Archive for September, 2013

Market Close Sept. 30, 2013 – Adding Money

Monday, September 30th, 2013

Monday, September 30, 2013

During the past three  years, my investment journey has followed a path that has led me inexorably to Index ETFs where the risk is top down, transparent and diversified.

Vanguard’s VTI represents the pinnacle vehicle for this type of investing…. the Total USA Equity Market….. a basket of over 3,500 holdings.

There have been only four round trip trades in VTI since April 30, 2003 ( using a trade at month end only methodology ) ….all four trades were winners,  with the average gain 23.45%.

The fifth and latest VTI trade is still open…..open since December 30, 2011….( 437 days )  and as of the close September 27, 2013 has appreciated 41.93%.

I am trying to gradually get in sync with that trade  by dollar cost averaging into a profitable position.    In fact, since it is September 30, I’m getting ready to invest a further 20% of my capital in VTI and its cousins.  VTI closed today at $ 87.65…..6.7%  above its 200 day moving average.

The  last part of my investment program will take place after the market close  November 30, when I am scheduled to invest a final 25% in the program,  IF….., VTI closes above its 200 day moving average on that date.

Never Say Never

I believe that the average investor, ( you and I ) , should not invest in individual equities.  However, over the past 10 days I have bought 1100 shares of Facebook at an average cost of $44.75 per share.  Why ?  My nephew Rick Waters, is a Search Engine Marketing Guru from Delray Beach  / Boca Raton, Florida .  He understands Facebook’ s business model and strongly believes we are looking at a mega bagger equity.  He has been invested since day one of the public offering  and has never wavered.  I totally respect his views on this and believe his expertise gives me an  edge.   I am buying my Facebook via a tax deferred IRA, so it means I can postpone the tax consequences if my trailing 5% stop is activated and results in a realized trading profit.  Between his expertise and my  5% trailing stop, I feel  far more protected than I ordinarily would with an  equity investment.  My only concern is in finding the  correct re-entry point if I am stopped out of my position , since I intend to stay close to the Facebook  rocket as it continues its post orbital ascent.

Back to the VTI front…..

As the market grinds higher,  VTI’s 200 day moving average will be dragged higher with it..  At the moment VTI’s 200 day moving average,$82.14,  would need to be $86.13 ( my average cost ) for me to breakeven should it violate its 200 day moving average.   If VTI were to violate $82.14 at a month end,  I would stand to loose at least  4.6% on my investment.  At the end of August I would have lost 6.96%.  At the end of July, I would have lost 8.89%. based on my average cost.  So, VTI’s 200 day moving average is gradually  moving in the right direction…. higher,  thus reducing my contingent loss ( entry fee ) for getting in sync with the program.

The November 30, 2013 close will dictate whether or not I’m to remain invested and where I am in relation to my cost and the 200 day moving average.

I intend to wait patiently until November 30 for the possible next leg of my involvement with VTI, while keeping a tight leash on Facebook.

 

Richard Maurice Gore

 

 

 

A New Inclusion in My Index Portfolio

Monday, September 23rd, 2013

Monday, September 23, 2013

Those who have read my posts know I favor equity index investing and trading 200 day trends.

I am willing to accept what will probably be less exiting returns so that I can avoid the specific risks of individual stocks.

Example:  Year To Date

SPY   plus 19%  ( 500 stocks, dollar weighted by total value of shares outstanding )  VTI   plus 20.2% ( Entire USA Equity Market – 3, 434 holdings )  VB  plus 26.1%  ( 1700 Vanguard selected small cap equities ), RPG  plus 28.1%  ( Fastest growing third of the S&P 500 ),  QQEW  plus 28.8% ( Nasdaq 100 re-sorted from cap value to equal value invested in each of the 100 equities )

Versus:  For Example….. Equities such as  AMZN  plus 23.7%,  C  plus 28.5%, DFS  33.4%,  DIS  plus 30.6%, GE plus 15.5%,  LNKD plus 27.0%, MSFT  plus 17.9% , T plus 0.4% TWX plus 32.8%, VZ plus 9.8%.

I do not know what flavor of nasty surprise awaits me in each of the above equities, and contemplating that is what I want to avoid !

Now, I have found a new candidate to join the five Index Symbols shown above.  BFOR is an ETF basket containing the Barrons Newspaper 400 stock index.  This ETF was launched June 2013 and has accumulated $89 million in investor funds since then.  BFOR is a stock pickers index choosing what it believes is the best 400 equities from 6,000 analyzed.  It uses 24 indicators including growth, value, profitability and cash flow to make its selections.  It is more expensive to own than the passive indexes ( .o65% versus .o5%  for VTI )  so it better outperform the cost differential.

Since June 30 it has outpaced all my passive and semi passive indexes, save one,  QQEW plus 11.9% / BFOR plus 11.8%. ( SPY plus 5.7% ) ( RPG plus 9% ) (VTI plus 6.5% ) ( VB plus 8.4% )

I will invest another 25% of my investment funds after the close September 30 if VTI finishes that day above its 200 day moving average.

My planned investment selections are as follows:

VTI ( 45% ) SPY ( 0 % ) BFOR ( 20% ) QQEW ( 15% ) VB ( 10% ) RPG ( 10% )

 

Richard Maurice Gore