How to Buy a Glider Afordably, or Euro vs ContraFund

A year ago I suggested that the way to counter the high Euro was to
invest your money and wait. As an investment vehicle I recommended the
Fidelity ContraFund (FCNTX). Now, I am not one to make idle
suggestions: I am personally heavily invested in this fund.

Here are the results one year later:

Euro: DOWN 9.4%
ContraFund: UP 20.4%

Difference: 30.2%

Of course, most will have to pay capital gains on the ContraFund, which
is 15% max in the U.S., so the 20.4% becomes 17.3% (or more).

Tom Seim
Richland, WA

At 06:06 22 November 2005, wrote:
A year ago I suggested that the way to counter the
high Euro was to
invest your money and wait. As an investment vehicle
I recommended the
Fidelity ContraFund (FCNTX). Now, I am not one to make
idle
suggestions: I am personally heavily invested in this
fund.

Here are the results one year later:

Euro: DOWN 9.4%
ContraFund: UP 20.4%

Difference: 30.2%

Of course, most will have to pay capital gains on the
ContraFund, which
is 15% max in the U.S., so the 20.4% becomes 17.3%
(or more).

Tom Seim
Richland, WA

People should look up 'suvivor bias' to gets a sense
for how to assess backward-looking views of investment
performance (example below).

Start up ten or twenty investment newsletters, and
in each of them publish a different prediction about
where the market is headed: 'The bulls will return!',
'The bear draws near!', 'Market to flat-line!'. At
the end of the year discontinue the newsletters that
got it wrong but keep publishing the winners--with
new random predictions. Start up a fresh batch to replace
the losers. After a few years you'll always have a
newsletter lying around that you can point to as proof
of your financial genius--the one that, by dumb luck,
got it right five years running. If only investors
had subscribed they'd all be rich by now! If anybody
mentions the losers just tell them you are skilled
enough to know when to cut your losses, then show them
a pretty chart on glossy paper depicting the fortunes
they'd have made if only they'd followed your advice.


This scam depends on 'survivor bias', since only the
successful newsletters are still around you seem to
have a good track record. Only if someone looks back
at the failed publications will they realize you operate
on sheer dumb luck. Welcome to the world of financial
publishing, investment advice--and mutual fund management.


9B

wrote:
A year ago I suggested that the way to counter the high Euro was to
invest your money and wait. As an investment vehicle I recommended the
Fidelity ContraFund (FCNTX). Now, I am not one to make idle
suggestions: I am personally heavily invested in this fund.

Here are the results one year later:

Euro: DOWN 9.4%
ContraFund: UP 20.4%

Difference: 30.2%

Of course, most will have to pay capital gains on the ContraFund, which
is 15% max in the U.S., so the 20.4% becomes 17.3% (or more).

Tom Seim
Richland, WA



Only if you sell --- there's the rub 8)

Bob Johnson
Midland, TX

I am not sure what you are recommending - if ANYTHING! It sounds like
you are in the "hide it under a mattress" crowd. Be my guest,
especially if you hide it under MY mattress! What I recommended a year
ago wasn't backwards, it was forwards. Guess what? I was right. Your
use of the perjorative word "scam" clearly indicates your bias. Still,
the question is, what is the best strategy for buying a glider
afordably. Do you have any REAL suggestions, or are just passing gas?

Tom

wrote:
I am not sure what you are recommending - if ANYTHING! It sounds like
you are in the "hide it under a mattress" crowd. Be my guest,
especially if you hide it under MY mattress! What I recommended a year
ago wasn't backwards, it was forwards. Guess what? I was right. Your
use of the perjorative word "scam" clearly indicates your bias. Still,
the question is, what is the best strategy for buying a glider
afordably. Do you have any REAL suggestions, or are just passing gas?

Tom

Here's Tom's original post.

Tom Seim
Nov 15 2004, 8:44 pm show options

Newsgroups: rec.aviation.soaring
From: (Tom Seim) - Find messages by this author
Date: 15 Nov 2004 20:44:56 -0800
Local: Mon, Nov 15 2004 8:44 pm
Subject: US Dollar sinks to new low against Euro
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(Mike Stringfellow) wrote in message
. com...
The US dollar is now valued close to 0.75 Euro, down from its peak of
1.25 a couple of years ago. Analysts say it may go even lower, with
some projecting exchange rates of 0.7 (1.4 dollar to the Euro).

This has pretty much put the kibosh on my goals of buying a new
European sailplane. A model at, say, Euro 85,000 cost around $70,000
a couple of years ago, is now around $110,000 and may soon be at
$120,000.


Economic models would suggest a strong incentive for sailplane
manufacture in North America, but I wonder if the numbers of potential
sales would justify this.


Any thoughts?



Yes, invest your money and wait. For instance, if you put your money
in a high quality mutual fund you will begin accumulating principal.
Take your $70,000 and put in a Morningstar 5-star fund (i.e. Fidelity
Contrafund). If you average 15% return the numbers a
Year Amount
0 $70000
1 80500
2 92575
3 106461
4 122430
5 140795
6 161914
etc.

At some point the price of the glider, converted from euros, is going
to be less than your investment. BUY THE GLIDER! This is, simply, the
power of compounded interest.


Don't agree with my numbers? Then put your damn money into a mattress
and see what happens!


The moral of the story is that patience is on the side of the buyer.

-end-

At 04:06 24 November 2005, wrote:
I am not sure what you are recommending - if ANYTHING!
It sounds like
you are in the 'hide it under a mattress' crowd. Be
my guest,
especially if you hide it under MY mattress! What I
recommended a year
ago wasn't backwards, it was forwards. Guess what?
I was right. Your
use of the perjorative word 'scam' clearly indicates
your bias. Still,
the question is, what is the best strategy for buying
a glider
afordably. Do you have any REAL suggestions, or are
just passing gas?


Only point was that one would need to know your predictions
for what to do for, say, the past 10-20 years to know
if your 2005 prediction was good or just lucky. Stock
newsletter writers have used 'survivor bias' in market
forecasting for years - trumpet your successful calls
and hide from the rest.

But rather than trying to go back a decade, we can
just start now. For those considering buying gliders
later in 2006, what's your forecast for the $/Euro
rate 12 months from now?

My recommendation is, if you have a glider on order,
hedge the FX rate, but if you think you can out-guess
the market, you're probably only half right.

9B

Only point was that one would need to know your predictions
for what to do for, say, the past 10-20 years to know
if your 2005 prediction was good or just lucky. Stock
newsletter writers have used 'survivor bias' in market
forecasting for years - trumpet your successful calls
and hide from the rest.

But rather than trying to go back a decade, we can
just start now. For those considering buying gliders
later in 2006, what's your forecast for the $/Euro
rate 12 months from now?


Well, I started about 35 years ago, but who's counting?

For the next 12 months I predict that the Euro will continue its
decline, probably leveling off at a $1.05 to a $1.10. I would
definitely not hedge the Euro, however. I would - and will - keep a
substantial portion of my holdings in the ContraFund (but I also own a
couple of dozen other funds, ContraFund is my largest holding). And, at
this point, I would put the glider on order (if I were in the market
for a new glider).

My recommendation is, if you have a glider on order,
hedge the FX rate, but if you think you can out-guess
the market, you're probably only half right.

9B

I don't out-guess the market; I find fund managers who have a proven
track record of doing that. And I monitor there performance to ensure
that they remain in the top 20-30% of their peers.

Tom

Roy Clark, B6 wrote:

Yes, invest your money and wait. For instance, if you put your money
in a high quality mutual fund you will begin accumulating principal.
Take your $70,000 and put in a Morningstar 5-star fund (i.e. Fidelity
Contrafund). If you average 15% return the numbers a
Year Amount
0 $70000
1 80500
2 92575
3 106461
4 122430
5 140795
6 161914
etc.

At some point the price of the glider, converted from euros, is going
to be less than your investment. BUY THE GLIDER! This is, simply, the
power of compounded interest.

If you wait long enough, you might be able to get yourself that same ship
secondhand for even less money. Sorry, but I find these "advises" a bit too
obvious. Of course you can make some money if you invest your money in a
clever way, and you can put that profit towards a nice ship from Europe. So
what? I don't think somebody interested in buying a new ship is interested
in waiting a couple of years for their investment to grow big enough (if
indeed they did the right investments it does grow): they want their ship
for the next season! They want to go chase that wave or that cumulus
street, not to stare at it from the ground knowing that the money that they
could have put towards a nice ship now might in a few years be enough to
buy a great ship then.

Then again, the idea that you can invest your money in order to get more
money doesn't only work for buying gliders, it works in general. So, what
exactly is the relevance to soaring, other than the fact that gliders cost
(a lot of) money?

My advice? If you want to buy a ship, just look for a ship you can afford
*now*. For me, the important factor of a ship is it's fun/price ratio. You
can always find one that fits your wallet and your level of flying.

André

At 12:42 24 November 2005, wrote:

For the next 12 months I predict that the Euro will
continue its
decline, probably leveling off at a $1.05 to a $1.10.


No guts, no glory - good for you!

Current FX is 1.18. If on Thanksgiving of 2006 the
rate is between 1.05 and 1.10 you'll be 2 for 2, and
can start your own currency trading newsletter. If
not, you'll be at 50% - on par with a coin flip.

We could make it an annual event!

9B

I don't out-guess the market; I find fund managers who have a proven
track record of doing that. And I monitor there performance to ensure
that they remain in the top 20-30% of their peers.

In the business, we call this "chasing past return", an investment
fallacy sort of like setting the MacCready value on the last thermal.
The catch of course is if that they don't stay in the top 20-30% of
peers, you've already lost your money.

I looked up contrafund just for fun

http://quicktake.morningstar.com/Fun...A&Symbol=FCNTX

Looks like they made one good move in not losing as much as the average
2001-2003; other than that they track large cap growth pretty
perfectly. And they charge a hefty 0.92% expense ratio!

John Cochrane
BB