CNBC just interviewed Marvin Appel. He has a book out called Investing With Exchange Traded Funds Made Easy. As best as I can tell the basic strategy is 25% in bonds, 25% in REITs, 25% in large, smal-cap, value & growth (some combination?) and 25% in International, S&P 500 or cash(one of the three?).
For purposes of the post the strategy does not matter and I am neither endorsing nor trashing the idea. This is a very simple strategy that I am sure has compelling results. The point of this post is that to take on a strategy like this is to take a long term view of your portfolio which is something I think is very important.
Like with all methods I am sure there are periods going forward where this will lag and other periods where it will do very well. I specifically did not want to analyze it in this manner. If you can embrace a long term view, first I think you will have a much better experience in terms of emotion, you have to realize and accept that there will be periods where you beat and other periods where you lag the market. Chasing heat during the lags is when people get themselves in trouble.
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8 comments:
I suppose CNBC has to fill in dead air time.
That looks like a list of things that performed well over the prior 12 months. I'm sure it back-tests well... lol
Actually in his book Marvin talks a lot about of maximum drawdown, standard deviation, Sharpe ratio and quite a broad range of subjects on risk and reward. He also uses relative strength to decide which sectors should be in the portfolio. You can construct very simple to relatively complex portfolios depending on your time and degree of involment.
I should also mention his dad Gerald Appel also has a book out called "Opportunity Investing"
I am glad to see that books like theirs begin to take a good look at the benefits of "timing the market" instead of saying you are not smart enough to time the market.
This isn't all that different from Paul Merriman's "Ultimate Buy and Hold Strategy" or IFA's Index porfolios (except for the heavy allocation to REITs).
http://www.fundadvice.com/fehtml/bhstrategies/0108/0108a.html
http://www.ifa.com/?gclid=CNqG1o3Is4gCFRiDGgodrVEa1w
I actually use a similar strategy for 1/3 of my retimement savings, but I am fully aware of and willing to live through the drawdowns.
ROGER,
The market is up 1,500 points in 3 or 4 months. I quess you said it has been a break-even year for you, BUT do YOU think their are any bargains out their now and what stock/funds are they? Or do you think a wait for a big correction is the smarter way to go??
Do you even know how to read anonymous. Roger has kept up with the market this year and he never gives hot stock picks. Those are only for suckers anyway.
thanks roger...i looked and liked what i saw, and ordered the book. always looking to improve my ranking system. perhaps a sucker for active indexing.Perhaps the same "hope" that people follow a mutual fund.
Well, guess I'll get out of my REITs now that everyone knows you can make a killing in them...
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