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Hi Snoopy,
Valid points.
Regards,
Cris
----- Original Message -----
Sent: Sunday, February 08, 2004 10:05
AM
Subject: Re: [sharechat] Scope - TA/FA
Challenge
Hi Cristine,
I appreciate the initiative you have
brought to sharechat. Having
people go out there do their
homework and tell us what they think is
what this forum is all
about. I am not saying that I agree with
everything you
write, but then this forum would be a dull place all the
time if we all
agreed with each other over everything, wouldn't it?
I notice that,
characteristically, you have put significant time into
working out initial
boundaries for a T/A vs F/A competition. However, I
question
the need for such an approach as the two techniques are not
necessarily
mutually exclusive.
In simple english, if you start
assuming that either F/A or T/A is 'better'
and draw up a test to 'prove
it' one way or the other, the results will be
meaningless if the
proposition you start with is flawed.
Furthermore, particularly my
style of F/A is not amenable to such a
test. Why
not? Because I make no predictions at all on timing, or
how long I will have to hold an investment before it comes
right. My
sole aim is to recognise undervalued
situations. I have no control
over when Mr Market
wakes up and recognises the same
undervaluations that I do.
>
>If you proceed ...
>
>1) Suggested Time Frame, eg; 1.3.04
- 31.8.04? (All picks to be
posted
>by 1.3.04)
>
My
minimum investment time frame is three years. So tests on
such
a ridiculously short timeframe of a few months are really of no
interest
to me. To any contemplating investing in the
sharemarket when they
know they will need that money just a few months
later, my advice is -
don't!
>
>2)
Industry - all industries or specific?
>
I can't see any merit in
restricting the universe of industry in which you
can invest.
>
>3) Blue Chip only or open field?
>
I think the key point
here is that for a competition you need liquidity in
the shares that you
trade in. I would suggest that unless your share
trades every day,
in reasonable volume on every day in which the
market is open, it is not a
suitable candidate to be in any competition.
>
>4) Number
of picks - 2 x ASX, 2 x NZX (each for FA & TA)?
>
Far too few
shares I think. I would say five is a minimum. Anything
less and you are just running a random lottery. In fact I would
suggest
that running a share competition over a time frame of weeks , not
matter how many shares are selected, is akin to a random lottery
anyway.
>
>5) Valued on share price as at 1.3.04 and
31.8.04, or should value
>include total value, eg; dividends,
etc?
>
Of course any competition could not proceed without
including
dividends. They are part of the investment returns
so how could you
ever even contemplate excluding them?
>
> 6) Impartial Judge, or group consensus and if so what minimum
or
> maximum number will represent consensus?
>
I think any
result should be able to be measured. No judge or
consensus should be necessary.
>
> 7) Number of entrants
- limited or open field?
>
I guess you would want equal
representation from each discipline.
>
>8) Extenuating
circumstances: Will consideration be given when
>unforseen world or
local events have a dramatic negative influence
and
>if so, will
competition then focus on the best 1 out of the 2 to
> determine the
victor? (Hence possible need for impartial judge.)
>
No exception
for any extenuating circumstance. It is the same for
every
entrant. There are many traders who do not understand the
concept of 'risk of ruin'. That relates precisely to extenuating
events
and this is what finishes most of them off financially in the
end.
>
> 9) Volunteer to chart progress - weekly or
monthly?
>
In any competition like this the only result that
counts is the final one.
Oh, and one more thing on the Telstra T/A vs
F/A exchanges on
Telstra in this forum recently.
Phaedrus claims that trading Telstra
would have been a far better
proposition than buying and holding
Telstra, specifically over the last
three years. But the only information
he has given us is that he
bought TLS around May 2003 and sold
around November
2003. That is a mere six
months. Phaedrus
gave us no information on what he
did with those Telstra funds in over
two years of unaccounted
time. I'm not saying that Phaedrus didn't
do
better than I did over that period. I am saying that he
didn't give
us the information to allow us to make an effective
comparison.
I guess the implicit implication of saying nothing is that
you could have
your money sitting in the bank just waiting for the
opportunity to land
that trade. But one thing I would
guess is that Phaedrus certainly
didn't do that.
Perhaps Phaedrus was off using the money to make other positive
trades, in which case good on him. Perhaps he had a few net
losing
trades. Even if he did the latter, there is a
possibility he still came out
ahead of me, or maybe I am ahead of
him. But declaring that he
made a 10-15% profit on
Telstra shares over a six month period
neither proves nor disproves that
he outperformed my buy and hold
strategy with TLS over the most recent
three years.
SNOOPY
--
Message sent by
Snoopy
on Pegasus Mail version
4.02
----------------------------------
"Dogs have big tongues, so you
can bet they don't
bite them by
accident"
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