Archive for September, 2017

SPY Model Signal : Buy / Sell

Saturday, September 30th, 2017

September 30, 2017

The September Equity Market is now in the books

Since the model closed September comfortably above its 200-day simple moving average, if you follow the model, by rule, you would continue to hold your position in SPY ( S&P 500 ETF ) until the close of October.

Your theoretical investment in SPY which started at 1 million (4,905 shares ) had a value of  $1,096,413 on December 31, 2017.  Its present value  is $ 1,232,283.  Your unrealized paper profit since December 31, 2017, is $135,868 excluding dividends ( yield 1.90% ).

Appreciation has been 12.39% since January 1. and,  comparing this return to what you can get in a savings account or CDs or the 10 year Treasury is no contest….except for the Market RISK you must bear versus whatever Specific risk you may have in your alternative investments.

I’ve been doing this since August 2010 as a service for friends and people who have retired with a 401K and have very little experience in surviving on Wall Street.  I don’t give guidance, but I allow you to look over my shoulder to see what I see based on a formal education which consists of an undergraduate degree in Economics, a graduate degree in International Finance , five years  in the Overseas Division of  Citibank which included a 2 year stint on the Middle East and African Desks at 55 Wall Street, and a 2 year stint as an officer at Citibank’s Johannesburg subsidiary.

I don’t have a license to give advice and I don’t want one because I am beyond using this web site to make fees or commissions by giving advice or handling investment money

BUT, it would be interesting to know how many of you, if any,  find this blog helpful.  My nephew, who is a website designer, tells me that almost anyone who has commented on this blog has done so to create a link which would serve their own web interest.  So, I’m in the dark on whether or not anyone even reads this blog or finds it helpful.

You can get a better idea of SPY model rules and historical performance by consulting the blog which precedes this indicating the action dictated by the model for September 2017.

Richard Maurice Gore

 

“SPY ” ( S&P 500 Exchange Traded Fund ) Model Says… HOLD

Friday, September 1st, 2017

September 1, 2017,

The 4,905 shares of SPY you held on December 31 ….$ 1, 096, 415, are now worth $1, 216, 244.

This is a paper profit of $ 119,829.  ( $14, 979 per month since January 1, 2017 ) excluding dividends.

It may be interesting to compare that return to the estimated appreciation and net rental income on a piece of real estate you own as of December 31.

Investing in SPY requires no work from you except to read the newspaper once each month or listen to the financial news as often as you like. No complaints or annoying calls from tenants, no interaction with handymen or worry about repairs and maintenance. No big commissions when you buy or sell SPY probably in the neighborhood of $5 for the trade.  However, if you were to buy or sell each of the 500 equities in the SPY basket, each trade would cost you $5 in commission ( 500 x $5 = $2500) So that is a $2,495 saving just to buy or sell SPY. Real Estate commissions are a whole different matter.

On the other hand, if at any month end, the price of SPY is less than its 200 day simple moving average, you would be required by the rules of the ” model ” to sell out and move these funds into a money market account at the same brokerage.  This could result in a small loss if you got on board late or a larger loss if the market goes off a cliff during the month. The commission to sell SPY would aapproximate $5  !!, so that is not an obstacle.

There have been only 6 trades in the model since 2000 and 5 have been winners.

When at a subsequent month end,  the price of SPY again is higher than its 200 day moving average, the model would dictate you switch out of the money market and go ” all in ” to SPY.

The object of following this model is to spare you a slow, grinding descent with a paper loss which could approach 50%.  Real estate price declines could make you feel even more locked in and upside down.

The whole point of the SPY Month End Model is to preserve capital by following a trend until it ends and moving to the sidelines.

Rental investments have their risks too.  With what happened in Houston this week, I can remember in the 80s a Houston real estate broker telling me that he wished he could borrow enough money to purchase every vacant apartment in Houston.  Nothing lasts forever.

For me, knowing that SPY is on a buy is the underpinning for my decision to make equity investments far more aggressive than SPY .  My canary in the mine is SPY.  And I never take my eyes off my canary.

For those curious, present investments include exposure to MCO, MCD,MA, ITA, QQQ, DIA, PPA, GLD,NVDA, AAPL, FB, MSFT, AABA( yahoo ), SNE, UNH,SPGI, RTN, HON, KBE, AMZN, BX, XLF, AVAV, SBIO,OA and V.

My SPY investment is up 10.93% since December 31 as indicated above

My investments in the above symbols are up 17.1% since December 31.