Strangely, we actually agree on most points! Buy and hold is a wonderful strategy!
But I contend that the well-known strategies don't actually work if you apply them on a daily basis. For me the Benchmark is buy and hold. If you can't beat buy and hold, then you may as well quit the game -- your TA is useless. A big problem with TA is that all the fancy graphs showing buy and sell signals mask all the whipsawing that most TA produces. Even someone like Elaine Gazarelli has flopped badly over periods of months due to this effect. Add up the numbers from the trades, and you will often find that TA used by the public can add risk without adding profits, a VERY BAD combination!
But I very specifically limit the expected applicability of my TA methods. They aren't publicly known, so major money isn't chasing the signals. But I really have high doubts about whether they can be applied to individual stocks. I'm a very conservative investor, really. I want to minimize risk, I want to hedge, I hate losses. That's what my models are all about.
Yeah, gravity's definitely more consistent than my models. You got me there! My models are probabilistic, like if you roll dice once a day for 30 years and the first die is 5 or 6, yes, it's a good bet that the total of both dice will be 8 or higher. That's the kind of model I've made.
Of course, the markets change over time. Fortunately, that appears to happen slowly, at least with my formulas.
Now I'll quote you:
"Here's my model: Stocks go up more than they go down, therefore it's better to own stock than not to."
Exactly what I tell my visitors frequently. Unless you believe human technological progress has ended, don't ever ever bet that the markets will decline. That is: NEVER SELL SHORT.
Thanks for the detailed and interesting reply.
Kevin Farnham |
