MEB, the Stock Market Investing System That Beats the Market
InvestorEducation / Learning to Invest Oct 02, 2009 - 02:51 PMBy: DailyWealth
Dr. Steve Sjuggerud writes: If I weren't working on the same research myself, I wouldn't have believed it's possible...
The results of this system are so powerful, I hesitate to share them with a large audience. But I get paid to share the best investment ideas I find. So I feel compelled to tell you about this one...
In short, investment analyst Mebane Faber came up with an incredibly "dumb" system that beats the market. It crushes it actually...
Meb's system delivers the investment "Holy Grail" – higher returns with lower risk. It's hard to believe, but the system really is incredibly simple. And it's totally legit. While the traditional disclaimer "past performance doesn't equal future performance" applies, the fact is:
From 1973 (the start date for his data) through 2007, Meb's simple system never had a losing year. (Think about that!)
In 2008, when everyone lost money, Meb's simple system beat everything and was barely down. (I'm not sure what the exact figure was, but I assure you, it was only slightly negative.)
I remembered Meb's story when I opened up the most recent issue of Fortune... It turns out, Harvard and Yale's college endowments are down 27% and 25%, respectively, in the 12 months ending June 30. I tell you this because I first learned of Meb's system in a book he wrote, called The Ivy League Portfolio: How to invest like the top endowments and avoid bear markets.
The book is interesting... He shows you how Harvard and Yale have beaten typical money managers over the long run, among other investment ideas. It's worth owning just for that section.
But what interested me most wasn't Harvard's famous system in the front half... it was Meb's unknown system later in the book. Way in the back, after all the stuff about the endowments, I found Meb's little timing system.
He wrote the book before the Great Recession. How has his system performed since? It's hitting new highs:
But that's the way it's always been... I think the worst performing 12-month period (out of all possible intra-year 12-month periods) was a loss of less than 10%. Great stuff.
In the simple version of Meb's system, you only look at the markets 12 days of the year. And there are only five funds to own: U.S. stocks, foreign stocks, bonds, commodities, and real estate stocks.
In Meb's system, you have 20% of your portfolio in each of these five asset classes... and you are either in or out of each of them every month. So you might be only 40% invested one month, then 80% invested another month, depending on the system.
Look, Mebane Faber came up with this system... and he deserves credit for it... So I'm going to ask you to get it from him. Go to www.TheIvyPortfolio.com and get his book. Read his blog. If you want to know the "science" behind it, click on the "Timing Updates" tab and download his academic paper.
It's worth learning...
It's had only one down year since starting in 1973. And it's delivered the investment "Holy Grail" of higher returns with lower volatility... all in a portfolio of just five things that you only have to look at a dozen times a year.
What more could you want? Check it out: www.TheIvyPortfolio.com.
Good investing,
Steve
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Comments
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john
13 Oct 09, 00:38 |
Stock Market Investing
Now days Stock Market Investing really beating the market........ |
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