Faulbär-Strategie ETC worst Country Index 2021

Hi to all,

I am currently want to setup my portfolio with ETF following the “Faulbär-Strategy”. You can read the strategy in this article (German):

The success rate and performance is “stunning” over a long time periode and the costs of only buy/sell 1x a year for shifting to the newer badest country index is attractive. Looking a the history the risks seems to be ok for a longer period of time.,

So my question would be to you:

  • Did you make some experience with this strategy and if yes, can you explain your thoughts?
  • What do you think about this strategy?
  • Which country and ETF you would choose for 2021 with the outlook of 2022?

My time frame is 19 years from now on…;-).

Let’s share experiences and discuss.

Thank you to all of you.

Best regards,

syndroma

1 Like

Why do you think the risk is “ok”? It’s actually an extremly volatile “strategy”, meaning it has a high risk.

Choosing the worst performer and hoping that it will perform better next year is a bad “strategy” in my opinion. That’s just pure speculation not based on any fundamental data. There’s no reason that a bad performer will perform better the next year, it might as well continue underperforming or even get worse.
Also keep in mind if you lose 50% in one year, you need 100% next year to get back to square one.

4 Likes

Couldnt agree more. Sounds to me like poor mans market timing.
Why not just buy a world ETF like VT?

Hei thank you guys for your thought… but did you read the article about it above?

Statistical over 20 years about 3’000 %! And The process of “choosing the right market” (badest) including the historical values:
Hier ist eine Liste der vergangenen 20 Jahre:

Jahr Land Rendite
2000 Vietnam 98 Prozent
2001 Südkorea 37 Prozent
2002 Finnland - 19 Prozent
2003 Brasilien 101 Prozent
2004 Vietnam 32 Prozent
2005 China 8 Prozent
2006 China 114 Prozent
2007 Südkorea - 8 Prozent
2008 Irland - 66 Prozent
2009 Russland 123 Prozent
2010 Südafrika 15 Prozent
2011 Spanien - 13 Prozent
2012 Österreich 27 Prozent
2013 Südafrika - 26 Prozent
2014 Brasilien - 2 Prozent
2015 Russland 7 Prozent
2016 Brasilien 76 Prozent
2017 Dänemark 16 Prozent
2018 Russland - 3 Prozent
2019 China 25 Prozent
2020 Südkorea 42 Prozent

And the theoretical “total possible lost in %” (should not be more than 30%…) is a possible try for the next view years.

And for sure, the “selection” process of the “badest” country indlucing the “exclusion”-Rules of “No-go”-Countries such as South America (excl. Brasil), Africa (excl. South Africa), some “Eastern-Countries” etc. is a “must”.

But there is my question in “how to do that in practise”? Any suggestions?

Why not chossing 1 ETF? Just simple: why only 8% if you can earn more in respect that i choosing a high risk (but in outlook to 20 years… there is no really risk with outlook to statistics as copied above).

What do you think?

I love when people think that 8% (with high volatility) is already not risky enough. At some point you have to pick, play the lottery and have a strategy (and take it slow and steady).

8% is already very risky (and not guaranteed at all, you can have a bad sequence of return and nobody can predict the future) and high return (with compounding you more than quadruple your returns even without any extra other contributions…)

Edit for reference, let’s say you earn 6k/month, and save 2k/month. After 20y at 8% you end up saving 480k, but with compounding you have now have 1.1M. That’s already pretty good, right? Is you’re goal to have 1% or less chance of becoming very rich very quickly or to reach FI reliably?

2 Likes

Hi nabalzbhf,

Why should 8% be risky? This generates my pension of my company every year to all of they “normal” employees (and in some years even more). Some the “Lye” that thsi should be risky is at least for me not guilty (in comparison with the swiss pension index of all the pension company - yes my company would be one of the top but it is a KMU and not in the financial- or insurance business).
So the same to all the Swiss people who are thinking that 0.5% interest rate in the pension should be “normal” - look at the north to Sweden - They manage that under normal circumstances to generate more value to the people.

My questions was more in terms of the “article” and the strategy including the “hard facts data” behind it and which country would be “the next candidate for 2022”?

After i looking at the data of the “worst countries” I would chooose:

  • According to “Justetf.com”: badest countries 2021 (OK=for the strategy rules it is a country of the “OK” list):

  • Brasil (OK; the only 1 country for south america): -14.59%
  • Turkey (Nogo according to the strategy rules; Political risks etc.): -12.58%
  • China (OK): -8.22%
  • South Corea (OK): -5.73%
  • Malayisia: -4.48%

Following strategie options:

  1. Brasil
    (lowest TER 0.33%, Volume: 361 Mio; Domicil=Germancy): iShares MSCI Brazil UCITS ETF (DE) USD (Acc))

  2. China:
    iShares MSCI China A UCITS ETF (2.02 Bio; 0.4% TER; Domicil = Ireland)

  3. South Corea:
    [iShares MSCI Korea UCITS ETF (Dist) (566 Mio.; 0.74% TER; Domicil=Ireland)

What your thoughts about it?

Wish you a nice night and a good start into the morning tomorrow?

Did you read the article? The guy says nothing positive about the strategy and only recommends it for people with a high risk tolerance or for a small % of your portfolio.

Historical performance is no guarantee for future performance. In hindsight everything is easy. Why did you not buy bitcoin in 2008?
And if you see this and say there’s no real risk, you should read up about statistics.
There’s always a trade off between risk and return, you can’t get higher returns without taking higher risks.

Is that the return they make or do they actually pay out 8% or more? That would be the best pension fund ever.

What are the “hard facts data” behind it?

This :point_up: @syndroma
The author explicitely mentions that the selection of countries is, at best, random. And that you should only perform it with a small amount of your portfolio.

Also note that this is a theoretical exercise of backtesting. I don’t think that someone actually followed this approach in real life (and if so, just with a tiny amount of money invested).

Just buying the worst performing country ETF is stupid. What if the country actually has serious problems? Tbh, this is just another form of market timing and gambling. To buy the worst ETF of the last year, just hoping that it will perform better because of probability, is not wise (from my point of view).

So while 3000% in 20 years sounds amazing, you should set it in relation to risk, volatility and also compare how much you would have gained if you sticked to MSCI world or ACWI from 2000 until today.

Considering this is a gamble: how much of your stock portfolio would you allocate to this strategy? 10%, 20%, 50%, 100%?

2 Likes

Interesting, thanks for the link!

Anticyclical investing does have some proponents and as seen, can be profitable.

BUT (and that’s a big but), you have to be able to stomach the volatility. Take for example 2008 (Ireland, -66%). If you started then, your returns would be way different than 18% per year until today. I am quite sure that after that year most people would abandon the strategy, throw in the towel and realize their losses… so check your own psychology and risk assessment.

Let us know how it’s going if you decide to follow this strategy.

2 Likes

Thank you very much for all your feedback. You put me back on into “realistics”…:wink:

I have some sympathy for the approach. It basically presumes that markets tend to overreact.

The approach kind of considers everything priced in at a certain moment. Also serious issues in Switzerland do not mean that the SMI is going to crash, remember Nestle makee >95% revenue abroad.

What I do not understand: They buy the “worst country excluding some very risky ones”. Who is deciding this? Is there an ETF that I could buy if I wanted to follow the approach? Is there a Faulbär-Comittee publishing its decision on January 15th? Did the author of the book even go beyond a thought experminent? Do I have to buy the book to find out?

Hi,

See above i had the same questions to myself and and i did a proposal with the question of 2021 for the planning of 2022:

My questions was more in terms of the “article” and the strategy including the “hard facts data” behind it and which country would be “the next candidate for 2022”?

After i looking at the data of the “worst countries” I would chooose:

  • According to “Justetf.com”: badest countries 2021 (OK=for the strategy rules it is a country of the “OK” list):

  • Brasil (OK; the only 1 country for south america): -14.59%
  • Turkey (Nogo according to the strategy rules; Political risks etc.): -12.58%
  • China (OK): -8.22%
  • South Corea (OK): -5.73%
  • Malayisia: -4.48%

Following strategie options:

  1. Brasil
    (lowest TER 0.33%, Volume: 361 Mio; Domicil=Germancy): iShares MSCI Brazil UCITS ETF (DE) USD (Acc))
  2. China:
    iShares MSCI China A UCITS ETF (2.02 Bio; 0.4% TER; Domicil = Ireland)
  3. South Corea:
    [iShares MSCI Korea UCITS ETF (Dist) (566 Mio.; 0.74% TER; Domicil=Ireland)

What your thoughts about it?

Wish you a nice night and a good start into the morning tomorrow?

You might also want to consider the HSBC MSCI China ETF which has a lower ETF of 0.3%:

By reading and partipating to this forum, you confirm you have read and agree with the disclaimer presented on http://www.mustachianpost.com/
En lisant et participant à ce forum, vous confirmez avoir lu et être d'accord avec l'avis de dégagement de responsabilité présenté sur http://www.mustachianpost.com/fr/