Charles Givens' MONEY MOVEMENT STRATEGY?
Jim Blakeman
Hello,
Has anyone out there used Charles Givens' "Money Movement Strategy"?
Any opinions? It seems like a safe strategy to me & I'm considering
using it to begin investing in mutual funds.
I have used the strategies that he outlines in "Financial Self-Defense"
to save several thousand over the past two years...I hope the investment
stuff is just as useful.
Any comments would be appreciated.
Thanks.
James
J05...@lmsc5.is.lmsc.lockheed.com
>Hello,
>Has anyone out there used Charles Givens' "Money Movement Strategy"?
I've never used it, but I am quite familiar with it. It's an oversimplified
model. Still, it does make sense in the general case.
For anyone not familiar with the Givens strategy, it goes something like this:
You base your investment on the current prime rate and whether rates are
currently rising or falling.
If the rate is low, Givens says "invest in stocks." If the rate is high and
falling, it's "invest in bonds." If high and rising, it's "invest in money
markets." Hardly shocking advice in the general case.
The rate used in the Givens strategy is the prime rate, which (last I checked
three years or so ago) was "high" if over 9.5%. The Givens model would have
all of us invested 100% in stock funds right now, which is another caveat
I'd mention about Givens. His strategy doesn't include diversification at
all. You're 100% in some type of investment at all times.
>Any opinions? It seems like a safe strategy to me & I'm considering
>using it to begin investing in mutual funds.
It's safe if you treat it as a general guide to what investments are
historically good at any one time, and not as a fool-proof method. Also,
don't feel you need to place 100% of your investment in one area (all stocks,
all bonds, etc.). Your circumstances, ability to withstand ups and downs and
your age are important, too. For example, people who plan to hold their
investments for many years (over 10 years, perhaps) should be biased towards
stocks, while those with a short time horizon (perhaps less than 3-5 years)
should be biased against stocks. If you're saving up for something you hope
to buy in three years, you'd be a fool to place 100% of it in stocks,
regardless of market conditions.
>I have used the strategies that he outlines in "Financial Self-Defense"
>to save several thousand over the past two years...I hope the investment
>stuff is just as useful.
As I said, I think it's not a bad place to start (as far as learning what
makes certain investments "good" at a particular time). Just be sure that
you understand there's more to investing than the level and direction of the
prime rate.
Tim Irvin
***************************************************************************
Gary McGrath
Gary
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Jim Blakeman
In article <94018.277...@LMSC5.IS.LMSC.LOCKHEED.COM>, J05...@LMSC5.IS.LMSC.LOCKHEED.COM writes:
|> In <2hf2s0$9...@crchh7af.bnr.ca>, Jim Blakeman writes:
|>
|> >Hello,
|>
|> falling, it's "invest in bonds." If high and rising, it's "invest in money
|> markets." Hardly shocking advice in the general case.
|>
The only thing that I would add to this summary of his strategy is that he
suggests that investors work strictly with mutual funds (not indivudual stocks,
bonds, money mkts) because they are far less volatile. He also suggests that
investors avoid over diversification...by investing strictly in stock based
no load mutual funds (when his investment criteria indicates that stocks are
the best investment) OR bond based funds OR money mkt based funds.
He claims an annual return of 12-18% safely & shows the historical data to
back it up.
James.
Harry J Kobetitsch
>
>Hello,
>
>Has anyone out there used Charles Givens' "Money Movement Strategy"?
>
>Any opinions? It seems like a safe strategy to me & I'm considering
>using it to begin investing in mutual funds.
>
This is a good strategy if you want to pretty much guarantee average
results for the long term. Follow the prime rate AND the 30yr bond rate.
The bond rate fluctuates more quickly than the prime rate. I would use
this strategy for long term investments (at least 5 yrs) if your willing
to settle for an average of 10%-15% gains which is not bad. But if you
spend a little time educating yourself you can probably do a lot better by
picking more aggressive mutual funds.
For short term investments it is probably best to stick it in a short-term
bond fund or money-market fund.
The bottom line here is that there is no one person that you can depend on except upurself to invest your money with any intelligence. Equip yourself with as much knowledge from as many so-called experts and use your judgement.
Harry J Kobetitsch
>In <2hf2s0$9...@crchh7af.bnr.ca>, Jim Blakeman writes:
>
>>Hello,
>
>>Has anyone out there used Charles Givens' "Money Movement Strategy"?
>
>I've never used it, but I am quite familiar with it. It's an oversimplified
>model. Still, it does make sense in the general case.
>
>For anyone not familiar with the Givens strategy, it goes something like this:
>You base your investment on the current prime rate and whether rates are
>currently rising or falling.
>
It also is based on the 30 year bond rate where 8.5% is the decision line.
>If the rate is low, Givens says "invest in stocks." If the rate is high and
>falling, it's "invest in bonds." If high and rising, it's "invest in money
>markets." Hardly shocking advice in the general case.
>
This advice probably is shocking to the doomsdayers out there.
>The rate used in the Givens strategy is the prime rate, which (last I checked
>three years or so ago) was "high" if over 9.5%. The Givens model would have
>all of us invested 100% in stock funds right now, which is another caveat
>I'd mention about Givens. His strategy doesn't include diversification at
>all. You're 100% in some type of investment at all times.
>
Yes but just for money you can put away for at least five years.
>>Any opinions? It seems like a safe strategy to me & I'm considering
>>using it to begin investing in mutual funds.
>
>It's safe if you treat it as a general guide to what investments are
>historically good at any one time, and not as a fool-proof method. Also,
>don't feel you need to place 100% of your investment in one area (all stocks,
>all bonds, etc.). Your circumstances, ability to withstand ups and downs and
>your age are important, too. For example, people who plan to hold their
>investments for many years (over 10 years, perhaps) should be biased towards
>stocks, while those with a short time horizon (perhaps less than 3-5 years)
>should be biased against stocks. If you're saving up for something you hope
>to buy in three years, you'd be a fool to place 100% of it in stocks,
>regardless of market conditions.
>
Can you provide information as to where this strategy has failed. Givens has
an excellent analysis in one of his books that proves his theory.
>>I have used the strategies that he outlines in "Financial Self-Defense"
>>to save several thousand over the past two years...I hope the investment
>>stuff is just as useful.
>
>As I said, I think it's not a bad place to start (as far as learning what
>makes certain investments "good" at a particular time). Just be sure that
>you understand there's more to investing than the level and direction of the
>prime rate.
>
There is if you want bigger returns and do not mind the inherent risks.
Harry J Kobetitsch
Harry J Kobetitsch
>Maybe you could lay out the specifics, and many more folks are then likely to comment.
Specifically, you can read his book "More.. Wealth Without Risk"
steven.c.martin
Isn't back-testing a wonderful thing?
Steve
Tom Carminati
(steven.c.martin) wrote:
Hey! I can give you a strategy for picking winning lottery ticket numbers!
It works every time! And I've got the historical data to back it up.
Tom Carminati
U S WEST Technologies
t...@advtech.uswest.com
J05...@lmsc5.is.lmsc.lockheed.com
> Once upon a time, I wrote:
>>It's safe if you treat it as a general guide to what investments are
>>historically good at any one time, and not as a fool-proof method. Also,
>>don't feel you need to place 100% of your investment in one area (all stocks,
>>all bonds, etc.). Your circumstances, ability to withstand ups and downs and
>>your age are important, too. For example, people who plan to hold their
>>investments for many years (over 10 years, perhaps) should be biased towards
>>stocks, while those with a short time horizon (perhaps less than 3-5 years)
>>should be biased against stocks. If you're saving up for something you hope
>>to buy in three years, you'd be a fool to place 100% of it in stocks,
>>regardless of market conditions.
>Can you provide information as to where this strategy has failed. Givens has
>an excellent analysis in one of his books that proves his theory.
A theory like this can not be "proven" per se. It can be supported with
historical evidence, which admittedly Givens has done reasonably well. But
let's not forget that there was a lot of "no-brainer" investments in the
1980s, which is the primary source of Givens's relatively high returns. In
an expanding economy with little inflation, investing in stocks was a no-
brainer. When rates were high in the early 1980s, with nowhere to go but
down once a recession started hitting (early 1980s), investing in bonds was
a no-brainer. There is no "no-brainer" investment right now. Stocks are
priced at historically high levels. Interest rates have nowhere to go but
up. And short term cash doesn't even keep up with inflation, much less
generate any return on investment.
Do you realize what it means to "prove" a theory on how to invest? It means
that you can, with 100% certainty, predict the market's future performance.
As the disclaimer goes, "past performance does not guarantee future results."
The investing climate isn't as secure as it was throughout the last 15 years.
We're entering economic climates in which Givens's model has not been
adequately tested (in my opinion). Maybe it will do very well; maybe it
won't. But even if it does well, it still hasn't *proven* that Givens's
method will work tomorrow, next month or next year. It only *proves* that
it has worked well in the recent past.
That's a big difference for someone who is content to invest only on past
performance and doesn't consider current investing climate when placing their
bets. Will they be despondent and confused if a "can't miss" method loses
20% in a year?
Tim Irvin
*****************************************************************************
use...@lexmark.com
He gave this advice long time ago, and use the statistics recently to show that the
advice he gave long ago was correct.In article 210194...@leftfield.advtech.uswest.com, t...@advtech.uswest.com (Tom Carminati) writes:
Roy Johnson
He claims an annual return of 12-18% safely & shows the historical data to
back it up.
Interestingly, in "Wealth Without Risk," the earlier version of "More Wealth
Without Risk," he claims and shows 15-25%.
--
-------- Roy Johnson ---- rjoh...@shell.com ---- Speaking for myself --------
"When the only tool you have is Perl, the whole | "Hooray for snakes!"
world begins to look like your oyster." -- Me | -- The Simpsons (29 Apr 93)
------- "We _love_ being politically Koreshed" -- Steve Taylor, "Smug" -------
John A. Antolak
them at the library to see what all the fuss was about. My impressions were
that there was some good advice in them.
However, I found one disturbing aspect of Givens' strategies. Almost
everywhere that he says you can make 20% (pick a number here) return, he
uses leveraging to increase the amount of return. I would hardly call that
"without risk". In some examples, he is leveraging 90% or more of the
investment. What he fails to point out is the tremendous downside if you
are not careful.
Anyone care to comment.
--
John A.
Harry J Kobetitsch
He felt strongly about setting up a margin account with your mutual funds.
He claims that in the crash of 1987 the average stock plummeted ~45% whereas
the average stock mutual fund lost 20%. He also claims that you minimize the risk of leveraging by investing only in mutual funds.
I do not feel comfortable with leveraging so I cannot say how successful it is.
I guess when he weighs the return/risk ratio he can support leveraging with mutual funds.
Harry J Kobetitsch
>Interestingly, in "Wealth Without Risk," the earlier version of "More Wealth
>Without Risk," he claims and shows 15-25%.
I thought that in the first book he guaranteed 20% and in a later version
guaranteed 15%. I would be inclined to believe that his first book would be more
accurate because if you would have followed the Money-Movement strategy since
his first book was released you probably would have done better than 20%. But again it all depends on the time frame you are calculating against and as long as it is invested for the long-term (+5 years).
Red Herring
>In article <johna-250...@129.106.59.28> jo...@utmdacc.mda.uth.tmc.edu (John A. Antolak) writes:
>>With all the activity relating to the Givens books, I decided to borrow
>>them at the library to see what all the fuss was about. My impressions were
>>that there was some good advice in them.
>>
>>However, I found one disturbing aspect of Givens' strategies. Almost
>>everywhere that he says you can make 20% (pick a number here) return, he
>>uses leveraging to increase the amount of return. I would hardly call that
>>"without risk". In some examples, he is leveraging 90% or more of the
>>investment. What he fails to point out is the tremendous downside if you
>>are not careful.
>>
>>Anyone care to comment.
>>--
>>John A.
>
>He felt strongly about setting up a margin account with your mutual funds.
Is that possible at all?
>He claims that in the crash of 1987 the average stock plummeted ~45% whereas
>the average stock mutual fund lost 20%.
Untrue.
> He also claims that you minimize the risk of leveraging by investing only in mutual funds.
Yes, to the extent the average MF is less volatile
than the average stock.
Tom Carminati
wrote:
> >>[...]
> >>However, I found one disturbing aspect of Givens' strategies. Almost
> >>everywhere that he says you can make 20% (pick a number here) return, he
> >>uses leveraging to increase the amount of return. I would hardly call that
> >>"without risk". In some examples, he is leveraging 90% or more of the
> >>investment. What he fails to point out is the tremendous downside if you
> >>are not careful.
> >
> >He felt strongly about setting up a margin account with your mutual funds.
>
> Is that possible at all?
>
Sure. Set up an account with a discount broker (Schwab, Fidelity, Jack
White, etc.). They'll allow you to invest in mutual funds on margin. (I
haven't done it. It would to make sense for long-term investing, as long
as the fund returns more than the margin costs. Of course, in the
short-term it can be risky.)
Daniel Matz
Daniel
Harry J Kobetitsch
>I can't find his book in any library (they are all out on loan). Could someone briefly summarize what this strategy is?
>
>Daniel
Basically, there is an investment decision line (9.5% for prime rate and
8.5% for 30yr benchmark for bonds) that you work with. If the prime rate
is below the decision line then you should invest in stock nutual funds.
If the prime rate is above the decision line then you need to know in what direction the prime rate is going. If it is rising then you invest in money-market funds. If it is declining then you invest in bond funds.
This also applies to the 30yr bond rate but since the bond rate tends to react more quickly than the prime rate you might be able to use this information to your advantage.
According to this strategy, you would be investing in stock mutual funds.
In 1990, the rates were above the decision line and if you would have followed the strategy you would have avoided the losses most mutual funds had that year.
In 1991, you would have done very well with this strategy. This strategy is nice because you can ignore the doomsdayers and so-called experts talking about a correction. So what if a correction takes place. A correction is only a nataural process of the stock market. Long-term investors probably do not need to worry about corrections but for speculators this approach may not be optimal.