Guru Grades

Comments from Jim Rohrbach on the Review of His Recent Performance (From 11/18-11/19/06)

Jim Rohrbach, president of Investment Models, Inc., sent the following message after seeing our review of his recent investment performance:

Thank you for including me in your list of gurus. I have been identifying changes in the trend of the stock market for 35 years. You would have to take my word on that because there was not a service like yours back then.

I would be glad to share with you all of my Buy and Sell signals.

TheStreet.com called me a Guru, but BusinessWeek Online named me "The Zen of Market Timing." I think a Zen trumps a Guru. But I am sure you would know more about that.

In case you haven't recognized it, buy-and-hold is dead. It was buried in the 2000-2002 bear market when people saw their 401k turn into a 201k. Please stop advocating the buy-and-hold approach. Investors do read your stuff. You...must know that buy-and-hold can beat market timing in a sustained up market, but people never seem to talk about what happens to the buy-and-hold crowd in a bear market.

I do not predict the market, I identify changes in the trend. Big difference.

Our response:

A reader requested a review of information publicly available on your investment service, so we pass your thanks along to that reader.

Thanks for your offer to share all your Buy and Sell signals. We restrict all reviews at cxoadvisory.com to publicly available information (what an investor shopping for an advisor can learn without incurring an obligation to pay). This approach helps keep a level playing field for reviews, and also lets readers check the fairness of our reviews themselves.

With all due respect to Business Week, we would have to rely on past performance analyses to determine whether Zen trumps gurus.

Note that cxoadvisory.com does not advocate buy-and-hold, or any other specific investing method. The review of your recent record includes buying-and-holding of various funds as reasonable benchmarks for comparison. The review concludes that buy-and-hold would have outperformed your market timing over the same period for taxable accounts. The cxoadvisory.com site does advocate that investors employ skeptical analysis and sound research in making investment decisions.

The buy-and-hold crowd loses wealth in a bear market. Any investor who can find a reliable method for avoiding market declines without also missing market advances should use the method. However, for investors who cannot find such a method, buy-and-hold over the long term will very likely beat not investing in stocks.

The review seems clear as an analysis of your stock market timing calls over the past three years, and their investment results, but not an evaluation of any market forecasting ability.

And Jim Rohrbach's follow-up:

Most people do not believe that the stock market can be timed... They buy and hold, and the professionals keep telling them to stay invested. I personally get fully invested when the trend turns up and I go to 100% cash equivalents when the trend turns down. I am very fortunate that I have a mathematical formula (RIX Index) that has been accurately identifying changes in the trend for over 35 years. I know that is hard to believe, but I know that I have every daily calculation to prove it. However, I need to keep that proprietary.