Archive for February, 2018

On a BUY ?…..or What ?

Thursday, February 8th, 2018

Feb 8, 2018

What I have been saying about interest rates and inflation versus earnings yields is coming true.

The market is adjusting to the fact that the Trump / Republican budget is a calculated gamble that the tax reduction in the face of increased spending will not cause inflation, increased government spending, and a higher national debt to be financed in the bond market via higher interest rates.

The SPY model says we are on a buy signal and it has been right 5 out of 6 times since 2000. The model says hold till the close February 28 and exit if the 200 day moving price average of SPY is higher than SPY at the close that day.

This is an across the board sell off, so the risk is not in stock picking. This is market risk, pure and simple.

I have allowed my emotions to overule the model and I am now 1/3 invested and  still acceptably profitable for the year to date.

The balance I wanted to find is to look forward to the market’s close each day in anticipation of the market climbing, even though I am only settling for 1/3 of what could have been.

On the other hand, if the market continues to sell off, I can console myself that I am only 1/3 invested and positioned to invest 2/3 of my investible funds at lower prices.

The Republicans and Trump are swinging for the fences, instead of slow and easy like Obama and his Federal Reserve.  I can tell you that a home run, or better yet, a Trump home run is far more satisfying to the Donald than a high on-base percentage.

This approach landed him in trouble in Atlantic City and it reached the point where no USA bank would lend him money because of his Chapter 11 bankruptcies.

Now he is carrying the enabling Republicans with him and together they are gambling with the full faith and credit of the United States.

It may very well be that Trump’s approach to borrowing as the self-described ” King of Debt ” is the dreaded black swan the market has long feared.

Richard Maurice Gore

 

 

 

 

Believe it or not !

Thursday, February 1st, 2018

As of the market close January 31, 2018

What do you make of all the assurances coming from economic numbers?

The answer, at least for me,…….Short-term  ( 30 days ) positive , Long-term…. I’ll follow the SPY trend following model.

Today,  I have consulted with Confucius and he has suggested I take a good look at a chart of SPY, the ETF which represents a basket of 500 stocks which make up the S&P 500 Index. They trade as a single stock and you are in or out for approximately $6.95 per trade, whether you are trading 1 share or 1000 shares of SPY.

For Confucious, a picture was worth a thousand words, For me, a chart is worth 1000 words.

My SPY chart tells me SPY closed January with its price above its 200 day moving average, That means I should either own SPY or some alternate Index ETF which presents in a way you are confident will outperform SPY.

Or, you  can go riskier  and pick a  managed sector ETF such as BOTX ( robotics ).  Good luck!  Or, you can pick an individual risk stock such as AAPL.  Again, good luck.

SPY closed at $266.86 December 31. 2017  It closed today at $ 281.90.  That means the value of your investment in 4,905 shares of SPY grew by $ 73,771.20 just during January.  That’s right, just during January.

Your SPY investment has grown from $1 million  to $ 1,382,000 over the past 2 years. For doing exactly nothing….the very definition of Capitalism.

Is this performance based on the assumption that Trump and the Republicans will grow jobs and hours?  I don’t know,  and I don’t  care.  I follow the model. The model has been backtested to January 1, 2000.  I should be “all in ” until the trend ends  ( any month end SPY’s price ends lower than the 200 day moving average of its price ).

At the present time, my biggest risk seems to be not being fully invested in SPY and ignoring or doubting the upside trend while it lasts.

 

Richard Maurice Gore