June 13, 2006

I repeat - nothing works ALL the time

I like Investor's Business Daily.

Few opinions, zero a few years ago. Cool charts and information. Well organized. Always adding features. A positive outlook on life in general.

VERY AMERICAN. May William O'neal be blessed.

One problem is the IBD 100. It is only as good as the MONEY MANAGEMENT behind the scenes. That is the hardest part. Unfortunately, it is like giving people Taser's for their financial well being. People shock and awe themselves to death with that list when the markets turn - LIKE THEY ARE NOW!

I am a trend follower so I know my risks and I choose managers that understand risk management and can clearly display them and explain them to IDIOT ME in about 10 seconds.

I am emailing back and forth with my buddy Eric who manages the Blackstar Equity Trend program and being a 100 percent long only program, imagine the joy in that house. The thing is, Eric and Cole understand risk. They embrace it and harness it. It bites you in times like this, but their fund's risk continues to drop - NOT INCREASE - as markets crash. That is how you stay alive. Furthermore, the drawdowns generally come after big runups - playing with the house's money.

Most traders do not employ this part of risk management. If you don't, one bad stretch like this puts you OUT OF THE GAME - FOREVER.

With that in mind, I include this chart of the IBD 100 fund. For the risk, the performance is very underwhelming. I include it not to disrespect the fund or the strategy, but to say that I n a rising market, pretty much EVERYTHING WORKS.

Markets like this tell you who should be managing your money. Now is the time to interview new people and make changes if they need to be made. The good managers stand out NOW.


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