Friday, July 28, 2017

7/28/2017 Unscheduled Trade

ENOC is terminating its trading next week, so I have made an unscheduled trade.

The Model sold ENOC and bought FOSL.

That makes a second position in FOSL, just as there are two positions in NVR.  Eventually those second positions will be eliminated, but for now they are in place.


Monday, July 24, 2017

7/24/2017 Stock Trade

The Full Model sold AVB and bought HIBB with a 30% favorable gap.


7/24/2017 Long Term Avoids Two Monsters

Sector Model
XLU
-0.26%
Full Model
Date
Return
Days
BT
8/11/2015
-41.27%
711
TMK
11/23/2015
31.39%
607
NVR
12/16/2015
59.67%
584
CMP
2/19/2016
4.35%
519
NVR
2/22/2016
66.40%
516
ENOC
3/15/2016
4.92%
494
AMWD
3/17/2016
45.72%
492
CASY
5/12/2016
-6.02%
436
AVB
5/24/2016
10.18%
424
AEM
6/7/2016
-7.59%
410
ESRX
6/13/2016
-17.67%
404
AMED
6/16/2016
17.80%
401
FRO
6/27/2016
-16.86%
390
ASTE
7/12/2016
-5.08%
375
MFC
9/1/2016
51.28%
324
SFM
9/8/2016
23.78%
317
CFFN
9/12/2016
3.45%
313
FIG
12/6/2016
61.48%
228
PMC
3/16/2017
14.70%
128
FOSL
5/11/2017
-25.62%
72
(Since 5/31/2011)
S&P
Annualized
10.39%
Sector Model
Annualized
16.57%
Full Model
Annualized
13.68%
S&P
Total
83.53%
Sector Model
Total
156.56%
Full Model
Total
119.81%
Sector Model
Advantage
6.19%
Full Model
Advantage
3.29%
Previous
2017
S&P
66.43%
10.27%
Sector Model
120.54%
16.33%
Full Model
91.27%
14.92%

So far doing mostly nothing has worked out rather well this year.  That’s not the same as passive investing, but is instead meant to stay out of the way of high frequency trading algorithms.  If we sit back and let them feed off of each other, they can starve themselves out.

Won’t passive index investing accomplish the same thing?  Sure.  Passive investing and strategic long term investing both avoid the black box and the tax man.

The growth of index investing is either a fad, an evolutionary progression, or both.

Fads are easy to understand, but impossible to explain.

So I’ll focus on evolutionary progression.  Let’s say that there are two investors.  One flips stocks faster than McDonald’s hamburgers and the other holds an index.  The one with the most successful strategy (or the least unsuccessful strategy) will dominate the investment share.  If they start off with the same money then the total amount of money in each strategy is evenly balanced.  If one out performs the other, then the better strategy will eventually have two thirds, then three fourths, of the total money – and that’s even if neither investor changes his style.

For 95% of investors index holding is probably much better than trying to pick stocks or time trades.

And if those investors think they are in the top 5% then they are almost certainly wrong.

As for my own model – I already know I have the world’s worst investment instincts, so I let my own evolutionary algorithm make the decisions for me.

If I'm dumb, but I KNOW I am dumb, then I can have something else be smart for me.  For most of us that’s an index.  For me it’s my model.

In BOTH CASES, the answer is long term holding.  The short term taxes and high frequency algorithms will eat most of us alive if we flip trades.

LESS IS MORE.

Tim