Just wanted you all to know that I am now officially “tweeting” — i.e. using my Twitter account to send out short market alerts and other interesting updates.
If you want to get those quick, timely updates, just visit my Twitter page and click “follow.”
I won’t completely ignore this blog, but Twittering will be a much easier (and more immediate) way of letting you know what I’m seeing and thinking out there in the markets. I may even throw some more personal updates on there, too … especially on my house hunting excursions!
Related posts:
- Another strange house hunting experience … I’ve talked about my house hunting excurisions before … but this latest one takes the cake! And if you don’t...
- Couple random news items for today … Hey, there. You’ve probably noticed that I haven’t been posting here very often (at all, really). That’s because Twitter has...
- Is this a stock market breakout? Stocks have been showing real strength throughout this earnings season, and it does look like the bulls want to make...
{ 7 comments… read them below or add one }
I just read your column on dollar cost averaging. At first it sounded amazing. But if you look at the table only 4 of the 15 months were above the current price; one was at the current price; and ten of the 15 were below the current price. So it’s really not surprising that it “worked” for the past 15 months.
Nilus Mattive Reply:
August 11th, 2009 at 9:27 AM
Hi, Russ. Yes, that’s all true. I’m certainly not trying to say DCA is some magical cure-all … and I haven’t analyzed an infinite number of periods, but I’m willing to go out on a limb and say that you’d be hard-pressed to find any length of time when it didn’t work.
If you didn’t see my original piece, click through and read the Great Depression example. That covers a much longer time frame.
Also, anecdotally, I have a family member who’s been using DCA since summer of 2007. I checked the account’s performance recently, and it was down about 6% overall. Not bad considering that it entails another full year of “buying high.”
The bottom line point I was trying to drive home is that DCA is an easy way to greatly smooth the volatility of a crazy stock market. It minimizes your risk and automates an emotionally charged process.
Thanks for the feedback!
Hi Nilus,
For holdings that you recommend in Dividend Superstars that are above your Entry Price, would you recommend writing a naked Put at that entry price as it provides premium income until the Entry Price is reached? Also, for excess cash not currently invested in a DS holding, what short term investment would you suggest to invest in while waiting for Entry Prices to be reached or new recommendations? If you would address in an upcoming newsletter I would appreciate it.
Thank you
Nilus Mattive Reply:
August 21st, 2009 at 1:58 PM
Hi, James. You can always follow the “what to do” column in the portfolio table, but if you want to get in at our original entry prices … I think writing puts is a GREAT strategy. In fact, I plan on talking about it in an upcoming issue.
Regarding cash equivalents, I typically suggest a Treasury-only money fund. Since some are currently closed to new investors, you could also use a VERY short-term bond fund or ETF.
Hello
I bought your “forget it” retirement portfolio a while back and modeled it starting in Sept 2k8, something I do. It is up 12% through that rough period. I am very impressed, I really am. I have paid for and modeled other portfolios that are supposedly big crap gurus self proclaimed savants and they have never done more than break even in the long haul, especially lately. I also an original subscriber to the Contrarian Portfolio. Enough said about that. As far as I am concerned you are the man and the only one I want to put my money with. Thank you .
Nilus Mattive Reply:
August 25th, 2009 at 5:06 PM
Thanks for the kind words. I will continue to try my best … though these markets have been throwing us all a lot of curveballs!
Concerning your dollar-cost-averaging article there are a few flaws…
Nilus cherry picked his data and waited until he could show a nice return. His first 12 months return is ~$11681 on a $12000 investment. Which means he made all of his money in the last 90 day run-up. If the run continues he has done well.
Besides VBMFX is 6.13% over the last year with much, much less risk.
I feel bad for the 30 somethings that started to pour money into index funds in the mid to late 90s. If they didn’t get out in time, they’ve lost a decade of compound interest.
If one put $10K in VFINX on 12/31/97 you’d have a paltry $12,858, if in VBMFX one would have $19,106. That’s less than 2% compounded over 13 years! A savings account could have accomplished that.
One has to go back over 15 years, to the beginning of 1994 to beat an index bond fund–and that is if we are in a bull market.
My point is this: Unless you are a successful swing trader or your window of investment is close to 20 years, stocks are very risky.
Nilus Mattive Reply:
August 28th, 2009 at 11:08 AM
Tone,
Yes, stocks are risky. But don’t get too cocky about the “safety” of bonds, either. Remember, someone in 1999 or 2007 would have been saying you were an idiot to have all your money in Treasuries. Your examples are benefiting from the same “cherry picking” you’re accusing me of … because you are using today as the end date. Diversification remains important.
At any rate, I think you missed my point about DCA. It DOES NOT require the benefit of perfect timing as you’re demonstrating in your examples. Only the basic belief that stocks will rise in price over LONGER periods of time.
Nor was I trying to show that DCA’ing into stocks will produce the best result relative to any other asset class. Far from it. It is actually lessening your risk and allowing you to secure a better chance at more modest profits.
Cost averaging is probably the most apprepriate way for most people to participate in financial markets, other than commit yourself to full time market education. Majority of people can’t or will not devote the time and effort necessary to be independend trader, so dollar cost averaging is the way to go.
And yes, it is not some kind of investment panacea, risks are involved. This is inherent if person seeks returns greater than CD’s, which are “risk free” but has extremely limited potential.
Good article.
Nilus: I tried to join your Twitter page but, I can”t get in with my user name…paruno;
It keeps telling me the name is already in use
That is me! Can do?
paul
Nilus Mattive Reply:
September 29th, 2009 at 5:29 PM
Hmmm … I don’t know what’s happening. I would suggest logging out and logging back in. That’s all I got. =^) I’m sure the Twitter folks could help you sort it out if you continue having problems …
Dear Nilus,
I have a business partnership with a prominent Indian Company and look forward to your reports about your trip to India.
This is my first time at your blog. I’ll come again — saw interesting posts I did not know you had written on.
Re your “harvest your portfolio for tax losses,” I really appreciated that.
At times in the past I considered myself an expert on tax laws, relative to investments, but your refresher course was simple and just enough to embolden me to do exactly what you suggest.
I do have both losses and gains for 2009, and no need to subject myself to unnecessary taxes by not following the simple rules you described.
I will now do so, and thank you for this valuable reminder and just-right reminder of the rules.
It is not at all that you have become my source for these rules, but you have confirmed that my own rather fuzy recall on those rules was enough to move ahead and use them in the next couple weeks.
Karl Loren
Nilus Mattive Reply:
December 15th, 2009 at 9:10 AM
Hi, Karl. Glad you stopped over. I don’t post as much as I’d like here, but I do try to put forth some thoughts whenever I get a chance.
RE: India. Yes, very excited. My wife is Indian, and the whole extended family will be there for a wedding. Should be very insightful, and I will be talking about my experiences both in Money and Markets and Dividend Superstars. Will keep you posted!