Today’s activity…
Today’s activity…
“I have an undergraduate degree in Computer Science and an MBA. The MBA is pretty much worthless for trading but it does look good on the wall. When I decided to become a full time trader, I assumed that the computer science degree would really come into play. I figured all I had to do was to program a mechanical system and I would sit back and make money. I spent years searching for the “holy grail.” Eventually I realized there was none [My emphasis].”
– Dave Landry
Ah, the ongoing search for the Holy Grail. It’s the stumbling block of the vast majority of market participants who are looking to make consistently large profits.
Has a sales person ever shown you a mountain chart that represented how an initial investment (usually $10,000) in a mutual fund would have grown over a long number of years? If you’ve never been shown one of those, nobody has ever tried to sell you a mutual fund. It’s impressive. You would have been rich.
Did you know those mountain charts are absolutely true? For example, here’s one I remember seeing a lot — a $10,000 investment in the Templeton Growth Fund in 1954 would have grown to $2 million by 1992 when John Templeton sold his funds to the Franklin Group.
And that’s true, that’s exactly what would have happened. It is also true that you don’t know anyone who actually did it. I’m sure there are people who really did invest $10,000 with John Templeton way back in 1954. But because of the curse of the Holy Grail they didn’t make anything approaching $2 million. As soon as the market went through a long down period, as soon as they started to see their account dropping in value, they would have taken their money out of Templeton’s fund and moved it somewhere else. And where would they have moved it? To whatever was “hot” at that time. It’s the search for a non-existing Holy Grail.
That’s why I always tell people that the most important chapter in Joel Greenblatt’s “The Little Book That Beats the Market” is chapter 8. That’s the chapter where he explains that the Magic Formula will always work precisely because it does not always work. In other words, there will be long periods of time when the MF under performs the market. Maybe for two or three years in a row. And that’s when people will bail out and continue their search for the Holy Grail. That’s good for the MF because if it always worked everybody would do it. And if everybody did it nobody would be able to make money with it.
The curse of the Holy Grail doesn’t only apply to mutual funds and the Magic Formula. It applies to all profitable systems and methodologies. This site features five strategies that are very profitable. And the reason I track five is to give you choices. Hopefully, you’ll be able to find one or two that fits you personally — that you can stick with over the long term. But I also know that for most people it won’t work that way. People will want to do whatever has been making money lately. And if all five strategies go through down periods — which, of course, will certainly happen — people will look for the Holy Grail somewhere else.
There is a reason I call this site Grail Investing. It’s to emphasis that there actually is a Holy Grail. But it’s not to be found in systems and methodologies. The Holy Grail of investing is within you. You are the Grail. It’s the discipline and patience that you must find within yourself to keep you on track — to stick with a profitable strategy through good times and through inevitable bad times. And, unfortunately, the people who understand that are few and far between. I hope you’re one of them.
Let’s look at our non-Holy Grail strategies.
The latest Blees numbers are posted.
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