The majority of fund investors see themselves
as "in the know" and sensible investors.
These people often take a few quick glances at this web site
and then largely disregard it. Here are some of their reasons:
- "Investment advice, especially lately has been no better than a
flip of a coin, and in many cases, a lot worse."
- "I'm sticking with my stock funds."
- "Just holding index funds is the only way to go."
- "The whole investment scene is so hard to make sense of that, therefore,
the best strategy is to do nothing."
Not a good state of affairs for someone such as me who is attempting to reach some of
these folks thru an investment newsletter! However, I will continue to
monitor the investment world and to personally use the investment
strategies reported here. Why? Because the long-term results
reported on this site have enabled me to stay well ahead of the
typical investor. And ahead of the typical mainstream mutual funds columnists
read by hundreds of thousands in publications like the Wall Street Journal
and cbs.marketwatch.com, especially over the last 3 years.
The view of the typical funds investor, which often boils down to nothing less
than "no amount
of effort or research can make much difference", will likely cause them
to continue to keep most of their money on board a ship possibly headed toward an
iceberg. While the average investor holding funds
may continue to hold on to his past dreams, we have at least told
some of our friends that there are some other ships that are
sailing in safer waters.
Regardless of data, it is nearly impossible "to prove anything" and
the vast majority will remain skeptical of any newsletter. Thus, in the world of investing, old attitudes
die hard. But data is data, and in this
case, it has directly translated to more money in the bank. My newsletter may
never achieve the visibility that it perhaps deserves, but I expect to continue
to keep ahead of the majority by following what the data can tell and which has
shown to be a superior performance strategy since this publication began in May, 1999.
I remember reading an article several years ago that said in effect:
In spite
of evidence that buy and hold was the only "sensible" way to invest, newsletter
writers had to constantly tell you to change your mix, or else they would
quickly run out of what to say.
Although buy and hold may be the only
sensible way for most investors to deal with the seemingly random and
unpredictable movements of investments these days, what the above falsely suggests is
that there is virtually no advice of any true value. Perhaps the one exception
might be advice as to how to pick your investments and allocations wisely
in the first place. Once this is done, there is nothing else to be done, so
these people tell us. And besides, most people simply don't have the time
to read up on, and if suggested by evidence, to change their investments. This last
point is sadly the only one of these that is all too
true.
I assume though that if you are reading this article, you must have come
to this web site with at least some thought that some information might be of
help.
I too believe that buy and hold makes sense for a certain percentage of
your portfolio, perhaps around 60 to 70%. But unless you are truly
committed and able to leave your investments untouched for 10 or even
20 years (according to a
New York Times article, the average investor holds a fund less than four years
), you may
want to look at the real evidence I present that suggests that by attending
to ongoing trends, you have a good chance of outperforming other investors
within your overall portfolio.
The article in the right hand column of this issue
demonstrates that although it
may be very difficult to make money in this kind of investment
environment, there have been, and continue to be, some actions that
can help protect and grow your assets.
Sincerely,
Tom Madell,
PhD,
Publisher