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From its inception, when the Feste Award contest was announced, this board has been unique. Many days, when national, world and stock market news was enough to disillusion even the most dedicated optimist, I came here for comic relief, making it easier to regain perspective and sometimes even put those rose colored glasses back on.

While some of the rawer material has been a little extreme for my taste, many of the writings of MichaelRead, whose existence in the Fool Community was unknown to me previously, have been variously humorous, enlightening, educational and at times brilliant. "The interview that never was 111" is a delightful, intelligent piece of creative writing that this English professor would have easily given an A+.

As a student and leader of various TMF investment seminars, I have been impressed with the expertise, insight and communication skills of some totally dedicated Fools. I've seen them encourage and share their knowledge with thousands of novice and veteran investors. A few, such as Bruce Brown, have consistently been outstanding as team leaders and as greatly-valued regular contributors to several social and investment discussion boards and have authored Fool articles.

It seemed fitting that someone who has contributed so much to so many and is by far the most continually recommended and loved in all of Fooldom should be honored by TMF with the Feste Award. Regrettably it was decided that the Feste Award winners would be selected by cybervoting. It was inevitable that the system could be skewed with a little creative manipulation. That's the way politics works! In this case there was a bloc vote after some heavy lobbying by a special interest group. Those of us who pride ourselves on being independent thinkers probably could never have pulled that off. Give credit where credit is due and congratulate those who did.

The main attraction of this board has been light hearted banter and true satire without mean-spirited negativism, so pervasive on so many of the other discussion boards. These latest threads have threatened to reduce the board to their level.

It's human nature to defend your turf, but I hope both "sides" can just agree to disagree and return this board to its former "self". There are days when we could all benefit from a little comic relief.

Judy $:-D

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BTW: From what I have observed, the "few thousand" members of the MI community are fanatical in their support of and have fierce loyalty to their methods. Since TMF is basically a community of investors, maybe those of us who are not part of their insular community should find out why.

LAPropDoc said, in explaining this phenomenon, As I see it, there are two types of communities here on the Fool. Social and Investment. One makes you think, the other makes you money. Neither is inheritantly better than the other. That must mean that the members of the MI community have made a mint on their investments, while most investors have watched their portfolios drip red as the bottom line spiraled downward.

I, for one, would be interested in knowing what percentage gain individual members of the MI community have made on their Total % Return since they embraced that particular investment strategy. With a powerful enough incentive, even the most mathematically challenged of us can learn to appreciate and work with the requisite numbers.


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It would also be interesting to know how many people have given up on mechanical investing, having lost large sums of money.

Somebody over there posted that he had lost 60% last year. Oddly enough, it did not seem to bother him - he said something about it just being in the statistics.

I think that while mechanical investing is a good idea, the version of it on that board is a mistake for (at least) the following reasons:

(1) There is no market timing element
(2) Decisions are made at arbitrary intervals - e. g. first of the month, first of the quarter, first of the year, etc.
(3) There is little concept of technical analysis.
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BTW: ...

LAPropDoc said, in explaining this phenomenon, As I see it, there are two types of communities here on the Fool. Social and Investment. One makes you think, the other makes you money. Neither is inheritantly better than the other. That must mean that the members of the MI community have made a mint on their investments, while most investors have watched their portfolios drip red as the bottom line spiraled downward.

I, for one, would be interested in knowing what percentage gain individual members of the MI community have made on their Total % Return since they embraced that particular investment strategy. With a powerful enough incentive, even the most mathematically challenged of us can learn to appreciate and work with the requisite numbers.


Began mechanical investing 12/31/97 - Total return since then thru this evening:

S&P 500 (excluding dividends) +18.11%
"My" MI Portfolio +56.53%
My non-MI Portfolio
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I think that while mechanical investing is a good idea, the version of it on that board is a mistake for (at least) the following reasons:

(1) There is no market timing element


Funny... that's exactly why I like it. I haven't seen a market timing system with which I am comfortable.

Actually, there have been some discussions in the last couple of months regarding methods of shifting allocations between stocks and cash. Try reading posts on the Arezi ratio.

(2) Decisions are made at arbitrary intervals - e. g. first of the month, first of the quarter, first of the year, etc.


Actually, it's not that decisions are made on the first of everything, merely on a fixed interval. Those intervals aren't arbitrary - they're based on the granularity of the data that we possess. However, you are right - in general, hold times are fixed at the time of purchase. These hold times have been backtested to perform well. Most intelligent MIers would agree that, like any investing system (including plain old intuition), there is an element of faith that patterns observed in the past will recur in the future. The same assumption has to apply to technical analysis, by the way, or all charting patterns are worthless as predictors.

(3) There is little concept of technical analysis.

Actually, many attempts have been made to incorporate TA. As the available data has increased from monthly to weekly to daily, testing aspects of TA becomes more feasible. The one rock solid requirement for an MIer, though, is that the TA be quantifiable and backtestable.

Somebody over there posted that he had lost 60% last year. Oddly enough, it did not seem to bother him - he said something about it just being in the statistics.

It sure would bother me. But just about anyone who lost that much using ANY system was ignoring basic rules of having a diversified portfolio. So I don't think one should use such examples as an overall condemnation.

Apologies to anyone who finds this post insufficiently light-hearted for this board. :)

Eric
MI returns in 2001: +1.5%. Beat the market. Could have been luck. Could have been MI. I'll never know.
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BTW: ...

LAPropDoc said, in explaining this phenomenon, As I see it, there are two types of communities here on the Fool. Social and Investment. One makes you think, the other makes you money. Neither is inheritantly better than the other. That must mean that the members of the MI community have made a mint on their investments, while most investors have watched their portfolios drip red as the bottom line spiraled downward.

I, for one, would be interested in knowing what percentage gain individual members of the MI community have made on their Total % Return since they embraced that particular investment strategy. With a powerful enough incentive, even the most mathematically challenged of us can learn to appreciate and work with the requisite numbers.



Sorry posted too soon :(

Began mechanical investing 12/31/97 - Total return since then thru this evening:

S&P 500 (excluding dividends) +18.11%
My "MI" Portfolio +56.53%
My "non-MI" Portfolio +.58%
My "total" protfolio +34.15%

All percentages are total return since 12/31/97 NOT CAGR.

As you can see, I really know how to pick'em on my own...that's why I'm in MI for the majority of my funds.

Some have done better in MI - Some have done worse...Just my results.
I'm not a major contributor, or mathematician, or statistician, or any kind of ..ian - just one of the "thousands" (you give us far too much credit!) over on that other board. Anybody can do it - but it does take significant time (no free lunch here either) to understand the basics, find a strategy that works for you, and and build confidence and the commitment to actually jump in.

BB

gritton rules! :)
<return to lurk>
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I, for one, would be interested in knowing what percentage gain individual members of the MI community have made on their Total % Return since they embraced that particular investment strategy. With a powerful enough incentive, even the most mathematically challenged of us can learn to appreciate and work with the requisite numbers.

Judy2212,

I've got to admit that while I really have enjoyed the TMF site for the last couple of years, I've spent most of my (limited) time however reading the messages on the Mechanical Investing board. I haven't spent any time reading messages on this board until this minor controversy over Jamie Gritton's Feste Award was reported on the MI board. Jamie Gritton is an inspiration to many and has been one of the most generous and gracious contributors to MI and to MF in general.

I haven't been a contributor to the board in any real sense but I began "playing" with some mechanical-like techniques (Dog's of the Dow-style and some "home-grown" techniques) beginning in mid-1997. At first, I followed "virtual" portfolios and then occasionally used a screen to pick (and buy) an actual stock. I didn't really have specific plan for my real money portfolio and so I committed one of the most common errors of investing ... when my stocks (and the market in general) were doing poorly, I felt terrible and didn't spend any time thinking about the market much less put more money into it! When my stocks were doing well (and the market in general), I watched the prices every day and put more of our savings into stocks. This enabled me to buy high and then hide my eyes while my investments lost money.

Gradually, I noticed that the more "mechanical" I was about a particular stock or group of stocks (in terms of buying *and* selling), the better I did. I began my ValueLine subscription in April of 2000 and used some of the MI screens to pick stocks.

My wife and I moved our self-directed IRA's to Brown & Co. (from OLDE, which was becoming HRB) in Dec, 2000 and these portfolios have traded strictly mechanically on the first Friday of each month (using the top 8 stocks in the DH10RRS126-2s252 for what it's worth ... she gets 4 and I get 4). I wrote a computer program (a perl script actually) to pick the stocks and we followed the picks exactly (even when they looked silly!). Her average return from 1/1/01 until today is +26.13% (based on Quicken's Investment performance calculations). My IRA's average return over the same period is +28.23%.

Our taxable portfolio (16 stocks right now) was mixed between "mechanical" and "emotional" stocks up until July of 2001. I had noticed earlier in the year that generally the stocks that I had picked myself (without MI discipline) were not doing as well as the ones that were "Mechanically" chosen and traded. I finally sold the last of these stocks in July (for a loss) and from then on, it's been "Mechanical" and divided among 4 screens (I do a little tinkering from time to time, but with the screens and not with the stocks themselves). Our taxable portfolio's average return since then (7/1/01) is +43.41% (annualized). Based on the same period as above (1/1/01 until today), the average return is +30.23%.

I would like to emphasize that most MI investors have probably not done nearly as well as this in 2001 and one of the best explanations for this might be to say that I just got lucky. It's a big world and unlikely things are certain to happen. As near as I can tell, a good part of the success of MI is simply that it eliminates emotion (subjectivity) from the stock selection (and selling) decision process.

You should also remember that the people who did well with MI will be over-represented in the responses you get ... human nature being what it is.

heink

P.S. I also use a simple rule (reviewed once each month) for moving money into and out of my 401k plan (administered by Fidelity) and its IRR for 2001 was +8%.

P.P.S. MI has caused me to buy stock in companies that I otherwise would never consider ... I really disliked it when HRB bought Olde Discount Brokerage, raised commissions twice and encouraged my broker to start offering me a lot of "advice" about what to buy and sell. That merger was a key reason that we moved all of our money over to Brown & Co. Anyway, we bought HRB on 7/5/01 and sold it on 2/11/02 ... very sweet.
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I, for one, would be interested in knowing what percentage gain individual members of the MI community have made on their Total % Return since they embraced that particular investment strategy. With a powerful enough incentive, even the most mathematically challenged of us can learn to appreciate and work with the requisite numbers.


I started my MI portfolio in December of 1999. My portfolio value today is 28% higher than it was when I started. This is not quite as well as rerkeb did but I missed the boom years of 1998 and 1999.

MI as opposed to 'normal' investing, invests in a 'screen' of stocks rather than in individual stocks. A screen is usually 3 to 5 stocks that meet specific selection criteria. By using Jamie Gritton's program for backtesting existing screens, you can test the screen for how well it did over a range of years in the past. You can change varaibles having to do with how many stock to hold and how long you want to hold them. The hope here is that the screens you choose will have similar returns in the future. The beauty of Jamie's tool is that it gives you measures of Standard deviation and volitility that help you in making selections that meet your tolerance levels.

Once you have decided on a diverse set of screens, you buy the stocks that are picked for the date you choose to buy. You sell the stocks and buy new ones when your hold interval expires. If you do this in a disciplined fasion you will probably make money. I say probably because everyone in the MI community knows that just because your screens were good in the past does not necessarily mean they will make money in the future.

If you really want to understand more about MI, I suggest you start with the following post: http://boards.fool.com/message.asp?mid=16830804
LAPropDoc is a wonderful teacher and the MI community is almost always helpful to anyone who really is interested in understanding the techniques of mechanical investing.

We are always interested in hearing new ideas that can be backtested and welcome new minds in this cooperative effort.

Larry



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I, for one, would be interested in knowing what percentage gain individual members of the MI community have made on their Total % Return since they embraced that particular investment strategy.

I began using MI methods in my rollover IRA account in Sept. 1998. My total return to date since then, not annualized, is 258%. The bad news is that my total return since 8/31/2000, my high-water mark, is -30%. It means that at the peak I had a 411% return in less than two years. Those were the days....

Elan
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Judy,
Here's a "concrete" example of MI results.
http://members.core.com/~ramvan/house/house.htm
BBDok
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