Saturday, February 27, 2010

The 2010 portfolio results for the end of February.

The 2010 portfolio which I published on Hubpages in an article entitled Fund picks for 2010 continues to edge out the S&P500 index. The portfolio is down a whopping 0.26% while the S&P 500 index is down almost 1%.
The portfolio consists of the following funds.

JAOSX Janus overseas fund
RYLPX Royce Low-Priced Stock Fund
PLDDX PIMCO Low Duration Bond Fund
WTSLX Westcore Select Fund
LZOEX. Lazard Emerging Markets Equity Fund
AKREX Akre Focus Fund
GOLDX. GAMCO (Gabelli) Gold fund
YAFFX Yacktman Focus Fund
WGRNX Wintergreen Fund
BJBHX Artio Global High Income
CGMRX CGM Realty fund

Most of the funds are where they started based on the Decemeber 31 closing price. The ones that have performed the best are the PIMCO low duration bond fund, Artio Global High Income, Westcore Select Fund ,and the Akre Focus Fund. I am not surprised that the bond funds are in positive territory. The fact that two focus funds Westcore and Akre are both in positive territory speaks well of the fund management.
The gold fund is down over 6 percent which is the only real laggard. These results fortify my thinking that an investor should only put a small portion of their portfolio into a sector fund.
Again I published this portfolio Fund picks for 2010 on Hubpages.

Friday, February 26, 2010

Timing the markets part 3: How I got started timing.

Timing the markets part 3: How I got started timing.

I have always been interested in market crashes and bear markets. I remember the bear market of 1974. I remember people telling me that taking money to Wall Street was tantamount to flushing it down the toilet. The market surged for a few years before another pull back. Here almost 40 years later the market has never dropped close to the levels seen then. In the four years following October 1974 the NASDAQ nearly tripled in value. That taught me a lesson I will never forget. When everyone is giving up on the stock market buy!

In late 1990 I was getting sick of my funds dropping like crazy. I was in a 401K which had 3 choices, balanced, growth and aggressive. I remember getting angry and moving it all from balanced to aggressive. I figured if I was going to lose it I may as well lose it all fast. It turns out I was either very lucky or very good.

In February 2000 I happened to tune into a guy by the name of Bob Brinker who was telling his listeners to get out of the market. Bob was giving specific reasons from a technical and economic view why he felt the market was overvalued. I watched in awe as the market dropped in the following months. Perhaps the market could be timed.

As it turns out I was working for a badly managed company that has since gone bankrupt. I had a boss who ordered me to sit out on the production floor 12 hours a day and watch a machine run. This machine was worth about 50 million and needed to run. I was to be there to fix it. After a month of reading robot manuals and pneumatic schematics it was time to do something else with my time. Reading the paper got dull (as well as being forbidden by company policy) as did listening to the guys running the machine telling the same story day after day. I decided to take load up my lap top with as much data as I could with market data and determine any patterns that may exist.

I had spent years working on machinery and knew that if you could predict failure or production increases based on things most people never see. Could this be done with the stock market as well? I did not have to predict every break down nor did I have to predict every production increase, just if an event happened I wanted to be sure the line would break down of production would increase. To look at it from the stock market perspective I just needed to know if an event happened would the market go up or would the market go down depending on the event.

I spent the next few weeks with tons of data creating spread sheets to predict the next moves in the stock market. I still use those formulas today. Even those I dismissed as being somewhat ineffective, I resurrected and back filled with 9 years of data I found to be somewhat effective in predicting the markets movements.

Wednesday, February 17, 2010

Why I time the markets part 2. How I did over 10 years.

How well have I done? I often said I wish I would have been sent an email to tell me when to sell and buy. It never comes. Even if it did would you believe it? On May 6, 2001 I was listening to the Bob Brinker radio show. A caller came on with a heavy Middle East accent and stated you stock market is going to crash on September 11. Mr. Brinker the host stated that he had not made that call and that to make such a call would be purely speculative. The caller responded no you not make call I make call you call it 911! The caller hung up. I along with approximately one million listeners had just been given a stock tip which turned out to be very valid. I dismissed the man as being some kind of fool and no one could predict the stock market crashing on September 11. It turns out the man was correct. Unless you are living in a vacuum are well aware of the events of September 11 which changed our lives forever.

The truth is all one has to do is turn on CNBC or FOX Business and you will get a host of predictions where the market is going. Like the terrorist they are hard to believe. With so many opinions one of them has to be correct.

Over the last 10 years how have I done? I wish I would have done better but according to my calculations I am up 60 percent over buy and hold not including interest earned!

My major actions have been.
February 2000. I took 100 percent of my money out of the market and went to cash. (Good call) at that time the NASDAQ traded in the 4000 to 4500 range.
May 30, and 31 2000. I put about 10% of my assets in each day (20% total). NASDAQ was in the 3425 area.
June 21, 2000 I sold out. NASDAQ closed at 4064 that day.
July 26 through 28, 2000 I put the money back in that I had taken out in June. NASDAQ was about 3800.
August 23-28, 2000 I took the money out again. This time the NASDAQ was about 4050.
October 18 through 31, 2000 I put 100% back in the market (big mistake). The NASDAQ averaged 3250 on the days I added money. This is still much lower than when it was taken out of the market in February.

November 4 through November 12, 2004 I took out 50 percent of all my holdings from the NASDAQ which averages 2050 during this time.
April 20, 2005 I put the money taken out the pervious November back in. The NASDQ closed just below 1914.

April 27 to July 19, 2007 I sold off 40 percent of my stock portfolio and bought it back from July 26 to August 10, 2007. This was a long sell off and a long buy back. The average sell on the NASDAQ was 2650 the average buy back was 2575. Not a significant gains but a gain none the less.
Does market timing work? Yes but do not expect to sell at the top and buy the bottom no matter how good you are.

Sunday, February 14, 2010

Why I time the markets

A lot of so called experts will tell you that you cannot time the markets. I respectfully disagree. Very few people will disagree that if you could time the markets you could get rich very rapidly. If I had next weeks paper I am sure I could generate more than a million dollars in the stock market. I could make just as much betting on sports contests, Better yet for a few bucks I could buy a few lottery tickets and strike it rich the easy way. None of those things are going to happen.

My goal in market timing is to beat the market (buy and hold). I do not have to pick a top nor do I need to pick a bottom. I need to be able to do sell when the market is high and buy back a similar security when the market is lower. Conversely you can time the markets by buying when it is low and selling when it is higher. I prefer to buy high and sell lower. I cannot often sell at the top and seldom do I wait for the bottom. If you sell a mutual fund at $20 per share and buy it back at 18 you have 11 percent more shares. That does not even include any interest you may have received in your money market. How many times do you have to do this before you double your money? In the example shown you need to sell and buy seven times.

How many times has the NASDAQ dropped 10% after peaking in the last 10 years? I counted 19. That would be over a seven fold increase over buy and hold assuming you bought back at a 10% drop each time. If you caught just ten of those you are talking a three fold increase.

Timing the market has the potential for huge gains. Can it be done?

Next blog how did I do over the last 10 years?

Tuesday, February 9, 2010

Make money in closed end funds

Make money in closed end funds
Closed end funds can be profitable investments. Understanding closed end funds can increase your profits and decrease your risks. Make money in closed end funds explains how to use closed end funds to enhance your portfolio.

Saturday, February 6, 2010

Select the best concentrated portfolio funds

Select the best concentrated portfolio funds
The best concentrated portfolio mutual funds. These funds can be more volatile and are more dependent on the manager’s ability to deliver good returns. It is the author’s contention that 2010 will be a stock picker’s year and these funds will outperform the markets.