Comments on: The $64K Question: What Do I Do Now? http://www.etftrends.com/2008/10/the-64k-question-for-etfers-what-do-i-do-now.html Keeping a grip on exchange traded funds (ETFs) Sun, 08 Nov 2009 02:14:36 -0800 http://wordpress.org/?v=2.8 hourly 1 By: godmadescience http://www.etftrends.com/2008/10/the-64k-question-for-etfers-what-do-i-do-now.html/comment-page-1/#comment-5273 godmadescience Wed, 21 Oct 2009 04:15:21 +0000 http://www.etftrends.com/?p=5926#comment-5273 I like the trend-following strategy that Tom teaches here. I wouldn't suggest dollar-cost-averaging with a trend-following strategy, as that could be counterproductive.<br><br>The idea behind trend following is that an ETF that is going up will continue to go up for quite a while. One that is going down will continue to go down. So if it goes up, buy some more. If it goes down, sell some or all of your holdings.<br><br>Dollar-cost-averaging, on the other hand, relies on mean-reversion. If something is going down, it's bound to come back. So if it goes down, buy some more. This is the opposite of the trend-following strategy.<br><br>Buy-and-hold does you good in non-retirement accounts if you want tax efficiency, although I would argue that tax efficiency isn't always worth sitting through a market crash. But why do it in retirement accounts where you don't have to pay taxes anyway? I don't see any reason not to follow trends in retirement accounts. I like the trend-following strategy that Tom teaches here. I wouldn't suggest dollar-cost-averaging with a trend-following strategy, as that could be counterproductive.

The idea behind trend following is that an ETF that is going up will continue to go up for quite a while. One that is going down will continue to go down. So if it goes up, buy some more. If it goes down, sell some or all of your holdings.

Dollar-cost-averaging, on the other hand, relies on mean-reversion. If something is going down, it's bound to come back. So if it goes down, buy some more. This is the opposite of the trend-following strategy.

Buy-and-hold does you good in non-retirement accounts if you want tax efficiency, although I would argue that tax efficiency isn't always worth sitting through a market crash. But why do it in retirement accounts where you don't have to pay taxes anyway? I don't see any reason not to follow trends in retirement accounts.

]]> By: Tom Lydon http://www.etftrends.com/2008/10/the-64k-question-for-etfers-what-do-i-do-now.html/comment-page-1/#comment-2928 Tom Lydon Wed, 14 Jan 2009 15:39:25 +0000 http://www.etftrends.com/?p=5926#comment-2928 Aase, this strategy can be applied to nearly any kind of security. Some are more volatile than others - individual stocks, for example, might see bigger moves in one day than a broad ETF, so you might be doing more buying and selling. Aase, this strategy can be applied to nearly any kind of security. Some are more volatile than others – individual stocks, for example, might see bigger moves in one day than a broad ETF, so you might be doing more buying and selling.

]]> By: Aase http://www.etftrends.com/2008/10/the-64k-question-for-etfers-what-do-i-do-now.html/comment-page-1/#comment-2907 Aase Fri, 09 Jan 2009 18:42:11 +0000 http://www.etftrends.com/?p=5926#comment-2907 I heard your name- Tom Lydon- today in Andre Horowitz' podcast from 1/5/09. From there I went to this website, very, very interesting! My question is: could the general buy/sell 'rules' mentioned on this website be applied to mutual funds (F-class) as well? (I realize that mutual funds are only traded once a day). We are in a very diversified portfolio of 7 mutual funds,- but no ETFs. Since Jan. 2008 we have consistently been "$ cost averaging" extra cash into stock in a non-401k account every single week, because we are way off our target %stock. We also max 401k contributions in another account. We are in for the long term, but it seems that your "rules" would have worked out well even for the mutual funds..... Alternatively we could use the extra cash and buy EFTs in the future, according to the "rules". Thanks I heard your name- Tom Lydon- today in Andre Horowitz’ podcast from 1/5/09. From there I went to this website, very, very interesting!

My question is: could the general buy/sell ‘rules’ mentioned on this website be applied to mutual funds (F-class) as well? (I realize that mutual funds are only traded once a day).

We are in a very diversified portfolio of 7 mutual funds,- but no ETFs. Since Jan. 2008 we have consistently been “$ cost averaging” extra cash into stock in a non-401k account every single week, because we are way off our target %stock. We also max 401k contributions in another account. We are in for the long term, but it seems that your “rules” would have worked out well even for the mutual funds….. Alternatively we could use the extra cash and buy EFTs in the future, according to the “rules”. Thanks

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