Define My Beliefs: I cannot compete with the 'dream teams'. They are the 'elite professional investors'. They use technical analysis, trained analysts, and tips from the top. They will always know more than me. They will move the prices in a trend or randomly. They will set the direction of the trends. They will start and end the trends. They will act on their self interests and exclude my interests. I will never be able to interpret the fundamentals before or better than the 'dream teams'. Thus, I will never know (in time) how fundamentals impact the price of stocks. But, I can see the trends they create. Thus, while the dream teams will never be my friend, the trend may be my friend. Maybe -- if I buy a trend then I may be able to avoid losing money to them. I want to improve my confidence -- when using trend analysis tools. I want to improve my ability to catch a trend. I want to 'back-test/clarify' the relationship of a 'proposed investment process' against 'past price action'. I want to see what worked in the past. A 'trend analysis tool' will not tell me when a trend starts -- every time. So, I use an investing process and catch useful trends -- sometimes. I believe if an investing process has worked in the past then I can use it now. So, if the signal is sound, I will ride my winner. If a signal fails to follow then I will sell sooner and not later. Thus, I may be able to follow the 'dream teams'. The above is my current belief. I welcome suggestions for corrections from my fellow investors. Lou Schott www.tnl3000.com
Should I use asset allocation?
Some asset classes are U.S. stocks, international stocks, domestic bonds, gold, international bonds and real estate investment trusts. In an article on June 2006 in the AAII Journal, Mark Hulbert says, "When investors want to avoid losses over a 10-year duration then diversify into different asset classes. When the duration is less than one month then ... is useless." Apparently, the asset classes correlate in a manner that an investor can diversify. Thus, asset allocation can lower risk. But, other methods will lower risk -- also. I want to simplify my need to know about the correlations of asset allocation, so I will avoid international stocks, domestic & international bond and real estate investment trusts. All investments go up and down in price. I can get all of the ups and downs in price from our U.S. stocks.
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