am I ?
originally wrote this section to be read straight
I'm a retired actuary, born in 1936, formerly the CEO of
an employee benefit consulting firm.
I am NOT an investment expert, and I am NOT tech
savvy. PLEASE don't rely on me for investment advice.
YOU probably know more than I do.
My role is merely that of a statistician. I keep track of
the past performance of the Gilder stocks and pass
the results along to you. It's up to you what use you
make of it.
I'm happily married and the father of five grown sons
and a standard poodle named Bianca. Debbie and I
have three delectable granddaughters, Ivy, Sydney,
and Berkeley, and two handsome grandsons, Charlie
(back to top)
Why are you doing this?
It's a hobby and a labor of love. I do it in the hopes
of repaying George Gilder and the rest of the Gilder
community for all the pleasure they have given me.
It's an honor and a thrill to be part of this great
adventure, even in adverse times.
(back to top)
What got you started?
Being an actuary, it's second nature for me to produce
reams of statistics to keep track of my investments.
When I started investing with Gilder in March of '99, I
created the GTI both to track how George was doing
and to test the use I was making of his advice.
In January of 2000 I decided to create a web site to
share my information with other Gilderites.
(back to top)
How did you find out about George Gilder?
In late '98, just as I'd decided that my returns were
suffering from not enough tech stocks, a flyer came
in the mail from the GTR.
I'd heard George speak years before at a Cato
conference. It was at the height of America's fear of
Japanese business, and we were frantically seeking
ways to emulate their success. George said it made
him think of a convention of hares, gathered to
discuss the tortoise threat: "Maybe we should strap
heavy weights on our backs..."
Well, I figured, he certainly saw the future in that case,
so I'd give the GTR a try. I think it was one of the best
decisions I ever made.
(back to top)
What's your connection to the Gilder group?
None whatsoever, except that I subscribe to the report
and invest in stocks it recommends. This web site is a
hobby -- no pay, no advertising, all outgo, no income,
except for the pleasure I derive from doing it.
What's your personal investment style?
I think due deference (to Gilder's vision) is more
important than due diligence.
I don't believe in market timing. I'd rather buy at a bad
price than not at all. I'm willing to ride out the downs
in order to be sure of being there for the ups.
I spread my money widely among the companies on
the list. You never know who the next stars will be.
I think the Gilder companies have so much long term
promise that all we have to do is buy them and hold
I'm an optimist.
back to top)
What software and other tools do you use to maintain
your indexes and this site?
I wish you hadn't asked that -- I'm very backward.
My spreadsheet program is Microsoft Works, which is
sort of Excel for Dummies. It's what came with my first
computer, and it meets my needs, so I've stuck with it.
I also blush to disclose that until April of 2002 I entered
all stock prices by hand. I hadn't come across any
satisfactory way of automating the process. Then a
reader wrote suggesting I import the prices from
Yahoo, which is where I was getting them already. So
now I just import Yahoo files to Works. It's a big help.
My final confession is that I use Microsoft Front Page
to maintain the site. I've never learned HTML.
(back to top)
Enough about you. Let's talk about me. How do I get
a list of the companies?
You'll find them here. But you really should subscribe to the Report.
Click here for links to sample reports and subscriptions.
(back to top)
Let's discuss your methodology. Why an equal-dollar
It makes the most sense to me. The Gilder report lists
companies it recommends, but nowhere does it say
to favor some over others. (But note the exception for
"penny stocks" adopted effective May 6,2002.)
Of course I have my preferences, as does the report
itself. But mine are irrelevant, and the report's are
rarely set out clearly in print, are forever changing,
and are never quantified.
(back to top)
Yes, but most indexes don't use equal dollar weights.
Why don't you do what they do?
The NASDAQ and S&P's market-cap weights tell you
how the market as a whole is doing, just as the GNP
tells you how the economy as a whole is doing. But
neither is relevant to individuals. Who but an index
fund invests more in a company just because it has
a greater market cap?
The Dow (I think) buys equal numbers of shares. That
was a convenience in the pre-computer age, but not
today. Does it make sense to invest more in a stock
with a high price than a low price? Would you invest
less in a company the day after a split than the day before?
(back to top)
Why do you rebalance so often (daily until December 1,
2000, weekly thereafter)?
Every index must be rebalanced from time to time --
restored to its specified makeup. In the case of my
indexes, that means equal dollar holdings.
The more frequent the rebalancing, the less the index
wanders from its roots. The ultimate is to rebalance
at every update, and since I can, I do.
(back to top)
Frequent rebalancing is impractical for me. Why is it
OK for you?
Perhaps frequent rebalancing is impractical for the
individual, because of the transaction costs that
would be involved. (And yet . . .)
But a stock market index need not be a possible
portfolio to be useful. All that matters is that it reliably
represent the performance of the stocks it follows.
The NASDAQ, for example, is not a possible portfolio.
Unlike the S&P or the NASDAQ 100, there are no index
funds for the NASDAQ. It has too many component
companies in which to invest, even for a large mutual
fund. Yet it is widely accepted as a useful index.
Does your frequent rebalancing introduce a bias?
I used to wonder about that.
Under a rebalancing system, at each interval the index
"sells" a little of its above-average performers, and
"buys" a little of its below-average performers. This is
done to restore the index to its specified proportions,
which in my case means equal dollar holdings.
The reason for this is that because of their performance
during the interval, the winners have become
over-represented, and the losers under-represented.
The index no longer consists of equal dollar holdings.
The solution is to sell a bit of the winners and buy a bit
of the losers, until we have equal holdings again.
Might not this procedure introduce a systematic bias?
For example, if it's the case that stocks tend to move
up or down in relatively straight lines, then selling your
winners and buying your losers is a terrible strategy.
You are forever selling the stocks that are rising and
buying the stocks that are falling.
If, on the other hand, it's the case that stocks bounce
up and down like yoyos, then rebalancing is a brilliant
strategy. You sell a stock just before it drops, and buy
it back again just before it recovers.
If one or the other of those scenarios were reliably the
case, then daily rebalancing would indeed introduce
a systematic bias. It would perhaps make the GTI a
questionable source of information about Gilder returns.
(Of course, no index is perfect. In 1999 the NASDAQ
was up over 85%, but something like two-thirds of its
stocks were actually down. To many investors, the
85% return they read about in the papers must have
been a cruel joke.)
But getting back to the impact of such rebalancing, just
what is the case? Do stocks tend to move in straight
lines? Or do they yoyo? Or is neither the case? Do
stocks perhaps move all over the lot, so that both
phenomena occur regularly, maybe even canceling
each other out?
There is no way that I know of to answer this question
on a theoretical basis. So I put the matter to a real-world
test. I went back to March of 1999, when I started my
personal Gilder portfolio, and made a 17-1/2 month,
day-by-day comparison of the growth of $10,000
invested in both the GTI and my own portfolio.
The results of this test can be found in the chart in the
upper right hand column of Is It Accurate?
How can you compare the GTI to the NASDAQ and
S&P? They're so different.
Hey, even apples and oranges can be compared.
Apples are red, less spherical, and mealier inside.
Oranges are orange, and so on.
Most of us readily accept it when the press compares
the Dow to the NASDAQ and the S&P, even though
they are very dissimilar.
The NASDAQ and S&P claim to depict the action of their
component stocks, and most agree that they do. I make
the same claim for my indexes.
In fact, because of their narrower focus, I think my
indexes do a much better job of depicting their stocks
than the NASDAQ and S&P do of theirs. If there is a flaw
in the comparison, it's that the NASDAQ and S&P are so
broad-based that their results are too diffuse to be
pertinent to us Gilderites.
When you update, you add up each stock's percentage
change since the last update, and then divide by the
number of stocks to get the average change. Isn't that
It is generally wrong to add percentages, but not in this
case, where we are dealing with equal dollar holdings.
Imagine the GTI as a portfolio where each holding starts
out worth $100, so that the percentage and dollar
changes are the same. Up 3.25% or up $3.25; down
1.75% or down $1.75; it doesn't matter. Whether you
sum the dollars or percentages, the result's the same.
Looking at it another way, each percentage has the
same denominator, so it's OK to add them up.
It would be a sad thing if a Fellow of the Society of
Actuaries could not cope with arithmetic as
straightforward as that.
What about the "round trip problem"?
The round trip "problem" is that if a stock goes up 25%
and then down 20%, it is back where it started. But if
you average plus 25% and minus 20%, you get plus
2.5%, so you are not back where you started.
Thus, it is claimed, each of these round trips results in
an error, which over time must accumulate and throw
the index seriously out of whack.
However, I never average the example's plus 25% and
minus 20%, because they occur on different days.
Each day's index stands on its own. There is no round
I'd like to believe you when you say your indexes are
accurate and unflawed, but your arguments are hard
to follow. Can you simplify them?
be glad to. Click here to see a graph of how closely
Is there any way I could buy your indexes?
do you use when you add a new company
the Gilder list, I wait until the end of the week to reflect
the change in the GTI, unless it happens so early in the
week that I can still go back to the end of the preceding
week, which I do when the Gilder Report comes out on a Monday or before the market closes on a Tuesday.