Count Down to Investment

June 22,2013

On July 31, 2013 I will invest 25% of investible funds in VTI  if VTI closes  above its 200 day simple moving average on that day. ( or )

On July 31, 2013 I will invest 6.25% of investible funds in VTI,  if VTI closes below its 200 day simple moving average that day.  If this happens, I’ll be waiting for the next alternate  month end close,   ( September  30 ) to invest another 6.25%,   if VTI ‘s price remains below its 200 day moving average.  And so on….

The first month end  VTI re-emerges and closes above its VTI’s 200 day moving average will be the “all in” signal.

Its more important to be on the correct side of the trend than to purchase VTI at a lower price.  But, I don’t see any harm in lowering my average cost,  over time,  if VTI makes an extended stay below its 200 day moving average.  The market can move fast.  In two trading days this week, the market erased two months worth of gains. The month end proviso in my plan can eliminate a lot  of whipsaws.  Instead of 5 trades over the past 13 years, there would have been 50 trades  if I had acted  ( any day end  )  VTI crossed its 200 day average ( in either direction )  and only 11 trades of the 50 would have been winners.  The 13 year return would have been 72% versus 200% for the action at month end only  strategy.

As of the close, Friday June 21 @ $ 81.97 VTI was 6.84% above its 200 day moving average.  ( SPY was 6.65% above its 200 day moving average @ $159.07 )

 

Richard Maurice Gore

 

 

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