<p>When asked what he owns, its usually stocks even when he makes comments like recently</p>
<p>
</p>
<p>In one article I read, it looked at hedge funds. It claimed hedge fund managers are hoarding cash expecting a near-term correction. I did liquidate some yesterday to be cautious.</p>
<p>A question for people who know more than me:</p>
<p>I’ve been reading a considerable amount of stuff lately which all points to the same direction–that monthly reallocation according to simple measures of momentum, such as the 200 DMA and relative strength, leads to leads to long term substantial outperformance in asset allocation decisions (as opposed to day trading and choosing individual stocks). I have two questions:</p>
<ol>
<li><p>Is the literature really consistent on this point?</p></li>
<li><p>If so, why doesn’t every so-called investment advisor in the world follow some variation of this strategy?</p></li>
</ol>
<p>Faber - I must have first heard about him 25 years ago. He was called “Dr Doom” even then. Incredible that a guy can predict an imminent market crash for 25 years and still have an audience.</p>
<p>Rick Santelli - I met him in Chicago, probably almost 30 years ago when he was a broker for Sanwa and making occasional appearances on CNBC. He was a good bond market commentator when he would basically relay what he picked up from traders in the pits. Now he is a fulltime employe of CNBC and a self-styled economist. I believe everything he knows he has picked up by osmosis from being on the floor. Not necessarily bad or impossible, but on CNBC it seems like the guy who yells the loudest wins the argument. </p>
<p>After hours trading: Just a reminder (to myself as well) if you continue a bid after hours make sure the stock does not go ex dividend the next day. In that case today’s good price might be way too high tomorrow. I did get exercised on my IBM 205 call, so that worked out for me this time. (lucky)</p>
<p>EMM1: I can’t answer #1, but the answer to #2 is, if it is too easy I can’t sell you my high priced trading and stock picking skills. I want to get paid 2 and 20, and I need to send a lot of commision $$ to my favorite brokers so they share in your wealth also. That argues for high turnover.</p>
<p>[At</a> The Close - March 2010](<a href=“http://www.traders.com/Documentation/FEEDbk_docs/2010/03/close.html]At”>At The Close - March 2010)</p>
<p>NJRes, I like your stories…</p>
<p>One of the tenets of technical analysis is that it is dimensional. The patterns and approaches that work over one year also work for one month, one week, one day, one hour, one minute and even on the level of seconds. So you have traders that use a successful approach on different time scales.</p>
<p>I see people that are very good doing this on a minute-basis. They do their trades between 8:30 AM and 10:00 AM and they are done for the day. I prefer a longer-term horizon, generally weeks to months but I will do a daytrade or a trade of a few days from time to time - generally if I have the freedom to keep an eye on the market and on stocks that I follow.</p>
<p>There are also a lot of other approaches to make money and traders use those approaches too. I use a variety of technical techniques combined with fundamental analysis. I think that most traders use one or the other.</p>
<p>Thanks. </p>
<p>If I read that study correctly, it is talking about a system that would change allocation on the day that SPY closes 1% above (or below) the 200 DMA, rather than monthly reallocation. Is that correct?</p>
<p>Also, do you know of any negative studies on reallocation based on relative strength?</p>
<p>It is not a monthly reallocation.</p>
<p>No…I haven’t seen negative studies on relative strength…</p>
<p>“Faber - I must have first heard about him 25 years ago. He was called “Dr Doom” even then. Incredible that a guy can predict an imminent market crash for 25 years and still have an audience.”</p>
<p>He was right at least 3 times, 2000 dot-com bust, Sept 2001, 2008 and may include 1987</p>
<p>The only trading-band indicator that I pay any attention to (and it’s not high on my ranking list) is Bollinger Bands and what you’re describing seems like a variant of that. But it’s more of a short-term indicator.</p>
<p>“The federal government is sending each of us a $600 rebate. If we spend that money at Wal-Mart, the money goes to China. If we spend it on gasoline it goes to the Arabs. If we buy a computer it will go to India. If we purchase fruit and vegetables it will go to Mexico, Honduras and Guatemala. If we purchase a good car it will go to Germany. If we purchase useless crap it will go to Taiwan and none of it will help the American economy. The only way to keep that money here at home is to spend it on prostitutes and beer, since these are the only products still produced in US. I’ve been doing my part.”[21]</p>
<p>-- Mark Faber, 2008 (source: Wikipedia)</p>
<p>Love that quote, BCEagle91. </p>
<p>I don’t know what to make of this…
Bill Gross is so gloomy…
Is that because the three decade bull run in bonds is over?
Or is he really gloomy because of the credit expansion?</p>
<p>[PIMCO</a> | Investment Outlook - Credit Supernova!](<a href=“http://www.pimco.com/EN/Insights/Pages/Credit-Supernova.aspx]PIMCO”>Insights | PIMCO)</p>
<p>[PIMCO</a> | Investment Outlook - Money for Nothin? Writing Checks for Free](<a href=“http://www.pimco.com/EN/Insights/Pages/Money-for-Nothin-Writing-Checks-for-Free.aspx]PIMCO”>Insights | PIMCO)</p>
<p>An easier read…and shorter too…</p>
<p><a href=“Opinion and Commentary - MarketWatch”>Opinion and Commentary - MarketWatch;
<p>Money flows win. Also, the printing of money is going to assets so far, not to goods and services…</p>
<p>Stocks are not as ridiculously overpriced like they were in the past so are the prices of stocks really a problem? Bonds are priced high, but they may stay that way for a long time.</p>
<p>The economy may grow slower going forward, but that is preferable to an outright depression and trying to crawl out of that depression. </p>
<p>It is interesting that Gross thinks real returns gong forward over the next several years will be close to zero while the market is doing so well…</p>
<p>"So you have traders that use a successful approach on different time scales.</p>
<p>I see people that are very good doing this on a minute-basis. They do their trades between 8:30 AM and 10:00 AM and they are done for the day."</p>
<p>BCEagle91, what kind of approaches are these traders using? What kind of returns do they get on their money?</p>
<p>I like these links about tips.
[Treasury</a> Inflation-Protected Securities | TIPS: Perfect investment for imperfect times? News, ideas, alerts](<a href=“http://tipswatch.com/]Treasury”>http://tipswatch.com/)</p>
<p><a href=“http://tipswatch.com/2012/12/30/recapping-2012-the-year-in-tips/[/url]”>http://tipswatch.com/2012/12/30/recapping-2012-the-year-in-tips/</a></p>
<p>I don’t pay close attention to these guys but they use a couple of indicators and techniques that I’m not familiar with. They show the charts but I don’t know how they generate them. They’re typically looking for 0.3 to 0.6 percent on a move and they make money moderately more often than they lose. It is not an approach that I could ever employ because I have a day job. One of them is on the West Coast, though, which probably makes it easier to do this.</p>
<p>Do they automate their trading or do they trade by hand?</p>
<p>They trade by hand.</p>
<p>Ok. Thanks.</p>
<p>There is a “9244 calendar days” pattern that apparently determines market bottoms. If you add 9244 days to the market top March 5, 1937 the result is the 6/26/1962 bottom. Then the next date is 10/17/1987 which falls on a Saturday. The market crash was on Oct. 19, 1987. The next date is February 6, 2013. Let us see if the pattern holds.</p>