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General Market Commentary
In Chart #1 (AlphaDow), add up the numbers in the boxes. A BULLISH state first occurs when the count reaches 5 out of 5. A BEARISH state occurs when any 3 of the 5 turn negative. You can use this as a %27regime filter%27 to signal when the odds are in your favour of going long stocks or as a system to go long SPY vs. a move to cash/bonds (SHY/AGG).
The essence of portfolio management is the management of RISKS not the management of RETURNS. All good portfolio management begins and ends with this premise. -- Benjamin Graham
The Call For The Week of March 23rd:
These are unprecedented times with the Coronavirus front and centre in the minds of most while the Western world braces for a tsunami of cases. We have seen full capitulation in stocks, however, conservative investors should continue to focus on preservation. Nimble investors with shorter time horizons can continue to scale in.
Summary: Our "Sleep Well At Night" (SWAN) Portfolio uses a carefully measured suite of systems for stocks, bonds and gold.
Chart #1. 0% long SPY (30% SHY or cash) [or if you are Canadian use Chart #2. 0% HXT.TO].
Chart #3. 20% long TLT (vs. SHY -- AlphaBond)
Chart #4. 0% long GLD (AlphaGold) 20% in SHY or cash.
Chart #5. 0% long SPY (Fabian Wealth Builder) 30% SHY or cash
Each position is managed by a unique system, namely 1. and 2. AlphaDow, 3. AlphaBond, 4. AlphaGold, 5. FWB - New Dow Theory respectively.
Bullish when 5 out of 5 are true (+1) for each condition:
1. $SPX is above 65wk MA
2. Advance/Decline Line is trending up (buying power)
3. $TRAN is trending up (Dow Theory confirmation)
4. Utility Average MA rises (interest rate sensitive Utilities lead)
5. Bonds are trending up (interest rates are low)
Average holding period 392.3 days. 0.58 round trip trades per year. Longest drawdown duration 50 months vs. 73 for buy & hold.
64% winning trades since 1980. Beats buy and hold with less volatility (0.53 MAR Ratio).
Past performance is no guarantee of future results. This is not investment advice, but is for educational purposes only. Consult your investment advisor for additional information regarding suitability, fees, expenses and short term trading costs.
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