Thursday, April 23, 2009

GT Blog April 24th 2009

I am sure followers of this blog also follow Don Vialoux’s daily TechTalk which is a brisk and refreshing daily commentary on the capital markets.

In his Wednesday morning publication Don quoted a recent study by Standard & Poor's entitled “Indices beat most managers.” Apparently over the last five years 70% of U.S. large-cap fund managers who use the S&P 500 as a benchmark for comparison have failed to match the performance of the index over that time.

Don's observation comes a day after BNN regular “black box” analyst Brian Acker glossed over the negative 1, 2, 3, 4 and 5-year returns of the Finley Select US Value 50 fund by insulting his TV audience on live television. The big irritant for Acker was a caller who pointed out the terrible 1-year return (at March 31, 2009) of a negative 53.88%, double the loss of the S&P500 benchmark or peer at a negative 24.10%.

When under pressure from BNN's Michael Hainsworth to explain the severe underperform and the negative losses from inception Acker effectively blew up in front of a live television audience stating technical analysis to be “useless” and then describing the traders “out there in TV land” to be “hamsters.” Another caller was ridiculed for suggesting a selling strategy.

Wow, I and others just got called "useless rodents" on national television!

I forgive Acker because he was afflicted by a street term known as "Ackers Folly."

Acker’s folly is the tendency of investors to sell winners quickly (because they are expensive) and to hold losers (because they are cheap).

This affliction can be cleared up with a few visits with a qualified technical analyst.

If Acker had used even the simplest stop loss strategy he could have saved his enterprise from this disaster - see the chart below - one of this fund's largest holdings with a simple 10-week low price channel -

Combat Ackers Folly - it can be cured


cprtrain said...

I was shocked by Acker's comments and e-mailed BNN to complain. I understand that everyone is entitled to his opinion but to insult people who trade for themselves or who use technical analysis is idiotic. Your example of how technical signals could have helped Acker is a very good one. I love reading your comments.

chrispycrunch said...

I think that some of these guests should be put to the tests. I am on a virtual trading site called kaChing. If these guests used this site as a means to prove their investment strategies work, they would gain more credibility.

That said, blowing up on national television was amusing to read though quite a faux-pas. Are you thinking...redemptions?

Piazzi said...

Acker was a serial promoter of Morgan Stanley and Lehman, two of the best shorts of all times, because his box said so, what is black is not his box, but his head, maybe that's the black box

TA is not fool proof, what is, but we lose 5-6-7% when things go wrong not 58%, or a 100% as Mr. Ackers Lehaman did



RLF said...

Hello Bill,
Exactly. As a Technical Trader very much enjoying the challenges of both roaring bull and vicious bear markets, I more than gasped at Mr. Ackers's absurd remarks. Laughed,cried at his shocking lack of professionalism and initially relegated his comments to the Do Not Dignify With A Response File.

Upon further ( and yes probably too much reflection) Mr. Acker possibly did Technical Traders a great service- those that agree with him (amateurs) won't become professionals.

Please keep the Feed Stock coming Mr. Acker.


and I for one will not have to face them