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No. of Recommendations: 8
The Fool has patted itself endlessly on the back with regards to its RM and RB strategies. At least....it did when the bull market was roaring. Now it seems they have discovered that their "buy and hold" strategy just doesn't work in bear markets and are trying to rejigger their perspectives and plans to make us forget the crappy returns the portfolios have provided as of late.

Guys, you came up with a plan and I say "stick with it". If you want to REFINE the strategies, that is, add additional criteria before making purchases, then do so. But don't sell current holdings on the basis of new criteria. You made a choice, have been arrogant about it, so stick to it.
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No. of Recommendations: 5
Guys, you came up with a plan and I say "stick with it". If you want to REFINE the strategies, that is, add additional criteria before making purchases, then do so. But don't sell current holdings on the basis of new criteria. You made a choice, have been arrogant about it, so stick to it.

I would have no objection to their sticking to their strategy, since they do not seem to have done that in the past. But, IMAO, they should sell those current holdings that do not stand up to the criterea of portfolio membership. Since some stocks were never Rule Makers, and are unlikely to become so, they should be sold. Whenever it is clear that a mistake was made, it is idiotic to not rectify it.

A foolish consistency is the hobgoblin of little minds.
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No. of Recommendations: 3
The Fool has patted itself endlessly on the back with regards to its RM and RB strategies

All due respect here, but this is one of the great myths that if enough people say it, you start to believe it. While I admit there were many times when we celebrated our good fortune, I think saying that we ever "endlessly patted ourselves on the back" is a little bit of overkill.

I'd love for someone to pull out 30 examples of us patting ourselves on the back, aka unduly praising how great and smart we are (which is different from being happy that things were going well.) I'll recant if someone can actually do it.

More of a rhetorical than anything else, but you get the point.

Bogey
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No. of Recommendations: 19
I'd love for someone to pull out 30 examples of us patting ourselves on the back, aka unduly praising how great and smart we are (which is different from being happy that things were going well.) I'll recant if someone can actually do it.

More of a rhetorical than anything else, but you get the point.


C'mon Bogey. The constant theme at TMF has been that professional analysts and mutual fund managers cannot beat the market averages but TMF's strategies, and anyone who followed them, could do so easily. Can you in good conscience stand today behind such statements, which were made many many times?

"Our goal was and is very simple: beat the market and show others how to do it - the more novice, the better. In out brief Foolish history, we've enabled thousands of average people who didn't previously know a dividend from a divning rod to invest their own money without the help of Armani suits, and crush Wall Street at its own game." - The Motley Fool Investment Guide, Chapter 1, Page 14.

"That Wall Street nightmare, an approach bearing the name Rule Maker, is revealed over the next five chapters. It will haunt well-heeled financial consultants (a.k.a. the brokers) in their sleep, because it demonstrates that assembling a stock portfolio is no more difficult, no more time consuming, and no riskier than buying from the universe of managed mutual funds. Quite the opposite, in fact: Our thesis for this entire book is that individuals will, on average, spend less time worrying about money, have greater control over their destiny, and substantially improve their results if they choose common stock over mutual funds." - Rule Breakers, Rule Makers, Chapter 10, page 160.

Elan
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No. of Recommendations: 10
Elan:

"C'mon Bogey. The constant theme at TMF has been that professional analysts and mutual fund managers cannot beat the market averages but TMF's strategies, and anyone who followed them, could do so easily. Can you in good conscience stand today behind such statements, which were made many many times?"

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Aww, shucks! You didn't really think we meant that, did you? We were just jesting!! After all, we're Fools, you know!
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It's right in the Fool's employee handbook. Step one is to deny having made the claims. Step two, in the event that someone actually takes the time to call you on step one, is to assign some innocent intent to the offending claims, and act amazed that anyone would take them seriously.


Mort.
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No. of Recommendations: 30
I'd love for someone to pull out 30 examples of us patting ourselves on the back, aka unduly praising how great and smart we are (which is different from being happy that things were going well.) I'll recant if someone can actually do it.

Nice ones, Elan. Here's some of my favorites:

http://www.fool.com/press/2000/release000207.htm

- TMF asking the rhetorical question. "Is the Motley Fool's David Gardner the Best Portfolio Manager in America?"


http://www.fool.com/portfolios/RuleBreaker/1998/RuleBreaker981222.htm

- From the Rule Breaker Port, observing:

Nine days remain in 1998 and the Rule Breaker Portfolio continues its rise unabated. The richest reward possibly gained from this, by all of us, is the lesson that it continually teaches: You and I can absolutely wallop the highly paid professionals and beat the stock market by investing Foolishly.

Today our severe market-beating continued. The port added 1.7% as the major indices that we compete against were flat or down. There's no secret to this portfolio's performance; no active trading; no crystal ball; no chart reading. We're simply investing in promising new companies that are leading the charge on new business fronts. Any Fool can do this. That, I humbly remind, is the entire premise on which the Motley Fool is built.



http://www.fool.com/portfolios/RuleBreaker/1998/RuleBreaker981215.htm

- Also from the RB Port, a commentary on how wonderful and revolutionary the RB approach is, and how the Wise have missed the boat. My favorite excerpts are about Amazon, natch:

In no way am I saying Amazon will repeat that long-term success [of Wal-Mart]! Nothing repeats in exactly the same way, and I simply don't know for sure how Amazon.com will play out over the next two decades. What I am saying is that Amazon's early success on the public markets is not a sign of a market gone mad, as the conventional thinkers and the Wise have been saying throughout the course of this 1129.88% move upward.

They have missed the boat. Again.



http://www.fool.com/portfolios/RuleBreaker/1998/RuleBreaker981221.htm

- Also from the RB Portfolio, this one celebrates how much better RB investing is than listening to those awful Wise folks. As an added bonus, Mary Meeker is praised for her excellent work for standing contrary to those who call Internet stocks overvalued.

It is ALL THE RAGE to say that the Internet stocks are insanely overpriced, a "bubble," or at the very least, way ahead of themselves. In fact, that herdlike conventional Wisdom is exactly what enables Rule-Breaking Fools like us to make good money on the markets. Indeed, I hope this collective opinion about "Internet stocks" remains the case for a long time. I don't like to see smart people like Mary Meeker get too much publicity!


http://www.fool.com/portfolios/RuleBreaker/1998/RuleBreaker981231.htm

- And to close, here's the final celebratory column from 1998. My favorite quote - "you should be beating the market more often than not." Yes, that's right - everyone could be above average, if only they would heed this portfolio's market-stomping advice!

Fellow Fools, check out those numbers for 1998 again, and -- if you haven't matched or bettered them -- realize that they can be your returns. They can and should be. You should be beating the market more often than not, and paying nobody (but yourself!) to do so.

This portfolio's performance stomped the market and beat 100% (all of 'em) of the high-fee mutual funds "offered" to you by an outdated, bloated industry of underperforming professionals. You can see how this portfolio has been managed since 1994, longer than many mutual funds have been around! Every move we make is provided to the public before we make it. There is nothing extraordinary about how the Rule Breaker Port was managed this year or any other. It's all done in the open for Fools everywhere to learn from, and to derive ideas in how to manage their own money. (See the 13 Steps to get started!)



Albaby
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No. of Recommendations: 1
Albaby:

Sorry, you can only recommend a post to the Best of once.


This is one of those rare times when I wish I had a hundred doppels.....


Mort.
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No. of Recommendations: 4
"I'd love for someone to pull out 30 examples of us patting ourselves on the back, aka unduly praising how great and smart we are (which is different from being happy that things were going well.) I'll recant if someone can actually do it."


A few others...

Anyone can do it... We'll show you how. http://www.fool.com/portfolios/rulebreaker/2000/rulebreaker000103.htm

Harboring a long-term perspective since it was launched in 1994, the Rule Breaker Portfolio has gained, with very little trading, 1715% versus the S&P 500's gain of 217% and the Nasdaq's 474% gain over the same period.

Our gain isn't magic. It's merely the result of good, longer-term investing -- investing the likes of which anyone can achieve, even though few professionals ever do. To learn about this real-money portfolio's investing style, please read the Rule Breaker's principles linked to the right, or start right here: Principle 1....



http://www.fool.com/portfolios/rulemaker/1999/rulemaker990104.htm

All told, this group of four Fools who ran the Rule Maker Portfolio did better last year than over 90% of all managed mutual funds with minimal expenses and tax costs. We hope that each of you had comparable or even better results than we did and look forward to an even better 1999. Here are our numbers:...


Mort.
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No. of Recommendations: 6
Bogey,

You asked for examples of TMFoolish hubris:

"crush your mutual funds in 15 minutes per year."

'nuff said

Mark
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No. of Recommendations: 4
You asked for examples of TMFoolish hubris: "crush your mutual funds in 15 minutes per year."

Actually, I asked for 30, but I'm with you. If there was any single marketing line we could ever take back as a company, it would be that one. It's still the one that makes most of us feel icky, especially with the Fool abandoning the Foolish 4. The potential irony in all of this is that I think you'll see a reinvigoration of the Dogs of the Dow in the coming years.

My basic theory is that the reason the returns started to come down was because of the tech revolution in the 90's. There was an such a small emphasis on paying dividends, and the new Dow companies pay even less out then before. My guess is that in the coming decade investors are simply going to demand to get yield again. You think Microsoft is going to perpetually find ways to invest that $36 billion stash at a positive ROI? I don't. They'll try a lot, but when institutional investors see that the company starts falling short on ROI for that money, they'll start to demand that the cash be paid out.

Of course, that's just my opinion, I could be wrong.

Bogey
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No. of Recommendations: 8
My basic theory is that the reason the returns started to come down was because of the tech revolution in the 90's. There was an such a small emphasis on paying dividends, and the new Dow companies pay even less out then before.

This is the part I don't get (or rather TMF doesn't get). I know you are only voicing your opinion about DDAs but it happens to mirror that officially put forth by TMF and so I feel I must respond.

First of all, the point of using high yield was not to identify stocks that paid good dividends but rather to identify stocks that had been beaten down. High-yield meant inefficently low priced stock. Therefore the level of yield is really irrelevant to the premise of the strategy but rather the yield of Dow stocks relative to each other was the purpose for the selection criteria. Given the assumptions of the selection process, it makes no sense why the amount of the dividend would matter.

Secondly, a vast majority of the academic research done on dividend paying stocks supports the theory that yield does not matter. A stock's expected future return already accounts for a stock's expected dividend. The fact that yield increases is correlated with a lower return based on just the stock price. Conversely lower yield is countered with a higher stock price return. TMF certainly likes to wave the dividend flag but there is no academic support for it.

Lastly, to claim that the F4 "didn't work" because of a reduced emphasis on paying dividends means that you discard the possibility that it was a datamining artifact out of hand. This means that you have to ignore the fact that:

The Folish Four and other DDA strategies had only average returns pre-sample.
The returns of the Folish Four and other DDA strategies had only average returns post-sample. http://boards.fool.com/Message.asp?mid=11885638&sort=username

Stocks not picked in the datamined month returned had only average returns.
http://boards.fool.com/Message.asp?mid=12607213

Stocks picked by the DDA methods have lower volatility than a comparable portfolio of randomly picked stocks. http://boards.fool.com/Message.asp?mid=11906155

Non-Dow stocks picked by the F4 method display no outperformance. http://boards.fool.com/Message.asp?mid=13908952&sort=username

If ever a backtesting method showed the bias of datamining it is the F4 and the DDA strategies. The returns of these methods behave exactly as we would expect if they were datamining artifacts. And yet TMF claims:

"Today, only about half of the Dow stocks are paying significant dividends . . . we believe that these factors may undermine the strategy in the future and may, in fact, have already been affecting it for the last few years."

"In retirement portfolios, the strategy could be useful, but we would only use it as the value component of a diversified portfolio. "

http://www.fool.com/ddow/2000/ddow001211.htm

If ever a strategy displayed the patterns of a datamining artifact it is the F4. IMO, for TMF not to accept that the out-performance of the F4 and DDA's were spurious outcomes of a datamining process is tantamount to claiming that no excessive datamining can ever occur.

For TMF to continue to promote their dividend theory, they must ignore the data and analysis performed on the F4 discussion board, ignore the data and analysis that they themselves performed and furthermore dismiss the academic anlysis performed by the most brilliant minds in the field of finance. Hubris indeed.
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No. of Recommendations: 15
Actually, I asked for 30, but I'm with you. If there was any single marketing line we could ever take back as a company, it would be that one. It's still the one that makes most of us feel icky, especially with the Fool abandoning the Foolish 4. The potential irony in all of this is that I think you'll see a reinvigoration of the Dogs of the Dow in the coming years.

My basic theory is that the reason the returns started to come down was because of the tech revolution in the 90's. There was an such a small emphasis on paying dividends, and the new Dow companies pay even less out then before. My guess is that in the coming decade investors are simply going to demand to get yield again. You think Microsoft is going to perpetually find ways to invest that $36 billion stash at a positive ROI? I don't. They'll try a lot, but when institutional investors see that the company starts falling short on ROI for that money, they'll start to demand that the cash be paid out.

Of course, that's just my opinion, I could be wrong.


You are wrong. TMF didn't abandon the Foolish Four due to a few underperforming years. It abandoned F4 because a proper analysis of 36 years of data showed that it never was a valid strategy. Its outperformance over the whole period, if there was any, was so small as to be statistically utterly insignificant.

To say that you think the F4 will come back, because dividends will come back into vogue, means that you absolutely do not understand why F4 was abandoned by TMF.

Elan
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No. of Recommendations: 2
TMF didn't abandon the Foolish Four due to a few underperforming years.

To say that you think the F4 will come back, because dividends will come back into vogue

Elan,

I didn't say that we abandonded F4 because of a few underperforming years. I also didn't say that I thought that the Fool 4 would come back. The only thing I said about the Foolish 4 was that the marketing line made some of us feel icky. What I actually said was:

"I think you'll see a reinvigoration of the Dogs of the Dow in the coming years. "

That's all I said, and I meant is a more sweeping generalization, not about a specific tactic to be employed here at the Fool. The larger point of my post was that yield has been dead, not just because companies are being priced inefficiently in the marketplace, but because corporate America has moved away from the notion that paying dividends matters.

Time will tell.

Bogey
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No. of Recommendations: 5
I didn't say that we abandonded F4 because of a few underperforming years.

Then what did you mean when you wrote - "My basic theory is that the reason the returns started to come down was because of the tech revolution in the 90's."?

What I actually said was:

"I think you'll see a reinvigoration of the Dogs of the Dow in the coming years. "

That's all I said, and I meant is a more sweeping generalization, not about a specific tactic to be employed here at the Fool.


More accurately, you said "...with the Fool abandoning the Foolish 4. The potential irony in all of this is that I think you'll see a reinvigoration of the Dogs of the Dow in the coming years."

What irony might that be? I take it to mean - ironically TMF may have abandoned the F4 just as it was about to outperform ("reinvigorated"). If that's not what you meant, maybe I'm not smart enough to understand your hidden meaning.

Elan
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No. of Recommendations: 2
Elan wrote,

"What irony might that be? I take it to mean - ironically TMF may have abandoned the F4 just as it was about to outperform ("reinvigorated"). If that's not what you meant, maybe I'm not smart enough to understand your hidden meaning."

Too many Fools are full of it. Simple as that.


Mort.
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No. of Recommendations: 1
TMF constantly warned its listeners and web users not to mimic its attempts to devise strategies to beat the overall market. RM and RB are the strategies most touted, admittedly, at TMF. However, if you believe that TMF ever advised even the most experienced to not have a broad index fund like VTI as their core investment, you need to go back to Fool School.
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No. of Recommendations: 1
<<TMF constantly warned its listeners and web users not to mimic its attempts to devise strategies to beat the overall market. RM and RB are the strategies most touted, admittedly, at TMF. However, if you believe that TMF ever advised even the most experienced to not have a broad index fund like VTI as their core investment, you need to go back to Fool School.

Of course they did. And I never did mimic them. My statement is that they constantly touted themselves and their strategy, did really well during the greatest bull market of all time, and now that their stratergies are being hammered, they are abandoning their philosophy which they touted and bragged about for so long and trying to create a new strategy in its place.

This is hypocrisy, something I really think is just as disgusting as the "wise" they claim to be superior to.

TMF Bogey:
You asked for 30 examples, and I think you've been presented with about that many from other posters. How do you respond?
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No. of Recommendations: 5
lmsmedley:

"TMF Bogey:
You asked for 30 examples, and I think you've been presented with about that many from other posters. How do you respond?"



Check his last few posts. Apparently, he responded by attempting to change the subject, and subsequently leaving. His bluff was called.

I doubt he had any intention of responding. He simply hoped that he could "lay down the gauntlet", so to speak, and then when nobody called him on it the board's readership would assume he must be right.


Mort.
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No. of Recommendations: 0
I doubt he had any intention of responding.

Um...not true. I've just been occupied with other things. It happens, ya know? I'll respond.

Bogey
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No. of Recommendations: 1
Amen!!!!!!!!!!!
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No. of Recommendations: 5
Me:

"I doubt he had any intention of responding."

Bogey:

"Um...not true. I've just been occupied with other things. It happens, ya know? I'll respond."


A week since your last statement; two weeks since the original discussion. Found that 'time', yet, to respond?

You know darn well you never intended to respond, because you didn't think anyone would take the time to call you on your Fool-defense bluff. A few - notably Albaby and Elan - did so (and rather well), and your response was to somehow twist the thread into a dow-dogs discussion and then quietly walk away.

Is suppose congrats are in order for you, because you seem to have pulled it off. Only one or two posters ("vocal minority" types, at that - who needs them?) even noticed....
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No. of Recommendations: 6
You know darn well you never intended to respond

Mort,

Again, you're wrong. The problem is that an appropriate and well- thought-out/documented response isn't something you whip off in 5 minutes. It's something that takes a fair amount of time if you're going to do it any justice. Ya see, it only takes 30 seconds to make outlandish statements without any proper support. It takes much longer to actually rebuff the statement. And, while I thought for a little while that it was worth it to defend my answer to you, your arrogance makes me wonder if the hour or more I planned to put into the post is actually worth the time.

So, we'll see. If I do respond, it won't be to satisfy you.

Bogey
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No. of Recommendations: 12
It doesn't need to take an hour or more, Bogey.... Here's where the whole thing started:

Other poster: "The Fool has patted itself endlessly on the back with regards to its RM and RB strategies..."

You, in response:

"All due respect here, but this is one of the great myths that if enough people say it, you start to believe it. While I admit there were many times when we celebrated our good fortune, I think saying that we ever "endlessly patted ourselves on the back" is a little bit of overkill.

I'd love for someone to pull out 30 examples of us patting ourselves on the back, aka unduly praising how great and smart we are (which is different from being happy that things were going well.) I'll recant if someone can actually do it."


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The first bolded part of your statement looks a lot like what you accuse me of (making statements without proper support).

The second bolded section is the main point, though. You said you'd recant. That doesn't take hours' worth of your time to do.

Elann and Albaby fed you quite a few excellent examples of the Fool's penchant for self-back-patting. If you want to discount their efforts because they failed to reach your arbitrary and rather lofty request of 30 examples, then I suppose you can choose to do so.

Or, you could have simply acknowledged that, as is obvious to apparently everyone but you, the Fool does indeed have a history of patting its own back. You could also have used the opportunity to stress that the Fool has learned some things over the years, and has greatly reduced that tendency (which I believe it has).

Mort.
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No. of Recommendations: 8
A week since your last statement; two weeks since the original discussion. Found that 'time', yet, to respond?

As an obeservation it seems to me that for the boards I read Bogey is the sole TMF responsible. In addition he writes the rule maker column. I get the feeling that he works 24 hours-a-day. There's only so much an individual can do so let's go easy on response time, although we as usual can expect a reply.

Datasnooper.
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