Point and Figure
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C'mon give us a long term track record not some crap about Bear Stearns at 88 call. Or because we got lucky and beat the market this last Quarter. Any have arsed strategy is going be beat the market sometimes.
Doesn’t matter what I put down, you will just say BS because I am not going to do your job and give you specifics. As far as long term performance, accounts have performance #'s, brokers don’t. Now, base portfolio avg 11% since 1995. 13 for 13 positive years net of 1.5% fee. Beta in the neighborhood of 60 (S&P). Some accounts have done better, some worse.
[quote=Primo]2. Have you asked your compliance folks how comfortable they are with your pitch?
My firm pays for my DWA subscription.[/quote]Having a DWA subscription and using technical analysis is NOT the same as saying "Would you have liked your broker to call you in Nov 00 and take money out of stocks and put more into bonds and cash?" This is the type of service I provide my clients."
I'm asking about your stated pitch.
[quote=Morphius] [quote=Primo]2. Have you asked your compliance folks how comfortable they are with your pitch?
My firm pays for my DWA subscription.[/quote]Having a DWA subscription and using technical analysis is NOT the same as saying "Would you have liked your broker to call you in Nov 00 and take money out of stocks and put more into bonds and cash?" This is the type of service I provide my clients."
I'm asking about your stated pitch.
[/quote] Good point. "Would you have liked your broker to call you in 2000 and DECREASE your stock exposure and INCREASE your fixed income?" Better? Point is the find the pain. I have an alternative to set and forget that EJ (biggest comp) sells. Clients often do not understand why their acct is down and you are doing nothing. May not understand why you are doing something. Set the expectation of active asset allocation, do not overpromise (I cannot remember the last time I mentioned an investment return to a prospect) then go out and do it and make sure you have a concise explanation as to why. The returns happen. Not 100% of the time, but more often than not. 90% of what I have said in this thread is not told to a client. Clients need to know you have a process, they do not need to know the moving parts.
[quote=Primo]Relative strength is not a perfect process. Relative does not give you 40%avg returns. It helps you enhance returns while minimizing risk. [/quote]
Don’t misunderstand me. I have no problem with those who use DWA, technical analysis or RS as one tool in helping to form recommendations. My concern has to do with how you said you positioned yourself and this tool with clients. I think if you really use those words in talking with clients you will have created expectations no one can fulfill.
[quote=Primo]Good point. “Would you have liked your broker to call you in 2000 and DECREASE your stock exposure and INCREASE your fixed income?” Better?[/quote]
Certainly better IMO. Although it still creates expectations that you can make a tactical call at or near a peak.
I think you get my point - it’s not so much the tool, it’s not setting yourself up for disappointment in your clients’ eyes. Manage their expectations well from the beginning - using whatever approach - and you have a better chance for a long term client.
Primo - do you spend most of your time “actively” managing or selling mutual funds? Do you feel it takes time away from prospecting?
I would agree that we are getting closer to understanding, not agreement, but understanding. When I show the chart the changes in RS are well off the market highs and bottoms. This is discussed. What I put in the post was my elevator speech, not the entire client interview. Here is what sold me on RS. Fellow broker told me to sign up for the free trial. Pick out as many stocks (could use MFs) as you want and punch up a 10 year smart chart. Run the returns during the times when stock was on a sell signal, and when it is on a buy signal. Big eye opener. You have to remember that if a stock went negative RS to the market on July 2 2006, it was posted on the chart on the NEXT day. Real time. Not some hypothetical, real time.[quote=Primo]Good point. “Would you have liked your broker to call you in 2000 and DECREASE your stock exposure and INCREASE your fixed income?” Better?[/quote]
Certainly better IMO. Although it still creates expectations that you can make a tactical call at or near a peak.
I think you get my point - it’s not so much the tool, it’s not setting yourself up for disappointment in your clients’ eyes. Manage their expectations well from the beginning - using whatever approach - and you have a better chance for a long term client.
I spent many hours learning PnF and I am still not an expert. I spend 10 min each day reading the daily report. I have most things I use set up to get email notification of RS changess (DWA is very broker friendly). I probably spend 2-3 hour each week (n/inc when I am on the phone with a client analyzing an investment) looking at the website.Primo - do you spend most of your time “actively” managing or selling mutual funds? Do you feel it takes time away from prospecting?
Morphius you are right - DWA/PnF is one tool. It should be used in conjunction with other disciplines, and how to do that is an art. There is no right or wrong way. With that said, I think DWA is an IMPORTANT tool. And as someone (i dont remember who) said in an earlier post, everyone uses it in a different way.
I like to use it for the macro picture. Tells me whether to play offense or defense. And then within that framework, use fundamental research (with DWA to a lesser extent) to make individual security selections. (I should say that in the past tense, since I am spending less time managing money these days, due to my position as an ABOM, but reconsidering that as well) And it goes without saying that the most important part of the equation realting to clients, is managing their expectations, big time. Primo, my firm (maybe same firm as yours?) also provides DWA - its so underutilized that its not funny[quote=Morphius] [quote=Primo]2. Have you asked your compliance folks how comfortable they are with your pitch?
My firm pays for my DWA subscription.[/quote]Having a DWA subscription and using technical analysis is NOT the same as saying "Would you have liked your broker to call you in Nov 00 and take money out of stocks and put more into bonds and cash?" This is the type of service I provide my clients."
I'm asking about your stated pitch.
[/quote] I heard a DWA conference call about a month ago and there was a guy that said exactly that statement. In fact, he said his "indicators" told him to go to cash in Nov/Dec--he says he moved all accts--50+mil to cash by the first of 2008. Hard to believe.
DWA is a good tool. There is a particular relative strength indicator that I like that told you to get back into the market on March 24, 2003 and then to get out November 27, 2008. Not bad. Nothing is perfect. Actually, I would say half of the signals you get on DWA are wrong, but when you are wrong, you are usually just “a little” wrong, where as when you are right, you are REALLY right. IMO, point and figure, relative strength analysis is trend following. The other thing I would be looking at right now on top of this is the VIX. Going back to 1985, there has NEVER been a sustainable rally in the market with the VIX north of approx. 35-40. Until we see volatility subside (probably a VIX below 30), these rallies will be nothing more than bear market ones.
Troll … what managed futures funds are you using? I just joined an indy b/d and looking for some good funds. Registered and Non-Registered funds.
Rydex has one of the best. Unfortuantely my damn B/D don’t have them on the approved list.