Please find performance below for applying 10 mo simple moving average (SMA) method to two classic funds Dodge and Cox Income DODIX and Stock DODGX, instead of the exchange traded funds in the original post Flack's SMA Method
I was reluctant to try this approach for classic mutual funds because when you trade say at Schwab, there is a one-day settling period on funds and usually redemption fees for trading in under 60 or even 90 days. But if you own an account directly with D&C, like I do, you can literally exchange D&C mutual funds on-line (simultaneously selling and buying) at the day's closing NAV. Furthermore, D&C charges no trading fee, nor is there a redemption fee. So, game on.
Since these funds have a history longer than exchange traded funds, the analysis also addresses Investor's request to look back further in time.
Again, if DODGX is above its 10 mo SMA at month's end, then the method is all-in DODGX the next month. If DODGX is under its 10 mo SMA, then all-in DODIX instead the next month.
Here are timing plots and portfolio growth performance, as well as a look at running draw down:
Corresponding life-time performance::
And finally, performance over 218 5-yr rolling periods and 242 3-yer rolling periods:
The lifetime absolute return is extraordinary. But what continues to impress me the most is protection against downside risk that the method offers, in addition to the simplicity of implementation. Note that it may not beat the fixed portfolios every single period, but it sure seems to help avoid losing money.
I have always been told that you can't time the market and beat it. That may be true. But if your goal is to minimize downside risk while still being in the game for some potential upside, I'm becoming more convinced that dynamic risk parity approaches like Flack suggested are the way to go.