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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host -- Ignore unavailable to you. Want to Upgrade?

To: sea_biscuit who wrote (22054)	7/21/2005 3:55:57 PM
From: sat2000	Respond to of 42834

Dipy I can help somewhat with case #2. Please refer to post # 19695 on this board where David Korn did that calculation. His conclusion as of Oct. 2003 was it was a wash. Message 19446296 Steve Thompson

To: sea_biscuit who wrote (22054)	7/21/2005 7:22:12 PM
From: Tim Bagwell	Read Replies (2) \| Respond to 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.