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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: Mike Buckley who wrote (24696)	5/13/2000 10:19:00 PM
From: tekboy	Read Replies (2) \| Respond to of 54805

thanks, Merlin, that's really helpful (and to some extent comforting<GGG>). I have only one more question, and then I promise to stop hogging the thread with you (guess other people have lives!): If you were to plot those dips that you just mentioned against some kind of valid absolute or relative valuation measure, do you think there would be any pattern? I mean, obviously one can't time highs and lows precisely. But with, say, CTXS, is it your recollection that the drops came from unusually high valuations? If not, then fine, these things are random (or might as well be), and we just have to buy and hold. But the charts for the Naz this winter--and spring--seem anything but random, hence my concern. Moreover, I don't really think this--"It's one thing to pick the right company. It's another thing to know when to sell it, buy it, etc."--is a sufficient answer, particularly for those with tax-free accounts. Just as many studies show that stock-picking rarely works as show that trading rarely works, hence the strong consensus of academic economists behind not just LTB&H but also index funds... tekboy/Ares@offto"Gladiator".org PS Fred, you're right, and that's part of what makes this all so fun. Ironically, in my day job, I have generally been a so-called "realist," in the sense that I have tended to be skeptical of the comparable "new era" thinking in the (real) security arena. Same exact conundrum, and same need to make important decisions under uncertainty.

To: Mike Buckley who wrote (24696)	5/14/2000 12:07:00 AM
From: Uncle Frank	Read Replies (1) \| Respond to of 54805

>> This is probably the last I'll discuss this subject for a long while. You won't need to; the next time the topic comes up, I'll link them to your post. You are very generous to let us peek at the inner workings of your Portfolio. It's a definitive statement on the merits of a pure ltb&h strategy. No wonder you think LEAPS are borderline in terms of their "limited" timeframe. uf

To: Mike Buckley who wrote (24696)	5/14/2000 12:21:00 AM
From: Thomas Mercer-Hursh	Read Replies (1) \| Respond to of 54805

LTB&H is psychologically especially comforting. It is, if you have the "faith", but I think that one of the things that tekboy is illustrating for us is that, even for one within the "flock", is that the down swings try the souls of many and the up swings tempt them with the prospect of doing even better.

To: Mike Buckley who wrote (24696)	5/14/2000 8:19:00 AM
From: Larry Grzemkowski	Read Replies (2) \| Respond to of 54805

RE: MARKET TIMING Mike, you really sparked my interest with this one. If I were to time the market I would use the 175 day simple moving average of the McClellan Summation Index. Now it really does not make any difference what you would use the point is does timing improve your returns and prevent you from those drastic losses you suffer during long term buy and hold periods. Seeing that I also own the four stocks you mention CSCO, CTXS, GMST and SEBL I did a little study. I went back 3 years to the first buy in the timing model which was 5/4/97. So every other period is buy sell buy sell ect. What the data shows is that long term buy and hold is the best method and you just can not time the market. I bet your surprised :o). So for the period of 5/4/97 to 5/12/2000: ---------------------------%GAIN STOCK-----------LTB&H---------------------TIMING MODEL CSCO--------------816--------------------------400 CTXS--------------1499-------------------------1552 GMST--------------1257-------------------------440 SEBL--------------2357-------------------------1246 CTXS got lucky in the timing and gained 127% from 11/9/99 to 3/21/00. The study made me feel better about the subject and I hope it helps others. The data is below if it copies ok. Larry G CSCO LTB&H TIMED PRICE %GAIN $$$ 5/4/97 6.542 10/28/97 8.94 36.66 8.94 2/10/98 10.812 5/12/98 12.667 17.16 10.47 10/27/98 15.719 2/19/99 25.516 62.33 17.00 4/23/99 29.406 8/5/99 31.125 5.85 18.00 11/9/99 39.75 3/21/00 72.188 81.61 32.68 5/12/00 59.94 %GAIN 816 400 CTXS LTB&H TIMED PRICE %GAIN $$$ 5/4/97 3.292 10/28/97 12.198 270.53 12.20 2/10/98 11.958 5/12/98 14.516 21.39 14.81 10/27/98 17.016 2/19/99 24.406 43.43 21.24 4/23/99 20.719 8/5/99 23.281 12.37 23.86 11/9/99 40.531 3/21/00 92.375 127.91 54.39 5/12/00 52.63 %GAIN 1499 1552 GMST LTB&H TIMED PRICE %GAIN $$$ 5/4/97 3.312 10/28/97 5.406 63.22 5.41 2/10/98 7.906 5/12/98 11.141 40.92 7.62 10/27/98 13.719 2/19/99 15.25 11.16 8.47 4/23/99 28.625 8/5/99 28.906 0.98 8.55 11/9/99 44.562 3/21/00 93.188 109.12 17.88 5/12/00 44.94 %GAIN 1257 440 SEBL LTB&H TIMED PRICE %GAIN $$$ 5/4/97 5.25 10/28/97 9.969 89.89 9.97 2/10/98 11.688 5/12/98 13.375 14.43 11.41 10/27/98 9.812 2/19/99 21.594 120.08 25.11 4/23/99 21 8/5/99 26.688 27.09 31.91 11/9/99 63.125 3/21/00 139.812 121.48 70.67 5/12/00 129 %GAIN 2357 1246

To: Mike Buckley who wrote (24696)	5/14/2000 9:33:00 AM
From: alankeister	Read Replies (2) \| Respond to of 54805

The risk/reward scenario involving taxes over a 30-year period is not good for individual investors. A lot of people think when they sell, they lose 20% of the profits to cap gains. That's really just the beginning. That 20% compounded could be a whole lot of money in 10 years. Once you pay Uncle Sam, that money doesn't have a chance to earn you more. - Alan

To: Mike Buckley who wrote (24696)	5/15/2000 9:06:00 AM
From: Sunny	Read Replies (1) \| Respond to of 54805

Mike, you have been very generous in sharing your personal experience. However, will you please indulge us with your thoughts on how you made the choice to make the new investments into your 6 stocks. Did you make them with new money? If not new money, what criteria did you use to sell a previous investment and make the initial purchase? When you decide to take a position in a company, do you stage in or invest all of the allocated funds in a lump sum? When you have a winning investment do you average up (Russian Army support)? Thanks again for using your personal experience as a teaching vehicle. Sunny

To: Mike Buckley who wrote (24696)	5/15/2000 11:40:00 AM
From: Bruce Brown	Respond to of 54805

RE: Active vs. less active portfolios... Mike, Excellent recap of the yo-yo dieting our portfolios go through even without us touching anything inside the portfolio. Here's a little tidbit in relationship to the subject matter which I copy here from another message board. According to a blurb in yesterday's (5/14/00) Rochester Democrat & Chronicle, there was a study of 88,000 investors by Bloomberg Personal Finance magazine. Their conclusion after studying the facts? Active Traders' Returns are 5.5% LOWER!! The 20% of investors who traded most earned an average that was 5.5% lower then the least active investors. Being long term investors certainly requires that we not neglect the fact that interest rates will change during the course of our investments. Outside of that, valuations will stretch like a rubber band in both directions. Toss in all of the other market variables (war, currency, etc...) and a case could easily be made that the 'brilliance' it takes to time all of those things correctly increases the level of difficulty. Hence, we rarely see information presented to substantiate claims over the longer term of perceived 'brilliance' beating perceived 'longer term investing' by the retail active trader vs. inactive investor. That's not to say that all investments pan out by any means. In all of our learning curves of investing over the years, we all have mistakes, a few dogs and less that stellar performance at times. That's part of the process and hopefully we learn from our journey and improve upon it along the way. Our study of the technology adoption life cycle is the kind of timing that will serve us well over the years. I look forward to a few years from now to be able to glance back on the first half or two thirds of the year 2000 to compare with the various adoption life cycles and their growth over those years for my investments. Certainly most of us have had excellent returns from the PC and the Enterprise Networking life cycles to date. Both have been through their share of economic cycles and outside market pressures over the years. Other cycles that we are following present exciting opportunities over the next decade or more. We must count on all kinds of pressures being around to continue the yo-yo effect of our portfolios. To ignore that and hope for something more 'stable' would not be seeing with clear investing vision. BB