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Strategies & Market Trends : MDA - Market Direction Analysis

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Nov 7 4:00 PM EST

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To: jbe who wrote (46425)	4/16/2000 4:40:00 PM
From: pater tenebrarum	Read Replies (1) of 99985

jbe, there's an interesting study by James Stack of Investech that shows that 'buy-and-hold' at the tail-end of a secular bull market is the worst investment strategy one can follow. for long term investors the study recommends a mechanical strategy that sells when the S&P falls below its 200-dma and buys back in when it rises above it. this helps one to avoid the better part of bear markets, and ensures bull market participation. it is true that over long periods of time, stocks have an upward bias. but the fact remains, that after several years of excessive gains, long periods of extreme underperformance have usually followed. i saw Glassman once explaining in an interview how it wouldn't have been a bad thing to buy the top in 1929. after all, it took only until 1954 for the Dow to regain that top...:) he forgot to tell people how many of the companies and investment trusts listed in '29 disappeared in the following years. so what were you supposed to be invested in? and how much better would it have been to SELL in 29, and buy at a 90% discount in '32... regards, hb

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