Text Book Head and Shoulders Pattern
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We started taking money out of equity fund/etfs in dec 2007(though it was a gradual process we were mostly out by may/june of 2008. We started buying individual equities in oct/nov, selectively on a case by case basis…(BP,MET,PRPX,SD,CHK,GS,MA,PFE,PM,Gild,T,DE… just to name a few) We add back into equity funds/etfs end of march… we are looking for a exit point…
Who is we ? Did you get 100% back in in Oct or Nov of 2008 ? Did you get 100% in in Mar 09 ? If you didnt why not ?
And if you can time it on a broad scale like that why don't you just trade futures for yourself and forget about the client BS. Just buy and sell for your personal account and take it all.
No I(used we, because talking about clients, but if this makes you feel better) averaged in(same way we got out in Dec07-June08. No I have not gotten fully back in for the same reason, we average in(though I made point only to put back 50%(over 4 weeks)of our original equity(funds/etfs) positions…
I stayed invested in a couple funds/etf constantly. I based my movements on 20/50/200 EMA. Not real sophisticated but it has served me well.
Wow, you mean to say if you miss good days, your returns will drop? And if you miss bad days, your returns will rise? Why didn't I think of that? What this propaganda does not tell you is when the best days happen. 8/10 happened smack dab in the middle of bear markets. Remember the 1000 point intraday swing in November? You are an idiot if you think you can catch good days and miss bad days. However, you don't have to sit through a bear market on your hands while your clients are decimated because you might miss one of the 10 best days.buy and hold only works if you have 80 year time horizons or catch a secular bull market.
We always see the graphics based on 1984-2002 market return 9.66
If you missed just the best: Your return fell to:
10days 6.44
20days 4.16
30days 2.18
40days 0.47
But they never show the flip side.
Missed the worst your return grew to
10days 14.67
20days 17.28
30days 19.46
40days 21.46
And for the crazy arguers
If you missed best and worst return
10days 11.30
20days 11.39
30days 11.31
40days 11.31
So maybe somewhere in the middle is the answer
[quote=Moraen] [quote=Ron 14] and the typical investor doesn’t have ice water in their veins so if I am trying to help them it sure as hell won’t be market timing, it will be from a disciplined long term approach[/quote] This is true. But if you could be the disciplined guy, maybe they would be able to make money in any market. Of course typical investors don’t have the discipline, they hire YOU for guidance, not a “disciplined, long term approach” which is fundamentally flawed by the way. Buy and hold will never be dead, because people will be satisfied with mediocre returns and will respond to great “re-selling” and propaganda that firms put out to hold on to assets. If you are not trying to make money in the market, then just sell them an EIA. You make money, their money is protected. You’re buying and holding.
Disciplined long term approach is fundamentally flawed ? How ? When ? [/quote]
Have you been around for the last couple of years?
How many wealthy people do you know that own buy and hold mutual funds? It’s not many. And I mean, WEALTHY people?
For all everybody talks about Warren Buffet being a buy and hold investor, the man times the market! He buys things when they are cheap and sells them when they become overpriced!
People who make money in the market are people who set realistic goals, trade based on a strategy and stick to the strategy. They don’t get tied to any one investment.
What kind of sense does buy and hold make if you retire on September '08 and begin taking distributions? It makes zero sense.
Amazing! I never knew there were so many renaissance men left! Only on RR can one find so many $1mil + producers who are also basically private active-fund-managers for their clients who consistently beat the teams at American Funds, consistently going from cash to equities and back just in the nick of time over and over AND are prolific chat-site contributors. Inspiring!
Wow, you mean to say if you miss good days, your returns will drop? And if you miss bad days, your returns will rise? Why didn't I think of that? What this propaganda does not tell you is when the best days happen. 8/10 happened smack dab in the middle of bear markets. Remember the 1000 point intraday swing in November? You are an idiot if you think you can catch good days and miss bad days. However, you don't have to sit through a bear market on your hands while your clients are decimated because you might miss one of the 10 best days.[/quote] I think you made his point...[quote=Squash1]buy and hold only works if you have 80 year time horizons or catch a secular bull market.
We always see the graphics based on 1984-2002 market return 9.66
If you missed just the best: Your return fell to:
10days 6.44
20days 4.16
30days 2.18
40days 0.47
But they never show the flip side.
Missed the worst your return grew to
10days 14.67
20days 17.28
30days 19.46
40days 21.46
And for the crazy arguers
If you missed best and worst return
10days 11.30
20days 11.39
30days 11.31
40days 11.31
So maybe somewhere in the middle is the answer
[quote=Moraen] [quote=Ron 14] [quote=Moraen] [quote=Ron 14] and the typical investor doesn’t have ice water in their veins so if I am trying to help them it sure as hell won’t be market timing, it will be from a disciplined long term approach[/quote] This is true. But if you could be the disciplined guy, maybe they would be able to make money in any market. Of course typical investors don’t have the discipline, they hire YOU for guidance, not a “disciplined, long term approach” which is fundamentally flawed by the way. Buy and hold will never be dead, because people will be satisfied with mediocre returns and will respond to great “re-selling” and propaganda that firms put out to hold on to assets. If you are not trying to make money in the market, then just sell them an EIA. You make money, their money is protected. You’re buying and holding.[/quote]
Disciplined long term approach is fundamentally flawed ? How ? When ? [/quote]
Have you been around for the last couple of years?
How many wealthy people do you know that own buy and hold mutual funds? It's not many. And I mean, WEALTHY people?
For all everybody talks about Warren Buffet being a buy and hold investor, the man times the market! He buys things when they are cheap and sells them when they become overpriced!
People who make money in the market are people who set realistic goals, trade based on a strategy and stick to the strategy. They don't get tied to any one investment.
What kind of sense does buy and hold make if you retire on September '08 and begin taking distributions? It makes zero sense.[/quote] Well JPMorgan's Global Asset Management team has managed portfolio's consisting of mutual funds, SMA's, and ETF's and the account minimum is 25mil so I would say that hurts your argument. Also, if you employ a simple Nick Murray philosophy of having 2-3 yrs in cash to take from in retirement when the market retreats 20% or more so you don't erode your investments retiring in Sep of 08 isn't really a problem. I guess you guys are smarter than American Funds managers and Franklin Temp and Legg Mason and Alliance Bernstein. What you guys don't understand is buy and hold actually diminishes the money fund companies can make. Dont you think that if these companies believe they could enhance returns by managing more actively that they would do that, while also raising the expenses on the funds to 2 or 3% a year to cover trading costs. Wouldn't you pay a higher expense for a fund manager who went to cash at Dow 12k like you guru's and bought back in at Dow 7k. Where is that guy ? I will pay him 4,5% a yr!
Ron, I would pay a higher expense for that kind of management. Problem is, most of the time it doesn’t exist.
Ron, why do you worship fund managers? Just because they work somewhere with a name on it, does that mean they are geniuses? Are they smarter than me because I went to a state school to get my MBA (which is in the top 25 btw)? Are they smarter than me because I started my CFA later than them?
I’m not saying I’m smarter, I’m just saying that mutual funds are designed to make the mutual fund company money. Pay a fee, stay in for a while, sign this switch letter b/c FT bought you a better dinner. Then back to American Funds b/c FT isn’t working or the Alliance Bernstein chick is hot.
In addition, mutual funds are designed to make people mediocre returns. My clients are up quite a bit for the year and in some cases didn’t lose any account value during the downturn. 3% to them would be a small price to pay for that kind of return.
[quote=iceco1d] [quote=Ron 14]
Wouldn’t you pay a higher expense for a fund manager who went to cash at Dow 12k like you guru’s and bought back in at Dow 7k. Where is that guy ? I will pay him 4,5% a yr!
[/quote]
It’s me Ron. My support of indexing and rigid asset allocation is a sham. I’m a market timer. I sold out of equity when the Dow hit 14K. I repurhased @ 6800…with 3x leverage, no less. [/quote]
Send all yo moneee to ice!
I don't worship fund managers. What they have that most of us don't is the time and resources to do the research on the economy and the companies involved. Yes a mutual fund company is trying to make money. If they could time the market, trade more, beat the returns of every other fund manager wouldnt they do it ?? If they were crushing the other funds every year and getting in and out like you guys claim they would have huge inflows, thus increasing profits and allowing them to raise their fees. With your reasoning buy and hold is costing them money, which proves your reasoning is wrong. NOBODY CAN CONSISTENTLY TIME THE MARKET. Even if you caught a few swings accurately clients will expect that year after year. The first time you miss, they are gone, looking for the next tool who thinks they can time the market.Ron, I would pay a higher expense for that kind of management. Problem is, most of the time it doesn’t exist.
Ron, why do you worship fund managers? Just because they work somewhere with a name on it, does that mean they are geniuses? Are they smarter than me because I went to a state school to get my MBA (which is in the top 25 btw)? Are they smarter than me because I started my CFA later than them?
I’m not saying I’m smarter, I’m just saying that mutual funds are designed to make the mutual fund company money. Pay a fee, stay in for a while, sign this switch letter b/c FT bought you a better dinner. Then back to American Funds b/c FT isn’t working or the Alliance Bernstein chick is hot.
In addition, mutual funds are designed to make people mediocre returns. My clients are up quite a bit for the year and in some cases didn’t lose any account value during the downturn. 3% to them would be a small price to pay for that kind of return.
I don't worship fund managers. What they have that most of us don't is the time and resources to do the research on the economy and the companies involved. Yes a mutual fund company is trying to make money. If they could time the market, trade more, beat the returns of every other fund manager wouldnt they do it ?? If they were crushing the other funds every year and getting in and out like you guys claim they would have huge inflows, thus increasing profits and allowing them to raise their fees. With your reasoning buy and hold is costing them money, which proves your reasoning is wrong. NOBODY CAN CONSISTENTLY TIME THE MARKET. Even if you caught a few swings accurately clients will expect that year after year. The first time you miss, they are gone, looking for the next tool who thinks they can time the market. [/quote] Good post Ron. If you build your relationships on performance then you will have nothing to stand on the first time you don't get it right, and it's not an "if" but "when"[quote=Moraen]Ron, I would pay a higher expense for that kind of management. Problem is, most of the time it doesn’t exist.
Ron, why do you worship fund managers? Just because they work somewhere with a name on it, does that mean they are geniuses? Are they smarter than me because I went to a state school to get my MBA (which is in the top 25 btw)? Are they smarter than me because I started my CFA later than them?
I’m not saying I’m smarter, I’m just saying that mutual funds are designed to make the mutual fund company money. Pay a fee, stay in for a while, sign this switch letter b/c FT bought you a better dinner. Then back to American Funds b/c FT isn’t working or the Alliance Bernstein chick is hot.
In addition, mutual funds are designed to make people mediocre returns. My clients are up quite a bit for the year and in some cases didn’t lose any account value during the downturn. 3% to them would be a small price to pay for that kind of return.
[quote=Moraen]Ron, I would pay a higher expense for that kind of management. Problem is, most of the time it doesn’t exist. Ron, why do you worship fund managers? Just because they work somewhere with a name on it, does that mean they are geniuses? Are they smarter than me because I went to a state school to get my MBA (which is in the top 25 btw)? Are they smarter than me because I started my CFA later than them? I’m not saying I’m smarter, I’m just saying that mutual funds are designed to make the mutual fund company money. Pay a fee, stay in for a while, sign this switch letter b/c FT bought you a better dinner. Then back to American Funds b/c FT isn’t working or the Alliance Bernstein chick is hot. In addition, mutual funds are designed to make people mediocre returns. My clients are up quite a bit for the year and in some cases didn’t lose any account value during the downturn. 3% to them would be a small price to pay for that kind of return.
I don’t worship fund managers. What they have that most of us don’t is the time and resources to do the research on the economy and the companies involved. Yes a mutual fund company is trying to make money. If they could time the market, trade more, beat the returns of every other fund manager wouldnt they do it ?? If they were crushing the other funds every year and getting in and out like you guys claim they would have huge inflows, thus increasing profits and allowing them to raise their fees. With your reasoning buy and hold is costing them money, which proves your reasoning is wrong. NOBODY CAN CONSISTENTLY TIME THE MARKET. Even if you caught a few swings accurately clients will expect that year after year. The first time you miss, they are gone, looking for the next tool who thinks they can time the market. [/quote]
I doubt they are allowed to time the market by prospectus. Even if they had a good strategy, they wouldn’t be able to use it. If you are U.S. SmallCaps, it’s not like you can look at Global Mid-caps. If you are a sector fund manager, that sucks.
If you are an American Fund “portfolio counselor”, you have to follow your mandate, but you also have to worry about what others are doing (you should anyway - what up with the overlap!).
It’s not about swinging and getting lucky. It’s about actually analyzing securities (hell just read the damn quarterly and annual reports and you’ll be doing as much as most analysts) finding where they are cheap (and ignoring your anchors) and selling them when they become expensive. That is not timing the market, that is just good business sense. Although people call it timing the market.
How is buy and hold costing them money? That is general investment consensus. Everybody thinks MPT and asset allocation are the keys to investment returns. As long as they have advisors talking about b & h, they are going to keep getting inflows. The investing public is sold on b & h.
Buy and Hold costs them money because they could be doing much better if they hired you to "read the damn quarterly and annual reports, buy cheap and sell expensive." If American Funds came out with a "flexible equity fund" that made money last year and this year and traded frequently they would have people pooring into it and because of "trading expenses" they could charge 3-4%. That is a lot more than .75% they are charging now.
Buy and Hold costs them money because they could be doing much better if they hired you to “read the damn quarterly and annual reports, buy cheap and sell expensive.” If American Funds came out with a “flexible equity fund” that made money last year and this year and traded frequently they would have people pooring into it and because of “trading expenses” they could charge 3-4%. That is a lot more than .75% they are charging now.
Ron - Economies of scale and pricing. Why does American Funds charge what they do? They have $1 trillion in asssets.
And it's "pouring", although if you were attempting to make a joke, then it was funny.
There is no reason trading expenses should be that high. At all.
The question is, what is the value add for an advisor who sells actively managed funds? Rebalancing? Keeping them from making stupid mistakes?
You can only charge relative to the kind of service you are providing. If they were providing a strategy that didn't lose clients money in 2008 and then had them coverting from cash to equities in Mar of this year the demand would be extremely high and people would have no problem paying that fee, whether it is labeled trading expenses or some other type of management fee. If you are successfully timing the market you should be charging much more than a 1-1.5% management fee. The reason nobody does is because nobody can do it over time with any success.
Value prop is simply this, right from Nick Murray, the client can take it or leave it - Will the advisor and his firm be able to provide you a return that is 1% better than what you would do on your own? Will he save you 1% in time, worry, rebalancing, paperwork, research? Will he save you from making the big mistake which costs the average investor 6.5%/yr relative to the index? If any or all of those statements make sense to the client then he pays for your services. If not he finds a market timer who will charge him the same, not consistently provide what he offered and the client runs off pissed into CD's for the rest of his life and at age 85 just complains about what everything costs because inflation ran his ass over.[quote=Ron 14]
You can only charge relative to the kind of service you are providing. If they were providing a strategy that didn’t lose clients money in 2008 and then had them coverting from cash to equities in Mar of this year the demand would be extremely high and people would have no problem paying that fee, whether it is labeled trading expenses or some other type of management fee. If you are successfully timing the market you should be charging much more than a 1-1.5% management fee. The reason nobody does is because nobody can do it over time with any success.
Value prop is simply this, right from Nick Murray, the client can take it or leave it -
Will the advisor and his firm be able to provide you a return that is 1% better than what you would do on your own?
Will he save you 1% in time, worry, rebalancing, paperwork, research?
Will he save you from making the big mistake which costs the average investor 6.5%/yr relative to the index?
If any or all of those statements make sense to the client then he pays for your services. If not he finds a market timer who will charge him the same, not consistently provide what he offered and the client runs off pissed into CD’s for the rest of his life and at age 85 just complains about what everything costs because inflation ran his ass over. [/quote]
Like I said, if people want to actually make money in the market (which my clients do), they use my services (or Gaddock’s apparently). If they want to match the “index”, why not buy an EIA? And I would be happy to refer them to Bobby.
And yes, we charge 2% (now anyway). Because the market will bear that.
All I am saying is mutual funds don’t make sense if someone is actually trying to make money.
What research do you do? Which funds are good? That varies. 1% is already too much.
Provide a 1% better return? Can you guarantee that? What happens when you don’t provide that 1% better return? Same thing as what would happen to me if I guaranteed clients anything… they would leave. Once again 1% is too much, especially if you are only giving them 1% better return.
Making big mistakes? You mean like paying an advisor 1% and watching their money disappear? By the way, a lot of those “average investors” have advisors. So are they providing 1% worth of service. Doubtful.
Here’s what you tell clients and they can take it or leave it.
You should be prepared to lose everything. There is no such thing as a 100% safe investment. Period.
If you truly want to make money in the market, this is what I charge. If you are just trying to make market returns, here is a flat fee. Open up an E-Trade account, follow these recommendations and if you want more advice on it periodically, this is what I charge.
Do I suggest you build a relationship based on returns? Nope. I suggest you build a relationship based on expectations. Theirs and yours.