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
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!
JSC5 <js...@aol.com> wrote in message
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larrymoencurly wrote in message
Buy & hold is for asset allocators and it works. I'm not an asset
> I agree. Timing the market is a waste of time, as has been proved over and
> over again.
> On Sun, 02 Jan 2000 02:59:36 -0800, larrymoencurly
> <larrymoencu...@my-deja.com.invalid> wrote:
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.
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.
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?
<rfr...@surf1.de> wrote in message
Rick Harle wrote in message ...
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.