I've been using the Fabian newsletter for 20 years. I've realized an annualized net yield over that period of 16.5% following Fabian's buy-sell indicators. I'm quite happy with it. Thanks to the discipline of that plan, my wife and I are in good shape for retirement, and my kids can go to the college of their choice.
Dick Fabian, the originator of the plan, is my guru. He's semi-retired now, and his son Doug has taken over. Doug has a lot more "P.T.Barnum" in him. He has complicated the original plan by adding a lot of ancillary plans whose value I've yet to see.
I tried one of his new services this year called "Sectors", and it was a bummer. I made money with it, but I left a lot more on the table -- this new algorithm had me sitting on the sidelines in the money market a good part of the year. I had devoted about 10% of my portfolio to this plan, and I am about to withdraw and re-invest the money in the orginal plan. Fabian has (de facto) acknowledged the plan's dismal first year and is "revising" it. Once he gets a 3-year track record going forward (back-testing doesn't mean much to me), I may return. Disappointing.
On the other hand, the orginal Fabian philosophy of always having a *sell* plan as well as a buy plan still works great and is *understandable* -- you can see intuitively *why* it works so well -- that's why I continue to follow it. And Doug's weekly radio show (www.fabianlive.com) dishes out good advice.
My advice: if you have a 5-10 year investment-for-growth horizon, learn to follow the basic Dick Fabian plan still present in the basic service. It's boring, but I guarantee you'll never get tired of making with it!
I just read in the book, Index Mutual Funds, that Fabian's record over an eleven year period would have turn from profit to loss if an extra eighteen months were added to one end of that period. I am not saying Fabian practiced deceptive advertising, only pointing out the importance of even slight changes in reporting dates.
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<larrymoencurlyNOlaS...@my-deja.com.invalid> wrote: >I just read in the book, Index Mutual Funds, that Fabian's record over >an eleven year period would have turn from profit to loss if an extra >eighteen months were added to one end of that period. I am not saying >Fabian practiced deceptive advertising, only pointing out the >importance of even slight changes in reporting dates.
>* Sent from RemarQ http://www.remarq.com The Internet's Discussion Network * >The fastest and easiest way to search and participate in Usenet - Free!
If you want misleading advertising, look at cgm ads on tv, the one with the 2 people fencing. They are now doing poorly. Their ads went from 'we made over 100% in 3 years' (about 2 years ago) to currently "we've done 75% in the past 5 years." As their performance worsened, they extended the period of time to their advantange. When mentioning current performance, the reply is "were' in it for the long haul".......arne
>I just read in the book, Index Mutual Funds, that Fabian's record over >an eleven year period would have turn from profit to loss if an extra >eighteen months were added to one end of that period. I am not saying >Fabian practiced deceptive advertising, only pointing out the >importance of even slight changes in reporting dates.
>* Sent from RemarQ http://www.remarq.com The Internet's Discussion Network * >The fastest and easiest way to search and participate in Usenet - Free!
Sarge, I never thought of myself as a timer, but technically, I guess I am. It is the way. I would never try to talk anyone out of buy and hold because it's been great too, depending on what you're buying and holding.
Buy & hold is for asset allocators and it works. I'm not an asset allocator.
> I agree. Timing the market is a waste of time, as has been proved over and > over again.
> Sarge
> On Sun, 02 Jan 2000 02:59:36 -0800, larrymoencurly > <larrymoencurlyNOlaS...@my-deja.com.invalid> wrote:
> >I just read in the book, Index Mutual Funds, that Fabian's record over > >an eleven year period would have turn from profit to loss if an extra > >eighteen months were added to one end of that period. I am not saying > >Fabian practiced deceptive advertising, only pointing out the > >importance of even slight changes in reporting dates.
> >* Sent from RemarQ http://www.remarq.com The Internet's Discussion Network * > >The fastest and easiest way to search and participate in Usenet - Free!
Who is Gary Smith? What book are you talking about? Most of these timers use back testing methods that any child could use in an attempt to prove a theory. If you want to lose you shirt, go ahead and follow them, otherwise use the prove buy and hold for the long term theories.
On Sun, 02 Jan 2000 20:58:25 GMT, Rick Harle <rha...@athens.net> wrote: >You haven't been listening lately, have you. Pick up Gary Smith's >book, read it and then tell us what you think.
>Rick
>On Sun, 02 Jan 2000 13:10:19 +0100, rfr...@surf1.de wrote:
>>I agree. Timing the market is a waste of time, as has been proved over and >>over again.
>>Sarge
>>On Sun, 02 Jan 2000 02:59:36 -0800, larrymoencurly >><larrymoencurlyNOlaS...@my-deja.com.invalid> wrote:
>>>I just read in the book, Index Mutual Funds, that Fabian's record over >>>an eleven year period would have turn from profit to loss if an extra >>>eighteen months were added to one end of that period. I am not saying >>>Fabian practiced deceptive advertising, only pointing out the >>>importance of even slight changes in reporting dates.
>>>* Sent from RemarQ http://www.remarq.com The Internet's Discussion Network * >>>The fastest and easiest way to search and participate in Usenet - Free!
The Hulbert Financial Digest reports the 15 year real-time record for the Fabian Domestic Composite (their flagship plan) with an 11.9% annual return against the Wilshire 5000 Index return of 18.1%.
For comparison, $10,000 in Fabians plan would have grown to $54,007. A mutual fund indexed to the Wilshire 5000 would have grown to $121,269.
With the index fund you have no work, no decisions and lower taxes. You pick the number you would have been content with.
As long as we do not experience a prolonged bear cycle -- say for example 2-3 years with a market decline in excess of 25%, buy-and-hold should do as well or better than a trend-following algorithm like Fabian's. If you believe we've seen the last such bear market, then buy-and-hold is a sound and simple choice, and I wish you well with it.
Buy-and-hold advocates correctly point out that even prolonged bear markets are eventually followed by a recovery -- indeed the market always "comes back". But what never comes back is lost *time*. It takes a 33% gain to make up for a 25% loss. And that gain takes still more time. And that time and that 33% gain are wasted making up for past losses rather than generating new profits.
Buy-and-hold strikes me as too risky -- kind of like not buying fire insurance on my house -- as long as my house doesn't burn down, I'm better off than if I'd bought the insurance, no?
> Who is Gary Smith? What book are you talking about? Most of these timers > use back testing methods that any child could use in an attempt to prove a > theory. If you want to lose you shirt, go ahead and follow them, otherwise > use the prove buy and hold for the long term theories.
> Cheers, > Sarge
> On Sun, 02 Jan 2000 20:58:25 GMT, Rick Harle <rha...@athens.net> wrote:
> >You haven't been listening lately, have you. Pick up Gary Smith's > >book, read it and then tell us what you think.
> >Rick
> >On Sun, 02 Jan 2000 13:10:19 +0100, rfr...@surf1.de wrote:
> >>I agree. Timing the market is a waste of time, as has been proved over and > >>over again.
> >>>I just read in the book, Index Mutual Funds, that Fabian's record over > >>>an eleven year period would have turn from profit to loss if an extra > >>>eighteen months were added to one end of that period. I am not saying > >>>Fabian practiced deceptive advertising, only pointing out the > >>>importance of even slight changes in reporting dates.
> >>>* Sent from RemarQ http://www.remarq.com The Internet's Discussion Network * > >>>The fastest and easiest way to search and participate in Usenet - Free!
I wrote Sarge a reply, then erased it. But, I will say that fund selection is far more important. Timing is a last resort, ie, when to get to mmkt.......Arne
Rick Harle wrote in message ... >You haven't been listening lately, have you. Pick up Gary Smith's >book, read it and then tell us what you think.
>Rick
>On Sun, 02 Jan 2000 13:10:19 +0100, rfr...@surf1.de wrote:
>>I agree. Timing the market is a waste of time, as has been proved over and >>over again.
>>Sarge
>>On Sun, 02 Jan 2000 02:59:36 -0800, larrymoencurly >><larrymoencurlyNOlaS...@my-deja.com.invalid> wrote:
>>>I just read in the book, Index Mutual Funds, that Fabian's record over >>>an eleven year period would have turn from profit to loss if an extra >>>eighteen months were added to one end of that period. I am not saying >>>Fabian practiced deceptive advertising, only pointing out the >>>importance of even slight changes in reporting dates.
>>>* Sent from RemarQ http://www.remarq.com The Internet's Discussion Network * >>>The fastest and easiest way to search and participate in Usenet - Free!
> Sarge, I never thought of myself as a timer, but technically, I guess I > am. It is the way. I would never try to talk anyone out of buy and hold > because it's been great too, depending on what you're buying and > holding.
> Buy & hold is for asset allocators and it works. I'm not an asset > allocator.
The "buy and hold" approach reminds me of what I heard once: "A long term investment is a short term investment that went bust." The buy & hold technique is OK because the market overall has a constant upward drift over the long term, but in essence there is no reason why buying and holding should work better than market timing. In fact, buying and holding is like flipping a coin in which one of its sides has a somewhat higher chance of appearing - this reflects the upward drift over the long term. As you correctly pointed out, buy and hold is for asset allocators and asset allocation follows the principle of diversification and diversification, as Warren Buffet said: "is a protection against ignorance."
Gary doesn't endorse trying to time the market and for that matter neither does anyone I know. Much too hard and you've got to be right twice.
However, Gary does actively TRADE mutual funds and so do I and a lot of folks that I know. I momentum invest a part of my portfolio into the hot sectors and if things get dicey, I will take this trade money to cash. I leave my core holdings alone (~70%). I probably made 100 mutual fund trades this past year and had my most sucessful year by a gob. I'm able to do this without transaction fees and stick with noload funds that have no early redemption penalties. These are also retirement monies in an IRA/401/457. I didn't quite beat the nasdaq, but I beat hell out of the other indexes.
There is no earthly reason to sit there and watch a fund/sector/region tank and not do anything about it.
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