I’ve been following the China iShares, FXI, for a long time now and I noticed that Maoxian posted about it nearing its all time high. This reminded me of the time when the talk was that FXI might be overextended or possibly reaching a top. At the time, it sure looked that way. I even posted on my old site saying that the trend might be over but the more I thought about it, the more I wondered if my initial call was wrong.
Something didn’t seem right to me so I built a classification model to analyze FXI’s trend. I was surprised when the model remained long throughout the selloff.
You can see the charts I posted on January 31, 2007 and April 6, 2007 on my old site. I even reiterated FXI’s UP trend on one of my first blog entries here.
As of today (in 2007), the trend still remains UP.
Back in 2007 I thought I had a great trend following system. I was feeling pretty smug about the direction that my AI trend models were giving me (because it was up). Little did I know that I was just lucky. The markets were trending upwards and I was riding their coat tails. So it’s fitting that to revisit my FXI calls from 2007 and see where are they now.
Back in 2007 I made at least two posts about FXI. I posted this chart and noted that the trend remains still up. FXI was trading around $115 per share.
A little bit later in 2007, FXI split 3:1, so the price got cut by a third. For today’s argument, assume the split happened at $115 (it was a bit higher than that).
Today FXI is trading at $39.93, which is just over $1 higher than if FXI split at $115. So it did a whole hell of nothing over 12 years. If you look at the chart, it’s been nothing but a roller coaster. Up, then down, then up, etc.
Sure you could’ve picked up some FXI at the bottom of 2009 but who knew it would recover? Sure you could’ve picked it up when it touched $30 a share a few times over the years but maybe it would’ve gone lower.
FXI in July 2020⌗
Just updating this with a new chart.
What’s the moral here? I don’t think there is any except that dollar cost averaging is good and buying when people are scared is better.
Seriously though, dollar cost averaging is WAY easier than buying when people are scared because sometimes it’s better to stay out of their way. No one wants to catch a falling knife, now do they?