At 06:06 22 November 2005, wrote:
A year ago I suggested that the way to counter the
high Euro was to
invest your money and wait. As an investment vehicle
I recommended the
Fidelity ContraFund (FCNTX). Now, I am not one to make
idle
suggestions: I am personally heavily invested in this
fund.

Here are the results one year later:

Euro: DOWN 9.4%
ContraFund: UP 20.4%

Difference: 30.2%

Of course, most will have to pay capital gains on the
ContraFund, which
is 15% max in the U.S., so the 20.4% becomes 17.3%
(or more).

Tom Seim
Richland, WA

People should look up 'suvivor bias' to gets a sense
for how to assess backward-looking views of investment
performance (example below).

Start up ten or twenty investment newsletters, and
in each of them publish a different prediction about
where the market is headed: 'The bulls will return!',
'The bear draws near!', 'Market to flat-line!'. At
the end of the year discontinue the newsletters that
got it wrong but keep publishing the winners--with
new random predictions. Start up a fresh batch to replace
the losers. After a few years you'll always have a
newsletter lying around that you can point to as proof
of your financial genius--the one that, by dumb luck,
got it right five years running. If only investors
had subscribed they'd all be rich by now! If anybody
mentions the losers just tell them you are skilled
enough to know when to cut your losses, then show them
a pretty chart on glossy paper depicting the fortunes
they'd have made if only they'd followed your advice.


This scam depends on 'survivor bias', since only the
successful newsletters are still around you seem to
have a good track record. Only if someone looks back
at the failed publications will they realize you operate
on sheer dumb luck. Welcome to the world of financial
publishing, investment advice--and mutual fund management.


9B