cancel
Showing results for 
Search instead for 
Did you mean: 
     
Highlighted
Participant ○○○

Re: What to do now

FD, I was thinking of posting this on your OEF Bond Fund thread, but then decided it might be more on topic here. The quandary we have with respect to risk is that there are two very different directions this could go –

  1. I don’t understand why the equity market continues to go up. I think there is a good likelihood of another strong leg down in the market.
  2. On the other hand, If someone makes an announcement that the vaccine is in – we’ve solved it, things could go the other way pretty fast also. Depending on how much stimulus is already in the pipeline, we might start looking at some inflation. And some of the conservative bond funds with longer duration would take a hit.

I’m not asking anyone to say which way they think things will go (nobody knows) or to perform research on my behalf, but If anyone sees changes in the portfolio makeup for some of our more popular multi-sector bond funds, I’d sure be interested.

0 Kudos
Highlighted
Frequent Contributor

Re: What to do now


@PN wrote:

FD, I was thinking of posting this on your OEF Bond Fund thread, but then decided it might be more on topic here. The quandary we have with respect to risk is that there are two very different directions this could go –

  1. I don’t understand why the equity market continues to go up. I think there is a good likelihood of another strong leg down in the market.
  2. On the other hand, If someone makes an announcement that the vaccine is in – we’ve solved it, things could go the other way pretty fast also. Depending on how much stimulus is already in the pipeline, we might start looking at some inflation. And some of the conservative bond funds with longer duration would take a hit.

I’m not asking anyone to say which way they think things will go (nobody knows) or to perform research on my behalf, but If anyone sees changes in the portfolio makeup for some of our more popular multi-sector bond funds, I’d sure be interested.


PN, there are several ways to invest.  If you are a buy and hold nothing matters.

If you follow charts, trends and technical analysis it depends on what you follow.  It doesn't matter if it makes sense or it's logical, prices are the best indicator of all decisions.

The SP500 had a good entry when MACD became positive (see 1 below).  Point 2 shows that price is in a range from 2700 to 2950.  If the price cross over the 200 moving average and stay there for several days it's a good sign.  Below 200 MA it's not good.

sp500.PNG

 

On the other hand, QQQ looks much better for weeks. It didn't lose as much as the SP500. Point 1 was a good entry and since late March the trend is up and the price closed above the 200 days moving average for more than a month.

qqq.PNG

Highlighted
Contributor ○○

Re: What to do now

Good post, FD. I always prefer "looking ahead" conversations rather than, "I sold everything March 15" claims.   I'm sure everyone here means well. (I hope so, anyway), but rationales for transactions, recent and contemplated, are far more useful than rose-colored selective memories of yore.  Sandman's points are well taken, but we're all adults.

A couple of points, if I may...... R48 will remember the ancient conversations we had about the efficacy of 200DMA.  I won't resurrect old corpses here, other than to say I've always thought the 200 was much too tardy to be really useful.  By the time it triggers, massive losses may well have already occurred.   I have prefer shorter time triggers like PSAR, MACD or the 50DMA (being the slowest) when applied to low-volatility equities & funds.

One comment.  You write: "It doesn't matter if it makes sense or it's logical, prices are the best indicator of all decisions."

I might tweak that to write, "It doesn't matter if it makes sense or it's logical, changes in trajectory are the best indicator of all decisions."

Highlighted
Frequent Contributor

Re: What to do now


@richardsok wrote:

Good post, FD. I always prefer "looking ahead" conversations rather than, "I sold everything March 15" claims.   I'm sure everyone here means well. (I hope so, anyway), but rationales for transactions, recent and contemplated, are far more useful than rose-colored selective memories of yore.  Sandman's points are well taken, but we're all adults.

A couple of points, if I may...... R48 will remember the ancient conversations we had about the efficacy of 200DMA.  I won't resurrect old corpses here, other than to say I've always thought the 200 was much too tardy to be really useful.  By the time it triggers, massive losses may well have already occurred.   I have prefer shorter time triggers like PSAR, MACD or the 50DMA (being the slowest) when applied to low-volatility equities & funds.

One comment.  You write: "It doesn't matter if it makes sense or it's logical, prices are the best indicator of all decisions."

I might tweak that to write, "It doesn't matter if it makes sense or it's logical, changes in trajectory are the best indicator of all decisions."


T/A can be complicated as you want/need. The 200 days MA is too slow to use for the entrance after a big decline but it's not bad as a selling point to protect your portfolio for someone who doesn't want to trade too much. 

I look at this (chart).  The selling point was around 2900-2950.  To enter you can use MACD + 20-50-100 days MA.

The MACD signaled a buy late March and then the price was steadily above the 20 days MA which means around 2700 was another entrance for additional buy. 

sp500.PNG

Another indicator I like is the 3 line break, it's quick and very clear(chart). You are in when the bar is green and out when it's red, combine it with MACD to eliminate whipsaws.

Finally, I think that selling on time is more important than buying on time, especially for retirees who care to protect their capital. 

0 Kudos
Highlighted
Explorer ○○○

Re: What to do now


@richardsok wrote:

Good post, FD. I always prefer "looking ahead" conversations rather than, "I sold everything March 15" claims.   I'm sure everyone here means well. (I hope so, anyway), but rationales for transactions, recent and contemplated, are far more useful than rose-colored selective memories of yore.  Sandman's points are well taken, but we're all adults.

A couple of points, if I may...... R48 will remember the ancient conversations we had about the efficacy of 200DMA.  I won't resurrect old corpses here, other than to say I've always thought the 200 was much too tardy to be really useful.  By the time it triggers, massive losses may well have already occurred.   I have prefer shorter time triggers like PSAR, MACD or the 50DMA (being the slowest) when applied to low-volatility equities & funds.

One comment.  You write: "It doesn't matter if it makes sense or it's logical, prices are the best indicator of all decisions."

I might tweak that to write, "It doesn't matter if it makes sense or it's logical, changes in trajectory are the best indicator of all decisions."


Richard, I am using this thread to examine my investment strategies. I am foremost interested in preserving/growing assets so I have no interest in buy/hold/hang on. Above I have mentioned a past life greatly influenced by 200MA thought although that approach seems to be at the mercy of a much faster market pace these days.

Although I have no desire to become a trader or technician, I feel that I need a better rational basis for entry/exit from investments. Can you recommend (a) specific thread(s) that thoroughly address using buy/sell indicators like 200DMA, PSAR, MACD, 50DMA, etc. And if you caught it above in my posts I am very interested in low-volatility equities (ETF's)  & funds. The 3 line break trading FD discusses above seems way too focused on trading for my buy/sell needs.

Another area that I am investigating is when to buy/hold/sell CEF's. I hold a fair amount of CEF's in order to produce cashflow for stock ETF investments, RMD's for living expenses and Roth conversions, a minor amount that could grow in taxable account for living and estate expenses.

 

0 Kudos
Highlighted
Explorer ○○

Re: What to do now


@judger wrote:

Although I have no desire to become a trader or technician, I feel that I need a better rational basis for entry/exit from investments. 

 


Judger:

I've pondered that for 50 years.

Here's the rub:

Let's stipulate you've found "a better rational basis for entry/exit".

Why would you think you'd then follow it when your emotions tell you "yes, but not this time".

I've NEVER seen any individual portfolio holder claim to follow a strict mechanical model. I invariably see a lot of qualifiers about why they didn't in any particular case.....which of course defeats the purpose of any so-called "rational" method.

I'll bet you knew all of that.

Like you, I continue to fumble around, thinking it's a matter of finding the right idea. Like everyone here, I am unwilling to quit fiddling. Why would I buy Wellington (just as a for instance) when I can instead fiddle, thinking I can find a faster iceberg in the flow to the pole? A rhetorical question.

It's a matter of temperament. Nobody in a casino has the right temperament. Thus casinos proliferate. Let's continue to think the emotions in a casino differ from those in the market. Har-de-har-har.

My father controlled about 300 K of Boeing, circa 1963 at age 42 (having flown the "Red Gremlin" B-17 in the war). If he had done NOTHING from that point on, it would have been circa 15 M by 2002 or so, without reinvestment of distributions. About 25 M with. Needless to say, he couldn't "do nothing".

I'm a chip off the old block.

0 Kudos
Highlighted
Explorer ○○○

Re: What to do now

Ignaz says: "Like you, I continue to fumble around, thinking it's a matter of finding the right idea. Like everyone here, I am unwilling to quit fiddling."

I hear Ya. Soon I need to quite "fiddling", right?

Is this "analysis paralysis" or just plain "fear"? A big part of my quest is based on a bit of fear. Back in the early days when the sums were important but much smaller, it still really hurt to lose. Now, the sums and the family jewels seem to be in the game. At least for me, 1st QTR 2020 has been a wake up call. I have been doing this for many years. But that isn't the criteria for surviving this kind of shock. And to make it worse, it's not like some of us, including me, have decades to fix it.

One of the things I am trying to correct in our investments is to greatly reduce the number of things we own and the number of ways they are invested. Managing a smaller number of better understood investments and develop better approaches that can be executed in a much simpler fashion is the goal. A big part is probably just getting the strategy much simpler, or maybe that is even articulating a realistic strategy.

Maybe it's like a very smart and sharing, longtime M* anonymous friend, who has told me several times something like "When is enough, Judger? When do you start to enjoy and stop to smell the roses?"   :-)))

0 Kudos
Highlighted
Frequent Contributor

Re: What to do now



Judger:

 

My father controlled about 300 K of Boeing, circa 1963 at age 42 (having flown the "Red Gremlin" B-17 in the war). If he had done NOTHING from that point on, it would have been circa 15 M by 2002 or so, without reinvestment of distributions. About 25 M with. Needless to say, he couldn't "do nothing".

I'm a chip off the old block.

 


The above is way easy to dismiss.  If I bought just $10K in MSFT way back I would have so much money.  Owning one stock can be rewarding or in many cases a losing strategy.

A true story, in 2000 I had the pleasure to work with two retired gents from GE and Lucent. The first guy had 6000 shares of GE at 60 each worth $360K and the second guy had $300K in Lucent and that was most of their money. The market was going down in the next 2-3 years and both refused to sell any share. I was begging them to sell. The first guy lost 2/3 of his money, the second guy lost everything. Along the way, each had many reasons not to sell.

In 2000 GE was considered an empire, what can go wrong? go from 60 to 6 today(lose 90%) in 20 years while the SP500 went up.

0 Kudos
Highlighted
Contributor ○○

Re: What to do now

 

judger --

I am no longer trying to find the right idea.  For the rest of my life I will attempt to apply it more efficiently.

     I'm unable to give you a rational theory of my trading tactics that withstands academic scrutiny. What I do is the product of years of trial and error -- with emphasis on the errors. My original posts discussing moving average discipline are lost in the old M* format which, I believe are impossible to retrieve. Most recently, I did three or four detailed longer posts April 11, 12 and maybe 13 which you should be easily able to track down by clocking on my "profile" .
     I have spent a long time wading through ThinkorSwim trading website looking and combining my own small mulligan's stew of trading apps which I now use with, pretty fair success.   Two recent ( and very costly) lessons I have learned are (1) closed end funds MUST be traded at once when signals warrant and (2) within reasonable limits, the more positions you have in your portfolio the worse your tech trading efforts will perform. Less is indeed more. Timeliness and nimbleness are key.
     Ignatz has a point; NO ONE trades entirely and perfectly on tech signals -- nevertheless I do insist I now follow my sigs much more rigorously than ever before, and it shows in my results. For example, I believe I am the only M* contributor on these boards who has moved heavily into precious metals the last few weeks. No one here has argued for PMs, no one except me has posted big buys, there are no new fundamental analyses touting PMs. I have made my greatly over-allocated buys over the last couple of weeks strictly because of recent signals . And so far, so good. I watch them daily and will sell fast the moment conditions warrant --- and even quickly return if signals do a fast-reverse. The small losses I absorb in any such whipsaws are peanuts next to the gains that can accrue.
     My first introduction to tech trading years ago was "Riding The Bear", an out-of-print introduction to MACD. More recently I absorbed "Positively Fifth Street", (McManus), a fascinating look at championship poker players, and I starting thinking about applying poker probability theory to stock trading. I am convinced disciplined tech signals applied to low-volatility assets is a valid high-probability system and -- I think -- my personal key to success.
     Now you can use MACD or moving averages, but I wanted a tech signal that gave you ZERO room for hesitation or interpretation -- and for the average guy, I suggest that would be PSAR. Over on Yahoo, the simplest and easiest combo might be the Three-month chart with PSAR (add the 20-day mov avg as an optional 2nd signal for confirmation). I am constantly looking for low-vol trade candidates. Nothing is perfect, but here are four pretty fair ones: CLIX, SLV, NRGX, TAN. The best broad market trade vehicle I've found is QQQX.    I've never found a really good lo-vol bearish fund, so I compromise with PSQ and/or HDGE . I check my candidates at 3:45 daily. That is because sometimes you can get a "trade sig" to occur and then the interday movement will make it disappear by the end of the day. I check for sigs at end of the day, and either trade at once, or will trade early the next morning when I see the new "trade" sigs are still there.
     There's more to say on the topic, but this post is long enough.     Good luck.

0 Kudos
Highlighted
Explorer ○○

Re: What to do now


@judger wrote:

 

Is this "analysis paralysis" or just plain "fear"...............I am trying to greatly reduce the number of things we own...............Managing a smaller number of better understood investments..................

I'm largely with you to this point. I don't think it's "analysis paralysis". I do think it is partially but only tangentially related to fear..........the fear of eventually eating Alpo. Which for most of us is highly unlikely, at least if the USA as we sorta know it survives.

For what it's worth (nothing), I went from 10 holdings to 6 a couple of weeks ago. Largely out of exasperation with my fiddling. No, I wouldn't want to bet I'd have those 6 in 2025. Why would I quit fiddling?

and develop better approaches that can be executed in a much simpler fashion is the goal. A big part is probably just getting the strategy much simpler, or maybe that is even articulating a realistic strategy.

Tilt. "better approaches" implies yet more analysis, likely unending. Due to personality? A disease process?

 

Maybe it's like a very smart and sharing, longtime M* anonymous friend, who has told me several times something like "When is enough, Judger? When do you start to enjoy and stop to smell the roses?"   :-)))

Yeah.

40 years ago, I would have to go to considerable trouble to get my portfolio value at any random point. I relied on monthly (or was it quarterly?) paper statements from my broker. There was no Internet, no computers. I was not obsessed. I had a vague idea of "how I was doing" versus the Dow or SP.

I got a PC in 1995. In the 25 years since then, I have regressed from knowing "how I was doing" quarterly to monthly, then to weekly, and as of maybe 5 years ago, DAILY, fer krissakes.

That's half of it----the constant and easily obtained comparison of one's "performance" to something else.

Regrettably, I've always loved math, percentages, ratios.......which aggravates the issue.

 

 


 

Highlighted
Explorer ○○○

Re: What to do now

Ignatz, now you are embarrassing me. Heck, I have about 15 CEF's spread across a handful of accounts, both sheltered and taxable. And that's just the start.

I think one might fairly correctly call the "disease" "control freak".   :-)))

I remember the paper trails. Unfortunately, I have several severe stimuli for my math journeys. I not only have a math degree (never used it formally, but the influence remains) AND I spent my working life and it appears my retired life doing IT kinds of things. 

And my time checking performance or trying to improve or correct it is pretty much most of my waking hours.   :-(((

ENJOY!!!   :-)))

0 Kudos
Highlighted
Explorer ○○

Re: What to do now


@richardsok wrote:

 

and for the average guy, I suggest that would be PSAR.


Richard:

I don't know PSAR from any other 4 letters of the alphabet.

But it's nonetheless subject to the following issue:

You're at a 21 table. You know not to hit 18. The wine-head on the stool to your right hits 18 constantly. You notice (unfortunately) that he beats the dealer on 11 of his last 15 attempts. Guess what starts to enter your mind?

Or: "Well the market is down 10 percent from a recent high. The last 10 times it was down that much, it recovered and went on to new highs 8 times without first going down to a 15 percent loss. Hmmmmm.........8 out of 10. I like those odds."

On and on, more analysis, more fiddling, more "refining", more emotions. More unwillingness (literal inability?) to quit doing what you've been doing all your life.

Short of a personality transplant, I don't know how you overcome that.

It would help if we were all unaware of what the wine-head to the right was doing, but who can un-notice that, PC's being what they are?

 

 

0 Kudos
Highlighted
Contributor ○○

Re: What to do now

OK Ignatz -- let me propose a real life antidote to emotions.   Know this:   PSAR applied to lo-vol assets would have flashed warning before the Oct 1929 crash.  Using it, you'd have bypassed the early 1973 bear market.  ( I am uncertain about the Oct 1987 crash, but I believe enough warning was given to have triggered PSAR. )  AND the Oct 2007 plunge, and, yes..... I did very well avoiding the worst of last February.   (What cost me was -- the signals were there,  I was too slow in dumping my CEFs.  I had too many.  Never again.)

The only crash that PSAR would certainly not have pre-warned was 9-11.

I have posted many times that my hunches, my little observations, my opinions, my ever-present biases,  the chatter all around me are the ENEMY.  I rather suspect they are your enemy too.

We are bright guys.  We were always near the top of our classes in school.  We've learned to be confident in our opinion and have confidence we're right in almost everything.   Well, news flash:  the market doesn't give a fig for your little opinions or your **bleep** laude.  Nor for mine.

 

0 Kudos
Highlighted
Explorer ○○

Re: What to do now


@richardsok wrote:

 

I have posted many times that my hunches, my little observations, my opinions, my ever-present biases,  the chatter all around me are the ENEMY.  I rather suspect they are your enemy too.

We are bright guys.  We were always near the top of our classes in school.  We've learned to be confident in our opinion and have confidence we're right in almost everything.   Well, news flash:  the market doesn't give a fig for your little opinions or your **bleep** laude.  Nor for mine.

 


It's not a news flash, but I agree with all of that. The market is indifferent to all of us.

Unfortunately, I continue to analyze.

Here's another emotion example:

I subscribed to Marty Zweig's newsletter for 10 or 15 years.

He said to get out in August 1987. I think right at the end of the month.

I did. I avoided the October 1987 crash of over 20 percent in one day.

I'm "smart" because I followed the signal.

I'm so smart that because of my emotions, I did NOT get back in for far too long.

Nothing new under the sun as far as I can tell. Antidotes are useless to the extent you can't swallow them----for whatever reason. We've all got reasons. Again unfortunately.

The "chatter" you refer to correctly is analogous to the wine-head hitting 18 successfully.

 

 

0 Kudos
Highlighted
Contributor ○○

Re: What to do now


@ignatz wrote:

Here's another emotion example:I subscribed to Marty Zweig's newsletter for 10 or 15 years.

He said to get out in August 1987. I think right at the end of the month.

I did. I avoided the October 1987 crash of over 20 percent in one day.

I'm "smart" because I followed the signal.

I'm so smart that because of my emotions, I did NOT get back in for far too long.

Nothing new under the sun as far as I can tell. Antidotes are useless to the extent you can't swallow them----for whatever reason. We've all got reasons. Again unfortunately.

The "chatter" you refer to correctly is analogous to the wine-head hitting 18 successfully.

I'm enjoying this thread. I remember Oct 1987. I was a young musician in the Navy Band, also working six nights a week at clubs and banking all the money. I had started investing several years before when I took a year off from conservatory to go on tour. So, for my age and job I had a pretty nice little portfolio. I came home in the late afternoon and heard about the 'crash'. ”Bummer”, I thought. I just kept mailing my weekly check to Fidelity (Magellan, I think). By Jan or Feb the next year I was ahead. Were that I was that sophisticated now. 

“It took me four years to paint like Raphael, but a lifetime to paint like a child.”

―Pablo Picasso

 


 

0 Kudos
Highlighted
Frequent Contributor

Re: What to do now


@richardsok wrote:

 

 

A couple of points, if I may...... R48 will remember the ancient conversations we had about the efficacy of 200DMA.  I won't resurrect old corpses here, other than to say I've always thought the 200 was much too tardy to be really useful.  By the time it triggers, massive losses may well have already occurred.   I have prefer shorter time triggers like PSAR, MACD or the 50DMA (being the slowest) when applied to low-volatility equities & funds.

 


1.  My investing method has a few "Buts" to it.  One that I have posted often is that, in an official bear market, switch to a 100 day Moving Average...and a smaller MA number for aggressive investors.

2.  A 200 day MA is generally slow for traders.  However the investment principal in play for me, is to be investing/staying the course, in uptrends; not investing, and perhaps selling some, in downtrends.  Such trends are best identified by 200 day MAs, without many whipsaws.

3.  Note I posted in late January, that because market got way above its 200 MA (melt up), combined with pandemic virus concern, I was selling some stock funds.  Another use of MAs...identifying melt-ups (which are rare).

3.  Fund price going below a 200 day MA (in an uptrend) usually occurs at about 8 to 10% below peak market value.  Not that tardy to me.  BTW This kept me in many funds for the entire last decade bull market, capturing that performance.

4.  I agree with FD, that the 200 MA becomes a strong test in a bear market rebounding market like we have now.  QQQ went through it; let's see if S&P500 can get above 200 dayMA with staying power.  I would bet it cannot.  I am prepared to sell some more stock funds if it doesn't.

The market always tells you what to do.  The degree to which you act, is the investor judgment part.

But none of this is ever "easy."

R48

 

Highlighted
Participant ○○○

Re: What to do now

@judger "Although I have no desire to become a trader or technician, I feel that I need a better rational basis for entry/exit from investments."

I'm no authority on technical trading, but I have back tested buys and sells using different MAs and also MACD and none seemed reliable enough to me. Recently I backtested Asbury Research's Asbury 6 going back to Nov 2018, comparing SPY buy and hold vs Spy using Asbury 6 signals and was quite impressed at their ability to on the average sell high and buy low. Not tops and bottoms but close enough to increase shares over time, reduce risk and increase returns. I didn't want to pay for a subscription, but it would have paid for itself many times over even before this recent downturn which they avoided for the most part. Disclaimer: I am not recommending this recommendation. :-)

 

0 Kudos
Highlighted
Explorer ○○○

Re: What to do now

R48, I went and read your 10/2019 posts on Chang's thread asking about Pyramid Up investing, "Re: R48 - pyramid up", https://community.morningstar.com/t5/Portfolio-Design-Management/R48-pyramid-up/td-p/27987/page/2. Very helpful. I am struggling with how I might use Pyramid Down, especially for a portfolio with like tickers. Do you have a thread that discusses in detail PD when selling?

Thank you.   :-)))

 

0 Kudos
Highlighted
Frequent Contributor

Re: What to do now


@judger wrote:

R48, I went and read your 10/2019 posts on Chang's thread asking about Pyramid Up investing, "Re: R48 - pyramid up", https://community.morningstar.com/t5/Portfolio-Design-Management/R48-pyramid-up/td-p/27987/page/2. Very helpful. I am struggling with how I might use Pyramid Down, especially for a portfolio with like tickers. Do you have a thread that discusses in detail PD when selling?

Thank you.   :-)))

 


Judger, you see from that linked thread that, anytime I discussed Pyramid Up in detail, certain posters always made pejorative derision-type replies.  Some are posters with huge dollar losses from doing the opposite of PU, namely, averaging down.  For that reason I do not make posts anymore that try to "prove" any of my investing methods.  I'm semi-retired in this regard.  But I will attempt to answer questions about using a technique such as Pyramid Up.

Regarding Pyramid Down for selling, that you ask about, let me see if I can extract a past post from my library.  Note I cannot link to such posts because they are in the "old" M* forum, that is not accessible.  Standby.

R48

 

 

0 Kudos
Announcements

Morningstar is here to help you respond to the Coronavirus crisis.