Wednesday, October 13, 2010

Mutnemom: the reverse of Momentum

I'm a personal investor (kind of a mix between a hobby and a serious endeavor to enhance my future retirement income) -- wrt my actual job(s), see wikipedia.

More and more often I find myself moved to share some thoughts on some aspect of the matter with the world at large, and I usually end up doing so on comments on other people's blogs, which of course are pretty hard to put together into a semi-consistent whole;-)

Finally, reflecting on what wikinvest.com was recently telling me, I think I've come up with a good name. Take a look at this report...:

Portfolio's Performance1w1m3mYTD
YOU0.86%2.55%4.07%24.62%
DOW JONES1.63%5.20%7.93%5.55%
S&P 5001.65%5.01%8.09%4.49%
See? If I was managing OPM (Other People's Money), I'd probably have been fired, after underperforming the market on the last week, the last month, AND the last three months (though this somewhat understates performance all the way 'round, since it ignores dividends, and small steady profits from writing call options, and the ability to reinvest them, such understatement applies to all the rows;-).
But, since I only answer to myself and my wonderful wife, I'm allowed to follow the somewhat-contrarian "Mutnemom" strategy -- AKA "Buy Low, Sell High" (AKA "Buy when there's blood on the Street", AKA "Be fearful when others are greedy, be greedy when others are fearful") -- and underperform in the short run but outperform the market over longer time span.
That I've outperformed in the year-to-date is actually somewhat fortuitous -- the time horizon I aim at is actually 3-5 years, as used in Value Line's superb service, and I know -- thanks to the "track vs S&P500" feature of the excellent fool.com site -- that over the last such timeframe I did +9.6% (compound annual returns, including dividends assumed to be reinvested but ignoring profits from writing call options) vs S&P 500's +1.8% (over the same time and conditions).
But anyway, that's way plenty for an introduction -- I'll try to stay focused mostly on philosophy and strategy in future posts and not get too distracted by current events and refined technicalities!-)

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