Monday, February 19, 2007

Rip Van Winkle....vs cramer / hussman

to give hussman credit. he never mentioned the name "cramer" (polite). hussman is really consistent and the "anti cramer". some call him boring but his strategy works in the longer term. he is especially good when the market climate becomes a little bit more cloudy. (thanks to barry for the performance graph)

hussman verdient wohl die bezeichnung "anti cramer". einige nennen es langweilig usw. aber erwiesenenmaßen hat er ne gute performance. besonders dann wenn es an den märkten etwas ruppiger zugeht. ausserdem kann man ihm zugute halten das er den namen cramer nicht öffentlich genannt hat. der mann ist einfach zu höflich.

Today,” said Rip Van Winkle, “is nice.” And with that, after a game of bowling and drinking in the mountains with a band of dwarves, he fell asleep for 20 years. When he awoke, he found that the world had changed

At a point where investors' attention is dominated by a hyperactive, minute-by-minute, open-to-close focus on market fluctuations, it's easy to forget that generally speaking, day traders never made – and certainly didn't keep – the hot money that they chased during the late 90's.

If frantic day-to-day attention to market movements serves to do anything, it is to convince investors that they cannot afford to miss any short-term rally; that they can't afford to miss the latest utterance from the Fed; that they can't afford to miss the latest “hot play” offered up to the masses. It does not, however, serve to earn investors sustainable profits.

"You want my top 10 stocks for who is going to make it in the new world?" said one (cramer/added) of these heroes at the February 2000 Electronics and Internet Conference (eight days before the Nasdaq peaked). Stocks that could be bought and held in that brave new world, in preference to all others?

I needn't review the carnage that followed – the names alone tell the story. (have found more details)

In an article dated 2/29/00 by James J. Cramer published on TSCM entitled “The Winners of the New World"

They Are: A. Approx Price in 2000 B. in 2006
1. 724 Solutions (SVNX) A. 9.24 B. 3.22
2. Ariba (ARBA) A. 152.75 B. 10.12
3. Digital Island (ISLD) NA
4. Exodus (EXDS) NA
5. InfoSpace (INSP) A. 30.25 B. 28.14
6. Inktomi (INKT) NA
7. Mercury Interactive (MERQ - MERQ.PK) NA
8. Sonera (SNRA) NA
9. Verisign (VRSN) A. 202.56 B. 23.50
10. Veritas Software (VRTS) NA.

now back to hussman
I needn't review the carnage that followed – the names alone tell the story.

At the other extreme is Papa Van Winkle, ...... He falls asleep for years at a time. .........

Nevertheless, old Rip has come out pretty well over the years. He's outperformed the S&P 500 since 1960, 1970, 1980, 1990, and even over the past decade. And though he's earned over three times what the S&P 500 has achieved, including dividends, his deepest pullback over that period has been less than half of what the S&P 500 has periodically lost. He slept through most of the 1973-74 bear market, through the '87 crash, through the 2000-2002 bear market. Shhhhh. He's asleep now too.

What's Papa Van Winkle's secret? Simple. He doesn't overstay his welcome in overvalued markets.
Once the price/peak earnings multiple on the S&P 500 hits 19, he looks for the most minimal confirmation to get out – either a decline in the S&P 500 below its 10-week moving average, or a drop in investment advisory bearishness (
Investors' Intelligence) below 30% bears.

Then he goes to sleep.

Once he does, he snores through everything – even improvements in valuations – until the S&P 500 drops 30% from its highs on a weekly closing basis. No less. Sometimes he sleeps for years on end. Sometimes he misses enormous short-term advances. No matter. They're never retained by investors anyway.

Again, I wouldn't recommend old Rip's strategy in practice. It would be psychologically impossible to follow, and there are far better ones that capture greater gains with more controlled risk.

Still, the Rip Van Winkle strategy illustrates an essential point: advances in overvalued markets are regularly given back at great cost to investors who overstay, and can be avoided at no cost to long-term investors.

here are some more cramer quotes: (somehow this guy looks like ......../ hat irgendwie ähnlichkeit....)

first one from the "hall of fame" ( a must see!)

September 2000: Jim Cramer, CNBC commentator"SUNW probably has the best near-term outlook of any company I know." (Within four months Sun Microsystems went from $60 to $30, down to $10 in a year, below $3 in two years.)

august 2006 :Panic Over Option ARMS Is Just Noise..." The media call it dangerous. I call it prudence. ! "

and (thanks to rj )

i know that this not well balanced...but i don´t care. :-)

mir schon klar das diese aussagen etwas gemein sind. mir aber egal und der messias cramer wird es wohl auch verkraften. :-)

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