No. of Recommendations: 35
In case anybody was paying attention, my "Sell in June" variation of the seasonal signal
gave its sell signal at market close on its earliest possible date, June 5th.

RSP, the suggested trading vehicle, closed at $61.23 yesterday.
That's a total return gain of a nice round 20.0% since the buy signal at close last November 21.
It will now be in cash at least until market close October 14.

Jim
Print the post Back To Top
No. of Recommendations: 0
So are you getting more defensive and selling?
Print the post Back To Top
No. of Recommendations: 0
So are you getting more defensive and selling?

Yup. For about two months now, off and on.

Jim
Print the post Back To Top
No. of Recommendations: 0
gave its sell signal at market close on its earliest possible date, June 5th.

Nice timing, as I opened some short positions yesterday and am currently close to market neutral...
Print the post Back To Top
No. of Recommendations: 0
I sold a big chunk today before I saw this thread.
Print the post Back To Top
No. of Recommendations: 13
Jim, many thanks for posting your "Sell in June" signals. Have read your posts thoroughly but still appreciate your buy & sell signals. Again thanks for sharing freely with the board, look forward to a fall "buy" signal. john b.
Print the post Back To Top
No. of Recommendations: 0
Jim, can you give me a reference to this sell signal? I would like to mention it in my Sunday Control Panel post, with credit to you of course.

Thanks,
Wendy
Print the post Back To Top
No. of Recommendations: 0
What is the "Sunday control panel post"? link?
Print the post Back To Top
No. of Recommendations: 10
Jim, can you give me a reference to this sell signal?

This is the post that introduced it in June 2009.
http://boards.fool.com/sell-in-june-and-go-away-27760614.asp...

Sell signal is market close on the first day on or after June 5 that
a short term breadth signal is bearish, approximated by blue line
below red line on this graph http://stockcharts.com/h-sc/ui?s=$NAHL&p=D&yr=0&...

Buy signal is market close on the first day on or after Oct 14 that a short term
breadth signal is bullish, approximated by blue line above red line on the same graph.

Note:
Do NOT use this timing signal graph for any other purpose, it doesn't work.
It merely helps identify a turning point that you already know is
imminent for other reasons, and does not add value used by itself.

As it turns out I believe the more classic style signal by Sy Harding has
done better since that post. My signal has a much later earliest sell date,
and there have been a couple of market drops between his signal and mine lately.
That might disappear in the averages over time, or maybe my signal
should allow an earlier sell date. Hard to say.

Sy Harding's write up on his excellent method www.streetsmartreport.com/sts.html
Mine is but a minor tweak to his by-comparison-revolutionary insight.

Jim
Print the post Back To Top
No. of Recommendations: 0
Jim-
Do you consider the incremental increase in your stake in Wells Fargo as part of a defensive strategy or are you lightening up there as well?
Print the post Back To Top
No. of Recommendations: 1
Control Panel

This refers to a weekly post on the
Macro Economic Trends and Risks Board

Last2

# 424352 on 6/2/2013
and
# 423862 on 5/26/2013

Gary
Print the post Back To Top
No. of Recommendations: 3
Do you consider the incremental increase in your stake in Wells Fargo
as part of a defensive strategy or are you lightening up there as well?


It's true that I have lightened up net, and it's true that I've added
to my WFC position. But it's not because I see them as defensive,
other than in the general sense that I think the value is good.
Wells Fargo's price will likely fall along with the market if there is a sell-off.
I just moved money into it because I thought it was an even better
place to have my money invested than some of the other things I owned.

The Wells position is a long term thing for me.
For that I'm not bothered by short term price dips, I'll just ride through them patiently.
I'm a big shareholder in Berkshire Hathaway, and sitting tight for the
period from around five years ago (150k) until about one year ago
(120k) wasn't fun but it all seems to be working out well now.
I figure if you can find things that are both certain and profitable, to heck with fun.
You can have at most any two of high returns, safe returns, and steady returns.
Which one do you want to give up?

In case anybody is interested in some of the reasoning that led me
to want to increase my allocation to WFC, inspired by this fellow's posts
http://brooklyninvestor.blogspot.ca/2013/01/wells-fargo-is-c...
...I started this thread. Note especially table in the fifth post.
http://boards.fool.com/heresy-30651466.aspx?sort=whole#30651...

Jim
Print the post Back To Top
No. of Recommendations: 8
Every Sunday, I post a "Control Panel" on the Macroeconomic Trends and Risks (METAR) Board. Here is the latest one.

http://boards.fool.com/control-panel-signal-or-noise-3071444...

In the Control Panel, I try to give a METAR* for the coming week -- basically, a weather report for investors -- using a wide variety of market and economic data. I am always seeking good market indicators, hence my request to the redoubtable mungofitch.

Like all weather reports, the Control Panel is uncertain because it's not a crystal ball. But the markets have patterns that can be read in the context of the international macroeconomic situation.

Wendy

*http://en.wikipedia.org/wiki/METAR
The METAR is an aviation weather report, and the Control Panel is the dashboard of an airplane.
Print the post Back To Top
No. of Recommendations: 0
Thanks Jim! And thanks for the links. Informative as always.
Print the post Back To Top
No. of Recommendations: 3
It is a fact that stocks perform better from November to May, than during the rest of the year.

However, there is no where to put your money in the mean time.

Bonds return 2%/yr. If you leave the market for 4 months, you will earn .67% on bonds, assuming the value of the bonds do not decrease.

All you would have to do is make .18%/month on your stocks to due better than bonds.

I wonder if this makes it a better environment to stay in stocks.
Print the post Back To Top
No. of Recommendations: 0
I wonder if this makes it a better environment to stay in stocks.

No answers here. I've stayed in all the time and never used (and still don't) a sell in May type signal. I remember thinking in 2009 that it would be dumb to skip the summer, and that turned out correct. I think 2008 was good too. But personally, 2010 and 2011 summers were killers for me, just terrible. Boy, I wish I was out then.


Mark
Print the post Back To Top
No. of Recommendations: 0
It's going to take me more than just the month of June to exit stocks from now on. Same with NH-NL. Too many whipsaws which have hurt my returns.

I believe that I have used market timing to my detriment in the past. I will now watch the 3 bear catchers. If one goes bearish (probabaly NH-NL) I will pay close attention. When the next goes bearish, I'll get out.

My time horizon is 8-10 years.
Print the post Back To Top
No. of Recommendations: 0
It's going to take me more than just the month of June to exit stocks from now on. Same with NH-NL. Too many whipsaws which have hurt my returns.

My point is sell in May is a good strategy if you can put your money into bonds paying 5%. Now, there is no where to put your money.
Print the post Back To Top
No. of Recommendations: 6
My point is sell in May is a good strategy if you can put your money into bonds paying 5%.
Now, there is no where to put your money.


There's always cash. I like cash.
The return on cash is very high if you consider its optionality.
First, you won't lose much purchasing power with cash especially if it's
held in a mix of credible currencies. But most importantly is the
return you get from deploying cash when something is absurdly cheap.
You can't buy low if you don't have the folding money at that time,
so holding cash is an integral ingredient for that kind of success.

One can stay in stocks all the time, which is certainly a good idea if
capital gains tax is an issue for you, but as always I'd lean towards
the stuff that has a margin of safety based on valuation.
The S&P is somewhere around 50% overvalued compared to its long run history, which is a big headwind.
Bookmark this page and read it regularly http://www.smithers.co.uk/page.php?id=34
"As at 12th March, 2013 with the S&P 500 at 1552 the overvaluation by the
relevant measures was 57% for non-financials and 65% for quoted shares. "

Sure, the market can stay overvalued for many years at a time and probably will.
But I don't see any reason to believe things are different this time,
meaning we will see mean reversion once again and the prospects for
broad US market returns in the next 5-15 years are seriously sub-par.
The S&P will be fairly valued at today's levels (inflation adjusted)
if we see 20 years of 2%/year real trend earnings growth, which is
towards the upper end of historical 20-year real growth rates.
So, a best central guess would be that the S&P price level (ignoring
dividends) will not rise more than inflation in the next two decades.
The "monkey with a dartboard" expected real return will equal the dividend yield only.

Jim
Print the post Back To Top
No. of Recommendations: 4
Mark wrote:
I wonder if this makes it a better environment to stay in stocks.

I certainly don't think so. My own approach to the Sell-In-May concept does invest in bonds during the summer, when the strategy says to do so, which isn't every summer. Since there are times when a very simple algorithm will tell you that you are better served remaining invested during the summer.

But the point of my response is just to say, thinking you will only get 0.67% is far from the case. You simply choose what works best in bonds to invest in during the summer.

Here are the picks and returns for the last two summers:

  2011         
IPE 8.25%
BLV 21.43%
AGG 6.12%
Average 11.93%

2012
TLT 6.54%
TLO 6.27%
BLV 8.38%
Average 7.06%
Print the post Back To Top
No. of Recommendations: 0
That is a good point. Dry powder is nice to have around.
Print the post Back To Top
No. of Recommendations: 0
Wow. I had not idea that there were that great opportunities in fixed income available.

I use preferreds, which do fairly well, but not that well.
Print the post Back To Top
No. of Recommendations: 7
That is a good point. Dry powder is nice to have around.

I read allthetime people like Buffett, Cramer, myriads of web posters, magazine writers, etc. saying that you should keep some "dry powder" for buying when/if the market takes a dump.

The cynic in me then asks, "So...once you used up your dry powder and bought stuff that hit down 10%, what do you do when it hits 20% down, seeing as you are now out of powder?"

It's the same type of fallacy as the buckets-of-money [retirement withdrawal] strategy, where you keep 10% of your portfolio in cash to tap during a bear market so you don't have to sell stocks. If the bear lasts long enough, your cash bucket will be empty and you'll have to sell stocks _much_ lower than if you had sold earlier. And your allocation is now 100% equities.

IOW, the fallacy is looking at only the first step, and never at the next step after that.

As far as timing, I don't think of it as keeping dry powder to buy good things in case they stumble. I think of it as having a different asset allocation in circumstances where the market is in a bad regime.
Print the post Back To Top
No. of Recommendations: 0
I wonder if this makes it a better environment to stay in stocks.

Depends on how stocks perform. 0.18/mo. is better than a loss. Only if we had a crystal ball
Print the post Back To Top
No. of Recommendations: 9
Wow. I had not idea that there were that great opportunities in fixed income available.

Depends on how stocks perform. 0.18/mo. is better than a loss. Only if we had a crystal ball


Be careful.

We do not have a crystal ball, but with today's low interest rates and expectations for eventual rate increases the risk of most fixed income instruments is significantly higher than the expected reward.

Just talks or expectations about a potential rate increase caused in the last few weeks 7-8% and more drop in long term bonds (e.g. TLT, TLO, BLV ) yielding less than 3%/year, or 2-3% drop in shorter term stuff like GNMA yielding less than 1%.

Shelby Cullom Davis' comment quoted February 2009 by Warren Buffet still holds today: "Bonds promoted as offering risk-free returns are now priced to deliver return-free risk."
Print the post Back To Top
No. of Recommendations: 1
We do not have a crystal ball, but with today's low interest rates and expectations for eventual rate increases the risk of most fixed income instruments is significantly higher than the expected reward

There are safe places to park money. Bank Savings accounts paying 0.8. Low return but no risk.

There also are ETFs that short treasuries. Will pay off at some point. The problem when
Print the post Back To Top
Advertisement