Comments on Fund My Mutual Fund: Bookkeeping: 'Rising Tide' Performance Week 33

Wow you guys are brutal. CGMFX made you 80% last ...

2008-03-22T15:02:00.000-04:00

Wow you guys are brutal. CGMFX made you 80% last year - which is 4 good Buffet years put together in 12 months, and due to 3 months you are ready to bail on him? I guess he turned into a dummy overnight... I see he has a 13% loss YTD. You are still up massively over the the 15 month time frame.

Not a reflection on you, but I simply think people have very short attention spans, very unrealistic expectations, and don't allow for people to manage for the long run. This guy just gave his investors the best return since the tech bubble era, and for 3 months of lagging people already considering dumping him as if he has lost his investing skill. Tough crowd; very tough crowd IMO. Many many many investors whom I've been reading for many years have called this the hardest market they've ever been in. You cannot buy and hold anything, so therefore by de facto standard mutual funds won't do well in this environment since everything eventually gets trashed as things move from 1 sector to another and get sold off, and then the next day rebound, only to get sold off hours later. Not really a stable environment and when fundamentals mean nothing and Federal Reserve actions or news flow means everything, it's not really an environment for normalcy. Just keep that in mind when deciding what to do with your money.

I swing trade and do some day trading as well. Ho...

2008-03-20T20:00:00.000-04:00

I swing trade and do some day trading as well. Holding long or short overnight is sheer gambling in this environment IMHO. I also hold some MutFund, CGMFX being one of them. That thing was down about 10% over the past 2 days, making me wonder if I should just guide the ship myself at this point.

pik,My favorite markets are "somewhat volatile" bu...

2008-03-20T19:38:00.000-04:00

pik,

My favorite markets are "somewhat volatile" but the trend lasts 5-10 days, then reverses for 2-3 days, then resumes. I really don't care which direction. Thats where I make my major performance. Everyone has their own style - and over the years trend trading is my favorite and best suited for me. There was a time even in the fund in the fall, I went from a 20-25% gain in Blue Coat Systems in 5-7 days (as top position), rolled it into Ciena (as top position) in 5-7 days, and rolled it into CF Industries, in 5-7 days. Some is good fortune but the markets were amenable. I dont need an up or down market but just some stability. What we have now is something I've never seen. Even 2002 as bad as it was, well you knew it was going to be down, down, down, down and then a bear market rally but those rallies lasted many days, sometimes weeks, sometimes a month and a half. This current market is only good for daytraders - it is completely arbitrary and completely news driven. I'd rather have no news environment where trends and stock fundamentals/technicals win out. But thats not the current environment - it is very difficult. I have some wins, but I give back many gains because the directions change literally a day later. This market you need to be closed out and in cash each day at 4 PM and buy the worst performer of the previous day - not my style or taste. They say this market is very hard for bulls and bears and its true - no one is making easy money because no trend lasts. Eventually we will go back to some form of normal - until then just survival.

praveen it is hard to explain - you sound like a logical person. If you use logic in the stock market for long you will die a quick death :) It is an art. I can't say black and white answers. Is MOS broken? Or it simply a massive amount of hedge funds going into liquidation and being unlevered? If you ever have some time run a "daily" chart which shows you intraday movements of CF back in August - you will see some of the most crazy moves ever, and thats a fine example of forced liquidations forced onto a stock daily. These are not normal times and the money that runs Wall Street is being deleveraged by risk control at many hedge funds in my opinion. So if you are told, you need to reduce exposure by 80% you sell, no questions asked. Thats not an orderly market and hence stock charts are not sensible in that time frame.

In a normal market, I'd say a stock below 50 day and above 200 day is at very large risk, but not completely broken until below both lines. Other people would disagree with me 100%, they believe even a stock below its 10 day moving average is broken but they only buy 52 week highs. So again, there is nothing black and white. I don't like to see the 50 day cross below the 200 day average, and I don't like stocks that trade below all moving averages. That doesnt mean those stocks cannot have the hugest moves (see financials lately) but you are just guessing at the timing. Even on a non broken chart, I like to buy stocks in uptrend that fall back to the 50 day moving average - but guess what, half the time they break that line and its a broken chart - I need to take the loss and move on. And so on and so forth. Nothing works all the time and you just have to take each case as it comes. MTL is a perfect example - thats exactly the chart I dream of in a bull market - sharp drop from 52 week high to 50 day moving average. MANY technical traders would never touch it here - they would ONLY buy at it 140 or making a brand new 52 week high... I myself on the other hand find that risky but thats because I am 90% fundamentalist and only 10% technical. Many technical traders dont even know anything about the stock other than the stock symbol.

Everyone just needs to find the style that best is suited for them. My overall goal is to "rotate" money - after a stock makes a run my assumption is it needs to rest, and consolidate so I move to the next stock and keep repeating. If you nail the stocks and are in a bull market it works very well. Right now, stocks go up 10% 1 day and give it all back the next. Again, simply an environment for daytraders right now.

Thanks for a detailed explanation. When you said m...

2008-03-20T19:11:00.000-04:00

Thanks for a detailed explanation.
When you said most of the stocks are technically broke. What do you mean? below 50ma, 200ma etc.
Any criteria you follow to tag a stock "techically broken".
If 50ma is the standard, then MOS just broke that, right?
Thanks

Mark,I wonder how your performance is as a swing t...

2008-03-20T19:07:00.000-04:00

Mark,

I wonder how your performance is as a swing trader vs. mut fund mgr.

You strike me as a very good swing trader.

Just like wheat, soybean, corn dealers I am sure g...

2008-03-20T18:55:00.000-04:00

Just like wheat, soybean, corn dealers I am sure gold and silver dealers have never experienced this type of crazyness wrought by the lovely hedge fund community :)

Basically everything they bought the past month+ is underwater in the span of 48 hours. Welcome to the jungle.

Praveen,
Bull market? Let me rack my memory - that only seems like a memory now... ah...

Actually, I do the same thing in bulls and bears to some degree but with a slight twist. No I dont chase 52 week highs - that *WORKS* well in bull markets but not my style. In a bull market I'd be waiting for a pullback to at least a 20 day moving average and preferably 50 day. In a bear market very few charts are not destroyed so the pickings are far slimmer. Most stocks trade far below all moving averages.

I will tell you my frustration in a bull market is I sell and then stock continue to go up, and up, and up, and up with no meaningful value - that is what solar stocks did in October 07 for example. I trade my personal account more aggressively than this fund, so I am more completely "in" or "out" of positions - this actually works better in a bear market but not as well in a bull - i.e. I trade "out" and then the stock continues running and running. Since the market takes things too extreme (moves stocks too high and too low) it is probably best to do a core/trading strategy in things you like - keep the core, and trade around the position. I did that last year with MOS and FWLT and it worked out well.

So really the main difference is the uptrends last much longer in a bull market and the pullbacks are much less severe - and many many many more stocks present good opportunities. This market most of the stocks going up this week for example, are completely broken charts that I would never buy on technicals because they have been falling knives and can lose you a lot of money before they reverse.

Probably a lot of people would tell you in pure bull market to simply let your winners run. Which also works. Or set a trailing stop (which market makers love to sweep down and steal your shares). As with anything there is no perfect answer in investing - its more art than science. I will have to readjust to a bull market once we return to one... its quickly becoming a fading memory.

Mark,I was reading your strategy from few months, ...

2008-03-20T18:44:00.000-04:00

Mark,

I was reading your strategy from few months, scale down on fundamentally good stocks and accordingly sell on rallies. The present market is giving us opportunity to do in that way. Do you always follow the same strategy? What would you do in a bull market? Chase momentum?
Today, I have followed your strategy by buying MOS at 94 and plan to buy if it drops. Lets see:)

Thanks
Praveen

I check Silver American Eagle prices everyday at b...

2008-03-20T18:28:00.000-04:00

I check Silver American Eagle prices everyday at both these sites, and today was no different. You will find this interesting for sure.

http://news.silverseek.com/GoldIsMoney/1205995646.php

Someone else said that "They did not run out of silver. They stop sales because they were buying the silver and the price was dropping faster then they could re-sell it at a profit. So they suspended sales until the price stabilizes. "

Thats an interesting catch. Did you catch what th...

2008-03-20T17:30:00.000-04:00

Thats an interesting catch. Did you catch what the websites said 2 days ago? Same message? If so, then it means nothing.

If the msgs just showed up today than maybe they are like CA homeowners who refuse to sell and want 2006 bubble home prices. Except these guys want Mondays gold/silver prices :)

Again, another example of so many markets that the hedge funds roil as they dance in and out - I call them locusts. Unregulated pools of locusts, levered 30:1. :)

Mark,Check out these two siteswww.nwtmintbullion.c...

2008-03-20T17:10:00.000-04:00

Mark,

Check out these two sites

www.nwtmintbullion.com/silver_americaneagle.php

www.apmex.com

Do you find anything odd about the fact that up until today these companies had ample amounts of bullion to sell?

IMHO..they were refusing to sell their stock at this low price and they expect silver and gold to rebound