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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Les H who wrote (15454)	5/31/1999 6:41:00 PM
From: j g cordes	Respond to of 99985

Beating the S&P 500 means one has performed as well or better at avoiding risk than the index does. The problem needs to be looked at from a different perspective. The question of beating the S&P comes up again and again, especially with regard to funds performance. The phrase is misleading, because what the S&P accomplishes so well is spreading risk, not finding stocks that are home runs. When one appreciates this then understanding the apparent long term failings of sector, growth, emerging market, high technology and other more narrowly focused funds becomes clear. Its risk managment not stock selection. Jim

To: Les H who wrote (15454)	5/31/1999 7:19:00 PM
From: James F. Hopkins	Read Replies (3) \| Respond to of 99985

Les; You have the picture, and it's not the one normally painted on SI, or by the news pundits. I suspected the picture of riches in the market was grossly over stated all along. Something I don't talk about very much and refuse to prove ( because it would cause big problems ) is that I was able to peak at thousands of accounts of people who traded stocks instead of mutual funds and the results you gave on the funds was better than they did, in fact just about 85% of the stock pickers I looked at loss money. Most brokers know this already but won't talk about it, and is one reason they try to steer people into mutual funds. ------------------------- All the adds you see hold the winners up to the light, and you read about the best 25 or 100 funds and such, but the thousands of funds that don't do crap are sort of down played , and or they pick windows in time to shine a more favorable light on them, many of them would have done OK for the longer term invested, however there are not all that many people who will or CAN sit through a real bad down turn. In 87 many people just had to sell, the job market went to hell and car payments, and house notes all had to still be paid, so they took their losses on the stocks, and tried to pay on going bills; so forget those fancy adds that show a bunch of lolly pop middle class people who sat it out in 87, and are now rich as that crap is for the birds. The ones I know who had something on the ball, ( most even lost their homes ) but they came back not thanks to investments in the market but because they had the talent and fortitude to find new jobs and the over all economy improved. ----------------- The market gurus are given every one a snow job, as that's the way they make money..now they have JP6 all jazzed up and newbies are flooding the gates..but the same thing will play out, 15% may do OK , the other 85% are going to get took to the cleaners. ----------------- The odds are not so bad if one never puts any money in the market he will need to live on in the next 5 years even if he were to lose his job. We know the S&P500 is actully an enhanced index as are most others, tossing out the dogs and bringing in new runners. But take a real good look at the broader market, quote.yahoo.com^NYA&d=1ys you see the high last year in July, well we are only 22pts above that right now..and could lose that in the next month.. The point is every one has been fed a line of crap by the so called experts and they really believe the Market has jumped over the moon..BUT the broad market is having a hard time hanging onto a 3% gain since last July..and it may not make it. And why ? well that index is not adjusted for the Dollar index and the Dollar was higher last July than it is now..the gains made were a slight of hand, measured from the lows in Sept and Oct..and were mostly made when the dollar went to hell in a hand basket. Now that the dollar is crawling out of the gutter we are faced with a new set of problems.. The trade deficit has to go up so we are back to square one, and in the same dilemma we were almost a year ago, but this time it could be worse. ------------------------- Jim