...For the rest of the month I am going to excerpt snippets from this timeless classic.So here we are, three years after the 2009 bottom. It must be a cyclical thing.
The book is written as a series of three and four page chapters, almost in the form of notes from a friend.
Today, the Fisher forward and part of the introduction:
"To a 1935 reader...nothing was more terrifying than the prospect of buy-and-hold..."
"Loeb's preferred strategy of continual in-and-out, concentrated, 'speculation' seemed radical, fresh and far safer than buy-and-hold."
"Loeb recommended swapping...eerily like churning...he specifically recommended against letting money ride in the market.""That may not be sound advice today"Remember, the forward was written in mid-2007, as it turned out selling your losers on single-digit percentage drops was the only way to save yourself, if long, from October 2007 through March 2009.
Buy-and-hold meant dead-and-gone....
Barron's Feature article this week:
As global markets gyrate, a growing number of advisors are telling investors to set aside as much as 25% of their portfolio for shorter-term bets. Sizing up the risks and returns.Don't try this with a crooked or incompetent transaction-compensated person you saw on CNBC:
A fundamental tenet of financial advice is to settle on long-term goals, then pick an asset-allocation strategy and stick with it. A corollary is that trading in and out of positions in response to daily market gyrations is almost guaranteed to undermine an investor's long-term objectives.
But this advice, while often repeated, is not absolute. In the face of pervasive market volatility, some financial advisors recommend earmarking a portfolio for the short term and medium term, to take advantage of big market moves. This more active investing approach, often called a tactical overlay, is also an opportunity for financial advisors to demonstrate their value to clients.
"We have a target allocation and then adjust, based on whatever themes will likely affect the markets in the next six to 18 months," says Michael Yoshikami, CEO of California-based Destination Wealth Management, which has $1.2 billion in assets under management.
Yoshikami sets aside 25% of a client's portfolio for these trades. "We call it a thematic allocation strategy," he says. "It's still a long-term strategy, but with a short- to intermediate-term overlay. It's a way we can add value away from a standard allocation."
About 70% of Destination's investment decisions are based on valuation and 30% on broader economic themes and trends that tend to affect market psychology, Yoshikami says. "Some investors might suggest that a purely 100% bottom-up, value-based strategy is the best course of action. We disagree. Headlines and macro events matter."...MORE
..."When the 2000 Internet bubble burst, many investors were devastated as a result of an excessive belief in a particular theme. Our investment philosophy seeks to avoid this kind of dogmatic thinking. The world can change very rapidly."...