Dancing with the Trend

November 2017

Dancing with the Trend

Article Summaries: 7/2017 - 11/2017

by Greg Morris

Periodically I write an article that reviews the past few months of articles.  Why on Earth would I do this?  Primarily for two reasons.  One is that many new readers are involved and often they do not go back and look at the past articles.  Two is that my articles are rarely tied to anything that is happening in the markets.  Generally, they are about experiences I have had as a technical analyst for 45 years; the good, the bad, and the ugly.  You can click on the headers for a link to the article. Top 5 Investing Mistakes When Read More 

Dancing with the Trend

The Deception of Average

by Greg Morris

I mentioned in the last article I would discuss ‘average’ soon; so here it is, sooner than I thought. The “World of Finance” is fraught with misleading information.  The use of average is one that needs a discussion.  Chart A is a chart showing the compounded rates of return for a variety of asset classes.  If I were selling you a buy and hold strategy, or an index fund, I would love this chart.  From this chart showing 85 years of data, I could say that if you had invested in small cap stocks you would have averaged 11.93% a year, and if you had invested in large cap Read More 

Dancing with the Trend

WHY do Most Investors do so Poorly?

by Greg Morris

There are a number of companies that track performance for various asset classes, including the performance of investors.  Table A, from J.P. Morgan, shows the Average Investor’s 20-year annualized returns of only 2.3%.  I have reproduced the small print below the table because it explains the process used.  And I cannot read the small print. Source: J.P. Morgan Asset Management; (Top) Barclays, FactSet, Standard & Poor’s; (Bottom) Dalbar Inc. Indexes used are as follows: REITS: NAREIT Equity REIT Index, EAFE: MSCI EAFE, Oil: WTI Index Read More 

Dancing with the Trend

Zahorchak Revisited

by Greg Morris

A couple of years ago I introduced a trend following technique which I first learned in the late 1970s.  I thought this would be a good time to review it; especially since this technique is now available in StockCharts.com’s symbol catalog. A trend follower’s lament: “Only the market itself can tell you what to do.  Everything else is irrelevant.  While the irrelevant items tell you what the market ought to be doing, this may or may not be what it actually is doing.”  To determine what the market is doing compute the following: Read More