T Nation

How Do You Invest

It’s getting near years end and coincidentally I’m heavy in cash right now (on the sideline). I’m interested in hearing how some of you invest. I’m talking stuff that’s pretty liquid, not housing and land.

This is how I invest. In the accounts that I have complete control over, I put about half in a stock fund called Hussman Stratigic Growth Fund. Hussman actively manages to avoid losses yet still has the opportunity for solid grouth. He’s the only one I know of who does this. Other funds you’re at the mercy of the market. If the market drops big, your fund value also drops big.

With my company 401k and the rest of the money that’s not in Hussman, I watch the S&P 500 for trading channels. The S&P 500 trades in “channels” that hold up usually for a few years. When it’s at the top of a channel, as it is now, I sell my holdings. When it’s at the bottom I buy back in.

Energy stocks don’t necessarily follow the S&P 500 trend so I trade energy funds the same way, but instead I look at the channels in the IYE and XLE trackers.

I sold my energy funds yesterday and my other stock funds a few weeks ago. With this strategy I probably make 3 to 5 moves a year and don’t spend much time looking at the market until things start getting close to the edge of a channel.

I think for most people the best strategy is to pick some good funds, stocks and bonds via a good broker then just routinely put money in without thinking about it. That way you can put your full focus on your work and kick ass in your career. I’m not smart enough to do that, though. Either that or I’m not trusting enough to hand my money over to a broker and let them handle it.

Has any one else put too much thought into a system? Would you care to share it?

[quote]on edge wrote:
It’s getting near years end and coincidentally I’m heavy in cash right now (on the sideline). I’m interested in hearing how some of you invest. I’m talking stuff that’s pretty liquid, not housing and land.

This is how I invest. In the accounts that I have complete control over, I put about half in a stock fund called Hussman Stratigic Growth Fund. Hussman actively manages to avoid losses yet still has the opportunity for solid grouth. He’s the only one I know of who does this. Other funds you’re at the mercy of the market. If the market drops big, your fund value also drops big.

With my company 401k and the rest of the money that’s not in Hussman, I watch the S&P 500 for trading channels. The S&P 500 trades in “channels” that hold up usually for a few years. When it’s at the top of a channel, as it is now, I sell my holdings. When it’s at the bottom I buy back in.

Energy stocks don’t necessarily follow the S&P 500 trend so I trade energy funds the same way, but instead I look at the channels in the IYE and XLE trackers.

I sold my energy funds yesterday and my other stock funds a few weeks ago. With this strategy I probably make 3 to 5 moves a year and don’t spend much time looking at the market until things start getting close to the edge of a channel.

I think for most people the best strategy is to pick some good funds, stocks and bonds via a good broker then just routinely put money in without thinking about it. That way you can put your full focus on your work and kick ass in your career. I’m not smart enough to do that, though. Either that or I’m not trusting enough to hand my money over to a broker and let them handle it.

Has any one else put too much thought into a system? Would you care to share it?[/quote]

Not one responce over the weekend! come on guys, If I asked for your Blackjack system I bet I’d be getting responses. Anyone?

It sounds to me like you already know what you are doing my friend.

[quote]jre67t wrote:
It sounds to me like you already know what you are doing my friend. [/quote]

Can always improve and it’s always interesting to hear what approach others take.

A nice diverse set of ETFs and mutual funds that track indices – rebalance frequency depending on whether it’s inside the 401(k) (no transaction costs) or outside (cheaper to just buy the slower performing assets). I don’t like active managers.

Thinking about tax advantages – put bonds in your 401(k) and stocks outside – think of your taxable and non-taxable accounts together for the purposes of asset allocation.

Overall, I would probably weight my portfolio a bit more toward international assets than the average guru. I think people can also get into some nice areas for diversification via ETFs, such as the commodities index or real estate indices – shouldn’t be too much of your portfolio, but do provide excellent diversification.

Also a fan of dollar-cost averaging your investments.

Seriously consider physical gold and silver as well as mining stocks.

TOP-LEVEL INSIDERS SELLING THEIR STOCK
December 7, 2006 – America’s corporate chiefs are unloading their own stocks at one of the boldest paces in 20 years.
http://www.nypost.com/seven/12072006/business/top_level_insiders_selling_their_stock_business_paul_tharp.htm

[quote]BostonBarrister wrote:
A nice diverse set of ETFs and mutual funds that track indices – rebalance frequency depending on whether it’s inside the 401(k) (no transaction costs) or outside (cheaper to just buy the slower performing assets). I don’t like active managers.

Thinking about tax advantages – put bonds in your 401(k) and stocks outside – think of your taxable and non-taxable accounts together for the purposes of asset allocation.

Overall, I would probably weight my portfolio a bit more toward international assets than the average guru. I think people can also get into some nice areas for diversification via ETFs, such as the commodities index or real estate indices – shouldn’t be too much of your portfolio, but do provide excellent diversification.

Also a fan of dollar-cost averaging your investments.[/quote]

I also use the ETFs in my system. I’ve tried to select the segments I think will out perform but I think I probably would have done better just buying SPY.

I tried getting in on Brazil early in the year with EWZ but got burned. It dropped out of its steep trading channel which was my que to get out. It then came back strong. That’s the biggest flaw I see in what I’m doing. The US market in '98 was a similar pattern where one would have definitely wanted to stay in the market and ride out the steep drop.

I’ve got a cool device, it looks like a little piggy and it has a slot on the top of it’s head.

[quote]vroom wrote:
it looks like a little piggy and it has a slot on the top of it’s head.[/quote]

Are you related?

[quote]JustTheFacts wrote:
Seriously consider physical gold and silver as well as mining stocks.

TOP-LEVEL INSIDERS SELLING THEIR STOCK
December 7, 2006 – America’s corporate chiefs are unloading their own stocks at one of the boldest paces in 20 years.
http://www.nypost.com/seven/12072006/business/top_level_insiders_selling_their_stock_business_paul_tharp.htm[/quote]

The massive debts of the United States will eventually implode, causing a global depression far worse than the 1930’s. It is quite likely that our country will have a revolution. Physical possession of precious metals (or better, diamonds) might buy you a ticket out, if its really that bad. Bush was far too weak to stop the tide (as we conservatives hoped, so we’re basically doomed).

If you have a little more faith in the system, half gold mining and half short-term treasuries.

[quote]Headhunter wrote:
JustTheFacts wrote:
Seriously consider physical gold and silver as well as mining stocks.

TOP-LEVEL INSIDERS SELLING THEIR STOCK
December 7, 2006 – America’s corporate chiefs are unloading their own stocks at one of the boldest paces in 20 years.
http://www.nypost.com/seven/12072006/business/top_level_insiders_selling_their_stock_business_paul_tharp.htm

The massive debts of the United States will eventually implode, causing a global depression far worse than the 1930’s. It is quite likely that our country will have a revolution. Physical possession of precious metals (or better, diamonds) might buy you a ticket out, if its really that bad. Bush was far too weak to stop the tide (as we conservatives hoped, so we’re basically doomed).

If you have a little more faith in the system, half gold mining and half short-term treasuries.

[/quote]

Petro-Euros is our biggest problem if it it ever comes to wide scale fruition.

I have a mix of index funds, credit ops funds, and petro chemical funds.

I am forced to hold any purchase for a minimum of 60 days and I have to get approval for single issue purchases so buying and holding funds is my only real option.

I can thank the SEC and SOX for the lovely restrictions.

I concur with Boston - I generally think you should buy the market and revisit it quarterly at the most.

Diversification is key. And pay as little as possible for funds - professional stockpickers will most likely wind up breaking your heart and chewing up your returns with their fees.

And always remember that investing merely grows your wealth - you actually get wealthy by putting away money you would otherwise spend. Saving makes you rich, not getting in on a great stock pick.

I used to watch stocks more - now I would rather buy the market and enjoy my free time not watching the market.

[quote]Headhunter wrote:
J
The massive debts of the United States will eventually implode, causing a global depression far worse than the 1930’s. It is quite likely that our country will have a revolution. Physical possession of precious metals (or better, diamonds) might buy you a ticket out, if its really that bad. Bush was far too weak to stop the tide (as we conservatives hoped, so we’re basically doomed).

If you have a little more faith in the system, half gold mining and half short-term treasuries.

[/quote]

HH - you’re one of the people I was hoping to hear from on this thread, but I’m still surprised at what an extreme view point you have. I understand and agree with youto an extent. That is why I’m always ready to get out if prices drop. I also have good amount in the Prudent Safe Harbor Fund. I’m sure you know of the fund based on this post - and your post in the housing thread.

I think another substantial bear market, especially one that could lead us into depression is less likely than the current facts and figures (compared to past history) suggest. With the globalization we have now and the underdeveloped countries coming on line, there is alot more support to keep our economy rolling. Also, due to the company 401ks out there fueling such widespread participation, higher valuations are supported.

Regarding a revolution? I think we’re hundreds of years from that. That comes when the people can no longer support the government that keeps growing and becomes too large a tax burden. I think our government is WAY to big and takes Way too much of my money but they would probably have to take double or triple for me to consider revolting.

[quote]Marmadogg wrote:

Petro-Euros is our biggest problem if it it ever comes to wide scale fruition.

I have a mix of index funds, credit ops funds, and petro chemical funds.

I am forced to hold any purchase for a minimum of 60 days and I have to get approval for single issue purchases so buying and holding funds is my only real option.

I can thank the SEC and SOX for the lovely restrictions.[/quote]

Marmadogg, what do you do?

You can gamble a bit with a small part of your fortune. I’ve got most invested solidly. But it’s fun sometimes to take a bigger risk.
Only using money you can afford to lose of course.

This is by far the best book I’ve ever read on investing. Extremely simple and cheap to put into practice. Gives you ratios of what to invest in, why and how. Follow the ratios as outlined, depending on your time horizon. Then rebalance once per year.

All About Asset Allocation
by Richard A. Ferri