Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Uncle Frank who wrote (34282)	11/3/2000 3:28:08 AM
From: Bruce Brown	Read Replies (3) \| Respond to of 54805

Sir Lyre, if the knighting motivated you to even a small degree to produce that post, the Round Table is even smarter than we thought we were <gg>. No, it's just that after reading the shorts and pundits for the past few months it's always nice to step back and look at the long term picture. As well, my inspiration is seeing the same Wall Street 'gurus' hauled out on CNBC and Bloomberg this week to smile and nod their heads with positive comments after these same 'gurus' were on last week and the weeks before shaking their head side to side saying negative things and encouraging trimming holdings. It's a game that goes on day in and day out, year in and year out - over and over through all types of cycles. "Wash, rinse, repeat" made millions for the shampoo industry. Wall Street loves to use their endless supply of shampoo. Let me add some words from one of my favorite books that Wall Street loves to hate - "A Random Walk Down Wall Street" by Burton Malkiel: The Verdict on Market Timing [Many professional investors move money from cash to equities or to long-term bonds based on their forecasts of fundamental economic conditions. Indeed, several institutional investors now sell their services as "asset allocators" or "market timers". The words of John Bogle, chairman of Vanguard Group of Investment Companies, are closest to my views on the subject of market timing. Bogle said: "In 30 years in this business, I do not know anybody who has done it successfully and consistently, nor anybody who knows anybody who has done it successfully and consistently. Indeed, my impression is that trying to do market timing is likely, not only not to add value to your investment program, but to be counterproductive."] Malkiel goes on to provide supportive data of the best of the best professionals in their allocation to cash in percentage terms of total assets and how in the past 30 years, every time the allocation to cash was raised higher - it coincided with every market trough. These are the 'best of the best' professional investors and they are selling at the lows of each cycle. He goes on to say: [And the facts suggest that successful market timing is extraordinarily difficult to achieve. Remember, over the past forty-nine years, the market has risen in thirty-three years, been even in three years, and declined in only thirteen. Thus, the odds of being successful when you are in cash rather than stocks are almost three to one against you. An academic study by Professors Richard Woodward and Jess Chua of the University of Calgary shows that holding on to your stocks as long-term investments works better than market timing because your gains from being in stocks during bull markets far outweigh the losses in bear markets. The professors conclude that a market timer would have to make correct decisions 70 percent of the time to outperform a buy-and-hold investor. I've never met anyone who can bat .700 in calling market turns.] Now we know that the message boards, the printed media and the boob tube are full of 'trading type' talk that claim to be able to 'do it'. Simply go back to those longer term charts of G&K types of equities and see if you can find "anyone who has done it successfully and consistently, or anybody who knows anybody who has done it successfully and consistently" in the words of John Bogle. Maybe a hit or two here and there, but over the longer haul - Nichts! Simply food for thought as we build our portfolios and head towards our long term goals. I'm constantly attacked for this view over at the Fool, but it will be interesting to look back in 5, 10, 15, 20, 25+ years to see how it all pans out. BB