No April Foolin – SPY Model Still Positive

April 1, 2017

SPY ended March at $ 235.74of which is 7.49% above its 200 day simple moving average of $219.32.

This means that SPY is still on a BUY signal.

The 4,905 shares you theoretically hold are now worth $1,156,305 versus $1,096,415 on December 31, 2016. This means your unrealized profit for the first 3 months of 2017 is $59,890, excluding dividends of 2.36%

I always like to compare financial market profits to rental profits. Theoretically, you have received $19,963 per month rent ( with no dividends, BUT with no expenses or aggravation ) for 3 months on an investment property in which you have invested $1,096,000.

The current BUY signal was generated March 31, 2016 ( 253 days ago ). Since that date SPY has appreciated 17.08% excluding dividends which are 2.36% per annum. So, looking back 1 year your total return in SPY has been 19.44%.

Truthfully, I would have sold my position last week based on the possible inability of the Trump administration to make changes that would deliver higher profits and lower taxes. The financial markets abhor uncertainty. BUT, I realize I can’t predict the market at any specific time. All I can predict is that I will follow the trend dictates of my timing model and probably not head for the exits on time. On the other hand I can predict I will not be savaged by being long the market and most likely will escape with a decent profit instead of sitting on the fence, doing nothing to protect my profit, and consoling myself that I am a long term investor. The model will not allow me to sit still for anywhere remotely close to a 50% round trip which could take ten years to get back to breakeven as it did during the last grand recession.

I am sufficiently in the market to cheer for a daily rise and sufficiently out, thanks to Trump, to know it pays to have a reserve on the sidelines.

In addition to long positions ( primarily equities AMZN and GS ) (primarily ETFs QQQ, ITA, KBE, XLF ) I have written promises to accept assignment of certain stocks and ETFs ( Puts ) at lower prices.

Richard Maurice Gore

SPY is an Exchange Traded Fund. It is a basket containing all 500 names in the Standard & Poors 500 Index representing the largest of the large cap stocks appearing in the Index 500. In a word, it is the USA Stock market. It is passive in that it is not managed by a portfolio manager. Very few of the components in the index change from year to year. Its annual performance result is the benchmark against which all portfolio managers are measured to determine whether their expertise is worth a fee or commission. It eliminates ( spreads ) the ” specific risk ” of investing in a specific stock over 500 names and is said to contain only ” market risk ” making it attractive to people who want to be in the stock market, but not subject to the risks associated with any one company.

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