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Subject:  Re: Racy and Reasonable?? Date:  12/21/1999  5:54 AM
Author:  DHatch Number:  16689 of 88501

TMFPixy Date: 12/16/99 11:35 AM Number: 16413

<<It seems, then, that the FF suffers an upward as opposed to a downward volatility.>>

It may have been true during certain selected years IN THE PAST.

It may or may not prove to continue so in the future.

Don't even look at how poorly some of the Foolish Four porfolios might have done this last year. There appears to have been great variation depending upon which stocks might have been chosen and when the stocks might have been chosen and this sort of variation is not desireable in a retiree's portfolio.

<<Is that not a risk worth taking?>>

ABSOLUTELY NOT in a retirement portfolio for a retired person.

<<I certainly think so.>>


<<The proof is in the pudding, ...>>


The pudding appears fine in sample, however out-of-sample it has gone sour, partially rotten, and has too much crusty debris around the edges.

<<... and as far as I'm concerned the proof is there.>>

Only if one restricts one view to the years which include the original sample years.

<<Thus, unlike some critics, I have a tough time believing the FF is nothing but an anomaly of favorable statistics that's destined to fail.>>

Yes, it is tough. I know just what you mean and I used to feel the same way myself.

All I ask is that you keep an open mind and consider the possibilities and think deeply about recommending that 100% of a retiree's stock portfolio should be:

1. In only any one program or system;

2. In only four stocks, no matter how selected; and

3. Only in a program which has now been logically and intelligently questioned and about which there currently exists some serious and rational doubt.


P.S. Please stop attempting to defend a position which cannot be defended. Everyone is entitled to a change of mind when new information is made available. Total consistency is not always totally appropriate and is often the sign of a closed or clouded mind which should never apply to you because you are simply too darned bright to let it happen to you for very long.

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