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I figure it's hard enough to pick stocks to stay invested in. So I naturally distrust the stock funds with rapid turnover. At that point you've got to be pretty much of a genius to overcome the expenses.
That being said, most bond funds seem to turn-over like a mayfly hatch.
Lots of BS about me. How nice is to post trash without any proof. ============== @davidrmoran:but it is true that FD1k should be a multimillionaire, philanthropist, and posting regularly for seekingalpha or similar
FD: I'm a multimillionaire but not philanthropist or making money posting on seekingalpha. ============= @davidrmoran: plus a byline somewhere advising others about bonds and his rapid fund trading without penalty.
FD: why do you think I should pay any penalty? I have special arrangement at Schwab where I have a dedicated trader that buys all the Inst funds for me with no commissions and I can sell these funds within one day (I don't buy funds that have longer mandatory hold). Example: IOFIX,PIMIX. If I don’t buy Inst funds and these funds are not Schwab fund and I sell within 90 days I do pay the $49.95 short term penalty which is nothing compared to the amount I'm making. =============== @Junkster, Your posts have several examples of liars, are you insinuating that I lied too?. I never claimed that I made a very high %, just a pretty good performance with very low SD. Remember, since I retired in 2018, we have enough money to sustain our standard of living for another 40-50 years if our portfolio will make just 4% annually including inflation. Our portfolio is 35+ times our annual expense without our SS. This is why I set up the following goals: make 6% average annually with the lowest SD I can get (preferably under 3) and never lose 3% from any last top. We don’t care about maximizing performance anymore but to meet our specific goals. To do that I use mainly bond mutual funds + several short term trades (hours-days) using stocks/ETF/CEFs/other. The 3 year results are much better than my goals. I never lost more than 1% from any last top in the last 3 years. Below is a copy from my Schwab accounts as of yesterday which is about 95% of our total money. There is no way to achieve these results without being a good trader and why I posted other funds too
3 year performance/SD...SPY 13.1%/17.7...VBINX (60/40) 10%/11.1....VWIAX (40/60) 7.046.6%/...PIMIX 3.75%/5.6....IOFIX 0.2%/23.7
My portfolio performance was 9.9% annually for 3 year with SD=2.18
Below you can see an image of performance as of 10/14/2020 from Schwab. Column 1=one year...Column 2=YTD...Column 3=one year...Column 4=3 years
Sticking to the original topic, as I meant no insult to any individual posters here, OJ or FD1000, I find, to be more specific, much albeit not all of technical analysis to be nonsense. I think volume data is useful in the right hands, as are advance decline, short-term momentum, and investor sentiment ratios, but it is this specific rearview analysis in the article of long-term past returns I find to be ridiculous:
April has been the strongest month this century, rising 80% of the time AND producing average monthly gains of 2.5%. The second- and third-best months are November (rises 79% of the time, with average monthly gains of 1.7%) and October (rises 70% of the time, with average monthly gains of 1.3%), respectively. In fact, if we look at the S&P 500, there have only been 7 years when this benchmark index has fallen during both October AND November. Here are the years:
1951, 1971, 1973, 1976, 1987, 2000, 2008.
5 of those 7 years occurred during the secular bear markets from the 1970s and 2000s. 1987 was when we had Black Monday and the resulting fallout the next month (November). Outside of those years, we've had ONE year since 1950 when we've been in a secular bull market and saw the S&P 500 slide during both October and November in the same year. I think it's safe to say that the odds really favor the bulls during the balance of 2020.
Let's take it one step further. If we look at the S&P 500 from the close on October 27th through the close on January 18th of the following calendar year, our benchmark index has ended this period higher than it started in 61 of the last 70 years. It's risen 35 times in the past 38 years during that period. I'd say the odds are definitely on the bulls' side. But it's not just the frequency of the gains, it's the size of them. Before I give you this next stat, keep in mind that the S&P 500 has averaged gaining roughly 9% per year since 1950. Would you like to know how many times the S&P 500 has gained at least 9% during this "less-than-90-day-period"? 17. And if we lower the bar to 8% or more, the number swells to 25 times in the past 70 years.
What if I said that the NASDAQ's history during this period is even more bullish? Because it is. The average gain on the S&P 500 during that October 28th through January 18th period is 4.59%. The NASDAQ? +6.20%. Furthermore, over the past three decades, here are the 4 best calendar months on the NASDAQ in terms of annualized returns:
To look at history based merely on the price movements in the past without any real analysis as to why that price movement occurred--say falling interest rates, age demographics, America becoming a super power after the wars, and not being in the midst of a terrible pandemic for instance--and whether similar conditions are present today is stupid and useless to me, and reaks of snakeoil salesmen. However, there is use in some technical data I believe for measuring the "psychology" of the market in the short-term.
One stock advisor I follow is somewhat maddening in selecting growth companies on the basis of their future prospects (generally tech or health). He has done a great job of picking winners over the years I have subscribed. What irritates me is his commentary each month on “the chart XYZ is tracing out,” as if there were a relationship between what investors are doing and what the economic prospects of the company in question may be. All the charts of the stocks in the newsletter show massive declines last spring due to the COVID crisis, but I don’t learn anything from that information other then to reinforce my opinion that tech stocks are volatile. I can understand Lewis’ comment about using a chart to try to predict for the short term, but other than that, charts are of little use to me. I would like to meet the investor who has enriched him/herself by using a “head and shoulders pattern” chart to determine buy/sell decisions. OTOH, WTF do I know?
Below is a chart of the SP500. When do I buy stocks (usually SP500 or QQQ)? I look for at least 5-8% loss from the last top. Then I need to see: 1) MACD goes from higher negative to positive 2) Uptrend in price for several days 3) If price crossed the SP500 it's better I buy for 2-5 days to make 2+%. There are other signs but it's a good start. You may think it’s bogus but I have been using T/A for years with a very high success rate. Why the above works? because the more the market goes down, there is a good chance it will come back at least 50-60% of the lose. I'm looking for the first sign of momentum, join it and leave within days.
=========
For bond funds where I make most of my money I look for momentum + SD in the last 1-4 weeks (but also look at long term) + other factors. Again, I have done very nicely as the numbers showed. The key for me it to make money slowly and lose almost nothing. I follow funds and categories to see where is momentum. What seems a lot of work for most, it's a passion of mine and many times I do nothing for several weeks-months. Of course, T/A is only one aspect of it, a visual of a chart is very helpful because I can see many funds on the same chart. Look at a simple (chart) with 2 funds, can you guess which one is better? IOFIX is better because the uptrend is gradual and goes up while PIMIX chart goes down then up which means IOFIX momentum and volatility is better.
FD 1000, thanks for the lucid explanation. I understand how you can make your goals by your plan. Unfortunately for me, I can't do it. Using the IOFIX example, one would have to invest 1 million (minimum required) in IOFIX to make $7500 holding the fund for that productive a month. I have neither the money nor the courage to put that much on the line when the same unexpected drop that occurred in February to March can recur in our present uncertain times. So, I dither along making $ 10-20k investments at a time. Do you have any suggestions on modifying your technique for smaller sized investments?
@Zolta, IOFIX min is only $100K at Schwab. I'm guessing your investments is at Fidelity. This is one of the reason I transferred most of my money to Schwab. Fidelity also have a million dollar min on Pimco Instit share funds too. My technique is not recommended to anybody, it takes skills to know when to change. When I started investing this way 20 years ago it was simpler. About twice a year I looked for the best 5 risk/reward funds and kept changing but I used 3 (60%) as core and 2 funds as explore. The funds had to be in the top 30% of performance at all times which made sure I would not hold lagging funds for years. I never cared about OVER diversification. The funds mangers can do whatever they want I just expect good performance and SD(volatility) which led to good Sharpe+Sortino.
Regardless whether this trading system works or not, your system has little relation to the dubious contents of the posted article. I would say there is evidence that short-term price momentum as a factor works. But why it works and when it works--and when it doesn't--is I think more important than the fact it has worked in the past. The FOMO factor may explain why it works on a psychological level. But momentum tends not to work at major inflection points and shocks to the system, when the trend suddenly shifts.
The current market on a more fundamental level is an unusual one with two key factors I believe affecting it--the coronavirus and economic/monetary stimulus. Those death, jobless, infection and eco re-opening rates on one side, and the sheer amount of money the government is willing to socialistically dump on securities markets to bail rich people out on the other side. The risk on one side is enormous, but so is the relief on the other, a monetary stimulus that is five to six time what was spent on the 2008 crisis one manager recently told me. So while the common people continue to suffer, the stock market continues to rise. And these bailouts will occur in the U.S. regardless which party is in power. The Democratic party as it currently stands--and Obama's administration was testament to--likes bailing out rich people too. So the question then becomes how bad is the virus, and is there a point where main street's suffering affects rich folks' celebrating? The third leg of this stool is valuation. At what point does all of this stimulus get priced in while the economic realities for main street aren't?
I don't think momentum will address these questions if we take a sudden turn.
@LewisBraham We are discussing beyond the article. The article is talking about long term and mention T/A + other non T/A reasons.
As I said before, you think T/A is dubious and you entitle to this opinion but I have been using it very successfully for about 20 years. It worked great for me for short and long term. T/A is only part of my system and it's how most people who use T/A do it.
So, go ahead and post AGAIN that you think T/A is bogus and I will post after you the above too
Comments
That being said, most bond funds seem to turn-over like a mayfly hatch.
==============
@davidrmoran:but it is true that FD1k should be a multimillionaire, philanthropist, and posting regularly for seekingalpha or similar
FD: I'm a multimillionaire but not philanthropist or making money posting on seekingalpha.
=============
@davidrmoran: plus a byline somewhere advising others about bonds and his rapid fund trading without penalty.
FD: why do you think I should pay any penalty? I have special arrangement at Schwab where I have a dedicated trader that buys all the Inst funds for me with no commissions and I can sell these funds within one day (I don't buy funds that have longer mandatory hold). Example: IOFIX,PIMIX. If I don’t buy Inst funds and these funds are not Schwab fund and I sell within 90 days I do pay the $49.95 short term penalty which is nothing compared to the amount I'm making.
===============
@Junkster,
Your posts have several examples of liars, are you insinuating that I lied too?. I never claimed that I made a very high %, just a pretty good performance with very low SD. Remember, since I retired in 2018, we have enough money to sustain our standard of living for another 40-50 years if our portfolio will make just 4% annually including inflation. Our portfolio is 35+ times our annual expense without our SS. This is why I set up the following goals: make 6% average annually with the lowest SD I can get (preferably under 3) and never lose 3% from any last top. We don’t care about maximizing performance anymore but to meet our specific goals. To do that I use mainly bond mutual funds + several short term trades (hours-days) using stocks/ETF/CEFs/other. The 3 year results are much better than my goals. I never lost more than 1% from any last top in the last 3 years. Below is a copy from my Schwab accounts as of yesterday which is about 95% of our total money. There is no way to achieve these results without being a good trader and why I posted other funds too
3 year performance/SD...SPY 13.1%/17.7...VBINX (60/40) 10%/11.1....VWIAX (40/60) 7.046.6%/...PIMIX 3.75%/5.6....IOFIX 0.2%/23.7
My portfolio performance was 9.9% annually for 3 year with SD=2.18
Below you can see an image of performance as of 10/14/2020 from Schwab. Column 1=one year...Column 2=YTD...Column 3=one year...Column 4=3 years
Below is the SD for one year and 3 years
However, there is use in some technical data I believe for measuring the "psychology" of the market in the short-term.
I look for at least 5-8% loss from the last top. Then I need to see:
1) MACD goes from higher negative to positive
2) Uptrend in price for several days
3) If price crossed the SP500 it's better
I buy for 2-5 days to make 2+%.
There are other signs but it's a good start.
You may think it’s bogus but I have been using T/A for years with a very high success rate.
Why the above works? because the more the market goes down, there is a good chance it will come back at least 50-60% of the lose. I'm looking for the first sign of momentum, join it and leave within days.
=========
For bond funds where I make most of my money I look for momentum + SD in the last 1-4 weeks (but also look at long term) + other factors.
Again, I have done very nicely as the numbers showed. The key for me it to make money slowly and lose almost nothing. I follow funds and categories to see where is momentum. What seems a lot of work for most, it's a passion of mine and many times I do nothing for several weeks-months. Of course, T/A is only one aspect of it, a visual of a chart is very helpful because I can see many funds on the same chart. Look at a simple (chart) with 2 funds, can you guess which one is better? IOFIX is better because the uptrend is gradual and goes up while PIMIX chart goes down then up which means IOFIX momentum and volatility is better.
by your plan. Unfortunately for me, I can't do it. Using the IOFIX example, one would have to invest 1 million (minimum required) in IOFIX to make $7500 holding the fund for that productive a month. I have neither the money nor the courage to put that much on the line when the same unexpected drop that occurred in February to March can recur in our present uncertain times. So, I dither along making $ 10-20k investments at a time.
Do you have any suggestions on modifying your technique for smaller sized investments?
Apologies; I thought it was you who said long ago you did all your rapid trading of mfunds without penalty via special treatment.
Not seeing that anything I said is trash. Good for being multimillionaire; me too.
My technique is not recommended to anybody, it takes skills to know when to change. When I started investing this way 20 years ago it was simpler. About twice a year I looked for the best 5 risk/reward funds and kept changing but I used 3 (60%) as core and 2 funds as explore. The funds had to be in the top 30% of performance at all times which made sure I would not hold lagging funds for years.
I never cared about OVER diversification. The funds mangers can do whatever they want I just expect good performance and SD(volatility) which led to good Sharpe+Sortino.
The current market on a more fundamental level is an unusual one with two key factors I believe affecting it--the coronavirus and economic/monetary stimulus. Those death, jobless, infection and eco re-opening rates on one side, and the sheer amount of money the government is willing to socialistically dump on securities markets to bail rich people out on the other side. The risk on one side is enormous, but so is the relief on the other, a monetary stimulus that is five to six time what was spent on the 2008 crisis one manager recently told me. So while the common people continue to suffer, the stock market continues to rise. And these bailouts will occur in the U.S. regardless which party is in power. The Democratic party as it currently stands--and Obama's administration was testament to--likes bailing out rich people too. So the question then becomes how bad is the virus, and is there a point where main street's suffering affects rich folks' celebrating? The third leg of this stool is valuation. At what point does all of this stimulus get priced in while the economic realities for main street aren't?
I don't think momentum will address these questions if we take a sudden turn.
We are discussing beyond the article. The article is talking about long term and mention T/A + other non T/A reasons.
As I said before, you think T/A is dubious and you entitle to this opinion but I have been using it very successfully for about 20 years. It worked great for me for short and long term. T/A is only part of my system and it's how most people who use T/A do it.
So, go ahead and post AGAIN that you think T/A is bogus and I will post after you the above too