The Motley Fool Discussion Boards

Previous Page

Investing/Strategies / Mechanical Investing


Subject:  Re: $NAHL went positive Date:  10/27/2019  1:36 PM
Author:  Baltassar Number:  275385 of 281874

Just curious as to what other folks are doing.

I follow all three of the FRED indicators (Industrial Production, Retail Sales, and Unemployment), and turn on timing when any of them is negative; which has scarcely happened since Jesse Livermore first published his work in Jan 2016.

But it's not something I'd decide by voting. I think you should consider how this form of risk management interacts with other methods that you use. If your normal timing is relatively twitchy, or if your usual holdings are relatively volatile or expensive to trade (e.g. small-cap stocks), you might want to wait until you get two negative indicators. Given that the main goal is to reduce whip-saws, it might make sense to set a higher bar (two signals rather than one) if the underlying portfolio strategy is in fact prone to whip-saws. Or maybe not: if you take on a lot of risk to begin with, maybe you want all the risk management you can get? As so often, a lot of investing comes down to temperament.

Copyright 1996-2021 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us