Author: mungofitch

Subject: Re: how does MI compare with Buy and Hold

Date: 6/16/2013

Recommendations: 5

An 8th alternative is to invest in asset classes that have beat the market overall. I.e. small value, small value emerging market, Reits, Large Value, Pacific Rim small value, Dividend growth, etc. ETFs. This is a tough approach, as it`s hard look at what worked better than average in the past and discern which subset will also do so in future. To take REITs as an example, it`s hard to think of a sector that will be hit harder when real interest rates eventually come back up to normal. With negative real interest rates everybody with high leverage looks like a genius, for now. Thus their outperformance in the past [ending now] might be a sign of danger. That being said, I do believe that there are some industries that are simply better bets than others because they have structurally better business economics. I expect medical devices will probably continue to beat airlines, and cosmetics will still beat textiles. Also, many of the strategies mentioned here, using etfs, and momentum, seem to do well. That`s the timing category. It works on average, but they all have bad stretches. We have just come off about 20 years of the perfect golden era for timing, when almost every momentum system worked if you followed the trends. The market went up, down, up, down, up--with no sudden drops like 1987. How hard was that? The 100 prior years weren`t so kind, so I don`t expect the next 10 or 30 to be kind. Things can get very jagged. Jim