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A System for the Long Term Investor to Enter and Exit Equity Positions
I looked this over and although I have not used it in the past I am considering adding it to my own tool box as an overlay to what I am currently using. Over the past year, my currently system has green lighted with only three Class A buying opportunities. The link below will take you to the subject system.
Thank you. Another form of relative strength, eh? At the least, one may know that the trading servers should have extra cooling fans in place right now.
At this point in my life and retirement, I only use asset allocation as a tool and while I have slowly been increasing fixed income with a goal of 25-30%, I don't make changes from technical indicators.
Reply to @catch22: Not exactly relative strength. It is a form of looking at extremes of market breadth. The challenge I find with such systems is that extremes can stay in that zone for a while and test your patience. Trend following is a bit easier for me. You just have to wary of choppy markets when trend following can get troublesome. As I mentioned few weeks back, I started lightning of my positions and at the end of April moved completely to cash in my tax-sheltered account. So far it looks like it saved me some money.
Perhaps I should have used a different word set. I will note that I fully understand the upward limit of my thinking capacity and have studied/reviewed some very complex (at least for me) charting functions. I do stop at points in this understanding and move back to the most simple of trends. You are more aware than myself of the volume of trending indicators any number of folks use. If these folks are able to improve their money growth, I salute them. Your call on your sells was on the money. Looking back, one finds around April 9 as a start point, with some other equity areas holding their own through about April 23, with a lot of flip flops since then. And your saving money from your money moves is money you will have in the future, with which again to obtain gains. Hats off to you. Selling is a tough consideration; let alone where to place the sold monies.
Reply to @catch22: Smart ones know what they don't know, so I count you among them. I follow only a few indicators to make my decisions (one, three, six month relative returns, volatility, couple of moving averages) and try not to get distracted by all the noise, including macroeconomic trends. Just watch the price! Too much complexity clutters my thinking and reaches a point of diminishing return. It is also hard to catch the exact top and bottom, and I just accept it. Someone here on FA recognized the top earlier and got out sooner.
I agree that one should run with what they have good confidence in. I primarily use only four to six indicators in my technical analysis and trend system. Thus far it seems to have worked for me since I have become a more active investor now that cash is paying little to nothing form a yield stand point. With this, I put some cash to work in activity known as trading around the edges since I don’t sell out, I just sell equities down and raise my cash by a like amount and visa versa when I raise my equity allocation.
And, yes, I started cutting my equity allocation back around the first of the year as I felt we were approaching a topping in the markets. I learned a long time ago form my late father that when equities are in an upward run, coming off a bottom; and they are approaching or reaching a new 52 week high they can easily become overbought by over enthused investors. So with this, I sold some of them off and booked good profit. I did not try to catch the exact top as my selling was done in a process that took place over weeks as it is hard to know where the absolute top will be. Currently, I am a happy camper with cash in hand awaiting the next set up. I am looking for the S&P 500 Index to pull back to the 1320’s before I nibble … and, I would not be surprised to see a pull back around the 1250 range before fall gets here.
Remember, this is an election year and the political wrangling is soon to start in Washington plus all of the other recent headline stuff still needs to be dealt with and factored into market value. I feel there is a greater chance for the markets to continue a pull back and bottom soon after the November election. Certainly, there will be a few counter trend rallies between now and then … but, for now the trend is currently down, not up. And, with this, I am currently cash heavy and watching.
Reply to @Kaspa: Looking back at some old posts. Was wondering if you bought back in or waiting for a drop in the markets. Thanks for your time, Derf 1/23/13
I am not sure if your question was directed to me or Kaspa.
I am still trading around the edges as I earlier described.
At this time I have cut back my equity ballast section and it currently is not as large as it used to be with some equity money being moved to alternatives. I have been watching the markets and if you have been following my recent previous post then you know I had targeted S&P 500 Index @ 1500 to start my equity ballast trim back process. I am still with these thoughts realizing the markets could push higher in the near term.
My most recent portfolio allocations bubble at Cash 15%, US Stocks 35%, Foreign Stocks 15%, Bonds 25%, Other 6% and Not Classified 4%. The primary reason stocks are a smaller amount now is that I moved some money to alternatives and increased this area to where the Other and Not Classified account for a combined ten percent of the portfolio. This is where the alternatives are shown through Xray or at least the ones that I own are.
From my risk assessment which was done by my broker within the past year as I was approaching 65 years of age has me with an equity range of 40% to 60%. As you can see, I am now at the mid point in this range. Had I been carrying a full load of equities at 60% there would be more choices for me to choose from where to trim. Now my choices are narrower since my allocation to them is smaller and with this, the decisions of where to peck from are harder than they have been in the past. Perhaps a five percent trim back are my current thoughts.
So, I am still with my pops old program, cut some loose when the markets approach and start reaching new 52 week highs. And, then buy them back during the pull backs and most definitely when they are at new 52 week lows.
Reply to @Skeeter: Thanks for taking the time to reply. I was trying to point the question toward Kaspa. I thought I may have past over a buy in, or buy during a market pull back.
Part of my investment strategy is to adjust my equity allocation as stock valuations moves upward and downward and cycle into overbought and oversold conditions.
Since the S&P 500 Index has now closed above 1500, I have begun the process to reduced equities. In the near term I have targeted another reduction at S&P 500 Index 1525 and another one at 1550 should the Index reach these levels in the near term.
This was done because I believe that stocks have now cycled to an overbought condition. This does not mean that stocks want continue an upward advance as over enthused investors rush to get money into equities. From my thoughts it is going to take some more fuel for them to continue to advance on a solid footing and corporate earnings are not as good as some believe. To support this, I have linked below a recent blurb by Zero Hedge that explains this in more detail.
For those that might wish to review information on a fund that sets it stock and bond allocations to the price level of the S&P 500 Index ... I have linked below some information you might find of interest.
Comments
Thank you. Another form of relative strength, eh?
At the least, one may know that the trading servers should have extra cooling fans in place right now.
Take care,
Catch
Perhaps I should have used a different word set.
I will note that I fully understand the upward limit of my thinking capacity and have studied/reviewed some very complex (at least for me) charting functions. I do stop at points in this understanding and move back to the most simple of trends. You are more aware than myself of the volume of trending indicators any number of folks use. If these folks are able to improve their money growth, I salute them.
Your call on your sells was on the money. Looking back, one finds around April 9 as a start point, with some other equity areas holding their own through about April 23, with a lot of flip flops since then.
And your saving money from your money moves is money you will have in the future, with which again to obtain gains.
Hats off to you.
Selling is a tough consideration; let alone where to place the sold monies.
Take care,
Catch
Hi Kaspa,
I agree that one should run with what they have good confidence in. I primarily use only four to six indicators in my technical analysis and trend system. Thus far it seems to have worked for me since I have become a more active investor now that cash is paying little to nothing form a yield stand point. With this, I put some cash to work in activity known as trading around the edges since I don’t sell out, I just sell equities down and raise my cash by a like amount and visa versa when I raise my equity allocation.
And, yes, I started cutting my equity allocation back around the first of the year as I felt we were approaching a topping in the markets. I learned a long time ago form my late father that when equities are in an upward run, coming off a bottom; and they are approaching or reaching a new 52 week high they can easily become overbought by over enthused investors. So with this, I sold some of them off and booked good profit. I did not try to catch the exact top as my selling was done in a process that took place over weeks as it is hard to know where the absolute top will be. Currently, I am a happy camper with cash in hand awaiting the next set up. I am looking for the S&P 500 Index to pull back to the 1320’s before I nibble … and, I would not be surprised to see a pull back around the 1250 range before fall gets here.
Remember, this is an election year and the political wrangling is soon to start in Washington plus all of the other recent headline stuff still needs to be dealt with and factored into market value. I feel there is a greater chance for the markets to continue a pull back and bottom soon after the November election. Certainly, there will be a few counter trend rallies between now and then … but, for now the trend is currently down, not up. And, with this, I am currently cash heavy and watching.
Take care,
Skeeter
Thanks for your time, Derf
1/23/13
I am not sure if your question was directed to me or Kaspa.
I am still trading around the edges as I earlier described.
At this time I have cut back my equity ballast section and it currently is not as large as it used to be with some equity money being moved to alternatives. I have been watching the markets and if you have been following my recent previous post then you know I had targeted S&P 500 Index @ 1500 to start my equity ballast trim back process. I am still with these thoughts realizing the markets could push higher in the near term.
My most recent portfolio allocations bubble at Cash 15%, US Stocks 35%, Foreign Stocks 15%, Bonds 25%, Other 6% and Not Classified 4%. The primary reason stocks are a smaller amount now is that I moved some money to alternatives and increased this area to where the Other and Not Classified account for a combined ten percent of the portfolio. This is where the alternatives are shown through Xray or at least the ones that I own are.
From my risk assessment which was done by my broker within the past year as I was approaching 65 years of age has me with an equity range of 40% to 60%. As you can see, I am now at the mid point in this range. Had I been carrying a full load of equities at 60% there would be more choices for me to choose from where to trim. Now my choices are narrower since my allocation to them is smaller and with this, the decisions of where to peck from are harder than they have been in the past. Perhaps a five percent trim back are my current thoughts.
So, I am still with my pops old program, cut some loose when the markets approach and start reaching new 52 week highs. And, then buy them back during the pull backs and most definitely when they are at new 52 week lows.
Good Investing,
Skeeter
Good investing, Derf
Part of my investment strategy is to adjust my equity allocation as stock valuations moves upward and downward and cycle into overbought and oversold conditions.
Since the S&P 500 Index has now closed above 1500, I have begun the process to reduced equities. In the near term I have targeted another reduction at S&P 500 Index 1525 and another one at 1550 should the Index reach these levels in the near term.
This was done because I believe that stocks have now cycled to an overbought condition. This does not mean that stocks want continue an upward advance as over enthused investors rush to get money into equities. From my thoughts it is going to take some more fuel for them to continue to advance on a solid footing and corporate earnings are not as good as some believe. To support this, I have linked below a recent blurb by Zero Hedge that explains this in more detail.
http://www.zerohedge.com/news/2013-01-25/q4-earnings-season-far-worse-most-suspect
For those that might wish to review information on a fund that sets it stock and bond allocations to the price level of the S&P 500 Index ... I have linked below some information you might find of interest.
https://www.columbiamanagement.com/content/columbia/pdf/LIT_DOC_9E00B57F.PDF
And, the Morningstar report ...
http://quote.morningstar.com/fund/f.aspx?Country=USA&Symbol=CTFAX
Good Investing,
Skeeter