Style Model
|
Small Value
|
||
Sector Model
|
XLU
|
0.00%
|
|
Large Portfolio
|
Date
|
Return
|
Days
|
BX
|
4/14/2014
|
19.72%
|
96
|
TIVO
|
4/23/2014
|
11.43%
|
87
|
SHOO
|
4/28/2014
|
-3.43%
|
82
|
PWR
|
5/12/2014
|
4.62%
|
68
|
PM
|
5/27/2014
|
0.41%
|
53
|
SR
|
6/2/2014
|
7.55%
|
47
|
CFI
|
6/9/2014
|
-0.45%
|
40
|
FRAN
|
6/16/2014
|
-5.37%
|
33
|
NUS
|
7/7/2014
|
-14.71%
|
12
|
BT
|
7/14/2014
|
-0.32%
|
5
|
(Since 5/31/2011)
|
|||
S&P
|
Annualized
|
13.09%
|
|
Sector Model
|
Annualized
|
27.03%
|
|
Large Portfolio
|
Annualized
|
25.93%
|
Rotation: selling PWR; buying RRD in the publishing
industry.
Both the market and the Sector Model recovered on Friday,
only to switch to Utilities at the close:
One would think that nothing at all had happened on
Thursday.
But this week has seen a horrific tragedy from a terror
missile in the Ukraine, and a reluctant return into Gaza as Israel tries to
stop hundreds of terror missiles being fired almost non-stop on her citizens.
Death rains from the sky: and the market… recovers the next
day.
I think that’s the worst part of trading. You watch unspeakable things happening to
real people and see news about how this is supposed to affect your portfolio.
Aside from the moral sacrilege of such news, it’s also bad
investing.
Forget the effect of wars and rumors of wars on your
wallet. It’s bad for your soul and bad
for your wallet.
It’s bad for your soul because you try to look at how many
dollars three hundred dead people have cost you. I don’t care how much money you have – it’s
not worth the price of a single life.
The death of one person destroys infinitely more value than the entire
wealth of Warren Buffett. Your puny
portfolio is less than nothing in comparison.
It’s bad for your wallet because these things do not affect
your returns beyond the extreme short term.
ANY reaction you have to them is guaranteed to be wrong.
Investing is a slow process of measuring earnings, profit
margins, debt, demographics, and a host of other metrics that do not change
from day to day.
What many market “news” articles are trying to get you to do
is to think along the following lines:
“How much is the death of three hundred people going to
affect the price of a cosmetics stock?”
LOOK AT THAT QUESTION.
The question itself is bankrupt in the extreme. It’s the kind of question only a psychopath
would even try to calculate. Psychopaths
belong in prison.
Too often they become CEOs.
But that’s another post.
THIS post is about avoiding psychopathic news that takes
Fama’s efficient market hypothesis to such an extreme that the market will
plunge on the day people are killed and get euphoric the very next day.
The market recovered on Friday.
The victims of flight MH17 did not.
Your wallet is safe.
The civilians in Israel who are constantly running back and
forth to bomb shelters are not.
Forget Fama. The
market is not efficient; neither is it “right” to plunge on Thursday and
recover on Friday.
And any news reporter who tries to help you to profit on
tragic news should lose your business.
Just stop reading such “advice.”
Boycott it, and take the time you would have spent worrying about your
trades to do something infinitely more profitable: hug your children; call a
friend; find a charity to help the victims of terror; and worry about ways to
make humanity more humane.
Tim
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