Doug Fabian - the Mav

» radiodude - Re: Update: Doug's Million Dollar Challenge

With 6 weeks gone out of the 52 weeks, and being down to $432,098, it looks like he now needs a return of over 130% in a little over 10 months.

This should be interesting.

-- posted by radiodude

» hairie31 - Hulbert on Fabian's Record & Goals

CBS.MarketWatch.com
Sept. 17, 2003

How does making 50 percent per year strike you?

You're not alone. Subscribers to a new newsletter from a veteran adviser are being tantalized by returns this large.

The newsletter is Fabian's VIP Investor, edited by Douglas Fabian, which was inaugurated at the beginning of August. In describing his new service, which invests only in mutual funds and exchange-traded funds, Fabian writes: "You are about to hop on the fast track to profits! You'll also discover that it's possible to make 50 percent+ a year without the risk of stocks or options."

In fact, Fabian is so confident of the returns he can generate that he has invested $500,000 of his own money in an account that he will manage publicly. His stated goal is to turn this account into a million dollars by next August, the one-year anniversary of starting this new newsletter.

That would require a 100 percent return on his investment, needless to say.

Before analyzing the odds of Fabian succeeding in averaging even a 50 percent return over time, let me first commend him for putting his money where his mouth is. Many advisers are unwilling to do that. It takes courage not only to risk so much of one's own money, but also to do so in such a public fashion.

Having said that, I must say that my 24 years of tracking investment newsletters does not provide much confidence that Fabian will succeed.

Consider first the returns of two other newsletters that he either currently edits or used to edit.

The first is Doug Fabian's Successful Investing, which was started in the late 1970s by his father, Dick Fabian, when it was called Telephone Switch Newsletter. It has been edited by Doug himself for a number of years.

Between mid-1980 and the end of August, according to the Hulbert Financial Digest's calculations, this newsletter's advice in the domestic equity arena produced a 10.6 percent annualized return, in contrast to 12.8 percent for the Wilshire 5000 index. (Its return in those years in which the younger Fabian was editor are similar.)

Not only is this 10.6 percent annualized return a lot lower than 50 percent, it is also lower than the 20 percent annualized returns that, in the 1980s, the newsletter said it would be able to achieve in any five-year period.

Consider next the returns of another Fabian newsletter, which was discontinued at the time Fabian's VIP Investor was inaugurated. This now defunct newsletter was Fabian's Sector Investing.

For the period starting in January 1999, when the HFD began monitoring this other newsletter, through the end of July, the HFD reports a loss of 2.4 percent annualized.
To be sure, this return matches the 2.4 percent annualized loss of the Wilshire over the same period. But, needless to say, it still is a lot lower than 50 percent a year.

If it is any consolation to Fabian, he is not the only newsletter editor who has been unable to produce returns anywhere close to 50 percent per year over long periods of time.

In fact, none has been able to. Among those tracked by the HFD, the best-performing newsletter over the past 10 years has produced a 23.3 percent annualized return.

Over the past 15 years, the top performer has returned 20.6 percent annualized, and over the past 20 years, 14.7 percent annualized.

Don't conclude from this that newsletters are inferior to other sources of investment advice. The top performing diversified domestic equity mutual funds have produced returns in the same ballpark.

Even Warren Buffett, commonly recognized to be the most successful investor alive today, hasn't been able to come close to Fabian's advertised goal. Over the past 30 years, his investments have grown at an annual rate of around 23 percent per year.

Don't be upset that returns higher than this are very unlikely. Even a 15 percent return per year will make you wildly wealthy over the long term.

But averaging 50 percent returns per year over many years is virtually unattainable.

If Fabian beats these odds, I'll devote many columns to his achievement.

But I'm not holding my breath.

-- posted by hairie31

» fabianblows - Re: Re: Update? What update?

Steve

-- posted by fabianblows

» radiodude - Re: Re: Re: Update? What update?

Steve:

Hopefully you used a credit card with "chargeback" features. If so, I'll bet you can get your money back. I've used chargeback three times in the past 20 years or so, and it works GREAT!

Do it quickly. I think you only have 60 days to chargeback, and you first need to attempt to resolve the problem in writing with the Fabian people.

I think I heard Fabian once on the radio, and quickly changed stations.

-- posted by radiodude

» snaimon - Doug's Million Update

Stan

-- posted by snaimon

» Kirk - Re: Doug's Million Update

08/03/03 $500,000
08/15/03 $480,840
09/12/03 $432,098
09/30/03 $468,000

<img src=http://www.dougsmillion.com/images/large... width=400 height=300>

<img src=http://cbs.marketwatch.com/charts/int-ad... width=452 height=366>

  Date       Kirk    S&P500   Delta
2003 YTD    +48.8%    18.5%    30.3%  as of 10/3/2003 
 

                                Kirk   S&P500+  NASDAQ 
4.75+ Yrs 12/31/98 to 10/03/03 128.2%  (10.5%) (14.2%)
Annualized Annual Return        18.9%  ( 2.3%) ( 3.2%)  
 

9/30/03 Inception Value:   $100,000
9/30/03 5 yrs later value: $345,395 up 245.5%
S&P500 between 9/30/98 and 9/30/03: up   4.6%
With dividends reinvested. All Numbers unaudited. 
Click for a free issue of my newsletter .

-- posted by Kirk

» fabianblows - Re: Doug's Million Update

I just checked out fabians "Doug's Million Dollar Challenge" This guy has lost 125K in 10 weeks. -25% return from his brilliant advice.
I think he will now take even riskier bets on his money to try to save face. Chances are this moron will lose half of his initial 500K before he comes close to 1 Mill.

I bet subscribers are fleeing in droves. Can anyone believe his preaching after this type of showing?

-- posted by fabianblows

» Kirk - Re: Re: Doug's Million Update

I just checked out fabians "Doug's Million Dollar Challenge" This guy has lost 125K in 10 weeks. -25% return from his brilliant advice.

Do you have a date? I'll make an estimate for the table below.

08/03/03 $500,000
08/15/03 $480,840
09/12/03 $432,098
09/30/03 $468,000
10/13/03 $375,000 estimated from previous post.

The market has been going up which makes his losses all the more significant.

<img src=http://cbs.marketwatch.com/charts/int-ad... width=452 height=366>

Doubling your money in a year was a pretty wild thing to attempt. It looks like he was wrong on market direction and might be closer to needing a triple now just to catch buying a simple Wilshire5000 index fund (VTI). I'd advise running when folks make wild claims to get fantastic returns in the future. I have done well in the past, but I'm not foolish enough to predict I can continue to do so well. If I was looking for investment help, I'd be happy just to beat the market by 5% a year as that compounds over time to do very, very well. Most folks don't even meet the market and I read the majority under perform by 5 or 10% a year!

  Date       Kirk    S&P500   Delta
2003 YTD    +57.1%   20.2%    36.9%  as of 10/13/2003 
 

                                Kirk   S&P500+  NASDAQ 
4.75+ Yrs 12/31/98 to 10/10/03 141.0%  ( 9.2%) (11.8%)
Annualized Annual Return        20.2%  ( 2.0%) ( 2.6%) 
 

9/30/98 Inception Value:   $100,000
9/30/03 5 yrs later value: $345,395 up 245.4%
S&P500 between 9/30/98 and 9/30/03: up   4.6%
With dividends reinvested. All Numbers unaudited. 
Click for a free issue of my newsletter .

-- posted by Kirk

» hairie31 - Making Back Your Losses

To get to $ 1,000,000, from the remaining $ 375,000, he would need to make a return of 166 % in the next 9 & 1/2 months.

The S & P 500 has been up 5.5 % in the last 10 weeks. The Nasdaq is up 12.75 % and the QQQs are up 12 % in the last 10 weeks.

I'd like to know exactly what he invested in to lose 25 % in the last 10 weeks. It sounds like he probably went 200 % short the QQQs.

-- posted by hairie31

» fabianblows - Re: Re: Re: Doug's Million Update

The date he recorded losses is 10-10-03. He was invested in Profunds Ultrashort (USPIX) on margin for 350K and fully invested with his other assets in the same fund. Probably had somewhere in the neighborhood of 800K invested short. He say's "Don't count me out yet"

Get real!

-- posted by fabianblows