RalphWaves

Asset Class Performance ( Actual Counts )

 

Everyone would like to be able to look into the future to help us to make wise decisions to get the best out what is to come.  Actually, the future is very uncertain and predicting the future with any certainty is almost impossible.  It seems that the best that we can do is to look at past trends of events and to assume that those observed trends will continue into the future, for a short time at least. When it comes to predicting the future values of financial investments such as stocks, mutual funds and futures, it would appear that there would be benefit in being able to invest in places where there would be a fair likelihood of financial gain. It is an old saying in investment circles that " the trend is your friend until it isn't " . 

At the heart of this game if investing is the art of being able to identify the trends and to act in a timely way to ride on the trend only for its duration, and then to get off in a timely way. This is similar to body surfing in the waves that build up near the beaches in Australia.  Surfers swim out past the normal place where the waves start to break and just wait for "the big one", as well as looking out for sharks. These large waves can be seen easily and when they come and you actually get onto these waves, the ride is great. You can also have the experience of being "dumped" when the breaking of the wave drives the surfer deep down into the turbulence. There is an analogy here with investing where there are three essential steps to success, being,

Many investors tend to attempt to predict the performance of individual stocks or funds using past data and charting as the guide. This is micro management. This website presents a method for identifying the performance of asset classes, for example, Precious Metals, Science and Technology, Financials etc. . Every individual stock or mutual fund belongs to an Industrial Group or Asset Class.  There is a lot of choppiness in the waters, and the performance of individual members of the groups or classes can be extremely chaotic. If we examine the performance of the overall groups or classes, much of this choppiness can be smoothed out.

This section of this website presents a way of examining the relative performance of the various asset classes in Canadian mutual funds, using the weekly and 30-day change in the unit values. The Mutual Fund Ranking section presents the performance of a selected currently best 500 performers and shows their rankings according to a number of critreria form week gains to three-year gains and some combinations of these.  One of these combinations is "Combined Week and Month Ranks"  Here, the ranking numbers for each sort are added and a further sort is done using this sum.  The intent here is to capture the movements in the short term and medium term. This final sort presents a set of 500 mutual funds with each member being assigned a ranking number with "1" being the best and "500" being the worst. This set of 500 mutual funds is populated by members of the various asset classes, and these are spread around the space between 1 and 500. The plot of how the members of each asset class are distributed in this space is a simple frequency distribution plot or histogram. 

It is known that some asset classes perform better than others at any point in time and that there are movements in the relative movements in these performances.   Some classes are better performers than others. for example Precious Metals may perform better than Science and Technology at any one time.  The frequency distribution plots provide a good measure of the relative performance of the individual funds.  At time now, or at least the latest reporting data, a complete set of bar graphs can be prepared that indicate which funds are near the top of the ranking and those that are at the bottom. Since we are considering only the top 500 performers, often some asset class do not even get into the "top 500". We are here considering trends in the performances of all asset classes.  Trending involves the viewing of the past in terms of movement.

"RalphWaves" are moving pictures of the frequency distribution plots as they move from the past to the present. These moving pictures can show a wave-like motion where the predominant bars move from right to left showing the the asset class is progressively performing better during the time frame.  A motion from left to right would indicate declining performance. In time, a dominant performer will be displaced by another. Having identified the strong asset class performers. the next step would be to pick the individual strong performers for the purposes of investing in these. The individual ranking tables will indicate these strong performers. 

An overview of the movements in the relative performance of the individual funds is presented as a moving distribution plot with 37 bars.  The actual counts of the numbers of funds for each fund class contained in the group of 500 are shown as individual bars that change in height. Twenty time frames from the past are presented. The time performance of individual funds are obtained by clicking on a fund class name in the table .

Asset Class Performance ( Actual Counts )