Observations

I left a few things to do on the boat. It is a great excuse for me to go there and escape. Annapolis is a great place with a myriad of good restaurants.

Akron is not the place it was several years ago when the city was the “tire capital of the world”. The four major tire companies were in town and they added some excitement (and $). Now the major employers are healthcare and government. This is what happens when lack of state leadership fails to attract new businesses and scares them away with high taxes. Oh, well, higher taxes are needed to give people what they want. The consequences are grim

Last time I went back to the boat to install the de-icer. This is a propeller you put close to the bottom of the bay and it pushes the warm water to the surface, thus avoiding ice formation around the boat. Ed decided to come with me. With Ed we are studying the history of philosophy. An interesting project. We are now studying Schopenhauer.

Ed tried to find out what is my forecast for 2008. Is it important? After digging deep into my brain I was surprised by the answer.

The forecast is not the most important step in an investment program. The investment process is what makes the difference between success and failure.

The first and crucial step in the process is to measure the portfolio performance. You are trying to maximize returns. The keystone of the process has to be the reduction of the poorly performing positions and increasing your investment in the strongest ones.

The forecast fits in the process, but should be taken as an assumption. It helps guiding your decisions. However, a forecast is always wrong, by definition. The performance of the portfolio tells you if your assumptions were correct. Right now my main “assumption” is that the economy is going to slow down. This trend will drive all asset classes. We will focus on the strongest ones.

(This Observations appeared in the 1-7-08 issue of The Peter Dag Portfolio ).

George Dagnino, PhD Editor,
The Peter Dag Portfolio.
Since 1977
2009 Market Timer of the Year by Timer Digest
Portfolio manager

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