Momentum - who do you love.

ERD50, Maybe these returns will provide some insight :confused: I have listed the 7 lazy portfolios tracked by Paul Farrell, My returns "David" and my newsletter "Sound Mind Investing"

Portfolio Name, Equity %, 5-year annualized return %
  1. David , 100, 21.90
  2. Aronson Family Taxable, 80, 21.47
  3. Sound Mind Investing, 100, 20.92
  4. FundAdvice Ultimate Buy & Hold, 60, 20.32
  5. Margaritaville, 67, 18.63
  6. Yale U's Unconventional, 70, 18.12
  7. Dr. Bernstein's Smart Money, 60, 17.75
  8. Dr. Bernstein's No-Brainer, 75, 17.47
  9. Second Grader's Starter, 90, 17.02
  10. Coffeehouse, 60, 16.71
  11. S&P 500, 100, 12.83
Sorry about the table, I haven't figured out how to work HTML yet :p

I think all the strategies are easy to implement, have a resonable number of funds and can be managed in an hour a month if you wish.

As you can see, I should be a hedge fund manager :duh:

All strategies beat the S&P 500 quite handily. It is still the issue of risk that I can't get my head around. After the fact it is easy to say that my strategy was not risky because it succeeded. I can attribute that to the superiority of the strategy or luck. I can also look and say the Fund Advice portfolio came close the the same return, but only had 60% equity exposure. Presumably that had less risk, or at least less volatility if that is how you count risk. I guess I feel I got my money's worth, but I wonder if the ride will continue.
 
DJRR said:
ERD50, Maybe these returns will provide some insight :confused: I have listed the 7 lazy portfolios tracked by Paul Farrell, My returns "David" and my newsletter "Sound Mind Investing"

Portfolio Name, Equity %, 5-year annualized return %
  1. David , 100, 21.90
  2. Aronson Family Taxable, 80, 21.47
  3. Sound Mind Investing, 100, 20.92
  4. FundAdvice Ultimate Buy & Hold, 60, 20.32
  5. Margaritaville, 67, 18.63
  6. Yale U's Unconventional, 70, 18.12
  7. Dr. Bernstein's Smart Money, 60, 17.75
  8. Dr. Bernstein's No-Brainer, 75, 17.47
  9. Second Grader's Starter, 90, 17.02
  10. Coffeehouse, 60, 16.71
  11. S&P 500, 100, 12.83
Sorry about the table, I haven't figured out how to work HTML yet :p

I think all the strategies are easy to implement, have a resonable number of funds and can be managed in an hour a month if you wish.

As you can see, I should be a hedge fund manager :duh:

All strategies beat the S&P 500 quite handily. It is still the issue of risk that I can't get my head around. After the fact it is easy to say that my strategy was not risky because it succeeded. I can attribute that to the superiority of the strategy or luck. I can also look and say the Fund Advice portfolio came close the the same return, but only had 60% equity exposure. Presumably that had less risk, or at least less volatility if that is how you count risk. I guess I feel I got my money's worth, but I wonder if the ride will continue.
Click to expand...

Those are great returns, so I'm not surprised you are happy! But for a truly meaningful comparison, one cannot ignore risk (usually measured by volatility - which may not be the best measure....).

For example, I could buy Strike 60 DEC 2008 call options on the S&P 500 for about $78. SPY is at about $138, so that gives me 1.77:1 leverage. That call will move up/down in dollar value almost exactly 1:1 with SPY, and you pay a very small premium for such a deep in-the-money call. So, if S&P goes up 12% my account would go up about 21%. But, did I get 'something for nothing'? No, if SPY drops 12% I would go down 21%.


So, risk adjusting your returns is essential for comparisons. I think I said this earlier, but if you are in the accumulation phase, taking some added risk might be just fine. But you should recognize it for what it is.

To get a handle on it, look at the S&P from some recent peak-trough, calc the % delta. Do the same with your account. Then work it the other way. Keep watching that over time, or compare EOM changes in value. If your account is moving more violently than the S&P, the S&P is not a good benchmark for comparison. You may or may not be doing better on a 'risk adjusted' basis.

-ERD50
 
[snarky hijack]

Am I the only one who can't look at this title without thinking "Its WHOM do you love"?

[/snarky hijack]
 
Maurice said:
[snarky hijack]

Am I the only one who can't look at this title without thinking "Its WHOM do you love"?

[/snarky hijack]
Click to expand...

Not if you lived thirty years in New Orleans and finally learn't ta talk rite!

What did those silly high school English teachers in the old PacNW know anywise - me Mudder was from Detroit and me Father from Boston and they got married/lived for a while in New York City - Brooklyn yet.

:D

heh heh heh - :rolleyes:
 
I thought the song clearly said "WHO DO YOU LOVE?!?!!!"

But some people call him Maurice... ;)

And that song includes a made-up word!
 
LOL guys!


ps - UncleMik - nt sure if you've seen me post about it, but I actually live in Brooklyn! :D
 
Must be 'who' - Bo Diddley couldn't be wrong, could he?

But now I can't read the title w/o drumming the desk top with a shuffle beat....

- ERD50


I walked 47 miles of barbed wire,
Used a cobra snake for a neck tie.
Got a brand new house on the roadside,
Made out of rattlesnake hide.
I got a brand new chimney made on top,
Made out of human skulls.
Now come on darling let's take a little walk, tell me,
Who do you love,
Who do you love, Who do you love, Who do you love.
Arlene took me by the hand,
And said oooh eeeh daddy I understand.
Who do you love,
Who do you love, Who do you love, Who do you love.
The night was black and the night was blue,
And around the corner an ice wagon flew.
A bump was a hittin' lord and somebody screemed,
You should have heard just what I seen.
Who do you love, Who do you love, Who do you love, Who do you love.
Arleen took me by my hand, she said Ooo-ee Bo you know I understand
I got a tombstone hand and a graveyard mind,
I lived long enough and I ain't scared of dying.
Who do you love (4x's)
by Bo Diddley
​
 
The night was dark, the sky when blue
When 'round the corner the $hit wagon flew
Shots rang out, a scream was heard,
A man was killed by a flying turd...

Least, that's the way I heard it... :duh::cool:
 
cute fuzzy bunny said:
I thought the song clearly said "WHO DO YOU LOVE?!?!!!"

But some people call him Maurice... ;)

And that song includes a made-up word!
Click to expand...

Steve Miller Band - eh! I actually had him among many other - dast I say it, 33 1/3 LP's that went with the house in Katrina.

Not chasing the hot mutual fund with the mo - but the principle is the same - every few years I Google or find a version of Bernstein's 15 Stock Diversification Myth which shows the odds are again ya - I read the reverse to pep me up - a 1 in 6 chance of hitting 'the stock'.

Being male and above ground with a few functioning hormones left - I still entertain visions of knowing when to hold em and when to fold em with my hobby money.

Target Retirement 2015, small pension, early SS for real retirement.

heh heh heh - I really did miss Maurice was from Brooklyn - saw the NYC.
 
cute fuzzy bunny said:
Yep, every time I see one of your posts, that frickin song runs through my head.
Click to expand...


I'm showing my age on this... I'm both too young and too old for the Steve Miller reference. The first time someone here linked my screen name to the song (and at least three people have) I had to google to understand the reference. (after googling, though, I realized I had heard the song)

I'm too old because my musical taste runs from the 18th century to the early 20th, with some exceptions. In fact, on a whim I choose Maurice when signing up because I was [-]obsessing with[/-] working on a Ravel piece at the time.

Maybe you could start whistling jeux d'eau when I post? Or (god forbid) Bolero?
 
Bolero has a different connection in my brain. Its a good one though...

Hmm, I wonder what old Bo Derek looks like these days.
 
Fundx and momentum floated through my mind again...

Here is a five-year comparison of FundX Upgrader, Vanguard's 500 Index, and Vanguard's Total Stock Market funds:

link

Morningstar's evaluation of FundX:

link

>90% in stocks, large blend, ~75% of stocks are international. From FundX's site, about 30% is in their more aggressive categories 1 and 2.

From Vanguard and FundX's websites, 5-year annualized returns for their funds:

Vanguard 500 Index 11.89%
Vanguard Total International Stock Market 22.20%
FundX Upgrader 17.29%

Now, (11.89% * 0.25) + (22.20% * 0.75) = 19.62%

Looks like FundX does trail the relevant composite index by about their 2.2% expenses. Athough the above analysis doesn't take into account the ~9% cash/bonds position of FundX, which would make FundX look better.
 
I think the fundemental problem with the love/hate attitude and shades in-between toward fund X is the momentum chasing aspect - the ability to identify, case and catch momentum in 'the' asset classes having the mo. When your asset class mix changes so much through time - how do you you identify the risk you are taking relative to a fixed asset class mixture - and after expenses/trading/switching costs - is it worth the effort.

A difficult calculation given that future is not what it used to be. - with apologies to Yogi Berra.

heh heh heh - :cool: TickTock's calc is a good swag.
 
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