Following J-System, bought more TZA, disregarding #1 trading rule, "cut your losses, don't buy more of your losing holdings." My TZA cost basis is now 34.04.
Man, you're not kidding. I've been very distracted lately, pretty much ignoring the left side of the page. I'll fix it all up this week. I'll have plenty of time, finally.... Thanks for hanging in there!
Here's hoping this author will be proven wrong... http://www.marketwatch.com/story/you-cant-beat-the-machines-2013-05-10 Investors can’t beat the machines. Computer-dominated trading takes over By Mark Hulbert, MarketWatch It has always been difficult for investors to consistently beat index funds. It has been nearly impossible lately. And there’s a double whammy: The small number of advisers who outperform the market rarely can keep doing so. One big culprit, experts say: the rise of sophisticated computer trading programs.
What I like about Hulbert's post is that he has data to back up his claims. Now, I do know of several people who have beaten the market over a long enough period to be meaningful (Marco of Long-Short Timing comes to mind), but, I don't know of many of them. I'm hoping that J's system ends up belonging to that elite club, but, as I've said before, my confidence in J is tempered by what I hope is a healthy skepticism.
All of which is to say that Hulbert may not be entirely correct, but what he says insn't a "crock." If you have such information, I would love to hear of other investors/traders who have verifiable realtime results superior to the market over several market cycles.
Someone (in one of the many websites I read) mentioned this last week that one of the reasons why high end advisors/hedge fund managers can't beat the indexes is because they have too much money to manage. When they make purchases or sales, it moves the price too much. I can't find the discussion, but I am sure it would make more sense to read it.
As small traders, I can't see any reason why we can't been the indexes, especially since we can take advantage of leveraged ETFs...
Hulbert also tracks market timers, i.e., people who don't manage funds, but who simply call the market. Their record isn't that good either.
Having said that, many traditional trend following systems will beat the market, with lower volatility, over time. For example, a 13/48.5 EMA crossover system on a daily chart on a global average of markets will yield 10.66% CAGR since 1991. This beats the market handily, but isn't going to make you rich overnight.
The historical fact just continues, year after year.... I've tracked this one for over a decade now and it's as true now as it was in 1999.... (roughly) 85% of managers fail to beat their benchmark index (which is very often the SP500) over the "long haul". If "investors" want to beat 85% of the dorks out there (which includes all the "machines"), then just buy the index via SPY, and dollar-cost-average. Sit and be happy that you are beating ~85% -- over the long haul.
That people are morons and "chase the dots", try to "pick stocks", follow the recent fads be they "target date funds" or TIPS or what-have-you.... I can't help that. But beating "the machines" ... beating "the pro's"... beating whomever is the favorite scape-goat-de-jour... is always the same. Just know the simple (publicly available) stats and play those odds.
Why would anyone be a buy and hold investor with the stats I provided? Even if you don't beat the market, it sure helps to reduce huge drawdowns, but simple trend following systems have beaten the market. And, like I said, there's also Marco.
Yeah, a little long in the tooth...
ReplyDeleteHave a great week-end J!!!
Following J-System, bought more TZA, disregarding #1 trading rule, "cut your losses, don't buy more of your losing holdings." My TZA cost basis is now 34.04.
ReplyDeleteHave a great weekend, J and all.
ReplyDeleteAnd J, when you have a chance, it would be great to see how the updated stats look.
Man, you're not kidding. I've been very distracted lately, pretty much ignoring the left side of the page. I'll fix it all up this week. I'll have plenty of time, finally.... Thanks for hanging in there!
DeleteThat's kind of funny, you thanking us. The other way around is more like it.
DeleteHere's hoping this author will be proven wrong...
ReplyDeletehttp://www.marketwatch.com/story/you-cant-beat-the-machines-2013-05-10
Investors can’t beat the machines. Computer-dominated trading takes over
By Mark Hulbert, MarketWatch
It has always been difficult for investors to consistently beat index funds. It has been nearly impossible lately.
And there’s a double whammy: The small number of advisers who outperform the market rarely can keep doing so.
One big culprit, experts say: the rise of sophisticated computer trading programs.
Glad we're not "investors"... rofl.... what a crock... just an excuse for those to do not.
ReplyDeletethat should have been "for those WHO do not"
ReplyDeleteJKH,
ReplyDeleteWhat I like about Hulbert's post is that he has data to back up his claims. Now, I do know of several people who have beaten the market over a long enough period to be meaningful (Marco of Long-Short Timing comes to mind), but, I don't know of many of them. I'm hoping that J's system ends up belonging to that elite club, but, as I've said before, my confidence in J is tempered by what I hope is a healthy skepticism.
All of which is to say that Hulbert may not be entirely correct, but what he says insn't a "crock." If you have such information, I would love to hear of other investors/traders who have verifiable realtime results superior to the market over several market cycles.
IRT the reason why advisors/hedge funds:
ReplyDeleteSomeone (in one of the many websites I read) mentioned this last week that one of the reasons why high end advisors/hedge fund managers can't beat the indexes is because they have too much money to manage. When they make purchases or sales, it moves the price too much. I can't find the discussion, but I am sure it would make more sense to read it.
As small traders, I can't see any reason why we can't been the indexes, especially since we can take advantage of leveraged ETFs...
Lets see what happens the rest of the year.
Hulbert also tracks market timers, i.e., people who don't manage funds, but who simply call the market. Their record isn't that good either.
ReplyDeleteHaving said that, many traditional trend following systems will beat the market, with lower volatility, over time. For example, a 13/48.5 EMA crossover system on a daily chart on a global average of markets will yield 10.66% CAGR since 1991. This beats the market handily, but isn't going to make you rich overnight.
The historical fact just continues, year after year.... I've tracked this one for over a decade now and it's as true now as it was in 1999.... (roughly) 85% of managers fail to beat their benchmark index (which is very often the SP500) over the "long haul". If "investors" want to beat 85% of the dorks out there (which includes all the "machines"), then just buy the index via SPY, and dollar-cost-average. Sit and be happy that you are beating ~85% -- over the long haul.
ReplyDeleteThat people are morons and "chase the dots", try to "pick stocks", follow the recent fads be they "target date funds" or TIPS or what-have-you.... I can't help that. But beating "the machines" ... beating "the pro's"... beating whomever is the favorite scape-goat-de-jour... is always the same. Just know the simple (publicly available) stats and play those odds.
So you are a buy and hold investor?
DeleteWhy would anyone be a buy and hold investor with the stats I provided? Even if you don't beat the market, it sure helps to reduce huge drawdowns, but simple trend following systems have beaten the market. And, like I said, there's also Marco.
ReplyDelete