|
|
|
Our Philosophy
This mutual fund investing website counters buy hold philosophy with an alternative active trading, market timing philosophy and strategy for mutual fund investing.
This website is about managing mutual funds to make money and protect your capital. We do not believe that buying a mutual fund is a once in a lifetime selection. We view mutual funds as wonderful tools, means to the end of making you more professional and successful in your investing. Mutual funds provide diversification and concentrations in a variety of asset classes. They are easy to handle; and since they are priced once a day, you don't have to spend a lot of time watching them.
It is our experience and therefore philosophy that successful long-term mutual fund investing cannot be accomplished without accompanying disciplines of trading and market timing.
The establishment mutual fund companies will not tell you that. They have positioned themselves to have you believe that successful long-term mutual fund investing equals buy and hold. And further they promote the opinion that market timing is short term investing and therefore bad. A corollary to this latter position is the statement that most timing done by regular people is done on emotion. Reacting with fear or greed, people get out of the market at bottoms and in at tops.
Our philosophy calls the mutual fund investor, whether for a mutual fund trading account or IRA or 401k, to a newer, smarter, truer vocabulary and experience of mutual fund investing.
The mutual fund industry has built itself on buy and hold and continues to market that theme for many reasons -- mostly self serving. See our in-depth report How the Real Mutual Fund Scandal Can Affect You and What To Do About It.
We say that the first job of the mutual fund investor is to rid oneself of the intellectual fog the mutual fund companies put out in their marketing strategies to get your assets under their management and keep them there. The fog created by the catch phrases "buy and hold", "dollar cost averaging", timing equals bad theory, redemption fees equal protection for the invester, can create states in the individual investor ranging from confusion to inaction, guilt, fear, or submission. These market phrases can inhibit an investor's natural and valid desire to attain further knowledge or seek better systems to protect capital and enhance performance.
Newer, Smarter, Truer Long-term Investing
Our view is that when one commits an amount of money to owning shares in world capital markets through mutual funds and plans to keep it engaged to make a return, one is a long-term investor. That fact that one utilizes a strategy to make adjustments into those areas of the capital markets showing potential for better returns through current price patterns historically associated with advancing prices, and exits those areas showing the reverse, makes one, we believe, a more prudent, long-term investor.
We believe by holding this investment philosophy one is not on-the-outs with the wisdom of long-term investing, as the slogan buy and hold could make one feel. Long- term is important. We believe one must stay at the investing discipline because good returns, reinvested, are cumulative. Wealth is cumulative.
The Place of Trading and Market Timing in Long-Term Mutual Fund Investing
It's important again to clear the fog before looking at the place of trading and market timing in mutual fund investing.
The assumption of the establishment mutual fund industry is that the mutual fund investor historically acts on the emotions of fear and greed. They never mention reasonable strategies drawn from another aspect of history, that is, price pattern data that could have rescued these same investors from pure emotion along the way. The reason that most voices of the establishment mutual fund industry do not talk about trading or timing is that quite simply they are not in that business. They are in the business to sell funds, to collect assets. They are talking their position.
Our position for the mutual fund investor comes from a more updated, objective vision. It is to own good funds, and then take a monitoring stance with the help of a good technical strategy. The monitoring stance is the same as being in a trading mode. Our trading rules put investors in a trading mode after making a commitment. You will see these trading rules as you browse the site and learn about them in more depth as a subscriber. While the rules are flexible and drafted to allow a fund to trend long-term, our exit rules are drafted to block short term losses before they turn into major losses and damage invested capital. We will therefore exit a losing position quantified variously depending on price action (subscribers see Rules) to re-position in another fund with a qualifying entry point.
As simple as it may sound, stock and bond prices do trend in one direction until they reverse and trend in another direction. Often the change in the long term direction of the market is a lengthy and painful process. Market observers call these transitions "trading range" or "rotational" conditions which must be recognized and dealt with for incremental profit and safety from longer term bear trends. Dealing with these conditions is a large part of our trading rules which are offered for your information by this website.
In trading a mutual fund we are thus market timing this fund because our entry and exit points are defined by price changes over time and the application of technical indicators we have formulated specifically for mutual funds. In the absence of a qualifying mutual fund, our strategy will invest in the fund family's money market fund until a new fund qualifies. This is "market timing" in the classical use of the term.
The mutual fund industry's association of the guilt of unethical late-trading acts to the term "market timing" is in our opinion chicanery. These acts were committed by and granted by industry insiders, not regular mutual fund investors. Investors must learn to see through the false negative association and not be dissuaded by it.
On Time
Time is an issue in investing. It is not simply a matter of calculating how long one thinks one has before retirement and assuming a quaranteed payoff will be waiting at the end of that time. Many people have already seen the gains of the bull market of the late 90's cut drastically, and this was perhaps the time they needed those returns. Not everyone had another decade or two to recover from those losses. Mutual fund companies may have all the "time" in the world to have your money, but the question should be more about your personal time frame. What if the time you needed your invested capital comes sooner than you thought, or market conditions when you planned to need it take a bad turn as our recent markets did. It is our opinion that the only time the investor has for sure is present time, and a series of present time market conditions. We contend that best long term profits comes from the daily protection of capital.
This is a strategy for every mutual fund investor seeking a truer way of mutual fund investing. See Getting Started. With this strategy one cannot expect to get the very top price before exiting or that each entry will trend long-term. However if you apply the rules on a daily basis, you will keep your losses small, your invested capital safer, and you will be engaged in a winning fund before it takes off. You will not be chasing performance. You will be positioned to participate in it. And you will not be trading on emotion. You will be in charge. This system is not just buy and hope. We hope you subscribe and look forward to hearing from you.
Subscribe Today
|
|
|