That’s the name of the tune with stops…watch the spacing, and move up

with the market. You get whip-sawed occasionally, but you make the client

aware that it can happen, and if the client gets out with some big gains (like

the REITs mentioned by ALLREIT), they’re pretty happy. I haven’t met the

client yet who complains about locking in a gain and then watch the position

tumble after they’re on the sidelines.

[quote=AllREIT]
Buy sell decisions should be motivated by objective/rational reasons. Very dangerious to go chasing what is hot and avoiding what is cold.

[/quote]

I concur about chasing what is hot an avoiding what is cold. My post doesn't imply this rationale. However, selling a good investment to put in a poor investment is very dangerous to your clients bottom line. Especially when trying to can a market cycle into a 12 month period to do this.

Allreit my methods are adding to the traditional fundamentalist view.  I use fundamental analysis to get my stock list and technical analysis to know when to buy and to sell.  For mutual funds, etfs, shorting I use technical analysis alone. Anyone can buy and hold, sell best performers to buy the lowest performers. That is elementary, thats why jones does not want anyone to think for themselves. My clients know when a market shifts what is going to happen. I do take a lot of time to educate them. We know when we are going to sell, how much profit we will take when trigger points happen, when to tighten stops. Some positions could be for just a few weeks, some years.

Is this method for everyone, no. I do not want every prospect.  I understand my methods are a minority in the investment business. I simple believe it is because people want the easy method and this requires more time.  If you simply follow the fundamentalist view, you are not the man. You are relying on someone else to tell you what action to take. My success has been better than I have ever dreamed due to my clients and sharing with them my methodology. They now more than ever feel like they have control.  They have listen to all the big firms analyst tell them to keep holding on to Enron. When technical analysis would have told you over and over to get out.

[quote=Bamzor]

[quote=Big Taco]Philo, I don't understand why you would want to sell an asset class when it's down.  Isn't that a great opportunity to buy inexpensively when you rebalance?  Take profits from the areas that did well last year or quarter and reinvest into the etf that did poorly during that time? 

I had not considered placing stops on etfs.  Plus, market orders expire so quickly.[/quote]

Philo, I had to respond to this.

What??  Taco you must be kidding. Don't tell me at your clients annual review you say, "oh this small cap value did 31 percent last year we need to sell it or take profit and buy our worst performing large cap growth fund that did 4."  You could have done this the last 5 years and killed your clients returns.  Some of us don't follow the pie chart methodology.

Yes, we rebalance.  In our wrap accounts we'll sell parts of the positions that have grown larger than the particular asset allocation model supports, and take that profit and reinvest it in the positions that didn't do as well, or lost value.  We do this mechanicly, and take much of the emotion out.  Yes, we make some tactical asset allocation decisions, but we're still disciplined in our rebalancing approach and try to stay humble enough to realize that we can't consistently outguess the markets.

I suggest you explore what your company may not be teaching you.

I didn't learn the finer points of MPT and asset allocation at a weekend retreat.  Who won a nobel peace price for your methodology?

 Let's take for instance joneses preferred list. They never changed that lie until they got their ashes put against the flames from the revenue sharing. Voyager was on that list until it was a joke to see how long they could keep it there. 

Why are we talking about revenue sharing?  Our security selection involves filtering, then zephyr analysis, and further scrutinizing by us.  We don't pick them from the "preferred list".

What I am saying is if Philo sells an etf because it is down. He may be using a different methodology that says this class etf is not longer supported for whatever reason. He doesn't buy down, because it could 3 months, 6 month,s or 3 years before that class gets support.  Those of us that use technical analysis understand.

I'm aware of what technical analysis is, but thanks for not patronizing me.  regardless of whether or not an asset class is getting support for 3 months or 3 years, rebalancing will insure that we keep adding to the asset classes that aren't doing as well, which will in turn insure that these areas are bought at a discount.  They will come around again.  This also insures that we're not buying the classes that are "hot", and buying them at premium prices.

My opinion is to never put a time frame around the investment itself. It is what it is. 

It sounds like market timing to me.  maybe I misunderstand it. 

 Clients are the ones that think in 12's. We don't know when high is high and low is low.

precisely why we rebalance, and take the emotion out of the equation.