Re: "accept your failure and move on."
Good advice. In January of 2000, I made sure I understood and agreed with the reasoning before taking action. That decision worked out well. In October I didn't do that. I had a bad feeling about it, but I went ahead anyway. Why? Because I let my greed get the better of me. It's a good illustration of that old Wall Street adage:
"Bulls make money, and bears make money, but pigs get slaughtered."
Actually, I am far from having been slaughtered, although I would obviously be better off if I hadn't followed the October recommendation. Last Friday I built a spreadsheet to make it easy to update my results since January of 2000. The result is that, based on today's closing prices, the half of my portfolio allocated to equities is about 14% better off than it would have been with buy-and-hold. And that's AFTER taxes. Furthermore, I have a nice chunk of cash to scoop up bargains when the time comes. So that may explain something about why I am not as willing as some to say that Bob Brinker is The Devil Incarnate.
As for why Brinker stumbled, I suspect that the experience of picking a major top within three months and 5%, as well as the experience of getting in so near a bottom in May, may have made him overconfident. It's also true that he has made reference in past years to using various stocks as "trading stocks," so we know that he has done trading in the past, presumably successfully. It would not take a great leap of faith to believe that the techniques he used for short term trading worked well during the bull market, but not in the bear market.
The lesson I draw from all of this is that I need to make sure that I understand and agree with the reasoning behind anyone's recommendation before acting on it. It also underscores the need to remain clear about the strengths and weaknesses of any advisor I might follow. |
