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Strategies & Market Trends : Ride the Tiger with CD -- Ignore unavailable to you. Want to Upgrade?

To: kidl who wrote (205416)	10/23/2011 12:54:31 PM
From: Canuck Dave	Read Replies (3) \| Respond to of 312358

"At least two out of every three mutual funds underperform the overall market in any given year." I'm surprised it's that high, LOL. I thought they were pretty much all dogs. Reading this article, it's made me want to answer the question "Is what we do luck?" I keep monthly tabs on my net worth. If I do it on a yearly basis, would it be fair to compare the yearly gains and losses to say, the Dow, in order to determine if I have any "skill"? This is going to be geeky fun. I'll post the numbers. I think Loneclone is a stats man. I'm pretty sure he can compute 95% confidence levels. Perhaps more germanely, the article underscores the trader's mantra "Cut your losers short, let your winners run" as the key to long term succes. Where to cut them off (I use 10%) and where to let them run to (I look for the tape to turn) is the trick. CD

To: kidl who wrote (205416)	10/23/2011 2:24:21 PM
From: Canuck Dave	Respond to of 312358

"It's not Luck, Charles" - Louis H. Winthorp III to rival suitor in "Trading Places". Ok... I've got the numbers... Starting December 31 1998, and computing yearly gains for the Dow and myself... Year Dow gain(%) me(%) ----- ----- ----- ----- 1998 9200 ----- ----- 1999 11500 25 884 2000 10900 -5 15.0 2001 10200 -6.5 8.8 2002 8500 -16.7 43.3 2003 10200 20. 18.5 () 2004 10600 3.9 -9.3 () 2005 10800 2.0 -5.2 () 2006 12500 15.7 31.2 2007 13000 4.0 9.7 2008 9000 -30.1 -24.4 2009 10000 11.1 18.9 2010 11100 11.1 26.7 () denotes years I underperformed the Dow. So... 8 out of 11 years, I did better, and the average gains 2000-2010 (excluding 1999 for obvious reasons)... Dow -.26%, me about 20% (I probably need to recompute with averages rather than dividing 2010 net by 2000). I'd call that skill. I do a lot better when markets are good and never vastly underperformed. We will probably never see another year like 1999 again (!). CD