March 2004 

Confusing Signals

March 1, 2004

Some of the signals have begun to look better as of the close today.  The market was quite strong, and I bought some stuff.  Tomorrow, if things look good, I may go long with more money.  I still see no large cap fund that is sufficiently high ranked to be worthy of a buy.

March 5, 2004

My Son Eric and his New Daughter, Kaylee Marie

A father at 19 years of age.  Much too soon, and he and his girlfriend are not married.  Still, I am optimistic.  Eric seems to be taking his new responsibilities seriously.

 March 6, 2004

Guilty on All Counts - Is this the Future?

I am really not at all sympathetic.  She thought she was too important to have to play by the rules.  The rules were for the rest of us.  Now she will have to play by some one else's rules.  Besides, I view that decorating and cooking stuff as too trivial to be worthy of very much attention.  Her laywer told the jury in his summation that they should let her go so that she could go about her business doning good things.  Gimme a break:  this is not Mother Theresa we are talking about.  She is just a rich lady who made a fortune telling people to put glitter on animal toys for Christmas decorations, among other things.  I think I could have figured out how to do that myself, if I had wanted glittered-up animal decorations.  But I would never have had the nerve to market it to the public.  Nobody ever went broke underestimating the stupidity of the American public.

March 10, 2004

Well, the signals are mixed again.  The sort of thing that I do does not work well in a market that just moved back and forth.  I am fully invested, and worrying that I should not be.  Time will tell.

March 13, 2004

Bad week with a good ending, at any rate.  The bombings in Spain did not help, of course.  We may be in for more attacks.  I thought about that as I took the Metro into D. C. on Thursday.  

Who would have thought that the small caps would still outperform everything else?  Although it would not have been prudent, I could have made more money just by putting everything into a small cap index fund.  

Meanwhile, there are problems at Brown.  I have put up with their various mistakes, including a bounced check for no reason, but now they have called to criticize me because I was banned by a fund.  This in spite of the fact that I have followed all of the rules in the prospectus - at least all that were sufficiently concrete to follow.  So far, I have never seen a definition of forbidden market timing in any prospectus.  Where certain characteristics may be specified, such as selling a fund four times in the same year (something I have never done, although I have switched within families that often), there is always an elastic clause, usually beginning with "or otherwise...".  So basically, a fund company can accuse you of market timing and then ban you from the fund for any arbitrary and capricious reason they specify.  They are encouraged by the recent market timing scandals to act in ways which make their life easier.

Of course I time the market, and my definition of market timing is simiple.  I look at the intermediate term trends as best I can, and an in when the market is trending upwards; but out when the opposite is true.  I also do not think I am in any way obligated to stay in a fund which is not doing well, proficing I can find another that is doing better.  I do avoid selling before one or two months, of course.

I do think that I have traded too much at some times, and I think that some of that has been unprofitable.  I intend to work on that.  In many ways I need steadier nerves, or maybe some good drugs.

It is bad enough that the fund companies do not have your best interests at heart.  They just want the money to collect the fees, no matter what the performance.  The fact is that if I can tell that the market is declining, so can they.  And if I know to sell, they should know to hedge their portfolios by selling the futures.  If I found somebody who was really good at that, I would just hold his fund forever.  However, when a brokerage house like Brown or Waterhouse (where I can tell some horror stories) compounds the arbitrary and capricious actions of the fund company, there is no excuse for doing business with them if you can find an alternative.

Anyway, I am transferring all of my money out of Brown and into a Merrill Lynch Unlimited Advantage Account.  There is a 1% "wrap fee" for mutual funds, but you are exempted from paying the loads.  This gives me a number of new funds to consider.  The transfer will happen gradually, since there are some funds that Merrill Lynch cannot carry, and I do not want to sell those funds at this time.  I had thought to go to my friend Dave Serbin at AXA, but shortly my wife will retire and then I will put her account with Dave.  I do not want all of our assets at any one company.  I found a good guy at Merrill Lynch (the D. C. office at 1850 K St.), Timothy Mickey, who, unlike so many of the Merrill Lynch reps, actually seems to know how to trade, and although he operates very differently from me, he has helped his clients make good money.  In addition, he is no more a fan of buy and hold than I am.

I had a conversation with a pompous ass at Merrill Lynch who did not want my account because I would not promise to buy GNMAs.  What a loser!

I have developed a good system for trading ETFs.  It trades rather infrequently, and yet it gets about 35% per year - more if you go short during the sell periods.  Whenever I free up some cash I will probably move into that system.  I will post it shortly.  It is only backtested for about 3 years, since in fact there are not that many ETFs before then.  This system trades just about everything, including sector and foreign funds.

 March 17, 2004

Major sell signal for today.   I clearly should not have put more money into this market at the beginning of the month.  Still, this sell signal may be bogus.  There is a lot of uncertainty concerning the terrorist threat, and then we have triple witching on Friday.  I have already raised some cash, and I may put on a hedge.  So far this morning the futures are quite positive, so I may do nothing at all.

It is clear to me at this point that with the restrictions on trading open-ended funds I may have to change my strategy and concentrate on ETFs.  At least you can get out of those without having to pay a penalty or having somebody at the brokerage call up and criticize you.

Another problem with Brown's software.  Actually, this has been around for a long time - long enough for them to have fixed it.  They have in some cases internal symbols for some mutual funds.  I do not know why.  If you sell one of those funds for which they have an internal symbol, your ability to make another trade or even look at your open orders goes away.  You have to call on the phone and make the trades.  Then you have to convince them to give you the $5.00 fee for the sale vs the $19.00 that they charge for phone trades.  The whole thing just reeks of spaghetti computer code.  One part of the system changes something unrelated in another part of the system.

March 19, 2004

At this point I have raised some cash, but am still mostly in the market.  Oddly enough, my stuff did pretty well yesterday, even though the major indices were down.  The current market is news-driven, with the major news being that the Pakistanis have some high value guy surrounded.  Then there is a bomb scare at DC schools.  Hard to get any system to work in this environment.

March 26, 2004

Generally crummy market, but yesterday was a surprise on the upside.  Most of the stuff that will transfer to Merrill Lynch has done so, but of course at the time of the transfer one fund, SMCDX, put out a huge distribution, and no telling where that is.

March 30, 2004

I posted the ETF system on the site.  IWNMACD and MICROC2X went to buys tonight.  I will move into that ETF system tomorrow. [Ed Note, November 2004:  I abandoned that system, and took it off the site because I felt that the average gains on each sale were not large enough to make it worthwhile, given the spreads on some of the ETFs]