# Derek Foster....talk about bad market timing!!



## warp (Sep 4, 2010)

Derek Foster.....whose books I have read, made what appears to be a terrible market timing decision.

I came across this article today, heres the link.....look at the date!!! 
Almost exactly when the markets rebounded!

http://www.thestar.com/Business/article/600754

He was totally wrong!!

anyone know where he is today?? 

Is he still selling put options?

I "retired " at about his age...but I didnt panic,,,and didnt have all my assets in equities either!



By the way, I bought Algonquin Power at almost the exact price he sold it, as per the article, in early 2009....and Ive done pretty well with it!
When he was selling...I was buying a lot of trusts and div payers at nice prices,


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## CanadianCapitalist (Mar 31, 2009)

warp said:


> He was totally wrong!!
> 
> anyone know where he is today??
> 
> ...


Selling more "dividend growth" investing books. lol. 

He's making the blog rounds talking about how great dividends are. I haven't seen any mainstream coverage though. Maybe they wised up to his ways?


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## dogcom (May 23, 2009)

He was the favorite to knock around on the old canadian business forum. I remember all his talk on that forum about buy and hold dividends and so on only to run away when the going got tough.http://forums.canadianbusiness.com/thread.jspa?threadID=3947&start=0&tstart=0

He used the name stopwork and tested all his books on the canadian business forum.


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## PF_Enthusiast (Jan 21, 2011)

He just recently posted on Million Dollar Journey http://www.milliondollarjourney.com/an-interview-with-derek-foster.htm


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## Assetologist (Apr 19, 2009)

Classic!

It takes real fortitude to hold steady during any storm and he proves that small investors tend to be their own worst enemies not the big bad Wall St guys. It's easy to say something in a book but it's a heck of a lot harder to stare down a 50+% loss and hold steady. 

I especially like this: Mar 12, 2009

"I think we're in for more pain," he says when explaining his abrupt about-face.

"My strategy was to buy quality dividend-paying stocks and hold them through thick and thin.

"I held on all last year, but I've been doing lots of research and I don't think we're close to the bottom yet."


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## HaroldCrump (Jun 10, 2009)

yeah, he generated a lot of discussion about a year and two ago.
I participated in several of those heated discussions on the CBO and FWR forums that dogcom linked to above.
I think his escapades are old news now.

He must be busy writing some new book on how to re-retire at 40 

He does write for the Money Saver magazine ocassionally though.
I think his last article was about 3 or 4 months ago.


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## Belguy (May 24, 2010)

He makes a few bucks telling other people how to invest but, back in 2008, he panicked and sold.

Not to toot my own horn but I do not write financial articles and books but I sold NOTHING during the downturn and was fully invested when the markets rebounded. Not only that, but I don't have anywhere near the time horizon that he has!!!

I'm not sure what the lesson is here but I don't read anything that he writes. Why encourage him??!!

Buy, hold, and prosper!!!


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## Toronto.gal (Jan 8, 2010)

I learned a lot from Derek Foster and do recommend his books to new investors.

I think that many people are forgetting the fact that we experienced an unprecedented crisis, which saw the financial markets collapse in a manner never before seen in our lifetime and no one really knew how it would end. Who would have thought share prices would have tumbled as they did or that giant banks would collapse, etc., etc.? 

We are all entitled to make mistakes & change our investment strategies [even writers] & considering Foster's age, IMHO, he is an intelligent man, did pretty well for himself and would hardly call his market exit irrational at that moment in time.


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## dogcom (May 23, 2009)

Toronto.gal go the Canadian Business Forum I linked above and look at all posts by stopwork and you will see in timeline and the discussions that went on there. While he did give some good info like you said you will see where Idontwork and others there really held his feet to the fire.

I also thought like him that the worst is still to come and I still do. The only difference is I did go defensive and was only half into equities instead of 100% during 2007 and 2008 unlike him. He did however make his money by selling books and you will get that real story by going over his and others posts from that forum.


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## Argonaut (Dec 7, 2010)

Derek Foster is an example of "do what I say, not what I do". I would avoid these people at all costs, especially their books. He made his fortune on a highly leveraged gamble on Phillip Morris. He then preaches a dividend buy and hold strategy that is mislead as "stop working" at ages of 34 or whatever. He then makes the dumbest trade in Canadian history by selling his entire portfolio at a generational bottom. This was publicized in the newspaper, so I wonder how many of his readers followed his advice? Very dangerous.

Derek Foster is to investing what Al Gore is to politics. Preaching about climate change when he's flying around in a private jet.


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## Jungle (Feb 17, 2010)

He's bashed pretty hard on business forum. I've read every page. I know he preached, "buy dividend stocks and hold them forever" and he did go against his word. THe psychological affect and ability to time the market got to him. 

But I can understand the feeling, because I too cashed a small position of leveraged stocks when the market crashed. HOwever what I learned from it, was to just leave it alone and look at dips as a generous buying opportunity. At the time that it happened, and based on Mr. Foster's experience, I think he should have known better then to cash all that out. 

But his book stop working did provide a nice thought and inspiration to retire early.


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## andrewf (Mar 1, 2010)

Alternatively: have an exit plan. Don't wait for the sky to fall to exit. A simple market timing technique (200 SMA) would have had you out of the market for December 2007 - May/June 2009. The reason why people panic at the bottom is because you can never be sure (in the gut-feeling sense) that this isn't a Japan-style meltdown. Buy-and-hold got slaughtered there. Even worse though is to be a fair-weather buy-and-holder. If you don't trust yourself not to panic, have an exit plan and follow it.


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## Four Pillars (Apr 5, 2009)

andrewf said:


> Alternatively: have an exit plan. Don't wait for the sky to fall to exit. A simple market timing technique (200 SMA) would have had you out of the market for December 2007 - May/June 2009. The reason why people panic at the bottom is because you can never be sure (in the gut-feeling sense) that this isn't a Japan-style meltdown. *Buy-and-hold got slaughtered there.* Even worse though is to be a fair-weather buy-and-holder. If you don't trust yourself not to panic, have an exit plan and follow it.


Actually, buy-and-hold did just fine.


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## OptsyEagle (Nov 29, 2009)

andrewf said:


> Alternatively: have an exit plan. Don't wait for the sky to fall to exit. A simple market timing technique (200 SMA) would have had you out of the market for December 2007 - May/June 2009. The reason why people panic at the bottom is because you can never be sure (in the gut-feeling sense) that this isn't a Japan-style meltdown. Buy-and-hold got slaughtered there. Even worse though is to be a fair-weather buy-and-holder. If you don't trust yourself not to panic, have an exit plan and follow it.


and the 200 sma did OK over this last major drop but at times of almost sideways movements, it is pushing you in and out of the market so many times you either increase it to 300 sma or ignore it completely or what most would do, stop using it.


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## andrewf (Mar 1, 2010)

It can be tuned to reduce whipsawing, which is a very real concern. 

Look at the Nikkei chart:

http://www.forecast-chart.com/historical-nikkei-225.html

The real return there is atrocious, even if you didn't buy at the peak. Real return with some market timing would have been significantly higher (ie, not negative). Most of the time it doesn't enhance returns but merely reduce risk. -80% markets peak to trough happen, and that risk is unacceptable.


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## atrp2biz (Sep 22, 2010)

If only we could market time.


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## CanadianCapitalist (Mar 31, 2009)

DF "fans" would get a chuckle or two from this Maclean's column:

Lessons from the Fall



> Not that Foster, who just published his fourth book, Stop Working Too: You Still Can!, says any of that applies to him. He insists he didn’t get spooked by the crash, and says that bailing out near the bottom of the market, and then buying back in after the rebound didn’t cause him any grief, or even lose him any money. “I’m not any further ahead or behind where I would have been,” he says, thanks to a side strategy of buying put options, a complicated tool that lets investors bet on falling stock prices. Instead, the number one lesson Foster says he learned from the experience was not to share every investment decision he makes with the public.


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## dogcom (May 23, 2009)

Jungle and others I think it would be a good idea to print off threads like that and others that give us a timeline and a real time look at what happens during the good times and during a crisis. Many people wish we had more of this kind of info to look at about the great depression.

CanadianCapitalist thanks for that quote and I think what we can take from it is don't invest or be wary of books and so on when the writer will not share his own experiences. His books are based on him retiring early and how you can to, so how can we believe or trust someone who is not willing to share everything with the public.


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## HaroldCrump (Jun 10, 2009)

CanadianCapitalist said:


> Note that Foster, who just published his fourth book, Stop Working Too: You Still Can!


This is hilarious! 



> the number one lesson Foster says he learned from the experience was not to share every investment decision he makes with the public.


Yes, of course, so that no one can call his bluff!


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## dogcom (May 23, 2009)

Sorry haroldcrump I forgot to give you a plus 1 for being part of the slam Derek history on the Canadian Business forum.


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## andrewf (Mar 1, 2010)

Did he justify why he sold? He sounds pretty mealymouthed on the subject. 

I agree that he has an odd definition of retirement. Going back to the well with a fourth book on how you too can get rich quick is not part of mine.


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## MoneyGal (Apr 24, 2009)

I personally found it pretty distasteful that he described in some detail how to keep realized income low to ensure that Canada Child Tax Benefits are maximized. 

While I agree this is a rational, self-maximizing strategy nonetheless I found it irritating, because of the underlying assumption that *someone else* was gonna pay taxes on income to make those payments possible.


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## CanadianCapitalist (Mar 31, 2009)

It's funny going back and reading those posts. I really hope investors checked out that debate and decided against suddenly switching to a "money for nothing" strategy...

http://forums.canadianbusiness.com/thread.jspa?threadID=1547&tstart=0
http://forums.canadianbusiness.com/thread.jspa?threadID=17256&tstart=0


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## Toronto.gal (Jan 8, 2010)

CanadianCapitalist said:


> DF "fans" would get a chuckle or two from this Maclean's column:
> 
> Lessons from the Fall


"DF fans" on this forum? You're funny CC. 

I was in Mutual Funds back then and not being the panicky type, I did not sell at all [though I was urged by my then advisor to do so]. That crisis & my advisor's panic, were some of the factors that drove me to the library every week & what ultimately got me interested in becoming a DIY investor. 

One of the 1st books I found/read was 'The Lazy Investor' and so I owe Mr. Foster [and other authors & many of you on this forum too] credit for some of what I have learned & for inspiring me to keep on learning, but certainly I did not take his books as gospel, nor anyone else's for that matter. So he made risky/bad decisions, changed investment strategies and contradicted himself, who hasn't? At 30 something, he still had much to learn.

Thanks for the link CC; you too dogcom.


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## warp (Sep 4, 2010)

MoneyGal said:


> I personally found it pretty distasteful that he described in some detail how to keep realized income low to ensure that Canada Child Tax Benefits are maximized.
> 
> While I agree this is a rational, self-maximizing strategy nonetheless I found it irritating, because of the underlying assumption that *someone else* was gonna pay taxes on income to make those payments possible.


MoneyGal:

I HATE our tax system.

That being said...every citizen has the right , ( and personal obligation), to lower their taxes in any legal way they can!

Fosters use of the tax code is just another reason that we need to get to a falt rate tax, or completely overhaul and simplify the system we have now!

In our system everybody is looking for "someone else" to pay, which results in a poorer society overall.
When some gets "something for nothing", ( as in govt handouts), someone else is getting nothing for something, ( as in more taxes).

I dont blame him for not wanting to work...hell, I I dont work either...havent for many years in fact.

Personally I feel the bigger the government gets...the poorer its citizens get.
A simpple equation.

Back to Derek Foster, and why I started this thread........is he a perfect example of why market timing does not work for the average investor?


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## warp (Sep 4, 2010)

I did want to write a quick story here too, about Philip Morris.. the stock that Derek Foster made his first real money on thru a dangerous leveraged bet.

In 2000 I bought Philip Morris.....I dont smoke but loved the dividend, and expected smokers to continue doing so.
One morning I was on my comp, and the TV was on CNN in the other room.
From the TV , I heard a breaking newsflash story about a huge liability settlement in Florida, that some jury had just awarded to a smoker who got cancer, against Philip Morris.
I went to the TV, and the reporter was going on about how this set a precedent and was ruinous for Phillip Morris etc, etc. etc.

I immediately called my broker...( I was with a full service firm then), and told him to immediately sell all my Phillip Morris stock, feeling I was early on that news on could get out quick for a small loss.

Of course you can guess the rest. I wish Id never heard that newsflash.

The court settlement was rejected on appeal, the govt stepped in to limit these outrageous jury awards, and Phillip Morris recovered, and has never stopped since, spinning off Kraft, and PhilMo International...both great stocks in their own right.

That move,,,which I proud of at the time, ended up costing me many , many thousands of dollars, as I am a buy and hold dividend type investor.

The lesson here?.........close your eyes and ears to all this financial noise.

As others have posted here...BNN can be dangerous to your financial wealth.

Foster does what he thinks is right for him...that does not mean that you should blindly follow him, or any other financial "guru".

By the way..I take exception that he calls himself Canada's youngest retiree at 34.

He works on his books,,,and he works giving speeches and such.
I've got to hand it to him though, as he prob enjoys his work.


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## bean438 (Jul 18, 2009)

Toronto.gal said:


> I learned a lot from Derek Foster and do recommend his books to new investors.
> 
> I think that many people are forgetting the fact that we experienced an unprecedented crisis, which saw the financial markets collapse in a manner never before seen in our lifetime and no one really knew how it would end. Who would have thought share prices would have tumbled as they did or that giant banks would collapse, etc., etc.?
> 
> We are all entitled to make mistakes & change our investment strategies [even writers] & considering Foster's age, IMHO, he is an intelligent man, did pretty well for himself and would hardly call his market exit irrational at that moment in time.


His decision was completely irrational.

I think he is a flake. I bought 2 of his books, but he has zero cred with me now.


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## bean438 (Jul 18, 2009)

Four Pillars said:


> Actually, buy-and-hold did just fine.



Buy and hold always seems to do just fine. Especially if you buy quality at a reasonable price.


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## kcowan (Jul 1, 2010)

warp said:


> By the way..I take exception that he calls himself Canada's youngest retiree at 34.
> 
> He works on his books,,,and he works giving speeches and such.
> I've got to hand it to him though, as he prob enjoys his work.


I think that is the Big Lie. He decided to become an author, speaker and promoter.

Retirement means not longer working for money. He is actually dependent on a much more fickle source of revenue: people who buy his stuff because they believe in him.


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## scomac (Aug 22, 2009)

HaroldCrump said:


> > the number one lesson Foster says he learned from the experience was not to share every investment decision he makes with the public.
> 
> 
> Yes, of course, so that no one can call his bluff!


Although it wouldn't have been nearly as effective a marketing tool for his third book -- _Money For Nothing (and your stocks for free)_


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## scomac (Aug 22, 2009)

CanadianCapitalist said:


> It's funny going back and reading those posts. I really hope investors checked out that debate and decided against suddenly switching to a "money for nothing" strategy...
> http://forums.canadianbusiness.com/thread.jspa?threadID=17256&tstart=0


I had forgotten how hot that debate got.


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## lost in space (Aug 31, 2015)

MoneyGal said:


> I personally found it pretty distasteful that he described in some detail how to keep realized income low to ensure that Canada Child Tax Benefits are maximized.
> 
> While I agree this is a rational, self-maximizing strategy nonetheless I found it irritating, because of the underlying assumption that *someone else* was gonna pay taxes on income to make those payments possible.


Different tax system but I do the same, put a ton of effort into tax avoidance, specficly healthcare which is payrol tax and a damm steep one. Moved all our investments into my wife's name as I'm co-insured with her. If I have income I have to pay. It's a (very) low level version of how the rich avoid taxes. More on Foster tomorrow bedtime here


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