A.I.M. Users Bulletin Board

[BowlerBob]

To All,

I believe, and act upon, the idea that a person needs to know what kind of investor they are, and act within those "boundaries". I am not a Value Investor, nor an AIM Investor, as such -- I tend to be an "All In - All Out" type of Investor (not a Trader). I don't want to own stocks (or ETFs) during a severe down turn. That is why Ocroft's Method interests me, especially with the Monthly MACD, as does the Mebane Faber's "Ivy Portfolio" that is "timed" with entry/exit based on Monthly Moving Averages on quality ETFs that give a good degree of "Asset Allocation".

The idea of Value Investing appeals to me, but I know I would not be able to "ride out" another 2008, or 2001-2002, when nearly all categories of investment classes were "highly correlated", and fell as if they were all the same issue. The same applies for AIM -- I would not be able to hold the "core position" during the "downs". I know that LD-AIM works at getting around that by having "Virtual Shares", but I do it with the long-term MAs, and such.

Nonetheless, I do try to read up on these other methods to help me select the various instruments I might want to purchase at the right time. I came across an article that might be of interest to you all (y'all) that I have not seen on this board. It might be more appropriate on Mark Hing's board, but I'll link it here because it has worth for all of us.

http://25iq.com/2015/01/25/a-dozen-things-ive-learned-from-joel-greenblatt-about-value-investing/

I am going to paste one section here so you can get an idea.

10. “If you are going to be a very concentrated investor, you should not use leverage. You can’t leverage because you need to live through the downturns and that is incredibly important.”

Being a successful value investor requires that you have staying power. When you use financial leverage your mistakes are as just as magnified as your successes, and those mistakes can be big enough to make you a non-investor since you may have no longer have funds to invest. Don’t just take it from me. Please listen to these three investors. First, Charlie Munger: “I’ve seen more people fail because of liquor and leverage – leverage being borrowed money.” Second, James Montier: “Leverage can’t ever turn a bad investment good, but it can turn a good investment bad. When you are leveraged you can run into volatility, that impairs your ability to stay in an investment which can result in a permanent loss of capital.” Third, Howard Marks: “Leverage magnifies outcomes, but doesn’t add value.”

I think you will find it worth the few minutes it takes to read the whole article -- steps you are already aware of, but that might need "stressing" in this market. Follow the links in the article and be prepared to give them "real thought". And a reminder, mostly to myself, when Ocroft first appeared on this board, a Major part of his idea was finding the highest quality stocks to use his Method on -- not just the methodology.

I wish you success in your investing.

Bob