Gold has not rebounded from what previously looked like a shorter-term pullback. On the other hand, real estate has resumed its upward climb, though it is still very risky. Bonds, which could resume their gains, are currently moving sideways.
Monthly Archive for December, 2009
Once again, we are continuing to recommend gold because of its longer-term uptrend. The issue with gold is that it’s in a shorter-term pullback. This makes it a relatively risky investment right now. Because of this, in the conservative allocation, we are mostly in cash and bonds.
Stocks are still flat. We are moving into bonds because they have a little upward potential, while, at the same time, having a low risk.
Questions: When are the TSP newsletters emailed?
Response: The first newsletter of the month comes out on the Sunday before the first Monday of the month. The second newsletter of the month comes out two weeks after that.
If you are expecting a newsletter to come out around the 1st and the 15th of the month, then, in some months, you might think that they are late. But they’re not.
For example, let’s take December 2009. The first Monday of the month was December 7, which means that the first newsletter of the month came out on December 6. The second newsletter is scheduled for December 20, which is two weeks after December 6.
Question: What are your thoughts on Taleb and how his work relates to your trading method?
Response: Based on what little I know about Taleb, his main criticism of statistical modeling is that it does not take into account rare but devastating events (“black swan” events). My response is that this is an excellent criticism of how statistics is often done, but not of statistics itself. Rare but devastating events can and should be accounted for in statistical models. Good statisticians do this. But most people who practice statistics are not good statisticians.
As this relates to my investment method, I do think that my statistical model accounts for some “black swan” events. Not all of them, of course. Part of the nature of a “black swan” event is that it is difficult or impossible to foresee.
Not foreseeing things is bad. That’s true. But with a statistical model that you’ve put a lot of thought and work into, you can foresee more than without it. You can always make improvements and do better. But you cannot do the impossible, such as anticipating events that are impossible to anticipate. And that’s OK.
I was looking up information about the Lifecycle funds the TSP started offering in 2005, and your site came up on one of my searches. I’m looking at a wide variety of free help groups and newsletters to try and get a good picture of what are good strategies with the goal of either finding the best allocations from one source or a good synthesis strategy from the various sources available. Your gains seem to be among the best I’ve found.
-M.W.
Our three recommendations for this week are real estate, gold, and bonds. Of the three, real estate has the greatest potential gain, but also the greatest risk. This is followed by gold, which in turn is followed by bonds. While gold, which we are continuing to recommend, fell last week, it is still in a longer-term uptrend. Note that this week’s bond recommendation is different than it was last week.
Stocks are not climbing, at least for now. We’re moving most of our money to the money market, just to be on the safe side.
We are continuing to recommend corporate bonds and gold. Pharmaceuticals are flattening out and we are no longer recommending them.