Safe Again – But Just !

February 1, 2014

VTI ( Vanguard’s basket of 3500 USA stocks ) closed January at $92.88,… 5.78%  above it’s 200 day moving average…and safe from an end of January  sell signal.

So, I remain invested in VTI ( 1271 shares at $89.53 ),  I intend to add more very soon ( based on no particular indicator except maybe my  perception that the market is extremely  oversold )

For anyone who invested in VTI at the time of its BUY signal ( December 31, 2011 ), ( not me ),  the trade has persevered without a SELL signal for 522 days and shows a profit of  51.47%.

There have been four other round trips in this trade since it generated its original buy signal, April 30, 2003.  The longest holding period was from September 30, 2004 to December 31, 2007…..818 days.  All four closed  trades have also been winners.  The score is 5 wins versus zero losses. This is not a Buy and Hold strategy because the  end of  any given trade can come at any month end.  Neither is it a short term technical trade.  It’s history has been that of a long term” trend trade”.  To my mind this is the perfect compromise between short term speculation and buy / hold.  Additionally it seems to perform as a long term barometer of whether its safe to be in the market.

I am using VTI as a direct investment ( hoping  eventually to get in sync with its methodology ), plus I use it as a ” Surfs Up “indicator.

I use other index ETFs to weight VTI’s all encompassing composition toward big cap, growth, technology etc..  For that purpose, I may invest in SPY, QQQ. QQEW. RPG, VGK, BFOR and PRF.  I can’t report the timing  or selection of these investments in any way that I believe can be useful to you.  Too much of a gap between my action and your possible re-action.  Additionally, I may invest in sector ETFs such as XBI,  XLV, XLF, KRE and DXJ for different reasons, an example being DXJ which I believe will be ultimately driven by the dollar yen exchange rate and the impact a weaker yen will have on Japan’s export driven economy.

Then, I  have positions (presently losing)  in ITT and GE.

And, for the boy in me who would like to have worked under the hood of a 56 Chevy  ( but couldn’t because my attention  was directed elsewhere by my parents )  I tinker with trying to understand the levers of what may turbo charge the market performance of a WBMD, CAMP, and/or  a YAHOO.

Bottom line.  I believe the average  individual investor should focus exclusively on when to be in or out of VTI.  I believe that is the key to reducing your risk to a point where you  can drive the result based on accurate transparent data that is readily accessed.  In other words, stay safely on the beach when the surfs not up and don’t  chase  an alluring  result that could put you back in the Wall Street jungle. !  If you are not in VTI, assuming only market risk, you definitely shouldn’t be assuming. sector risk, cross currency risk. political risk,  and the cornucopia of risks associated with specific corporations.

I’ll keep you up to date on the VTI trade.

Richard Maurice Gore

 

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