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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: GraceZ who wrote (94754)4/16/2001 3:58:31 PM
From: pater tenebrarum  Read Replies (5) of 436258
 
all they do is telling their clients what percentage of their portfolios to allocate to stocks, bonds and cash respectively...they were completely wrong all the way down, and at every important market inflection point in the past.
not all of their clients follow these models of course, but many do. the problem with extremely high allocations to stocks and low allocations to cash is that at some point, they get so high that they can only be cut in the future. Galvin's shop has e.g. 90% allocated to equities in their model - not much room for error there, and the allocation can only come down (causing those clients that follow the model to sell).
also, those broker clients following the models have no dry powder left (and were fully invested in the downturn, and missed the bond rally to boot). leaves less fuel for rallies, and more potential supply.
not that there isn't plenty of supply anyway...insiders remain on a selling spree.

one thing about TrimTabs: by the time their data are released, the flows are already priced into the market. that doesn't mean the data aren't useful...the rule of thumb being "sell a market that falls in spite of inflows and buy a market that rises in spite of outflows".
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