Hi Tom and everyone,
On the subject of increasing risk and Vealies, here is a scenario for discussion purposes.
Let's say, for example, that I am in a fund which is moving right along, i.e., going up. I pull a Vealie, and another Vealie. Then, the momentum slows, the NAV goes flat and starts to decline. Maybe the tide has turned for a while, and the next thing that happens is, I get an AIM buy signal where I pulled the first Vealie.
So, what gives? Why should I buy where I was supposed to sell in the first place?
Okay, I say to myself, my approach is to look at fundamentals; are the fundamentals still fine? However, the 'fundamentals' with funds just might be too weird to try to figure out. So, I ask myself, is there more upside potential than downside risk with this fund?
Here is a sacrilegious thought. With funds, would it make sense to pull Vealies while the momentum is strong and take money off the table when the momentum slows? If the cash reserve exceeds 35%, no problem; I could just move the excess cash elsewhere.
What are your thoughts?
Regards, Jack |
