How to buy a glider affordably - redux

FROM 11 MONTHS AGO:

Only point was that one would need to know your predictions
for what to do for, say, the past 10-20 years to know
if your 2005 prediction was good or just lucky. Stock
newsletter writers have used 'survivor bias' in market
forecasting for years - trumpet your successful calls
and hide from the rest.

But rather than trying to go back a decade, we can
just start now. For those considering buying gliders
later in 2006, what's your forecast for the $/Euro
rate 12 months from now?


Well, I started about 35 years ago, but who's counting?

For the next 12 months I predict that the Euro will
continue its
decline, probably leveling off at a $1.05 to a $1.10.
I would
definitely not hedge the Euro, however. I would - and
will - keep a
substantial portion of my holdings in the ContraFund
(but I also own a
couple of dozen other funds, ContraFund is my largest
holding). And, at
this point, I would put the glider on order (if I were
in the market
for a new glider).

My recommendation is, if you have a glider on order,
hedge the FX rate, but if you think you can out-guess
the market, you're probably only half right.

9B

I don't out-guess the market; I find fund managers
who have a proven
track record of doing that. And I monitor there performance
to ensure
that they remain in the top 20-30% of their peers.

Tom
_________________________________________

Soooo, with a month to go on Tom's prediction how are
we doing?

Tom's advice:

Don't buy Euros in 11/05, instead buy ContraFund (versus
alternative funds, such as an S&P ETF or Euro-based
index) and wait.

Specific Euro prediction: weakening Euro from $1.20
in 11/05 to $1.10 or $1.05.

Actual performance:

Euro has strengthened from $1.20 to $1.25.

ContraFund: up 10.9% or 9.97% after management expenses
S&P 500 index: up 15.1%
DAX (German market) index: up 28.2%

So if you had taken $100,000 for a new glider (pick
your own number, but this one is nice and round) and
invested it in the ContraFund and taken it out yesterday
to buy Euros you would have 87,644 Euros or a 5% return
after adjusting for exchange rates.

If on the other had you had bought Euros a year ago
and put your money in a no-load DAX index you would
today have 107,017 Euros, or 23% more than under Tom's
strategy. In fact buying Euros and investing in a short-term
money market fund would have done better too.

Of course there is still a month to go so maybe the
ContraFund will make a big move, but over the past
12 months (and particularly the past 3 months the ContraFund
has significantly underperformend all the major market
indicies.

This was the point about chasing past returns - anyone
looking at the ContraFund performance up to last November
and deciding to invest with an expectation of above
market returns would have been disappointed.

Credit to Tom for putting his money where his mouth
was and making a prediction - many people don't have
the strength of their convictions. He just didn't turn
out to be right on either count up until now.

For reference:

http://finance.yahoo.com/charts#char...;range=1y;comp
are=^gspc+^dji;indicator=volume;charttype=line;cro sshair=on;logsca
le=on;source=

9B