Yo!! Looking to buy some mutual funds? I have some that you might like. All of my ultimate mutual funds have the same investment philosophy and goals:
UMF-1 has an investment strategy that is simplicity itself. At the beginning of each year, UMF-1 invests all of its money in the stock that will have the greatest return over the coming year. It holds that stock and sells all of it at the end of the year, converting the holding to cash in preparation for the next year.
Since the greatest return is greater than the average return (duh!), UMF-1 will deliver a market-beating return during any year.
This process is repeated year after year, ensuring that you, dear investor, will earn spectacular, market-beating, compounded annual returns.
"How can you pick the stock with the greatest return over the coming year?" you ask.
Well, all UMFs retain the services of the world-famous analyst and expert Krystall Ball. Miss Ball has PhDs from Chicago and MIT, is published in peer-reviewed journals, and has made a career of casting her imprimatur on and blessing widely known ideas (in other words, if you say something then you are a fool, but if she says the same thing then it is the truth). Miss Ball is an expert in Spanish and spends her spare time playing racquetball.
Miss Ball is also well-known for her quadruple rounded assets (two in front and two behind). So, she has had many years of experience in asset selection, allocation, management, and maintenance.
Krystall Ball identifies the stock with the greatest return over the coming year, and she is never wrong. In fact, she is in line for being granted entry into the ranks of nobelity, so there.
"What if you have so much money and that the stock with the greatest return over the coming year is so small in capitalization that you cannot invest all the cash in this stock?", you ask.
Read on, dear investor.
UMF-2 identifies and invests in those stocks sorted by decreasing order of greatest returns over the coming year. It invests as much money as it can in the top ranked stock, then moves on to the next stock, and so on, until all its cash is invested. It holds these stocks and sells all of them at the end of the year, converting the holdings to cash in preparation for the next year.
Since the greatest returns are greater than the average return (duh!), UMF-2 will deliver a market-beating return during any year.
This process is repeated year after year, ensuring that you, dear investor, will earn spectacular, market-beating, compounded annual returns.
"How can you pick all those stocks with the greatest returns over the coming year?", you ask.
Er, have you met Miss Krystall Ball yet?
"But still, hasn't it been shown that you cannot pick with certainty these top-performing stocks in advance?", you ask.
Read on, dear investor.
UMF-3 identifies and invests in those stocks that have the greatest probability of having the greatest returns over the coming year. While this means that there is some likelihood that the stocks so identified will not rank among the top returning stocks at the end of the year, they have a high expectation of doing so. UMF-3 holds these stocks and sells them at the end of the year, converting the holdings to cash in preparation for the next year.
Since the greatest expected returns have a high probability of being greater than the average return (duh!), UMF-3 will deliver, with a high probability, a market-beating return during any year.
This process is repeated year after year, ensuring that you, dear investor, will earn spectacular, market-beating, compounded annual returns.
Miss Krystall Ball, working closely with associate Mr. Dayta Mynyng, has documented procedures for identifying such stocks, and has published many trees worth of papers in respected journals, so there is no question of the validity of her results.
"How can you sustain these above-market returns year after year if you also seek to compound the returns? Even if your stock picking skills are truly revolutionary, won't you quickly earn so much money in your early years of operations so that you will, all by yourself, swamp the entire market? Will it not be the case that your above-market returns of some years will be mixed in with below-market returns of other years, so that over the long-term you will earn more or less the market-return itself?", you ask.
Read on, dear investor.
As Monty Python might have said, "There is no Ultimate Mutual Fund #4".
Most people have no trouble seeing the utter ridiculousness of earning market-beating returns year after year, or even having a high probability of earning market beating returns year after year; when such a strategy is explained as being the result of crystal-ball stock picking or astrological market timing.
Most people recognize that any market beating strategy, if at all it works, does so only as long as it is constrained to (1) manipulate extremely tiny amounts of money, (2) not perturb the market in any way, and (3) be known to an extremely small number of people (conversely, a strategy that is published in books certainly does not qualify as a market-beating strategy).
And yet, replace the phrase "stock(s) with (high probability of) the greatest return(s) over the coming year" with the phrases "small" and "value", garnish with crapola like "systematic risk", "cross-sectional covariance", "multifactor regression", and "risk factor premia", and you will see these very same people flock in droves to these investment scams.
It seems to me that these people:
Take your pick.
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First written: Thu Nov 9 14:57:10 PST 2000
Last updated: Sun Jun 27 17:00:19 PDT 2004
URL: http://geocities.datacellar.net/krishna_kunchith/markets/ultimate.html