Doug Fabian - the Mav
- Normxxx
- daryll40
- Kirk
- radiodude
- daryll40
- radiodude
- stocksystm
- Normxxx
- stocksystm
- Kirk
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» Normxxx - Fabian attempts the impossible
Fabian attempts the impossible
Bottom line: if someone promises triple-digit gains, don't walk, run
By Peter Brimelow, CBS.MarketWatch.com | 1:16 AM ET Aug. 2, 2004
NEW YORK (CBS.MW) -- Just a year ago, on Aug. 1 2003, Doug Fabian launched his new service, VIP Investor, with these ringing words: "Welcome to VIP Investor! You are about to hop on the fast track to profits! You'll also discover that it's possible to make 50%+ a year without the risk of stocks or options.
"We'll use index investments, mutual funds, bear funds and Exchange Traded Funds to pursue extraordinary returns and, most importantly, our sell strategy is designed to keep your principal intact...
"We'll pursue profits by pouncing on short-term opportunities, looking to make 5% or 10% in 1 to 12 weeks. We'll hop on intermediate trends that can yield 25% to 50% in just 3 to 6 months, and we'll look for shifts in market trends and invest against the herd.
'While this is a brand new service, replacing Sector Investing, the strategies and principles are the same ones used in Successful Investing, the Fabian newsletter founded 26 years ago!
"Also, be sure to check out Doug's Million Dollar Challenge at the link below. I've put a chunk of my own money to work as I begin my quest to double $500,000 in 365 days!"
Oh yeah?
This is what really happened according to the most recent data from the Hulbert Financial Digest.
For the 12 months ended July 31, VIP Investor lost 33.6 percent. In contrast, the dividend-reinvested Wilshire 5000 gained 18.3 percent during this time.
Obviously, this is a particularly catastrophic result for Fabian. But the fact that he failed to achieve a triple-digit annual gain is not at all surprising.
As Mark Hulbert explained in a column last year on Fabian's claim last year, all the HFD's monitoring suggests that annual gains above 15 to 20 percent are unsustainable in the long run -- and highly unpredictable in the short term.
Triple-digit gains do happen. But letters that experience them, for example Medical Technology Stock Letter, also tend to experience high double-digit losses. (See my June 14 column).
Bottom line: if someone promises triple-digit gains, don't walk, run away.
So why did Fabian put his head in this noose?
Presumably because it does sell letters. Amazingly, investors still prefer bold claims to mediocre success.
I am beginning to think that Fabian, who writes with tremendous force and clarity, may be as great a salesman as his father, Dick Fabian, who rose to fame advocating a stunningly simple moving average system in the letter now called Successful Investing (and still published by his son).
You had to see Dick Fabian in action, preaching to packed crowds investment conference, to appreciate his messianic impact. Read Mark Hulbert's June 10 2003 column about the Dick Fabian phenomenon, it's a classic.
The difference is that Dick Fabian's system really worked. Doug Fabian's does not. In fact, he's even begun to second-guess his father's system in Successful Investing, to no good effect.
To the true salesman, of course, the product to be sold is ultimately irrelevant.
There was always a moment in a Dick Fabian revival meeting when he would screw up his face as he felt the pain of the investor who was tormented by the suspicion that everybody everywhere was making vastly greater gains than the humble 10 to 15 percent that Fabian's own system promised.
Then Fabian would yell at the top of his voice:
"BUT THEY'RE NOT!"
Doug Fabian, his son, obviously realizes that investors are still tormented by the same suspicion.
He's just decided to tell them what they want to hear.
The content of this message is not to be construed as constituting market or investment advice. It is intended for educational purposes only. Individuals should consult with their own advisors for specific investment advice.
-- posted by Normxxx
» Kirk - Re: So, When Does Doogie Fess Up?
.In response to message posted by daryll40:
In case the graph vanishes, I made a copy and filed it here for our records.
Running Tally:
08/03/03 $500,000
08/15/03 $480,840
09/12/03 $432,098
09/30/03 $468,000 ???
10/28/03 $375,000 down 25% & still short
10/31/03 $343,000
11/19/03 $435,400 down 12.92%
11/15/03 $349,131 down 30.2%
01/02/04 $300,000 down 40%; via gus_eson’s message
01/13/04 $241,295 down 51.7%, posted on web site!
01/23/04 $230,389 reported by stocksystm. Down 54%
01/30/04 $256,439 How to make a million: Doug starts with 2!
05/31/04 $260,075
Current Graph on Doug's site
<img src=http://dougsmillion.com/images/large_cha... width=500 height=400 alt="Blank If Doug Removes His Graph">
Graph Stored here:
<img src=http://www.suite101.com/files/topics/270... alt="http://www.suite101.com/files/topics/270..." width=500 height=400>
URL for my Graph http://www.suite101.com/files/topics/270...
Graph of the Nasdaq from 8/1/03 to 8/1/04
<img src=http://stockcharts.com/def/servlet/Sharp... width=520 height=301>
Graph of the S&P500 from 8/1/03 to 8/1/04
<img src=http://stockcharts.com/def/servlet/Sharp... width=520 height=301>
It looks like Doug was a mega bear and used leverage to take a bearish gamble and was wrong as the market went up.
I can update it if Doug posts a new graph showing his final total.
-- posted by Kirk
:lol: 
» daryll40 - Doogie soft pedals the fess up.
The site finally has a fess up, albeit soft. He talks about all of the lessens he learned blah blah blah and how the lessons were worth more than the $200K (or so) that he lost blah blah blah. And how YOU TOO can learn from his lessons blah blah blah. What a putz.-- posted by daryll40
» radiodude - Re: Doogie soft pedals the fess up.
In response to message posted by daryll40:Just so we have it documented before it disappears from his web site, I have copied what he says about this stupid stunt.
I like this part...
....To that end, I've been successful. My portfolio gained 40% in the month of July in a leveraged index fund that moves the inverse of the Nasdaq 100.
What a complete Dumb-Ass.
Doug gets put in my record book as the biggest idiot on the planet.
Doug's Million Dollar Challenge
When I first began Doug's Million Dollar Challenge a year ago, I set out to prove that you could use ordinary investing tools to pursue extraordinary gains -- that you could do so without loading up your portfolio with individual stocks and exposing it to the risk associated with them.
To that end, I've been successful. My portfolio gained 40% in the month of July in a leveraged index fund that moves the inverse of the Nasdaq 100. While this tech-laden index dropped 10%, my ProFunds Ultra OTC short position gained 20%. The fact that I also owned this fund in my margin account handed me a 40% gain.
That's all well and good, but as many of you will be quick to point out, I was also striving to double my $500,000 in a year. That didn't happen. In fact, my $500,000 is now worth $307,936 for a 38.41% loss from Aug. 1, 2003-July 31, 2004.
If I had to do this all over again I would change quite a few things about my strategy, mindset and implementation. Believe me, the lessons I learned from this exercise are worth far more than the $192,000 I forfeited during Doug's Million Dollar Challenge.
As I talk about how I'll use these lessons to improve my own investment strategies, be assured that I DO NOT take the same approach or take on the same risk with your money as I do with mine. This was a personal challenge independent of VIP Investor or Successful Investing. In fact, as you'll read, I was guilty of going against some of the very principles I preach to our subscribers. Like some of you, I too, learned the hard way.
I've always said, it's OK to make mistakes as long as you learn enough from them to never make the same ones again. That said, here are the key points that I strayed from and those that I'll make a priority moving forward.
1. Let price movement dictate investments decisions and leave my ego at the door.
I took the short Nasdaq 100 position very early on in the challenge, on Sept. 23. Although the trend in this index was down at the time, I held it even after it reversed direction and continued to do so over the next 6 months. I believed very strongly that technology stocks were a time bomb and when they exploded I wanted to make sure I was on the right side of the fence. While I set mental stops, a point in which I'd sell, I never followed through. That belief, dare I say prediction that the market would falter, only dug me further and further into a hole, so far that at one point my portfolio was down 50%. I didn't want to be wrong; no one in my position does. Instead, I focused on proving that I was smart and right. Well, I was dead wrong for 6 months. Had I cut my losses early on and monitored the trends more closely, I could have been making money on the long side of the market. The more you lose, the greater the significance of the lesson. I was over-invested in being right. So, this one was a big one.
2. Always have an exit strategy.
I touched on this lesson a little previously, but it deserves its own spotlight. How many times have you heard me say that when you buy a stock or fund, you need to know precisely when you would sell it? When I took this position, I never really had a plan for when I'd sell. And when I did set a mental stop (based on the 50-day moving average or a trading range high), I didn't follow through. Again, from everything I read, all the economic, political and corporate signs, convinced me that the market was going to tank. Yes, it eventually did, but too late for a full recovery in Doug's Million Dollar Portfolio. This lack of discipline moves counter to one of my most treasured commandments: "Thou Shalt Know When To Sell, and Thou Shalt Not Let Emotions Get In the Way." I committed two huge sins by not selling this position early on and as a result, I have paid the consequences.
3. Treat every market climate as an opportunity to profit.
I came into this challenge citing specific themes (similar to those used in VIP) that I'd be focusing on in Doug's Million Dollar Challenge: Rising interest rates, inflation, falling dollar, financial crisis, energy, gold and of course, tech bubble II. While I dabbled in the ProFunds Rising Rates Opportunity Fund (a leverage fund that rises with interest rates), and a foreign bond fund (falling dollar), I latched onto the tech bubble theme and wouldn't let go. What has now become blatantly obvious to me was I had no strategy for an up market. While I was shorting the Nasdaq 100 for 6 months and losing money, I could have making the same money had I been long the market. Sounds like a no-brainer, but when you're so focused on one aspect or corner of the market, it's easy to miss opportunities that might be right in front of your nose. The key is to monitor the price trends across the board, looking for opportunities in all market climates.
Everyone makes mistakes, investment advisors included. Not all of us are willing to step up and admit to them, but I'm a straight shooter. I have to be as honest with you as I am to myself. How else can I retain your faith and confidence in me and my decisions as we move forward? I took a big chance with my own money in this particular instance, but I'll never do that with yours. As far as I'm concerned, I've earned a wealth of knowledge from this challenge -- one that I intend to put to work for myself and for each and every one of you..
-- posted by radiodude
» stocksystm - Amazing
Doug is a truly sorry individual. But he has a lot of company in the investment newsletter business. What is really sad is that people will continue to pay for this type of advice.-- posted by stocksystm
» Normxxx - Re: Amazing
In response to message posted by stocksystm:That's why we have Mark Hulbrt:
http://cbs.marketwatch.com/news/newslett...
What are your Hulbert ratings?
-- posted by Normxxx
» stocksystm - Re: Re: Amazing
In response to message posted by Normxxx:I would never want to be associated with such drivel.
-- posted by stocksystm
» Kirk - Fabian Wins "Lump of Coal" Award
.full article: http://www2.marketwatch.com/news/story.a...
By Chuck Jaffe, CBS MarketWatch.com
Last Update: 12:01 AM ET Dec. 12, 2004
That's why it's time for the ninth annual Lump of Coal Awards, where today and again next week, I'll drop an inky chunk of carbon on the bad boys and girls of the fund world, the ones who deserve nothing more than fossil fuel in their Christmas stocking.
It takes more than wretched performance or mere involvement in a scandal to earn a lignite trophy this year. While those conditions earn close scrutiny, Lumps of Coal recognize managers, executives, firms and industry watchdogs for attitude, performance, action or behavior that is offensive, duplicitous, disingenuous, reprehensible or just plain stupid.
The 2004 Lump of Coal Awards go to:
[snip]
Investment newsletter editor and radio host Doug Fabian -- self-promoted as "America's simplest mutual fund investment adviser" as if that's a good thing -- promised in August of 2003 that he could produce a 100 percent return in 365 days using a turbocharged version of the system he sells investors. He put $500,000 of his own money into the project and turned it into $307,936.
Fabian claimed the $192,000 lost was worth it for the lessons he learned about fund investing. Presumably, one of those lessons was to trust your hard-earned dollars to a better investment adviser.
Next week: More coal, including the Lump of Coal (Mis)Manager of the Year.
Even if you don’t market time or buy individual stocks, my newsletter offers quite a bit of useful information and tables (Discussion of interest rates, The Fed Model, etc.) that many say are worth the price of the subscription on its own.
As of 12/12/04, the Total Return for Kirk's Newsletter since 12/31/98 is 157%. Here are some more periods and comparative benchmarks:
Kirk S&P500 NASDAQ
12/31/2002 +66% +39% +59%
12/31/2000 +32% -5% -14%
12/31/1998 +154% 5% -3%
- Click for a free issue of my newsletter
- Suitable for the aggressive growth part of your diversified investment portfolio.
-- posted by Kirk
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