Cully's Account Talk

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Had a chance to see Craig Allen speak yesterday, he is the auther of the Longmire series of books and works the scripts for the TV show on Netflix. Check them out if you haven't already. The TV show is filmed here in the Land of Enchantment, but the books/show take place in Wyoming.

FundXcellence system: 100% C
 
The Valles Caldera Valles Caldera National Preserve (U.S. National Park Service) where Longmire is portrayed to live is gorgeous...that's my favorite drive in NM, from Los Alamos up to the caldera, then down through the Jemez Canyon...I'm really getting into the series Manhattan lately (also filmed in northern NM in areas surrounding Los Alamos and Santa Fe), especially since my job takes me up to Los Alamos on occasion.
 
Not much of a start to the holiday season for stocks this week. Large caps (C Fund) are still leading the S and I Funds. But we are back to a "stable and quiet" market, even with the recent modest pullback. Data at FundXcellence.
 
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I found this quote about "exits" by a private trader informative:

'As a closing thought, I believe it's important that we distinguish between at least six different typesof exit rules:

• Market timing: Switching to 100% cash on an indicator of the S&P 500 or other broad index.
• Risk reduction: Ignoring indexes but switching to cash based on your portfolio's rate of change.
• Stop-loss orders: Sell orders that convert into market orders when a price limit is pierced.
• Put options: Placing money on bets that pay off when prices decline a certain amount.
• Asset rotation: Investing only in assets with the strongest relative strength at any given time.
• Buy-and-hold and then liquidate near the bottom: What most investors do.

If your only investment is an index, market timing makes perfect sense. Jeremy Siegel showed this in his 2008 book Stocks for the Long Run, 4th Ed. In a backtest from 1972 through 2006, a 200-day moving average with a 1% trigger band improved the annualized return of the Nasdaq index to 14.5% rather than 10.9%, even after Siegel subtracted hefty transaction costs instead of today's low commissions. (You buy at the end of any day when the index closes more than 1% above its 200-day SMA. You switch to cash when the index closes more than 1% below. The trigger band kept transactions down to about 2.7 per year.)'

Happy Thanksgiving!

FundXcellence
 
cully said:
I found this quote about "exits" by a private trader informative:

'As a closing thought, I believe it's important that we distinguish between at least six different typesof exit rules:

• Market timing: Switching to 100% cash on an indicator of the S&P 500 or other broad index.
• Risk reduction: Ignoring indexes but switching to cash based on your portfolio's rate of change.
• Stop-loss orders: Sell orders that convert into market orders when a price limit is pierced.
• Put options: Placing money on bets that pay off when prices decline a certain amount.
• Asset rotation: Investing only in assets with the strongest relative strength at any given time.
• Buy-and-hold and then liquidate near the bottom: What most investors do.

If your only investment is an index, market timing makes perfect sense. Jeremy Siegel showed this in his 2008 book Stocks for the Long Run, 4th Ed. In a backtest from 1972 through 2006, a 200-day moving average with a 1% trigger band improved the annualized return of the Nasdaq index to 14.5% rather than 10.9%, even after Siegel subtracted hefty transaction costs instead of today's low commissions. (You buy at the end of any day when the index closes more than 1% above its 200-day SMA. You switch to cash when the index closes more than 1% below. The trigger band kept transactions down to about 2.7 per year.)'

Happy Thanksgiving!

FundXcellence
Click to expand...

As a group I hope we notify and alert when this threshold has been reached. It seems that this is an occasional and worthwhile event to know. Thanks
 
This is a more readable version http://www.thinknewfound.com/wp-content/uploads/2014/11/What-Why-of-Portfolio-Tranching.pdf

FundXcellence

cully said:
Here is the link to a paper that has some interesting thoughts and data on portfolio money management. Does have some math, but it is not critical to understanding the majority of the concepts being addressed. It is entitled Minimizing Timing Luck with Portfolio Tranching, published in 2014.

https://www.thinknewfound.com/wp-co...zing-Timing-Luck-with-Portfolio-Tranching.pdf
Click to expand...
 
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