Subj : Market Action
To   : All
From : Paul Rogers
Date : Wed Jan 19 2005 06:49 pm

Content-type: text/plain

Guess what?  Today the market was underwater all day, sinking during the
morning, stuck there until the last hour when it tanked on heavy volume.
So my timing signal reversed one more time around.  Closing volume was
only +5% above average, so my formula didn't call it a "Distribution"
day; except it was.  That last hour the Street professionals were
"crowding out the door."  There wasn't a Bull in sight!

Now, back to my sister's reallocation problem.

Starting from an even distribution in those 9 boxes, she jiggles the
numbers and sums the rows and columns so the allocations among growth,
blend, and value in one dimension, large-cap, mid-cap, and small-cap in
the other, all seem to agree with her outlook.  Staying with the even
distribution amounts to just buying a "total stock market index" fund.

Is that a task to fear?  Not really.  We can't predict the future, so
there's no way to know what the "right answer" might be.  But if her
allocations are even moderately balanced her results should be in the
ballpark of general market results.  After all, if one wants to have
market beating results then one should expect to take market-beating
risks.  She needs to balance her performance expectations with her risk
tolerance, accept that, and then review and LEARN from her results.

From there, she's got it really easy.  The fund family she's
transferring to does a good job aligning its funds to the Morningstar
type distinctions.  At the old company more funds were actively managed,
so harder to nail-down.  Still, it's a matter of going to the
Morningstar reports at the local library and making choices that agree
with your desired allocation.  She still has choices to make too.

If one accepts the fact that one CAN'T predict the future, and makes an
allocation with that in mind and doesn't go way overboard with a skewed
distribution, one shouldn't go far wrong.

So this is a process most people aren't familiar doing and may feel a
little daunting.  But it is one that most people can do.  The main thing
is to LEARN from it.  Document the rationale for the allocation.  Do the
annual reviews.  Compare history with expectations rationally.  And
don't expect too much of oneself.

In case you missed my announcement, my "Tracking the Market" page has
been updated.  Pick one of the URL's below.

 Price    Vola-    Momen-   Volume   Oscil-   Summ.
 Change   tility   tum               lator    Index
 -__+     -__+     -__+     -__+     -__+     -__+

 __|_     _>__     __|_     __>_     _|__     ___<     01/12
 _<__     _>__     _|__     __>_     _|__     ___<     01/13
 __<_     _>__     _|__     _<__     _>__     ___<     01/14
 __|_     _|__     __|_     __|_     _|__     ___|     01/18
 _|__     _|__     _|__     __|_     _|__     ___|     01/19

Timing Signals:  I don't use or recommend timing signals, but they're
fun to watch.  If I did though, well, I might use something like this.
(Be warned!!  It tends to whipsaw around signal points!)

Last Signal: SELL       Date:  01/19/05 S&P:    1185
Winner or Loser:  loser                 By:     -11

See my market tracking charts for '03-'04 and my investment strategy
study at my website(s):
http://www.xprt.net/~pgrogers/Pers.html
http://www.angelfire.com/or/paulrogers/Pers.html
http://www.geocities.com/paulgrogers/Pers.html



Paul Rogers, paulgrogers@yahoo.com                       -o)
http://www.angelfire.com/or/paulrogers                   /\\
Rogers' Second Law: Everything you do communicates.     _\_V

.... Every absurdity has a champion to defend it.
___ MultiMail/MS-DOS v0.35

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 * Origin: The Bare Bones BBS (1:105/360)

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