What Equity Bubble? This Bull Run Has Only Just Begun [View article]
I'm Long the S&P500 right now based on Trend Following metrics - but using arbitrary valuation metrics that have no demonstrated historical value to try to prove the market is "cheap" is not going to help anyone. As John Hussman and others have pointed out, the US market is NOT cheap, and is priced to return only around 3% a year over the next 10 years with very high levels of risk.
Laszlo Birinyi Expects The S&P500 To Reach 1600 Before The Year Ends [View article]
Out of curiosity, I checked out the last issue of Business Week for 2007. Mr. Birinyi predicted a market return of +15.8% for 2008, actual return was -38.5%. Although to be fair, Elaine Garzarelli was even further off - she predicted a gain of +21%!
Laszlo Birinyi Expects The S&P500 To Reach 1600 Before The Year Ends [View article]
Laszlo doesn't exactly have a stellar forecasting or trading record - so I would definitely treat any of his predictions with a bit of well warranted skepticism!
@Extremebanker: I agree with you completely - It is not just about returns but also risk! Your observations on market psychology are spot on as well. During major bull markets, a trend following approach like the one I detail above may underperform, but over the whole market cycle I am confident that it will provide better risk adjusted returns.
I agree with mh001's advice to not try to out-smart your system. A system is simply a trading strategy that has been demonstrated to work in a given market over a period of time. It isn't perfect, and most definitely it is not a crystal ball that will let you predict the future. That is why in general terms I recommend using several different markets and systems in order to diversify and minimize the risk of having any one approach "bomb out" at the same time. With regard to using the 200 Day Moving Average to "time" the market - this approach has demonstrated its value when used with most stock market indices (e.g. SPX, RUT, etc.), but it is no silver bullet. For example, the 200 Day MA is NOT useful approach for timing Gold stocks (XAU), as I discovered myself during extensive backtesting. So don't assume that any trading system or approach works until you have fully back tested it - and even then, it is no guarantee!
Our Take On 'Why I Am Leaving Goldman' [View article]
Well, all I can say is that the track record of both Mr. Tilson and Goldman Sachs is a little spotty (not with regard to their own profits of course, but rather those of their long suffering clients/customers)...
Yes - particularly for me, as my style of trading (like that of many Hedge Funds) is focused on Trend Following. A lot of trend followers got hit as we were regularly subject to intermediate-term "whipsaws".
Revisiting A Quantitative Approach To Tactical Asset Allocation: Good Returns In Reach [View article]
Tim, Great article! And I agree completely with your comments about 2011 - it has been a tough year for Trend Following (TF), and this evidenced by the fact that many of the famous Hedge Funds in this space have performed poorly this year. But like all strategies, the day will come when TF will shine again. As you demonstrate in your article, over the long term TF has soundly beaten the market on a risk adjusted basis. It is truly refreshing to see on Seeking Alpha a well tested approach presented objectively and clearly. Most of the "commentary" on the site is skewed towards subjective mumbo-jumbo of extremely dubious value!!
The Market Is On The Edge Of A Cliff [View article]
While the "real economy" has been in the dumpster since 2007, the various government apparatchiks have been doing anything and everything to sustain the unsustainable status quo. The can WILL BE KICKED down the road until it can no longer be kicked - both in the US and Europe (especially in Europe). But eventually all hell will break loose, the only question is HOW and WHEN. As individual investors we must all do our best to avoid being trampled once the storm hits....
Timer Model: Buy Inflation Hedges and Risk [View article]
I think any timing model must be: a) Rigorously back tested and have a solid historical underpinning, and b) Avoid subjective analysis of any type. I'm not sure that is the case here.
With regard to the following: "As another bullish sign, Warren Buffett has been talking bullishly about US economy and employment and Bloomberg reported that Berkshire Hathaway recently bought $4b of stocks for its portfolio", I would note that BRK was down as much as the S&P500 in 2008-2009. So while Buffett may have a good long-term track record as a stock picker, his track record as a market timer is much in doubt!
The Next Crash Could Be a Lot Worse [View article]
I agree with almost all the negative comments about the world economy expressed here - but the one thing that everyone should remember is that collecting random negative (or positive) facts is not an effective way to time the market. None of what is said above is tradeable info. Many of the "negatives" mentioned were also in view in September 2010, and we proceeded to have the type of rally all of us should be aiming to participate in. Having said that, my own Market Indicator just produced a SELL signal (see link below to my Instablog), although there's no way of knowing how long the downtrend may continue. If things turn around and start going up, I'll be the first one to jump back in!
Two Clear Warning Signs From the Corporate Bond Markets [View article]
Peter, While I personally only apply strategies that I can thoroughly back test (which by definition means I must have plenty of data), I do understand the difficulties of trying to develop a strategy using data points that are either relatively new or incomplete. In the end there is a trade-off between the risk of using an approach you can't completely back test - or "losing out" on a potentially promising strategy.
What Equity Bubble? This Bull Run Has Only Just Begun [View article]
Laszlo Birinyi Expects The S&P500 To Reach 1600 Before The Year Ends [View article]
Laszlo Birinyi Expects The S&P500 To Reach 1600 Before The Year Ends [View article]
How to Beat 99% of Investment Managers [View instapost]
How to Beat 99% of Investment Managers [View instapost]
With regard to using the 200 Day Moving Average to "time" the market - this approach has demonstrated its value when used with most stock market indices (e.g. SPX, RUT, etc.), but it is no silver bullet. For example, the 200 Day MA is NOT useful approach for timing Gold stocks (XAU), as I discovered myself during extensive backtesting. So don't assume that any trading system or approach works until you have fully back tested it - and even then, it is no guarantee!
Our Take On 'Why I Am Leaving Goldman' [View article]
2011 Market Summary - A Tough Year! [View instapost]
Revisiting A Quantitative Approach To Tactical Asset Allocation: Good Returns In Reach [View article]
The Market Is On The Edge Of A Cliff [View article]
The Market Is On The Edge Of A Cliff [View article]
But eventually all hell will break loose, the only question is HOW and WHEN. As individual investors we must all do our best to avoid being trampled once the storm hits....
Timer Model: Buy Inflation Hedges and Risk [View article]
With regard to the following: "As another bullish sign, Warren Buffett has been talking bullishly about US economy and employment and Bloomberg reported that Berkshire Hathaway recently bought $4b of stocks for its portfolio", I would note that BRK was down as much as the S&P500 in 2008-2009. So while Buffett may have a good long-term track record as a stock picker, his track record as a market timer is much in doubt!
5 Safe Havens Set to Thrive for the Next 100 Years [View article]
The Next Crash Could Be a Lot Worse [View article]
The Next Crash Could Be a Lot Worse [View article]
Having said that, my own Market Indicator just produced a SELL signal (see link below to my Instablog), although there's no way of knowing how long the downtrend may continue. If things turn around and start going up, I'll be the first one to jump back in!
seekingalpha.com/insta...
Two Clear Warning Signs From the Corporate Bond Markets [View article]
In the end there is a trade-off between the risk of using an approach you can't completely back test - or "losing out" on a potentially promising strategy.