# 200 day moving average



## Broke (May 11, 2010)

I have noticed that the TSX Composite, the Dow Jones Industrials, the S&P500 and the NASDAQ composite indexes are all below the 200 day moving average.

Is that a bad sign? And if so, how bad?


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## canadianbanks (Jun 5, 2009)

I've never paid much attention to technical analysis, but in this case I think that stock markets will drift lower for the next few weeks, with the possibility for severe downturn getting higher by the day.


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## mogul777 (Jun 2, 2009)

Broke said:


> I have noticed that the TSX Composite, the Dow Jones Industrials, the S&P500 and the NASDAQ composite indexes are all below the 200 day moving average.
> 
> Is that a bad sign? And if so, how bad?


Typically bad, very bad. But taken as one measure it really doesn't tell the whole story, so one can't really conclude anything from that. Markets always revert to the mean and that is guaranteed, while the tech analysis guessing is not.


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## dilbert789 (Apr 20, 2010)

To a certain point I can see the next while being a negative market. Rationale I have is that as the largest group of our population, the baby boomers who probably hold most of the market value become older they want more stable investments. With the recent large market fluctuations and uncertainty, I can see a lot of people pulling back to a much more conservative profile or even completely going to guaranteed investments. If this happens on a major scale, then the markets should drop quite a bit since there would be more people leaving the market than coming in. 

That's how it works in my head at least...


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## andrewf (Mar 1, 2010)

If you're interested in moving averages as signals for market timing, here's a relatively accessible paper discussing performance over the last few decades:


A Quantitative Approach to Tactical Asset Allocation


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## Henry (Jul 12, 2009)

andrewf: I am a big fan of Mebane Faber.

Below 200 SMA = Bear Market


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## andrewf (Mar 1, 2010)

I think he has one chart in that paper that made a huge impression on me, as a former buy-and-hold advocate: exhibit 9 in that paper. It's really rather remarkable.


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## Broke (May 11, 2010)

Thank you all for your responses; and particularly to andrewf for the link to that interesting paper which I still have to fully digest. So if I got this right, the major indexes being below the 200 DMA many be a sign of big trouble ahead (again!!!). Well, I think it is time to say goodbye to buy-and-hold, as that approach did not help me one bit in 2008.


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## gwerstiuk (Apr 3, 2009)

If buy and hold didn't help you in 2008 can you really call it a failure? Shouldn't buy and hold be measured over 5, 10 or 20 years?


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## Broke (May 11, 2010)

gwerstiuk said:


> If buy and hold didn't help you in 2008 can you really call it a failure? Shouldn't buy and hold be measured over 5, 10 or 20 years?


When one has been investing every year for the last 10 years in low MER mutual funds (PHN), doing dollar cost averaging, keeping asset allocations recommended by the investment gurus (Gordon Pape, etc), rebalancing, etc, and at the end of 10 years ones' investments are worth less than one has put in (not even counting inflation), then I think it is fair to say taht at least in my own experience there is some thing wrong with the "buy and hold" thing. Don't you think so? 

As I said, I got hit hard during the 2008 meltdown, and I still have yet to recover. I am not prepared to just let that happen again without at least taking some precautions.


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## CanadianCapitalist (Mar 31, 2009)

Broke said:


> When one has been investing every year for the last 10 years in low MER mutual funds (PHN), doing dollar cost averaging, keeping asset allocations recommended by the investment gurus (Gordon Pape, etc), rebalancing, etc, and at the end of 10 years ones' investments are worth less than one has put in (not even counting inflation), then I think it is fair to say taht at least in my own experience there is some thing wrong with the "buy and hold" thing. Don't you think so?
> 
> As I said, I got hit hard during the 2008 meltdown, and I still have yet to recover. I am not prepared to just let that happen again without at least taking some precautions.


Here are the returns for the 10-year period from 2000 to 2009:

TSX Composite: 5.6%
Short Bonds: 5.75%
S&P 500 (in Canadian dollars): -4.05%
Developed Markets ex. USA: -1.59%
Emerging Markets: 6.67%

If you had started off with a diversified portfolio, you would have experienced positive returns (depending on your asset allocation). If buy-and-hold did not work for you, perhaps it is not the markets that are to blame...


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## Broke (May 11, 2010)

The asset allocation was correct, but one of the particular funds had a big impact in the negative returns. PHN has a fund called Vintage Fund that was doing extremely well for many ears but was closed to new investors. In June 2008, PHN did open the fund to new investors when shares were around $33. A number of PHN customers (myself included) bought shares from that fund at the end of June or early July 2008, then shortly afterwards it started plummeting until it went to around $10 in March 2009. Today is still around $18, and I didn't see that fund getting to the level I bought it any time soon. Evenually, I sold it at a loss and went for something else. 

I always found it highly coincidental that, after many years of the Vintage find being closed to new investors, PHN re-opened it just prior to the time the market started going down in a spiral. But whatever their reason, I got badly hit and that has made me wary of just buying and holding without taking any additional precautions.


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## Four Pillars (Apr 5, 2009)

Broke said:


> The asset allocation was correct, but one of the particular funds had a big impact in the negative returns. PHN has a fund called Vintage Fund that was doing extremely well for many ears but was closed to new investors. In June 2008, PHN did open the fund to new investors when shares were around $33. A number of PHN customers (myself included) bought shares from that fund at the end of June or early July 2008, then shortly afterwards it started plummeting until it went to around $10 in March 2009. Today is still around $18, and I didn't see that fund getting to the level I bought it any time soon. Evenually, I sold it at a loss and went for something else.
> 
> I always found it highly coincidental that, after many years of the Vintage find being closed to new investors, PHN re-opened it just prior to the time the market started going down in a spiral. But whatever their reason, I got badly hit and that has made me wary of just buying and holding without taking any additional precautions.


Let me get this straight: You bought this "vintage" fund in June of 2008, it crashed and then you sold it.

And now you are trying to explain why "buy and hold" doesn't work?

I think your strategy is more appropriately termed "buy high, sell low".


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## Broke (May 11, 2010)

Four Pillars said:


> Let me get this straight: You bought this "vintage" fund in June of 2008, it crashed and then you sold it.
> 
> And now you are trying to explain why "buy and hold" doesn't work?
> 
> I think your strategy is more appropriately termed "buy high, sell low".


No, I did not sell it at the bottom. I sold it recently when I realized it won't reach its original value any time soon and the market started to look "iffy" again..


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## andrewf (Mar 1, 2010)

Regardless, what you did is not buy-and-hold. You are also suffering from 'anchoring'. It doesn't matter what you paid for an investment, all that matters is the expected future performance.


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## dilbert789 (Apr 20, 2010)

Broke said:


> No, I did not sell it at the bottom. I sold it recently when I realized it won't reach its original value any time soon and the market started to look "iffy" again..


Sell low, doesn't necessarily mean the lowest price. The concept of buy and hold is meant for stocks that hopefully will retain and hopefully build value. Unfortunately it's the market and sometimes even stable, stocks go down. It hurts to get to a point where you believe that the stocks will no longer retain their value or return to the price where you at least bought in. However the goal is to be diversified enough that a single stock or a small number of stocks being in this situation will not kill all of your returns. This could be by either going with a lot of stocks or through ETF's / Mutual funds.


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## Broke (May 11, 2010)

andrewf said:


> Regardless, what you did is not buy-and-hold. You are also suffering from 'anchoring'. It doesn't matter what you paid for an investment, all that matters is the expected future performance.


My original question had to do with the meaning of the market being below its200 DMA, and the intention was clearly to pull out of the market if the danger of a crash like the one we had two years ago was high. If what I did with my MF was not "buy and hold", then name it whatever you like, it does not matter to me. But in a nutshell I am no longer willing to see a stock or mutual fund I hold dropping 60-70% in value without blinking and without doing something about it.


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## Sampson (Apr 3, 2009)

Broke said:


> My original question had to do with the meaning of the market being below its200 DMA, and the intention was clearly to pull out of the market if the danger of a crash like the one we had two years ago was high.


I wonder if the 200 DMA was/is a good metric for predicting the crash we experience in late 08 / early 09. From what I recall, no one was predicting the severity of the crash, even chart readers. There wasn't any predictive information about the crash 'in the charts' from what I understand, however, it was in the balance sheets and the quarterly earnings reports of both the lenders (with their complex and shody loans) and the borrowers (with excessive debt and leverage levels).

I think what many of the posters are reacting to your suggestion that buy and hold does not work, and cite your examples and not exactly the best measurement of success for that strategy.


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## MoneyGal (Apr 24, 2009)

Whether buy and hold "works" is a very legitimate line of inquiry. There are many smart people who believe the equity premium has been oversold. 

The issue from my POV is that the returns are too variable and "too close for comfort" to GIC or T-bill returns. 

The question of whether the past has much predictive value for future equity returns is also a very big, open question. I have read many persuasive arguments about whether the most recent crash (2008, not May 6) "broke" the financial system as we know it, rendering our available modelling techniques considerably less useful. 

I normally like to provide links. Here's where I spent my morning - this is just one example of the kinds of conversations I get to engage in as a result of my employment. None of my comments here or anywhere else should be construed as reflective of anyone's opinion but my own.


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## Broke (May 11, 2010)

Sampson said:


> I wonder if the 200 DMA was/is a good metric for predicting the crash we experience in late 08 / early 09. From what I recall, no one was predicting the severity of the crash, even chart readers. There wasn't any predictive information about the crash 'in the charts' from what I understand, however, it was in the balance sheets and the quarterly earnings reports of both the lenders (with their complex and shody loans) and the borrowers (with excessive debt and leverage levels).
> 
> I think what many of the posters are reacting to your suggestion that buy and hold does not work, and cite your examples and not exactly the best measurement of success for that strategy.


You make good points, but it is no coincidence they call the last ten years "the last decade of stock investing". The indexes are virtually where they were 10 years ago.

In the example I put before, had I had the PHN Vintage fund since 2000 and had I practiced "buy and hold" I would have had a return of 0.1% (the return would have been negative in 5, 4, 3 and 2 years).

https://www.phn.com/Default.aspx?tabid=465


Even a PHN growth fund would have given a return of just 1.5% over 10 years
https://www.phn.com/Default.aspx?tabid=461


but had I had the investments in the PHN high yield bond fund, the average annual return would have been 8.5%

https://www.phn.com/Default.aspx?tabid=534

Yes, this is hindshight, but should not we learn from it? There is something obviously wrong with the stock market when over a period of 10 years bonds have done better than stocks. Now, we are over one year into the so-called "recovery" and most of the equity funds and stocks have not recovered from the 2008 crash when we started again experiencing what some call a "correction" and others call a double dip stock market drop. Not sure who is right (time will tell), but to me there are only two ways of making money when the markets are going down: either short selling, or getting out of the market on the early stages of the decline and invest in less risky securities like cash or bonds. Buying and holding does not seem to work when the market crashes, but buying depreciated stocks does. Several people who followed this approach made a kill if they were gutsy enough to buy in early 2009, but what about "buy and hold" investors? Methinks that many are still trying to recover, like myself.


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## Belguy (May 24, 2010)

After the rollercoaster ride of the past couple of years, many pundits are now predicting that stock markets will essentially now move sideways for a long period of time. 

This may not be alarming to a thirty year old investor with a long timeline but it is quite disconcerning for this 67 year old investor with a considerably shorter timeline.

If there are any short term gains in the markets, perhaps we should consider taking profits and looking for yield from GIC's as rates rise, bonds, real estate income trusts, preferred shares and dividend paying stocks.

I feel that we are going to have to try to get blood out of a stone for the rest of our retirement years.


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## andrewf (Mar 1, 2010)

Is your comparison of high yield bond returns to equity returns stable over different time frames, or do they only work for the 10 year return? Please note that when you say equity indices are flat over the decade that you are forgetting dividend payments, while you are including interest payments in your measure of high yield bond return.


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## Broke (May 11, 2010)

andrewf said:


> Is your comparison of high yield bond returns to equity returns stable over different time frames, or do they only work for the 10 year return? Please note that when you say equity indices are flat over the decade that you are forgetting dividend payments, while you are including interest payments in your measure of high yield bond return.


I posted the link in my previous post so that anyone could see the returns over different periods.

8.5% over 10 years
7.3% over 5 years
8% over 4 years
7.7% over 3 years
15.3% over 1 year

Many of us have also invested in growth stocks, where dividends are usually zero. A growth stock fund return would have been as follows:

1.5% over 10 years
-0.1% in 5 years
-2.2% in 4 years
-9 in 3 years
+20.5% in 1 year

If the crash of 2008 did not happen, the above figures would look quite different. And that's precisely my whole point: buy and hold does not appear to work when markets crash.

Perhaps in hindsight the answer would be sticking to dividend paying stocks, which did much better than growth stocks over the same period:

7.4% over 10 years
2% over 5 years
0.4 over 4 years.
-6.1% over 10 years
18.4% over 1 year

But remember that, unlike now, a few years ago the gurus were endorsing growth stocks instead of dividend stocks. 

Still, high yield bonds did better.


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## Sampson (Apr 3, 2009)

Broke said:


> it is no coincidence they call the last ten years "the last decade of stock investing". The indexes are virtually where they were 10 years ago.


These are typically the same people picking stocks professionally. 



Broke said:


> Buying and holding does not seem to work when the market crashes, but buying depreciated stocks does. Several people who followed this approach made a kill if they were gutsy enough to buy in early 2009, but what about "buy and hold" investors? Methinks that many are still trying to recover, like myself.


When I look at the monies I put into the market in the 1990's, not only have those equities 'recovered', but they were never under water, even at Mar 09. Buy and hold has worked quite well for me, it was only when I was chasing the next best thing did I run into problems. 

You are cherry picking from only a few examples of PH&N funds where you got burned, but to me, this is very little evidence against a buy and hold strategy, all it shows is that particular fund has done poorly. As CC pointed out, many indexes have done reasonably well over the past ten years.

I continually have problems with how market returns are measured from time point 1 to time point 2. Except for those who have retired, most people are continuously adding to their portfolios, so perhaps the monies invested over the past 2-3 years is under water, but remember the markets were red hot before then. Had someone been consistently putting money into equities in 2003-2007, they would standing on solid ground despite the potential for a double-dip in the market.


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## humble_pie (Jun 7, 2009)

i can never understand why parties complaining about sideways markets do not learn to sell & trade options at the extremities of the trading bands. There are a number of hedge funds based on this model, but any retail investor who is quick with the math can learn to do the same.

indexation is widely perceived by academics as tending to produce more volatile markets. We've seen this throughout the past decade. It's the volatility that generates the premium in options, which in turn benefits the option seller. A good option trader is essentially holding stock or proxies long and selling volatility at the top and bottom of the trading band through a complex of put and call options. Generally speaking, the income will equal or exceed any dividends that are paid out from the underlying common stock. The fact that nearly all such trades can be taxed as capital gains makes them doubly attractive, imo. A beneficial owner who holds both the common shares and the option portfolio will collect both the gains and the dividends.

are banks, big energy and xiu going to flail back & forth, thrash up & down over the next few years, but not necessarily advance robustly or decline precipitously ? Oh, to bring this on. Such a scenario might spell gloom to buy-and-holds and even doom to market-timers who get the short-term cycles wrong, but it's an endless opportunity for the option trader.


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## andrewf (Mar 1, 2010)

Broke said:


> I posted the link in my previous post so that anyone could see the returns over different periods.
> 
> 8.5% over 10 years
> 7.3% over 5 years
> ...


I don't know what figures you're using. XIU, tracking the TSX 60, returned about 7% total return over the past 5 years. It also returned over 10% total return over the past 7.

XIU doesn't go any further back, but SPY, which has done poorly over the last decade, has still yielded about 7% total return over the past 15 years.

Try 15 and 20 years. I'm not sure your conclusions are stable over timeframes outside of the last decade. The point being that sometimes bonds will outperform equity and vice versa. High yield bond returns do not dominate equity returns in general.


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## humble_pie (Jun 7, 2009)

postscript re XIU and options: i've held xiu almost since its inception while selling call options against it. Its performance has lagged my overall portfolio, but i am content, because it plays a defensive role for me.

however, the only feature that has made XIU tolerable across all these years is that i have steadily, regularly and consistently harvested the premiums from the option sales.

my records show that i first purchased XIU in june 2001, so it certainly does go back at least 9 years and possibly longer.


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## Four Pillars (Apr 5, 2009)

Broke, I don't know if this will help - but I've gotten away from worrying about individual investments and try to focus on overall portfolio performance. This way I accept that some of my investments will do poorly (US index equities anyone?) for short periods of time, but overall I might be doing ok.

Ultimately, it is the overall return which will determine your wealth or goal achievement.

The latest MoneySense had an article about this.


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## Broke (May 11, 2010)

andrewf said:


> I don't know what figures you're using. XIU, tracking the TSX 60, returned about 7% total return over the past 5 years. It also returned over 10% total return over the past 7.
> 
> XIU doesn't go any further back, but SPY, which has done poorly over the last decade, has still yielded about 7% total return over the past 15 years.
> 
> Try 15 and 20 years. I'm not sure your conclusions are stable over timeframes outside of the last decade. The point being that sometimes bonds will outperform equity and vice versa. High yield bond returns do not dominate equity returns in general.


The figures I am using are the ones published at PH&N for the funds I was using in my example. Just click on the links, then on the tab "Performace and distributions".

PH&N Dividend Income Fund

https://www.phn.com/Default.aspx?tabid=449

PH&N Growth fund

https://www.phn.com/Default.aspx?tabid=461

PH&N Vintage Fund

https://www.phn.com/Default.aspx?tabid=463

PH&N High Yield Bond fund

https://www.phn.com/Default.aspx?tabid=532


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## CanadianCapitalist (Mar 31, 2009)

Broke said:


> You make good points, but it is no coincidence they call the last ten years "the last decade of stock investing". The indexes are virtually where they were 10 years ago.
> 
> Yes, this is hindshight, but should not we learn from it? There is something obviously wrong with the stock market when over a period of 10 years bonds have done better than stocks. Now, we are over one year into the so-called "recovery" and most of the equity funds and stocks have not recovered from the 2008 crash when we started again experiencing what some call a "correction" and others call a double dip stock market drop. Not sure who is right (time will tell), but to me there are only two ways of making money when the markets are going down: either short selling, or getting out of the market on the early stages of the decline and invest in less risky securities like cash or bonds. Buying and holding does not seem to work when the market crashes, but buying depreciated stocks does. Several people who followed this approach made a kill if they were gutsy enough to buy in early 2009, but what about "buy and hold" investors? Methinks that many are still trying to recover, like myself.


Starting valuations matter a great deal when it comes to investing. 10 years back, valuations were high and stocks were priced to produce below par returns. Today, valuations are far more reasonable. You can get a 2.0 to 2.5 percent return on dividend yield alone. Add another 2.0 percent for real earnings growth and you are looking at a 4.0% real return from stocks (assuming p/e ratios stay where they are). That's quite a bit better than what you can obtain from bonds.

Of course, there are no guarantees and investing in stocks always involves risk. Whether you are able and willing to take that risk is a question you alone can answer.

As a 36-year old with another two decades (at least) of asset accumulation years ahead of me, I'm willing to take the bet that there is rewards worth the risk in stocks. YMMV.


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## HaroldCrump (Jun 10, 2009)

CanadianCapitalist said:


> You can get a 2.0 to 2.5 percent return on dividend yield alone. Add another 2.0 percent for real earnings growth and you are looking at a 4.0% real return from stocks (assuming p/e ratios stay where they are). That's quite a bit better than what you can obtain from bonds.


Stocks will have to provide capital gains to make it worthwhile investing over bonds.
Pure dividend yield will not beat bond yields, at least not on the commons.
So in your example, a 4% return on common stock for a period of 10 years does not beat 10 year bond yields, even at today's low rates.
The govt. of Canada 10 year benchmark is at 3.30% and solid corporates like the banks are close to 5%.
Taxability is a different issue though.


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## CanadianCapitalist (Mar 31, 2009)

HaroldCrump said:


> Stocks will have to provide capital gains to make it worthwhile investing over bonds.
> Pure dividend yield will not beat bond yields, at least not on the commons.
> So in your example, a 4% return on common stock for a period of 10 years does not beat 10 year bond yields, even at today's low rates.
> The govt. of Canada 10 year benchmark is at 3.30% and solid corporates like the banks are close to 5%.
> Taxability is a different issue though.


You misunderstood my comment. The 4% expected return from stocks is inflation-adjusted, real returns. If you assume inflation will run at 2%, the return from stocks will be in the 6% range. The 3.3% GoC bond yields are nominal returns. 

Things were quite different 10 years back. Dividend yields were in the 1% range. Valuations were at historically very high levels. And GoC bonds were yielding more than 6%. Many were warning back then that stock are priced for low returns. Those expectations turned out to be true.

Today, the situation is much different. Dividend yields have doubled and valuations are half the level they were 10 years back. Stocks may not be priced for blockbuster returns but they do appear to be priced to deliver about 2.0 percent better than bonds over the next 10 years. Whether that premium justifies the risks is for you to answer as an investor.


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## andrewf (Mar 1, 2010)

HaroldCrump said:


> Stocks will have to provide capital gains to make it worthwhile investing over bonds.
> Pure dividend yield will not beat bond yields, at least not on the commons.
> So in your example, a 4% return on common stock for a period of 10 years does not beat 10 year bond yields, even at today's low rates.
> The govt. of Canada 10 year benchmark is at 3.30% and solid corporates like the banks are close to 5%.
> Taxability is a different issue though.


That was a 4% real return. 10 year Canada bonds are yielding ~2% real return, with no inflation protection.


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## Broke (May 11, 2010)

Broke said:


> I have noticed that the TSX Composite, the Dow Jones Industrials, the S&P500 and the NASDAQ composite indexes are all below the 200 day moving average.
> 
> Is that a bad sign? And if so, how bad?


Well, it seems that it is QUITE A BAD SIGN for what I can see...

And somehow, I think it will get much, much worse before it gets any better.


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## Belguy (May 24, 2010)

Well, for this investor, I have been seeing far too many difficult times on the markets lately.

There is a book out now by John Lanchester. 'IOU: Why Everyone Owes Everyone and No One Can Pay'.

In it, he asks readers to consider this analogy fo what happened to the economy: You are driving merrily along in the desert at 100 kilometers an hour on a sunny day and then you suddenly have to throw your car in reverse. Now, as we pick up the pieces, Lanchester helps us realize that the aftermath is going to dominate economics and politics for decades to come.

Source: Patricia Lovett-Reid, TD Investor Insights


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## james_57 (Jul 5, 2010)

MoneyGal said:


> Whether buy and hold "works" is a very legitimate line of inquiry. There are many smart people who believe the equity premium has been oversold.
> 
> The issue from my POV is that the returns are too variable and "too close for comfort" to GIC or T-bill returns.
> 
> ...


Great, so you can explain this, then, rt? 



> Yuxiang Chong (University of Toronto)
> Pricing catastrophe options under a regime-switching model
> The catastrophe options distinguish between a loss period [0,T1],during which the catastrophes may happen, and a development period [T1,T2], during which losses entered before T1 are reestimated. In this paper, we will model cumulative catastrophe loss before T1 as a doubly stochastic Poisson process. In order to incorporate the seasonal effect on the occurrence of catastrophe events, we will let both the intensity of Poisson process and the distribution of jump size depend on the state of a continuous time Markov chain. During the development period, losses are reestimated by a geometric Brownian motion. In this setting we derive partial integro-differential equations for the prices of catastrophe options. Using Fourier transform techniques, we are able to provide analytical pricing formulas for catastrophe options.


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## HaroldCrump (Jun 10, 2009)

james_57 said:


> Great, so you can explain this, then, rt?


LOL.
This sounds like this:
http://news.bbc.co.uk/2/hi/americas/4449651.stm


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## humble_pie (Jun 7, 2009)

he's describing the post-fusion molecular gastronomy approach to preparing fish.

we cook like that all the time in quebec. Then brad translates it into recipes to help the ROC avoid catastrophic loss at the dinner table.


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## MoneyGal (Apr 24, 2009)

I just came back to this thread. I didn't attend the grad students' presentations that day, mostly because their presentations are extremely specific, as the precis you posted demonstrates. 

The first keynote was from Arthur Fleigelman, former senior credit officer for Moody's (and before that, an analyst at Salomon Brothers). That was a very, very interesting presentation and the conversation before and after was very worthwhile. 

But: to answer your question: yes, I could explain the precis of the paper. We talk about the distribution of random variables all day long here.


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## james_57 (Jul 5, 2010)

MoneyGal said:


> But: to answer your question: yes, I could explain the precis of the paper. We talk about the distribution of random variables all day long here.


But really, 'brownian motion'.. I read a quip the other day, that economists suffer from 'physics envy'.. i thought it was just funny but now i get it.


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## Mockingbird (Apr 29, 2009)

Broke said:


> I have noticed that the TSX Composite, the Dow Jones Industrials, the S&P500 and the NASDAQ composite indexes are all below the 200 day moving average.
> 
> Is that a bad sign? And if so, how bad?


Now we are barely above. 
Classic example of consolidating market.


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## furgy (Apr 20, 2009)

Broke said:


> When one has been investing every year for the last 10 years in low MER mutual funds (PHN), doing dollar cost averaging, keeping asset allocations recommended by the investment gurus (Gordon Pape, etc), rebalancing, etc, and at the end of 10 years ones' investments are worth less than one has put in (not even counting inflation), then I think it is fair to say taht at least in my own experience there is some thing wrong with the "buy and hold" thing. Don't you think so?
> 
> As I said, I got hit hard during the 2008 meltdown, and I still have yet to recover. I am not prepared to just let that happen again without at least taking some precautions.


I hear you Broke , same way I felt , just realized that I was holding a lot of non paying investments which is just holding and hoping for gains.

I re-allocated my portfolio after the crash to well paying REITs , I'm amazed how fast the distributions add up , currently getting an average of 11.5% , and way up in capital gains as well (I was hoping there would be a move to REITs with the new trust laws coming , and my picks seem to support this) , up over 50% total , figuring in capital gains as well as compound distributions over the past 8 months or so.

I'm aware it may just be luck , but I won't seriously invest in any non paying investments anymore.

That said , I do keep a substantial fund designated for swing/day trading speculative investments , in this volatile market it has been working out very well , I buy and sell on news alone , and try not to get greedy , if I can get 5% or better after trading fees , I'm out and on to my next deal.

Any profits are put back into REITs for the income , and so far the profits have been substantial.

As for buy and hold , to me it is still alive , but only if I'm getting paid to hold.

It may not be for everyone , but for me it's working.


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## Broke (May 11, 2010)

furgy said:


> I hear you Broke , same way I felt , just realized that I was holding a lot of non paying investments which is just holding and hoping for gains.
> 
> I re-allocated my portfolio after the crash to well paying REITs , I'm amazed how fast the distributions add up , currently getting an average of 11.5% , and way up in capital gains as well (I was hoping there would be a move to REITs with the new trust laws coming , and my picks seem to support this) , up over 50% total , figuring in capital gains as well as compound distributions over the past 8 months or so.
> 
> ...


Hi, Furgy.

Are you still making a profit with REITs?

I just looked at two REIT ETFs (XRE-T and CGR-T) and both of them seem to be going down. Same seems to happen with other REITs like EXE.UN, AX.UN, BEI.UN, ZRE . However, others like CUF.UN, PMZ.UN, INN.UN and D.UN seem to be doing well.


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