Archive for February, 2016

Buy and Hold Wealth Tracker as of close February 29, 2016

Monday, February 29th, 2016

February 29, 2016….   at market close

SPY’s closing price $193.69 for February 2016  was below SPY’s 200 day moving average…..$201.17

According to the SPY, month end, 200 day trend model,  the average investor should have been and be on the sidelines , in cash or equivalents waiting for possible market re-entry after the close March 31.

$1 million invested in SPY at its December 31, 2015 closing price,$203.87 would now be worth $950,066 reflecting a decision to remain in the market despite the December 31 sell signal.  As of the close today, that decision to Buy and Hold would amount to an unrealized loss of $49,934, 4.99%.

On the other hand, if the December 31 sell signal had been respected and a market exit effected on the first trading day in January, the  unrealized trading loss would be and could remain at $16,500….1.65% until market er-entry.

In my opinion, what the above illustrates is that you better have a strong stomach  and plenty of patience if you decide to Buy and Hold.

Lets see how this turns out as time goes on.

Richard Maurice Gore

 

 

SPY Progress Report

Sunday, February 14th, 2016

February 14, 2016

SPY

$ 1 million invested….decision to Hold at December 31 close……….Now worth $915,500……Unrealized loss   $84,500

$ 1 million invested….decision to sell on December 31 signal……….Now worth $983,500……Unrealized loss   $16,500

Difference            $68,000

Warren Buffett has said ” Unless you can watch your stock holdings decline 50% without becoming panic stricken, you  should not be in the stock market.”

This is the reason why my serious money is in a passive index ETF .

Why did I leave  the market at its open January 4, my first opportunity to respond to the  December 31, SPY sell signal ?

Two reasons…

#1 Well before December 31, when I made the decision to trade market trends, I knew my purchase  timing would probably miss market bottoms, thereby  sacrificing some potential upside profits And, I knew that I’d probably leave profit on the table by leaving the market too soon. Bottom line I had to choose between hitting for home runs or for on base percentage.

I chose  to hit for percentage out of respect to Jesse Livermore .  ” No one ever went to the poor house taking a smaller profit “

# 2  I needed to find a trend trading model that wouldn’t involve me in many trades because the more I trade, the more I want to trade.  I suppose gamblers can relate to this.  So, I  did a lot of back testing and found a model that had only 7 trades since January 1, 2000.  

Five of these seven  trades were winners. Of the five profitable trades the median profit was 20.57% and the median loss was 3.59% for the two losing trades. .  Average days in winning trades 546. Average days in losing trades 31.  Total profitability Model 275.2% …Total Profitability Buy and Hold 82.7%.

I will re-enter the market with SPY when its month end closing price is higher than  its  200 day simple moving average price.

That’s all I really need to know….although I want to know more and continue to investigate everything from Moving Average Crossovers to the relationship of GDP to National Debt.  Its fun to predict, but I believe predictions are way more risky than simple trend following..

For me, the subject of finance and investing is a jigsaw puzzle with no outside borders.

Richard Maurice Gore