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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host
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To: sea_biscuit who wrote (22054)7/21/2005 7:22:12 PM
From: Tim Bagwell  Read Replies (2) of 42834
 
Let's face it, when Brinker bought at the low in Mar 2003, it helped to offset the QQQQ losses. To do the calculation you refer to is a bit involved because you need to consider tax consequences of selling in January and August of 2000.

Of course, if all trading was in a 401k account then it's not so hard. This is how $10000 would have done using WFIVX (Wilshire 5000 fund) as a proxy for the TSM with dividends included and a 4% interest assumption ...


Date    Situation                      Cash   WFIVX     QQQQ    Interest  WFIVX  QQQQ
                                                                  4%/yr   Price  Price
Jan-00  Brinker call to 65/35
        Value before transactions  10000.00		
        Value after transactions    6000.00  4000.00                      11.01

Aug-00  Brinker call to 60/40
        Value before transactions   6140.00  4134.42              140.00  11.38	
        Value after reallocation    6678.38  3596.05	

Oct-00  Call to put 1/3 in QQQQ
        Value before transactions   6722.90  3333.77               44.52  10.55  82.00
        Value after QQQQ buy        4481.93  3333.77  2240.97

Mar-03  Call to 100% invested
        Value before transactions   4915.19  2022.38   643.32     433.25   6.40  23.54
        Value after WFIVX buy          0.00  6937.57   643.32 		
							
Jul-05  Recap	
        Value                         0.00 11338.59  1078.40        0.00  10.46  39.46
							
	Total value	>>>>>>	  12416.98	<<<<<<


The gain is about 24% without taxes. It's a much different story if you consider taxes though. A 19% tax hit in January 2000 would have wiped out any gains!

A long term investor who held WFIVX from Jan 2000 to today would be down about 5%. Naturally, the buy and hold strategy will not beat good market timing.
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