PP Math

[Clive]

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[Reido]

I like your observation...
To continue on that theme, you can even make small adjustments to the PP - for example making the stock portion 1/2 S+P and 1/2 Small cap blend - which will cause the overall yield to be 9.82% over the 1972-2009 period with a STDEV of 8.29%.  Which outperforms stocks entirely.

I guess my thought just is that you have to find a way to implement Browne's technique in a manner that suits you, and then be consistent. 

Do you agree, Clive?

Altogether the thought of "your age in Bonds" and "dollar-cost averaging will smooth out the bumps in the road" is really a fallacy.

Watching your hard earned money get cut by more than 50% after years of work (as I witnessed with my father's retirement savings) is not a pretty sight, no matter how many people promise "it always comes back"

[LNGTERMER]

At present I'm attracted towards two thirds PP with the 'stock' invested in Decision Moose.  For the other Variable Portfolio third Decision Moose also seems a reasonable choice.  Whilst DM is relative strength based (5 months RS seems to be a reasonable proxy), it also appears to use a trailing 10% stop loss control.  Historically its done very well, but over more recent years much less so (and hence the appeal to me).

For others however being a stuck-in-the-mud and implementing the PP alone and rigidly in the conventional manner may very well be the best choice.

There are a huge risks with DM, you are outsourcing the responsibility so to speak. There is the risk of the proprietary formula not working, there is the risk of the manager etc. If one is attracted to black-box mechanical systems then the best approach is to do it yourself and learn how to program. It's a huge task but one that might remove dependence on mysterious formulas presented by others. I also disagree with the above characterization of the PP. The PP is a well balanced mechanical system that protects one from third party risk and hence black swan events while all along returning decent returns.

[Pres]

At present I'm attracted towards two thirds PP with the 'stock' invested in Decision Moose.  For the other Variable Portfolio third Decision Moose also seems a reasonable choice.  Whilst DM is relative strength based (5 months RS seems to be a reasonable proxy), it also appears to use a trailing 10% stop loss control.  Historically its done very well, but over more recent years much less so (and hence the appeal to me).

I'm a DM subscriber and frankly I like the idea less and less.

The author hasn't done well for quite some time now. He must lose a lot of money on the spread when selling assets and switching in something new. The systems has no diversification at all.

Momentum based systems are tempting, but don't seem to work well in weird times like these.

[LNGTERMER]

Clive,
Now we are on the same page.

selecting the 5 month relative strongest

Can you elaborate a bit on that, do you mean between the value and growth?

[Jan Van]

I'm more the opposite (odd ) in that I'm more attracted to bargains and look more deeply at investments that haven't performed well in anticipation that that might turn around.  More of a contrarian investor character I guess.

Funny, when I read this I though "I have to ask Clive about Magic Formula"...    For the MF, how many stocks would you hold?

Allocate a third of funds to a VP that holds such a DM/MF blend, and the other half to a PP...

Did you mean "Allocate half of funds to a VP"?

[Jan Van]

I'd be inclined however towards throwing it at being professionally managed on my behalf i.e. http://info.formulainvesting.com/results/

At 1% fees I find them a bit too expensive, though it includes all trading. But trading could be pretty cheap if you'd use for example www.lightspeed.com (100 shares for $0.40)...