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- Asset Allocation and ETFs: Pimco's El-Arian in 2008 [view article]
- Key Asset Class Returns of the Week [view article]
- 31 Country P/E and PEG Ratios [view article]
- Bailout Cost, per Taxpayer, by Income [view article]
- Yawning from the Market Sidelines, ETFs in Hand [view article]
- Simple Asset Allocation Yardstick [view article]
- A 360 View of Returns (July 2008) [view article]
- El-Erian's Recommended Allocation vs. Harvard, Yale [view article]
- Dollar Strength and Your Portfolio [view article]
- A Lazy ETF Portfolio Underweighting the U.S. [view article]
- A Low Cost, Fully Diversified All ETF Portfolio [view article]
- The Dollar Rally Ends [view article]
loading ...Recent VTI Articles
- Asset Allocation and ETFs: Pimco's El-Arian in 2008
- Key Asset Class Returns of the Week
- Tuesday Outlook: Capitulation? Not Yet
- Currency ETFs Shine Through Bleak Market
- Friday Outlook: Investors Finally Giving Bad Data Its Due
- Bailout Cost, per Taxpayer, by Income
- Liquidity Review of U.S. Stock, Sector ETFs
- Yawning from the Market Sidelines, ETFs in Hand
- All World ETFs Offer Access to Global Growth Opportunities
- Vanguard's Total Stock Market Fund New Top Dog Thanks to ETF Share Class
- Full List of Articles »
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A Simple Momentum System for Beating the Market [view article]
Puddi said: "Most such systems will make some money some of the time. If any system exists that makes good money all of the time, its inventor isn’t going to be writing a book about it."No trading system purports to make money all of the time. In fact, you can have less than 50% winning trades and can still make money. I suggest you read up on some basic trading theory.
Rudi said: "You didn't reveal any scientific proof because you can't."
Ah, dude first chill and then look at his peer-reviewed published academic paper! This is one of the most documented, pervasive effects in finance and you guys act like Mr. Faber is some kinda snake-oil salesman!!
Mebane, maybe these comments are an indicator as to why the momentum effect keeps on working....
Cheers from Osaka,
john Reply
The Only Chart True Investors Need to See [view article]
Yeah, what a huckster's hoax ... considering that 90+ % stock issues making up the indices 100 or even 50 years ago are now extinct. Go figure, a fool who simply buys and holds under the circumstances not even considering inflation's theft. Wall Street is no different than the Casino ... the house advantage and vigorish breaks you in two in the long run if you're naive to think the stock market is a failsafe money making machine. It may just take longer to fritter away your stash to the street profs. As in the Casino you better cash in your chips when you're fairly ahead and limit/cut your losses ... don't be greedy, play with a short bankroll or not know the rules of the game. Set goals and excercise dicipline. Putting your money in the market is as risky as the roulette table or rolling the dice. Don't believe the hype of buy and hold that the hucksters spin endlessly. ReplyA Simple Momentum System for Beating the Market [view article]
There can be long periods when markets are not trending and price keeps crossing above and below the 10-month (or whatever) moving average one is using to buy or sell. For example, if I were using PCRIX as my commodity investment there were two buy-sell round trips in 2005 and four round trips in 2006 which ground out loss after loss. I wouldn't have been able to stay with it over that 2 year period - would you? ReplyA Simple Momentum System for Beating the Market [view article]
Investment and trading is part art and part science. Momentum system as broadly defined here is definitely a mainstream strategy which many have benefited from, just as many have benefited from the Warren Buffet buy and hold strategy. Each strategy has strong points and drawbacks, but momentum strategy calls for control of risk [stop loss] and locking in profits [sell stop]; these are important features which many find appealing and practical. ReplyA Simple Momentum System for Beating the Market [view article]
Those are all ex-post analysis, aren't they? Comparing winners to loosers afterwards for sure shows an outperformance ;)You didn't reveal any scientific proof because you can't.
cheers
rudi Reply
The Only Chart True Investors Need to See [view article]
You're just a Wall Street Stooge, Mister. Sure, stock prices may go up, but you could also buy a house for $20,000 in 1970 (in many places). Increasing prices don't always mean increasing wealth. REMEMBER THE INFLATION MONSTER ! People have been losing money right and left in this MASSIVE BEAR market. So if you say that this is the only chart we need to see (ie-"all we need to know") - my response is "HOGWASH." ReplyA Simple Momentum System for Beating the Market [view article]
Like many other discussions of momentum analysis, this article makes broad assertions of the virtues while skirting the difficult details. Of course momentum exists in individual stocks – few people subscribe to the pure form of the random walk.The underlying economic principles are readily understandable. For a single company, steady earnings growth over the past few quarters is in most instances the result of circumstances that won’t change on a dime, so, all other factors being equal, betting on a continuation of a good trend is better than betting on the reversal of a series of bad quarters. An ETF approach is simply the single company approach applied to a sector.
The difficult details are the choice of entry and exit points. Most trends are interrupted by breaks, and all eventually reverse. All momentum-investing systems rely upon rules that purport to filter out the noise, cut the losses, hang in through the head-fake breaks, and exit before the true reversal, rolling the investment into another stock’s uptrend.
Most such systems will make some money some of the time. If any system exists that makes good money all of the time, its inventor isn’t going to be writing a book about it.
Reply
The Only Chart True Investors Need to See [view article]
Great chart.... If my name is Methuselah!!!!!Most people I know didn't start investing in 1871. How is this going to help anyone who is trying to retire right now? Reply
The Only Chart True Investors Need to See [view article]
Good article, some great comments on historically flat periods and time horizon...but one thing I would point out that I do not believe has been mentioned yet is that regardless of the "market" per se, there are some great investments out there. Another words there are some great stocks regardless of how the overall market or indexes perform.I think if one spends enough time studying key sectors one can pick up on what industries will outperform. In my opinion one such opportunity for the foreseeable future it is alternative energy. Perhaps this distinction becomes moot if and when indexes add what are today considered peripheral to the economy but which become central later. But still there is always the opportunity to realize this before the market does.
Reply
The Only Chart True Investors Need to See [view article]
Here are a few other overlays...First. Consider that the 1871 through the early 1900 time frame could be linked to the passing of the global leadership torch from the UK to the US. History teaches us that the winners of wars write history and gain economically.The next phase, through the 1929 crash to the New Deal is similarly politically oriented. We had a technology boom...the industrial boom. Creative destruction got us both the roaring 20's and the depression later. Boom and bust. It took the combination of the New Deal and winning WW 2, that again allowed the US to write history and establish bedrock capitalist roots throughout Europe and Asia. Again, the US was the key benefactor. Look at the growth curve from the end of WW2 through the 70's. You don't have to be a genius to understand the US led the world and our economy boomed.
What about more recent history? We finally won the cold war and unleashed another wave of capitalism. Remember the peace dividend? Then we had another revolution, the information technology revolution, that sparked another extraordinary economic boom. However, like the industrial revolution before it, creative destruction begat the dot.com bubble. The difference to me is rather than deal with the issues regarding the dot.com roaring 90's, we rolled the problem into the real estate bubble. What's changed to alter the view of the chart?
My fellow alpha readers are right to point to, energy, currency valuations, (a function of global markets for goods,) and maybe the other chart not viewed, political leadership.
The current housing/credit crisis will be more difficult to solve because the US will have difficulty generating the equity required to liquify both our banking/credit system AND consumer balance sheets.
If we get another big leg up from here it will be because politically we reach agreements with key global powers, think OPEC for energy and China for industrial production, and trade agreements. We have to win the wars we are currently waging and prevail at the bargaining table on multiple trade treaties. If not, we could endure years of below par growth. Reply
The Only Chart True Investors Need to See [view article]
This can't really be looked at as investment advice, because it's a sales pitch. Both timing and inflation are important and, as knobturner so aptly points out, the graph shows that the market is ripe for a protracted sideways move. The post should read "The Only Chart True Salesmen Need to Use." ReplyThe Only Chart True Investors Need to See [view article]
Yeah, I would like to see this whole article re-written with inflation taken into account. With inflation, that chart starts to look pretty lame considering time-value.concisetrading.blogspo.../
Ryan Reply
The Only Chart True Investors Need to See [view article]
In case you wonder what your wonderful returns over holding gold are since the Fed was put in place: 1.81% per anum. Sounds spectacular? ReplyThe Only Chart True Investors Need to See [view article]
Keith,You seem to have very looooooooooooong time horizon.
And on top of that measure in dollars that simply have not been the same for quite some time. Returns since the Fed was was established are 100 times. Yet the currency has been devalued 22 times. Then there are 3 trillion of USD withdrawn from circulation after single use (in China/Japan/Saudi Arabia). Which comes to uhh... 35% of the total value. Why are those 3 trillion so important? They have been churned through the system once and then withdrawn (profits booked and distributed). If that money is used to purchase real stuff it will ruin the value of the dollar and your return will simply turn out negative.
Being average does not cut it on the football team, does not cut it in the SAT tests, why should it be fine when it comes to investment? Reply
The Only Chart True Investors Need to See [view article]
Anyone who does not have a 10 to 15 year time horizon must be very careful about stocks right now. We have had flat periods of that duration before, and we may be at the beginning of another one. Some would argue that we are already a few years into such a prolonged subpar market. Be careful out there. Reply