. On that breakdown you gave from AAII, are you saying that when the PI turns bullish that then I should just use 20 percent to buy whatever large-cap mutual fund is offered to me on USAA, along with the other respective funds that you identified in your allocation breakdown?You're talking about buying funds, not individual stocks? And does your PI when it turns bullish mean you should buy in all of those categories at once, and then sell all when it turns bearish, or is it analyzing just one sector and not another?And is it your thought that all these different funds, whether it be Vanguard, USAA, whatever, would work to roughly the same level of success using your method since they obviously would be made up some varying amount of different stocks?

 

[Mystery Achiever]

I am in a vanguard star fund, and two vanguard ETF's (voo & vti) which have not been doing much.

VOO and VTI are up about 17.5% each for the year.https://personal.vanguard.com/us/funds/etf/all?assetclass=stk&assetclass=stk

 

[BeTheMatch]

I would love to use your recommendations for my 401K. If i'm understanding you correctly we should begin to allocate our money as suggested in the above post?

The asset allocation breakdown is what is recommend by the AAII for investors with a 30+ year investment horizon. It's an aggressive model. I feel I can be aggressive because I pay attention to every bear market, and will be protected when the next big one comes. The most common feedback I get is "Siffs method is too complicated...in my 401k I'm not allowed to trade XYZ..." What ever ETF I pick someone will have an issue with it. If you can't trade SPDR's...I'm sure Vanguard has a similar fund...or Fidelity...or Schwab. The results should be similar, though mileage may vary.

So I wanted to clarify something. On that breakdown you gave from AAII, are you saying that when the PI turns bullish that then I should just use 20 percent to buy whatever large-cap mutual fund is offered to me on USAA, along with the other respective funds that you identified in your allocation breakdown?You're talking about buying funds, not individual stocks? And does your PI when it turns bullish mean you should buy in all of those categories at once, and then sell all when it turns bearish, or is it analyzing just one sector and not another?And is it your thought that all these different funds, whether it be Vanguard, USAA, whatever, would work to roughly the same level of success using your method since they obviously would be made up some varying amount of different stocks?

Another question, Siff.With your PI method, you're not buying certain stocks/funds when things turn bearish, right? That's simply your signal to sell those funds that you bought when you got the signal to buy? And so you simply keep buying and selling the same funds over and over again as your PI flips back and forth?

 

[Dentist]

I would love to use your recommendations for my 401K. If i'm understanding you correctly we should begin to allocate our money as suggested in the above post?

i allocate my money very similarly to what he recommended except i don't have an emerging market fund in my choices, so i just put that portion into more regular international.

 

[Dentist]

I developed an indicator I call the "Perfect Indicator". Essentially it identifies tradeable trends with a high level of accuracy backtested to the late 1990's. I've posted the tuns of the PI here for more about 2 years.

The jist of the PI is to tell us when the market is bullish and when the market is bearish. It doesn't identify absolute tops/bottoms...it identifies a tradeable trend, which can last from between 2 months to 8+ months.

Using the AAII (American Association of Individual Investors) model for asset allocation I put together a simulated FBG Portfolio. Comprised of the following:

20% Large Cap

20% Small Cap

20% Mid Cap

20% Intl

10% Emerging Markets

10% Cash (AAII sugests a Bond fund, but I don't understand bonds and realize most people would want to have some funds in a specific stock)

We use the PI to determine Buys/Sells. Meaning we open positions at the close of the trading day when the PI turns from a Bear to a Bull, and we close those positions at the end of a day when the PI turns from a Bull to a Bear. In tradeable Bear Trends the portfolio is in cash. All of the positions are opened and closed on the same day. No short positions are ever taken. The results are from long positions only.

I ran the numbers from 3/27/09- Present. Basically a 3+ year non-stop bull market. Had I gone back 1 year in time to 2008 the results would be significantly better because the PI is bearish most of 2008 and fully bearish from early September 2008 to March 27, 2009 (the date I began the simulation). Meaning I'm cherry picking dates in favor of the Buy and Holder...not the trend investor. During that time you would have needed to be active in the market for 13 days only- opening the 5 positions 7 times when the market turns Bullish and closing them when the market turns Bearish 6 times. Assuming it takes an hour to do that...a total of 13 hours in about 4 years.

Here's the results:

FBG Portfolio

Edit: I predict in the next 30 years there will be at least 5-6 major bear markets. Not these little dips we've seen over the past 4 years. It is in the major bears where Trend Investing like I suggest will save your ###.

this makes a lot of sense

 

[Buddy Ball 2K3]

I am in a vanguard star fund, and two vanguard ETF's (voo & vti) which have not been doing much.

VOO and VTI are up about 17.5% each for the year.https://personal.van...&assetclass=stk

Just checked on those and thus far I am at (11.80%)

Pulled from Google Finance so I am not 100% sure thats accurate.

 

[FUBAR]

Using the AAII (American Association of Individual Investors) model for asset allocation I put together a simulated FBG Portfolio. Comprised of the following:20% Large Cap20% Small Cap20% Mid Cap20% Intl10% Emerging Markets10% Cash (AAII sugests a Bond fund, but I don't understand bonds and realize most people would want to have some funds in a specific stock)

I've been fairly close to this, but without the mid-caps. I can't open your link. Do you bother to diversify between small Int'l / EM and large Int'l / EM or lump them together? I've separated them, but thinking it might make sense to combine. Only big difference is 15% of my money is invested for 7-10 years from now (buying / building a house), where I'm almost entirely in bonds and DPO.