June 1, 2012 Reflections and Moving Forward
June 1 ,2012
The bad news is that between Jan 10 and April 23 my market winnings were an embarassing $272 ( with $4,000 ) in dividends. The good news is that if I hadn’t liquidated my portfolio on April 23 ( see that Post ” Sell Alert Its Almost May “ ) I would now be down $116,000 on an invested amount of $1,000,000.
So, in the final analysis I did preserve my capital AND that is rule # 1 through #10 in risk management.
Yesterday, the market ( SPY ) closed below its 150 day moving average and, for me, that is a confirmed sell signal.
Based on all the backtesting I have been doing with SPY, it looks like the best result in terms of fewest trades and highest return ( mechanically ) is to wait until month end to buy or sell. Buying or selling at moving average price crossovers of the 150 dma seems to result in more whipsaws, a great many more trades and smaller returns.
But, I suppose watching SPY’s price break down on the second day of the month and then being forced to wait till month end to sell if the SPY price is still below its 150 dma is similar to wondering if a parachute will open. Definitely, I am not a skydiver. …..So
I’ve decided to modify the model to allow for possible SPY crossover action on the 1st, the 10th, and the 20th. This means splitting my investment into 3 parts and allow each part to act independently of the other. At the moment, I am all in cash, and my rules won’t let me act till the 10th, if then. I’ll let you know…
Meanwhile, I’ve split my cash among FDIC Insured savings accounts and the following ETF symbols: BSV, VCSH, VCIT, LQD, BOND, BND. These ETFs are invested primarily in short and medium duration investment grade commercial credits offering a higher dividend than I can get in the money market. BOND is the ETF equivalent of PIMCO’s very popularTotal Return Fund.
Having a mechanical signal on the 10th to look forward to will keep me insulated from all those urges to buy trouble.
Plus, I have almost 15,000 comments ( not hits – comments ! ) that I need to screen for spam. That should keep me occupied ( I am retired ) and smiling ! Thanks for responding so positively !
Bye for now…
Richard M. Gore…aka Rich, Dick, RMG, Smiley from Woodlawn, …..