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Author: galtsgulch One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 74786  
Subject: Re: The Anti-Motley Fool viewpoint Date: 2/17/1998 2:01 PM
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<<So, you've still failed to show where there is any "danger" in this.>>

I would like to withdraw the word danger. This is obviously too strong a word for people who invest in blue chips. The statement that I wish to defend is: "It is unlikely for the DOGS to beat the market over the next 5 (or more) years."

<<Yes, winning 8 out of 10 coin flips proves nothing. But outperforming the market over 10, 20, 30, 40, 50, 60, and 70 year periods should tell you something. (This is where the common sense comes in.)>>

Fine, change my example to 80 out of 100 times, that's not the point. The point is that correlation is not proof.

Not to get on my philosophy of science soapbox… but this is exactly what has led so many people astray on environmental issues. The fact that there has been a temperature rise over the last so many years does not prove that the temperature rise is man made. Unfortunately, so many scientifically illiterate people have been duped into believing this claim, I have more or less given up hope. As long as they believe that correlation proves the case, regardless of establishing a causal relationship, they are impervious to reason.

[OK, I'm stepping off my soapbox now.]

<< *at what point* does any of this become statistically significant to you?>>

Depends what you mean by "statistically significant" in this case. If you are asking me how many times will the DOGS have to beat the market before I believe in the strategy the answer is: not in our lifetimes. This is because I *understand* that there is no reason why this HAS to be so.

<< And BTW, in a post to Pixy you said the Dog theories rely on a strong economy and
cherry-picking the best stocks... but the periods I've given you above take into account both weak
and strong economies, and there is a long enough time horizon there to negate any "luck factor" in
picking good stocks. >>

Are you serious? The US economy hasn't been strong in the 20th century? Let me assure you that if you followed a DOGS strategy in the Zambia your average returns would have been quite low.

Cheers,
John Power
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Author: orangeblood Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1832 of 74786
Subject: Re: The Anti-Motley Fool viewpoint Date: 2/17/1998 8:25 PM
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>>><< And BTW, in a post to Pixy you said the Dog theories rely on a strong economy and
cherry-picking the best stocks... but the periods I've given you above take into account both weak
and strong economies, and there is a long enough time horizon there to negate any "luck factor" in
picking good stocks. >>

Are you serious? The US economy hasn't been strong in the 20th century?<<<<<<

Huh? I said it has been through strong and weak cycles. Does the Great Depression mean anything to you?

The Dow theories have been backtested through all of that also.

>>>Let me assure you that if you followed a DOGS strategy in the Zambia your average returns would have been quite low.<<<

The Dow theories are unique to the U.S. market. Others have explained why on this board, I won't go into that. The theories *may* work in other markets, but too many factors are different.

>>>>Not to get on my philosophy of science soapbox… but this is exactly what has led so many people astray on environmental issues. The fact that there has been a temperature rise over the last so many years does not prove that the temperature rise is man made. Unfortunately, so many scientifically illiterate people have been duped into believing this claim, I have more or less given up hope. As long as they believe that correlation proves the case, regardless of establishing a causal relationship, they are impervious to reason.<<<<


First, many scientifically literate people also believe this. (There is valid reasoning on both sides of this argument.) Second, absolutely no one, to my knowledge, assumes the temp rise to be man-made *solely* because there has been a temp rise. They believe it because there are factors to support the theory. Same with the Dow theory. The reasons why it might work are outlined on this web site and in the Gardner's books. If you were able to outline why you don't think their reasoning is valid, I would respect that and agree to disagree. But thus far you have not refuted a single one of the reasons behind the Dow theory, you've only said they don't exist.


orangeblood

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Author: galtsgulch One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1844 of 74786
Subject: Re: The Anti-Motley Fool viewpoint Date: 2/18/1998 1:53 PM
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<< Huh? I said it has been through strong and weak cycles. Does the Great Depression mean anything
to you?>>

While both market investors and DOGS need a strong economy, DOGS claim to have the ability to cherry pick the market. Historically, in a bull market DOGS go UP MORE than the market and go DOWN LESS in a bear market. I claim that DOGS will not automatically go up in a bear market (in the future) -- they are indeed sensitive to the strength of the economy. If you try to implement DOGS in Zambia you will find the strategy fails. Or do you think that DOGS are immune to the strength of the economy? If not, then you admit that you need both a strong economy and the ability to cherry-pick the winners. QED

<< First, many scientifically literate people also believe this [environmentalism]. (There is valid reasoning on both sides of this argument.)>>

This answer does not surprise me given your willingness to trust correlation without ESTABLISHING cause.

<<Second, absolutely no one, to my knowledge, assumes the temp rise to be man-made *solely* because there has been a temp rise.>>

No, not solely. Just as DOG advocates have their plausibility arguments the environmentalist have theirs. However, for both groups this is their central piece of evidence. Unfortunately, there is an abundance of scientifically illiterate folks out there for them to sell books to or scare. And so it goes.

<<But thus far you have not refuted a single one of the reasons behind the Dow theory, you've only said they don't exist.>>

DOG advocates are asserting a positive claim and thus are obligated to prove they are right since one cannot, logically, prove a negative.

Cheers,
John Power


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Author: orangeblood Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1851 of 74786
Subject: Re: The Anti-Motley Fool viewpoint Date: 2/18/1998 10:06 PM
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>>>While both market investors and DOGS need a strong economy, DOGS claim to have the ability to cherry pick the market.<<<

Dogs claim only a good chance at beating market averages over the long term.

>>><< First, many scientifically literate people also believe this [environmentalism]. (There is valid reasoning on both sides of this argument.)>>

This answer does not surprise me given your willingness to trust correlation without ESTABLISHING cause.<<<

I have no such willingness. If you wish to discuss this particular environmental issue further, we should do so offline.


>>><<But thus far you have not refuted a single one of the reasons behind the Dow theory, you've only said they don't exist.>>

>DOG advocates are asserting a positive claim and thus are obligated to prove they are right since one cannot, logically, prove a negative.<<<<

Hey, *I* am not the one who started this thread!<g> The reasons why the Dow Dividend approach may be successful (as well as arguments against it) are laid out in the Motley Fool Investment Guide. I find it humorous that you choose not to refute a single one of those reasons.

Regards,

orangeblood

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Author: galtsgulch One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1858 of 74786
Subject: Re: The Anti-Motley Fool viewpoint Date: 2/19/1998 11:04 AM
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<< I find it humorous that you choose not to refute a single one of those reasons.>>

You do realize, of course, that your assertion that I did not give any reasons isn't true. AAMOF, I find it very humorous that you deleted most of my previous post and did not respond to it. For the other readers here is what orangeblood snipped.

"While both market investors and DOGS need a strong economy, DOGS claim to have the ability to cherry pick the market. Historically, in a bull market DOGS go UP MORE than the market and go DOWN LESS in a bear market. I claim that DOGS will not automatically go up in a bear market (in the future) -- they are indeed sensitive to the strength of the economy. If you try to implement DOGS in Zambia you will find the strategy fails. Or do you think that DOGS are immune to the strength of the economy? If not, then you admit that you need both a strong economy and the ability to cherry-pick the winners. QED"

On top of the problem I stated above, there are many problems in logical thinking that DOGS are making. Among their mistaken views is their belief that mutual fund managers (who spend their life at this game) wouldn't copy this technique since 90% of them lost to the S&P 500 recently. That just a few simple-minded "Aw Shucks" kind of guys could keep the lid on the secret. I've also noticed that many DOGS have fundamental problems understanding how prices are set in a market. (Please understand that I'm in no way agreeing that the DOGS works, I'm just pointing out another one of the fantastic ideas they must cling to in order to maintain their beliefs.)

Among the problems oragneblood is having is that by *proof* he means something equivalent to a crystal ball that can guarantee that the DOGS won't beat the market. And as long as he doesn't get this, he will go on happily believing the DOGS strategy until it losses to the market for 10 years in a row. At which point, I can only imagine he will become my strongest ally. :-)

I don't think there is any point going on. Short of a crystal ball, I don't think anything could dissuade orangeblood.

cheers,
John Power


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Author: orangeblood Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1867 of 74786
Subject: Re: The Anti-Motley Fool viewpoint Date: 2/19/1998 5:43 PM
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Geez John, you're out of control. You said:

>>>>I find it very humorous that you deleted most of my previous post and did not respond to it. For the other readers here is what orangeblood snipped.

"While both market investors and DOGS need a strong economy, DOGS claim to have the ability to cherry pick the market. Historically, in a bull market DOGS go UP MORE than the market and go DOWN LESS in a bear market. I claim that DOGS will not automatically go up in a bear market (in the future) -- they are indeed sensitive to the strength of the economy. If you try to implement DOGS in Zambia you will find the strategy fails. Or do you think that DOGS are immune to the strength of the economy? If not, then you admit that you need both a strong economy and the ability to cherry-pick the winners. QED"<<<<<

Then, what the heck is this:
----------
>>>While both market investors and DOGS need a strong economy, DOGS claim to have the ability to cherry pick the market.<<<

Dogs claim only a good chance at beating market averages over the long term.
-----------

The lead sentence to the graph you said I snipped is right there for all to see. But this is what I expect from you by now.... ignore my points and try to turn the conversation elsewhere. The rest of the paragraph didn't need to be quoted, *especially* since I already rebuted your Zambia point (which you chose to ignore, as usual). AND, NOTE TO EVERYONE: Do you see (above) what John snipped out of my response, and chose not to reply to?


>>>Among their mistaken views is their belief that mutual fund managers (who spend their life at this game) wouldn't copy this technique since 90% of them lost to the S&P 500 recently.<<<

Like most of your other points, this one makes no sense. No one believes this.


>>>Among the problems oragneblood is having is that by *proof* he means something equivalent to a crystal ball that can guarantee that the DOGS won't beat the market.<<<

Yet another inaccuracy on your part. I've never asked for proof of anything. At first I enjoyed this thread, because I thought you might provide some well-thought-out points as to why the Dog theories may be flawed. Boy was I wrong!


>>>I don't think there is any point going on.<<<

Yes, so you've said for the second note in a row now.


>>>Short of a crystal ball, I don't think anything could dissuade orangeblood.<<<

Oh just a little more direct debate on the various points, and less talking in circles and ignoring my points would be just fine, thank you.

Regards,

orangeblood



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Author: orangeblood Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1868 of 74786
Subject: Re: The Anti-Motley Fool viewpoint Date: 2/19/1998 5:53 PM
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One other note:

There is a good debate on the Beating The Dow board right now called "Debunking the Dow Theory."

Lots of meaty discussion, with folks on both sides of the issue bringing up good points.

Regards,

orangeblood

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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1870 of 74786
Subject: Re: The Anti-Motley Fool viewpoint Date: 2/19/1998 7:31 PM
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<<One other note:

There is a good debate on the Beating The Dow board right now called "Debunking the Dow Theory."

Lots of meaty discussion, with folks on both sides of the issue bringing up good points.>>

And FWIW from this Fool, that's precisely where THIS particular discussion belongs instead of in this folder.

Regards.....Pixy

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