Bob Brinker: Market Savant & Radio Host Message Board

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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host

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To: Math Junkie who wrote (21881)	12/28/2004 4:10:33 PM
From: Tim Bagwell	Read Replies (1) of 42834

I did provide a comparison to SPY. Does that differ in some way from what you're talking about? A better reality for evaluating the opportunity cost for the Bobbled QQQ(Q) trade is to compute where you would be today if you were following the long-term advice minus the short-term QQQ(Q) trades. In that case, the losses from monies tied up in the abandoned trade would have gone back into the market in March 2003 and would be up over 50% verses being down some 53%. So break-even in that part of the portfolio requires a 280% gain from where we are today! I know Bobble hasn't had that kind of success. It's very misleading to suggest otherwise. Break-even isn't even the proper metric. It's a ficticious metric because the target has moved. It goes back to that simple little principle that it takes much larger gains to come back from your losses. For example, if you lose 50% so your portfolio goes from $10,000 to $5,000, then to get back your loss you have to make $5,000 which is a 100% gain. But you're not done. If you had avoided the loss in the first place, the 100% gain would have netted you $20,000 now. So, your opportunity cost is $10,000 even after a whopping 100% gain. You can never catch up. In fact, the opportunity cost can be viewed as a tax because it's money that is taken from you forever and there's no way to ever get it back. It's a tax on being a loser -- or as I like to call it -- a Bobble tax. Anyway, Bobble never suggested to hold SPY over that time frame so it's purely anecdotal to compare to that yardstick. Truth is, an abandoned trade like the Bulletin #1 trade will never be overcome in a lifetime of investing. Bobble knows this simple fact and it's why he refuses to acknowledge his mistake. It explains why he chose to just be a QQQ(Q)uitter.

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