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MAB has pointed out to me that the Cycle Killers in my last post didn't perform all that well as a group.
Let's track Jim Cramer's cycle killers to the dollar and give him every possible benefit of the doubt. Let's say we bought $10,000 of each (to evenly diversify the risk), held all until yesterday (even though he told us to sell when they double, so we're really throwing him a bone here since we really should have sold CAT earlier), AND adjust for dividends and splits. That's $50,000 invested. Let's see how we did.
March 18, 2002 to April 30, 2008:
CAT: $25.95 to $81.88
AA: $34.17 to $34.78
IP: $37.46 to $26.17
DOW: $26.08 to $40.15
TYC: $108.43 to $46.79
Ending Balance:
CAT: $31,553
AA: $10,179
IP: $6,986
DOW: $15,395
TYC: $4,315
Grand Total: $68,428
$50,000 grew to $68,428 in 6 1/8th years.
(68428/50000)^(1/6.125) = 1.0526
That's 5.26% per year. Now let's see how we would have done with a 7-Year Treasury bought in March of 2002.
That's 5.14%.
Woohoo! The cycle killers performed almost exactly the same as a US Treasury Bond. Of course, in order to get that kind of cycle killing performance you had to ignore the advice to sell Caterpillar when it doubled. I wish to point that out again.
This musical tribute is probably the most fitting one I will ever have. Let's sum up why.
Group: Talking Heads
Album: Stop Making Sense
Song: Psycho Killer
That's a frickin' musical tribute miracle in my opinion. They come around maybe once in a million years or so, lol.
ICE: Mortgage Delinquency Rate Increased Year-over-year in October
-
From ICE: ICE First Look at Mortgage Performance: Serious delinquencies hit
17-month high while foreclosure activity remains historically muted
• At 3.45% ...
3 hours ago
3 comments:
Stag,
You are WAY to kind to Jimmy Cramer in your analysis. Almost ALL of the return came from NOT following his advice.
I remember being at a pension board meeting in 1999 and listening to an old timer say that people should realistically expect only 6% to 7% long term investment returns. People thought he was an idiot.
Mind you, the old timer was a professor at Wharton. I have a hunch a lot of pension and retirement plans are going to come up snake eyes for the boomers.
The thing that worries me about Jim is how many money mangers out there think (and act) just like him?
He's been serially calling the bottom on financials since last Nov. Every time he is wrong, but as one that is taking the other side of his trade, I have to respect if he is indicative of the market, the market can stay irrational longer than I can stay solvent.
MAB,
You are WAY to kind to Jimmy Cramer in your analysis. Almost ALL of the return came from NOT following his advice.
I thought I more than made up for it with the musical video and the heavy doses of sarcasm! I could be wrong though, lol.
AllanF,
You know it's bad when the new and improved "Winners of the New World" are actually his old losers of the old world. ;)
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