SPY Buy Signal Continues

Market close November 30, 2015

The SPY trend following signal ” BUY ” remains  in effect.

This is based on SPY’s November 30, 2015 closing price being above its 200 day simple moving average.

SPY became a buy October 31 and since then has appreciated..o.37%.. The trade is 20 days old.

SPY is an ETF ( Exchange Traded Fund ).  It represents a basket of the USA’s top 500 companies weighted by the amount of capital invested in a particular stock.  Take the price of a stock and multiply it by the amount of shares outstanding to arrive at total capital.

SPY’s top holding, Apple, represents 3.64% of it’s assets,  while SPY stock #25  of the 500 ( VISA ) represents 0.84% of the value of SPY’s portfolio… and so on, down to holding #500.  Pretty good diversification, for all intents eliminating the risks inherent in investing in one stock.

The remaining risk in SPY, market risk, ( all the boats go out with the tide ) is still there, but my intent is to eliminate that risk by my market trend following ( timing ) activity. Of course, Warren Buffett,  and John Bogle ,( Vanguard ) want you to just buy and never sell SPY, but my back testing  has put me in  the cheeky position of disregarding their advice.

If you want even more diversification, consider Vanguard’s VTI which represents 3,791 USA holdings ( the entire stock market ) in its basket.

I prefer to focus on SPY because SPY is more liquid than VTI and  I also use 50 % of my capital to contingently buy SPY one month out at a price lower than today’s price .For this I receive an upfront premium.  In other words, I’m not afraid to lock myself in to purchasing even more SPY at what I consider to be a better price.

Richard Maurice Gore

 

 

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