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Steven Bauer
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My Biography: In 2001, I retired and now permanently reside in Mexico. After 5 years of managing my own affairs, I resumed my career in 2007 as a financial analyst / asset manager. My career began while in University as a – manual chartist for some wealthy Investors, who had a fancy math formula... More
My blog:
Investing Wisely
  • My - Long-Term Performance Record . . . 0 comments
    Nov 14, 2013 10:54 AM | about stocks: SPY, QQQ, DIA

    My - Long-Term Performance Record . . .

    Quite a number of years ago I decided to document my Long-Term Record of identifying Bull Market Tops and Bear Market Bottoms. This is both a graphic and narrative presentation of my Work / Analytics ( Profitably - "Investing Wisely" ) over the past 50 plus years.

    There is an old poem that I have liked to share over many years, it was given to me by an old man when I was just a teen-ager. The poem goes something like this:

    You are the one who has to decide, whether to do " IT " or toss it aside, whether to go for the goal that's afar, or be content to stay where you are! These words just might help you decide whether or not to pursue an investment / financial / investment program FIX…..

    I can only help! You the Investor and as a Client - - MUST - - be involved with my work / analytics and communicate with me on a reasonable frequency.

    So, What is the " IT " ???

    Well, read on but be warned - I'm trying to SELL you something . . .

    Yes, at least to urge you to compare what information and data I am providing you with regard to my work / analytics - - and what you have been offered by other professionals, over the years.

    In every Bull Market (in history) public Investors and most professional Financial Analysts / Asset Managers come to the party late, not getting tuned-in to the stock market until a year or two after a new bull market has begun, and then piling into it with gusto - near its tail end, after it ( the Bull Market ) has made most of its gains.

    The other scenario is that people, not Investors, inherit, via death or divorce, money and then follow the herd of the mis-informed public. This lack of understanding how to make money in the stock market is little different than other important aspects of life - - "no body ever told me!" I hope my sharing will inspire you to make some changes in how you go about managing your investments.

    If you believe in being a 'Buy and Hold' - - or - - being a 'Trader' I believe the following will be of little value to you. I hope I am wrong if you are either of the above.

    - - -

    My Performance Record:

    1957 - 1963: Profitable on Average of 32%

    1963 - 1970: Profitable on Average of 16%

    1970 - 2001: Profitable on Average of 19%

    2001 - 2007: Profitable on Average of 22%

    2007 - 2014: Profitable on Average of 27%

    Best year: 67%

    Worst year: -8%

    Warren Buffett and I began our Asset Management services in the same year. We studied same basics of finance and applied many of the same principles. Up until the year 2000 our performance was almost identical. In my retirement years I have been increasingly more profitable. I don't believe Mr. Buffett has increasing profitability for his investors for a long time.

    - - -

    Well, for me, it all began at the age of 19 as an Engineering student. My father-in-law to be asked if I would be interested in a part time job while in University to do some fancy math which came from the Wharton School of Business / Finance - Graduate School of Business. I looked at the formula - which were actually rather simple calculus and said yes. So, I suddenly had beer money galore, did these calculations on 100 Companies, beginning in 1957 each day and manually charted the results. ( I still have those old charts )

    We made money (good profits) but there was something wrong and I had no clue. After graduation I went to Graduate School and on to more advanced work, and a doctorate in Economics and Finance. This took another 6 years or so - and all the while I kept up with the charting. Things (meaning performance) went from outstanding to getting worse and my fancy education did not help, in fact, looking back - it was a major hindrance.

    None-the-less, in 1967, I formed an Investment Advisory Firm and proceeded to make money for my Clients and myself for the first few years. The profits were smaller than I expected, and again, I was not impressed with myself or my hours of post graduate study. By then I had my doctorates and was feeling pretty pug having read a couple hundred books on investing.

    At the time of the - nine month, mini-Bear Market of 1969 - 1970 I was really down - a lot of education and hard work was shot to hell - I thought!

    It was during that time that - I decided to re-write the book, so to speak, and developed an Investment Methodology that is pretty much the same that I use today. I proceeded to make modest profits and most importantly to identify the highs of 1973. I took my Clients to Cash and subsequently found the bottom of that Bear Market, some 2 years later. Now I was feeling, much better, with a Methodology that "worked."

    Believe me, this Methodology is nothing like what the text-books promoted - - or - - what Wall Street was - PREACHING.

    The following charts are two things:

    • They are excellent representations of what took place in the past 6 Bear Markets - during my career, and
    • They are my Long-Term Record of My - - "Investing Wisely."

    I hope you will study them and understand that there will be both Bull Markets, Bear Markets and Sideways Markets for the rest of yours and my life. I believe I have the Methodology in place to prosper, that is, be profitable in both Bullish and Bearish environments with a very low threshold of risk.

    - - -

    Bear Markets are both the Teacher and the Truth - - My Revelation

    1957 - 1973 - -

    This was my first exposure to managing money. As an under-grad ( as I mentioned above ) I was given a fancy math formula from Wharton School of Business. Four wealthy investors pooled $25,000 each or $100,000 and instructed their broker to accept all orders I placed using this Wharton formula. I was paid to chart over 100 Companies by hand each day. That was a great job and it gave me beer money. I still like beer.

    The formula worked but soon I figured out how to improve on just what the Technical formula was performing for my four Investors. They agreed and we ran the $100,000 up to a considerable level. In those years my word produced well over a 30% annual return. It also caused me to lose interest in my Engineering studies but I was able to graduate. Graduate schools followed and I learned too much theory and not enough practical support for my now old Wharton fancy math formula.

    Computers were making a move by then and I was able to put this (modified) formula into the school computer and do some very fancy things to simplify and continue with building profits.

    Here is where I believe I learned the most important lessons of consistently maintaining profits. The thing I learned at a tender age was all about what a Bear Market does to Profits. No formula can deal with a Bear Market.

    If you will kindly understand the following is what I learned in the 16 years of getting my feet wet and for a long time having beer money.

    If your Asset Manager has not had multiple years of experience with Bear Markets you will soon find out that he too will need to get burnt badly and in the process will likely burn you.

    So here it is with a FOCUS on the Bear Markets that taught me how to make money consistently in the Stock Market.

    1973 - 1974 - - Bear Market:

    This was my first Bear Market test after the above mentioned - 10 year "dry spell" of not being as profitable as when I first began managing the portfolios for my first four Clients. My Research / Analytics Methodology had substantially improved and I was prospering.

    Looking back on this "first real test" - I can say that it ( 1973 - 1974 - - Bear Market ) was clearly the worst that had been experienced since the great Depression. Yet my stuff (methodology) worked (profited) well beyond my expectations.

    The stock market first broke though the 1,000 level on the Dow Jones Industrial Average in 1960 and did not advance beyond that level until the early 1980s. That too was a "dry spell" for many Investors that they did not understand. Finally, I did!

    In early 1973, with the Dow Jones Industrial Average again over the 1,000 mark, my research / analytics gave a clear signal to - Go to Cash - and I did. Please see the long - term chart below and not that the Dow Jones Industrial Average did not move much above the 1,000 mark until 1984. Because of this "Sideways" kind of a stock market my work produced profits but nothing like what was to come in the subsequent 3 decades. It taught me even more that I could have realized and truly provided a foundation for my Methodology. Buy and Hold does not work!

    ( This space was intentionally left blank )

    (click to enlarge)

    1980 - 1982 - - Bear Market

    So, with having once again built a great deal of confidence, I was off and running with about five more years of what can be described as a "Sideways Market." And yet we were very profitable. Little did I know that the fun was to begin, only after another, more moderate, Bear Market. This 1980 - 1982 Bear Market was again a opportunity to - "go to Cash" and I did. The Bottom in 1982 was easy to identify and then I can just say WOW! Again, please look at the historic chart below.

    By now, I had made myself and my Clients a great deal of money and confidence in my Methodology continued to find new supportive information and data to enhance it's effectiveness. Please keep in mind that Computers were just beginning to do the work that I had done - manually - like every body else.

    The good news was that I was already trained / competent in how to use these new Computer tools (Methodology) and that made a / the major difference.

    ( This space was intentionally left blank )

    (click to enlarge)

    1987 - - Bear Market

    With an unprecedented rise in the Stock Market, off the 1982 lows, almost a triple - that's nearly 300%, I was making money hand over fist in both the Stock Market and within my Asset Management Firm.

    Still young - not yet 40, I had made acquaintances with some of the best in the business who were people, to my benefit, quite a bit older. They ground into my head that this can't be real and yet I was getting no signals that there was any end in sight.

    With a tremendous spike from 1986 through summer 1987 my work kept giving me signals that a top was near. Finally, I determined that these "old" mentors were either right or going to be right and I - for a third time went to Cash. Remarkable to me - They did Not!

    The stock market took a severe drop in price loosing nearly 1,000 Dow points in about 3 months time. This was the last wake-up call I needed to know that hurt can be spelled with CAPS. It took another 12 - 13 years for this lesson to be put to use - that is the Bear Market of 1999 - 2003 and the current 2007 - ???? hard hitting Bear Markets.

    (click to enlarge)

    1990 - - Bear Market

    Well another mini-Bear Market occurred in 1990 and I had built up a lot of experience and wisdom and now was quite clearly a middle aged financial analyst that was somewhat mellow. I had, I think, learned not to Assume or believe anything offered by Washington, Wall Street or the Financial Media. Just deal with the raw information and data and all will be well. That is the very best advice I can give anyone. "Do not believe anything offered by Washington, Wall Street or the Financial Media."

    I implemented this important component to my Methodology and the lights turned on again. On top of "Don't Assume" and "Don't believe everything that is Printed" - - it was abundantly clear to me that the Stock Market is teaching us all something every day. So, I began to Listen Carefully as I did my Homework, and was given a very clear road map as to what is and what will, most likely, take place in the stock market and the economy over the coming months.

    (click to enlarge)

    2000 - 2002 - - Bear Market

    By now I was becoming even more conservative and Listening to what the Stock Market teaches (if you will listen), but the Economy tells a great deal more, if you will listen. Most everybody I meet, Clients, analysts, and some pretty smart people - often tell me their opinion of what is going on and for the most part, they are dead wrong. People's and Investor's Opinions are Something I Pay Absolutely NO Interest to At All.

    I believe they (most people and financial analysts) like to TELL the stock market, the economy, and others their thinking, rather than listening and learning. The stock market, the economy, etc. will tell you the all important "WHAT" and "WHEN" and "WHY" - - if - - you will listen and maintain Patience and Discipline.

    In 1999 there was an explosion again, this time in technology.

    Another lesson: The Sectors and Industry Groups are constantly in Rotation. That means what was good yesterday, will likely not be good tomorrow. You must keep a diligent hand on the whole mess to figure what will likely be the place to be - for tomorrow and beyond.

    (click to enlarge)

    2007 - 2009 - - Bear Market

    I took all Clients to CASH in September / October of 2007 and have remained in Cash until early 2009.

    My latest financial Update / Commentary ( a weekly - free service to Non-Clients - and - a bit fancier version for my Clients) began at this time and replaced a very large, out dated and time consuming Website.

    There really is not much else I can share regarding this Bear Market other than I feel that my Updates / Commentaries carries my current thinking and investment strategy to you with accurate and straight forward talk.

    (click to enlarge)

    Note: The above chart is obviously not exactly current, but still tells my story - quite well. . .

    - - - - - - - - -

    Well, that's my story.

    I hope you liked my poem and recital of how these Bear Markets helped to teach me my trade, keep me in beer money and made an extraordinary life for me. Changing the poem just a bit - - You are the one who has to decide, whether to (find out more) or toss this aside. Whether to go for the (profits) goal that's afar, Or be content to stay where you are.

    I believe I can help!

    Like always, I would like to hear from you - your thoughts, your concerns and your wants.

    - - -

    I sincerely hope the above information provides you comfortable feeling about both me and my professional background / services.

    Please allow / grant me the time to provide more insight to this important part of your financial / investment future and the possibility of our having a professional relationship.

    - - - - - - - - - - - - -

    Keep Smiling, and have Fun - Investing Wisely.

    Dr. Steve

    (click to enlarge)

    file:///data/seekingalpha/shared/posts/121308_13844443501496.doc

    Stocks: SPY, QQQ, DIA
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