Use access key #2 to skip to page content.

portefeuille (99.67)

Ellipsis

Recs

10

June 05, 2009 – Comments (16)

I wonder whether Tom Gardner follows the "caps" game. One thing one could say about the "caps" game is that it is not entirely irrelevant (see this paper (pdf)). Another thing one might add is that the game appears to support the thesis that "Long-Term Investing Doesn't Work", at least not that well.

Have a look at his recent article here ...

16 Comments – Post Your Own

#1) On June 05, 2009 at 7:40 PM, LongTermBull (93.91) wrote:

Wow, nice find on that article.  I didn't have time to read it all but will try this weekend.

Report this comment
#2) On June 05, 2009 at 7:46 PM, Tastylunch (29.33) wrote:

"Buy and Hold" I've always felt, is practiced as a lazy strategy and a bit of a misnomer

The Fool actually advocates something I believe" that can work (it did for my grandfather anyway) called "Buy to Hold" . Basically you buy something with an indeterminate holding period in mind, monitor it quarterly or so and sell it if you see evidence that it's maxxed out (whether it's valuation or business prospects, market saturation, unfavorbale regulation  etc)

Buy and Hold is usually not pitched that way to investors, it's more like "buy and forget about it". That I think is a clear mistake. There's no free lunches in life 

well unless you are this guy

1

in any event I do think the clever/skillful trader can out perfrom buy to Hold investors and they should because traders generally work harder/expend more effort than Buy to Hold guys. It's no surprise to me that CAPS shows that some degree.

Report this comment
#3) On June 05, 2009 at 7:47 PM, portefeuille (99.67) wrote:

I recommend it (the research paper, not necessarily the gardner article ...).

Report this comment
#4) On June 05, 2009 at 7:48 PM, portefeuille (99.67) wrote:

comment #3 was in response to comment #1

Report this comment
#5) On June 05, 2009 at 8:03 PM, portefeuille (99.67) wrote:

clever/skillful trader

I don't consider myself a "trader" and whether I am "clever" or "skilful" depends very much on the definition of those terms and the fields of competence.

I am much better in the field of mathematics/physics than I am in that of economics/"investing".

Report this comment
#6) On June 05, 2009 at 8:10 PM, portefeuille (99.67) wrote:

the abovementioned research paper is discussed here

Report this comment
#7) On June 05, 2009 at 8:15 PM, TMFJake (32.74) wrote:

I don't consider myself a "trader" and whether I am "clever" or "skilful" depends very much on the definition of those terms and the fields of competence.

I am much better in the field of mathematics/physics than I am in that of economics/"investing".

 

My kind of investor!  Keep up the great work portefeuille! 

Report this comment
#8) On June 05, 2009 at 8:21 PM, Tastylunch (29.33) wrote:

True they are broad terms with a lot of possible intrepretations. To be honest I wan't thinking of you I was thinking of the Steve Cohens, Jim Simmonses, George Soroses of the world. They perform better than most of the buy and hold investing crowd ( I do not consider what Buffet does to be applicable as he has oportunities available to him that most investors do not)

I have no idea if your real life performance is on par with your CAPS performance Portfeuille, I assume based upon what I know of you that you do/could do very well. But beyond that I really can't say. I'm sure are likely better than me as I can tell your analytical skills surpass mine.

I would hope you are better at mathematics/physcis than economics. The merits of those fields and the accomplishments possible in those  are undeniably greater in my mind. Economics is so affected by chancethat sometimes it appears to be a pointless pursuit.

I should add a caveat to my grandfather's performance, he also went long during the greatest bull run during American History so it is possible it was a generational aberration.

Buy and Hold makes some fundamental asusmptions that people often overlook, such as no war on American soil, no major pandemics, as well America itself continuing to grow etc. I seriously doubt Buy and Hold would work well under scenario where America's population dropped continuously for twenty years or so.

That's the way I see it at any rate.

Report this comment
#9) On June 05, 2009 at 8:56 PM, portefeuille (99.67) wrote:

True they are broad terms with a lot of possible intrepretations. To be honest I wan't thinking of you I was thinking of the Steve Cohens, Jim Simmonses, George Soroses of the world.

The first time I heard of Jim Simons was as one part of Chern-Simons. He is a theoretical physicist.

On classifications one of my favourite systems is the Landau system:

-------------------

Landau in general , especially in his youth, liked to classify everything. Later, when I got to know him, he himself looked at these classifications, for instance, of women, with irony. I shall only dwell on his classification of theoretical physicists who worked in the 20th century. It was done according to a logarithmic scale, with the base 10, so a 2nd class physicist was 10 times inferior to a 1st class physicist. It was a question of accomplishments, and not of the level of knowledge, of pedagogical ability or oratorical talent. Class 0.5 was given only to Einstein. Put into class 1 were Bohr, Dirac, Heisenberg, Schrödinger, de Broglie, Feynman. I have undoubtedly forgotten several names, but, of course, I will not supplement this list in the way I see it. I remember Pauli being put to class 1.5. Landau himself was placed in his own classification, as far as I remember, at first to class 2.5 and then to class 2. Once E. Lifshits told me that Landau had upgraded himself to class 1.5. Why does this classification seem interesting to me? First, it refutes the legends about Landau's immodesty and conceit. Secondly, it is important that he put an emphasis on the record of accomplishments, achievements. 

------------------- 

(from here)

In the book on mechanics (at least in the German version) you can also find the end of that classification:

"The classification continued to the rank of 5 for mundane physicists."

(from here (pdf))

I think in my copy of the book the word is not "mundane" but "pathetic".

I am sure that he would give me a 6 or worse.

 

Report this comment
#10) On June 05, 2009 at 9:04 PM, portefeuille (99.67) wrote:

I am sure that he would give me a 6 or worse.

So I am a 7 or 8 in economics.

And that is enough to be the no.1 "caps" player (considering only  "outperform" score points).

That is really pathetic!

(I think you should give an "investment" game in which the best players are economics 9s and 10s a grade of 10 or 11 (remember the "pathetic"/"non-pathetic" cut-off is at 5). If there was not this wisdom of the crowd thing (again: see that paper. and read it!))

 

Report this comment
#11) On June 05, 2009 at 11:45 PM, foolsMeThrice (99.64) wrote:

Interesting paper. Maybe I'll post a blog about what I agree with and what I wish the paper discussed in more depth after reading it again.

But anyway, my real portfolio performance by far trounces my caps performance.  In caps there is pressure to maintain high accuracy to be ranked.  As an investor accuracy means squat unless you are offering a newsletter with recommendations in which case the causal reader should at least have a better that 50% they pick one with positive PnL.

To quote Soros, it not how much you win and lose, it's how much you win when you win and how much you lose when you lose.  So buying at the "market bottom" which depending on the sector occurred at different times.  For junior miners, this was mid December.  For financials and certain energy plays (HERO, HLX, SFY, etc.) it is quite possible this was march.  It didn't matter to me if half of my picks went completely bust because the ones that would succeed would be in multiples of the initial stake. 

These were no brainer picks for me the cash on their books dwarfed their market capitalization by far.  We are talking price to book on order of 0.20.   Still took a lot of guts though cause maybe everyone else was right.  The only way you learn to build trust in yourself is to try it and let it ride.

So to name one of my greatest picks UEC.  Snatched them up at 0.20 dollars.  Sold at 650% return, if I held another 2 weeks, that would have been 1150%.  But my mother needed a new adapted van.

SMC, Central sun mining which was bought by b2gold corp.  They had more cash than the equity was worth when I bought it.  They also had two profitable mines one undergoing a transformation to convention mill mining for better recovery.I believe I sold this one up 580%.

There were others. I simply sold early up about 70% but they could have been massive multi-baggers on order of 350%.  The names HLX, SFY, HERO.  My motto: timing isn't everything it's the only thing.  These picks I bought on the way down starting when the price to book was .20 (the magic number which worked for me before).  Believe it or not HLX had a price to book of 0.06 at one point.  It was so insanely low I was not sure if the market knew something I didn't and the company was going to go bust.  That's when I relied on caps I trusted the community and I believe they had a shining 5 star all the way through it (or just ticked to 4 star).

My first shot out investing with real money (not trading) I don't want things going to my head so I'm mostly in cash (90%) now with exception to UNG (Long). If that next dip comes, I want to be ready to prance on it.  I'm up 82% so I can wait.  Don't want to be humbled by the market so to speak.

Report this comment
#12) On June 06, 2009 at 12:02 AM, portefeuille (99.67) wrote:

Interesting paper. Maybe I'll post a blog about what I agree with and what I wish the paper discussed in more depth after reading it again.

Yes do that. I think they make one (rather minor) mistake. I never really wrote down my thoughts on that. If you start I join. We can discuss the paper with tmfjake (see comments #16,17 here).

As an investor accuracy means squat unless you are offering a newsletter with recommendations in which case the causal reader should at least have a better that 50% they pick one with positive PnL.

Everyone should know that but some just have a hard time recognising that simple fact. You have read my post on that. All others: have a look.  bigpeach wrote today that he will write more on that soon.

So to name one of my greatest picks UEC.  Snatched them up at 0.20 dollars.  Sold at 650% return, if I held another 2 weeks, that would have been 1150%.  But my mother needed a new adapted van.

SMC, Central sun mining which was bought by b2gold corp.  They had more cash than the equity was worth when I bought it.  They also had two profitable mines one undergoing a transformation to convention mill mining for better recovery.I believe I sold this one up 580%.

Please make a list!!

 

This post here has gathered 8 recommendations. And it is one of my worst. What is going on??Must be the comment section ...

 

Report this comment
#13) On June 06, 2009 at 12:03 AM, portefeuille (99.67) wrote:

What is going on??Must be the comment section ...

What is going on?? Must be the comment section ...

Report this comment
#14) On June 06, 2009 at 12:29 AM, portefeuille (99.67) wrote:

This post here has gathered 8 recommendations. And it is one of my worst.

Here is a much better one with no recommendations.

 

(I could use my 12 players to change that, but I refuse to do so.)

 

 

I will add some more music ...

Report this comment
#15) On June 08, 2009 at 6:22 PM, portefeuille (99.67) wrote:

tmftomg has some strange thoughts:

--------------------------------

On June 08, 2009, at 6:07 PM, TMFTomG wrote:

But suffice to say that if "TravelingMel" is not a paying member of one of our membership services, we are losing money on "TravelingMel" today, tomorrow, next week, month and year...and right now, second by second, as our servers carry the weight of your clicks around the site.

-------------------------------- 

(from the comment section of this post)

Report this comment
#16) On June 09, 2009 at 3:43 AM, portefeuille (99.67) wrote:

tmftomg has some strange thoughts:

more on this in this post ...

Report this comment

Featured Broker Partners


Advertisement