At 18:36 31 October 2006, wrote:

Andy,

You better go back and reread your post yourself. There
was never any
mention of a 'bet'. Quite the contrary, I commented
on your complete
lack of any recommendations whatsoever. The only thing
you recommended
was to (maybe) order the glider and take a currency
hedge position,
which will be useless to your average investor. Mainly,
you criticized
mutual fund newsletters, but offered up no alternative.

Go back to Nov 15, 2004 and reread my ORIGINAL post:

Yes, invest your money and wait. For instance, if you
put your money
in a high quality mutual fund you will begin accumulating
principal.
Take your $70,000 and put in a Morningstar 5-star fund
(i.e. Fidelity
Contrafund). If you average 15% return the numbers
a
Year Amount
0 $70000
1 80500
2 92575
3 106461
4 122430
5 140795
6 161914
etc.

At some point the price of the glider, converted from
euros, is going
to be less than your investment. BUY THE GLIDER! This
is, simply, the
power of compounded interest.


Don't agree with my numbers? Then put your damn money
into a mattress
and see what happens!

--------------

Since then (Nov 2004) the ContraFund has gained 35%
vs 22% for the S&P
500. This is a compound rate of return over 16%. Personally,
I am VERY
pleased with that performance. If you left it in 3
month Tresury bills
(the present day version of the matress) you might
have gottern 8%.
The Euro has dropped from 1.2933 to 1.273 in the same
period (despite
one prediction on RAS that it would go to 1.35!). So
the advice was
excellent by any reasonable measure. Picking apart
performance
differences over a short time period (6 months) demonstrates
an
appalling lack of understanding on how markets work.
This is, indeed,
very bad advice.

Tom


Hey Tom,

Glad to see you haven't lost your fiestiness. ;-)

Ad hominem arguments notwithstanding...

Since the question was what should someone contemplating
a new glider purchase in November 2005 do, I find it
an interesting strategy to suggest that they go back
in time to invest their money. That is a classic symptom
of chasing past returns. Where do you keep your time
machine?

You are right, I did not mention a specific Euro hedging
strategy, but the most aggressive would be to buy all
Euros and invest in a local currency index like the
DAX. You could put any mix of dollars in an S&P 500
index and Euros in the DAX and it would have outperformed
a dollars/ContraFund strategy.

Most of us are long term buy and hold, so I don't know
where you get the idea that we are not. I have a mix
of index and actively managed accounts (mostly hedge
funds and internaltional markets for the latter). Looking
back 5+ years the ContraFund had done better that the
broad market - not a point in dispute. The question
is what will it do going forward? That is the question
confronting an investor today. Since our discussion
started a year ago, it defies reason to assume returns
from prior to November 2005.

I also agree that 12 months is short to judge the success
of an investment strategy - so maybe we should renew
the 'non-bet' for another year, 2-years? How long
would ContraFund need to underperform before it loses
its luster for you? Do you somehow think that its 5-year
history before 2006 guarantees that ContraFund will
out-perform a broad index (by more than its 1% load)?
Unless you have some insight into WHY a fund has outperformed
in the past and some evidence that that specific strategy
will continue to hold up, just picking top quartile
funds or managers over any period IS the definition
of chasing past returns - you can look it up. Oh, but
you don't read textbooks - that's for egghead professors
who don't understand real investing.

I admire your courage to keep shooting in the face
of mounting losses and I'm glad you haven't gone offline
- it would have spoiled the fun.

;-)

9B