A Summer Sampler. Jim Quinn (Student Investor) June 27, 2015

Transcription

1 A Summer Sampler Jim Quinn (Student Investor) June 27, 2015

2 DISCLAIMER The content of this discussion is provided as general information only and should not be taken as investment advice. All discussion content shall not be construed as a recommendation to buy or sell any security or financial product, or to participate in any particular trading or investment strategy.

3 DISCLAIMER (CONT) The ideas expressed in this discussion are solely the opinions of the author(s). The author(s) may or may not have a position in any security referenced herein. Any action that you take as a result of information or analysis provided in this discussion is ultimately your responsibility. Consult your investment adviser before making any investment decisions.

4 My Philosophy Preserve Capital Earn Best risk-adjusted Return Not a day trader, I am looking for weekly systems or longer I look for systems which meet these requirements Focus on ETFs and Mutual Funds rather than stocks to reduce risk; Mostly ETFs I am now focusing more on SIMPLE systems while ALWAYS watching the Market

5 My Philosophy (Cont) I Look for trends Visuals (ie charts) are Very Important I am not necessarily a Buy & Hold investor, but would like to be; and Am Getting Closer to being one Am ALWAYS interested in New & Innovative Approaches to Investing Questions/Comments: jquinn1469@verizon.net

6 PreScript Our next Meeting is in August which is a LONG Way Away I Intended to Leave a Summer Sampler on the AAII site After the 6/6/15 Meeting Even though the Market was going Sideways, it seemed like there were areas that were doing Reasonably Well Also wanted to STATUS all of my Standard Groups

7 MidScript I Noticed on that there had been substantial Downward Changes in the Market Had severe WiFi Problems at home, therefore had to take snapshots at that time as Opposed to during the week of 62115

8 PostScript My WiFi was fixed; Access & Info is Better Even though the Market has been going Sideways or Down, there ARE Many areas that ARE doing Reasonably Well In Addition to STATUSing all of my Standard Groups, I wanted to leave you with some IDEAS for the summer Section V Describes an Approach using a Derivative of Dual Momentum. I am seeing more of these approaches and I believe that these areas deserve much more Attention in our Future

9 Today s Categories Section I An ETF Sampling from JQ Section II Helen s Latest ETF Picks Section III Richard Young s Latest Ideas Section IV The Latest DM GEM Pick Section V A New Twist in DM Section VI Rob Bernstein s Latest Section VII Frank Grossman s Latest Ideas Section VIII Armagedon Review (If you need it for a Market TurnDown)

10 Categories (Cont) Section IX Market Status I am Leaving You With a Handout Which is the Text of This Presentation AND which SHOULD be Fairly Self-Standing so you should be able to Read & Understand it on your own in case we cannot cover it all

11 Sec. I - A List of top ETFs as of & The next 2 slides show the Top 50 ETFs during the Last 4 months Ranked by Relative Strength as of & As of A Moving Average of their index on both these dates is shown in the 3 rd & 4th slides, and The 5 th & 6 th Slides List their Symbols in the 3rd column and their YTD return in the 4 th column as of those dates

12 Best ETF Ranking 60215

13 Best ETF Ranking 61615

14 Best ETFs Index 60215

15 Best ETFs Index 61615

16 Best ETFs YTD % Change

17 Best ETFs YTD % Change

18 A Two Week Ranking as of to Give the Movers

19 A Three Week % Change (Col. 11) as of 62315

20 Summary Thoughts Note that there is a lot LESS green in the Ranking charts Moving Average chart on Slide 16 has flattened out NEITHER are good signs

21 Section II - Helen s Latest ETF Picks These are Helen s Monthly ETF Choices as of 06/02/15 Her choices are: CQQQ, IBB, EDEN, GEX, IHE, IHF and FPX The next 2 charts shows a Daily Chart of the MAs of this group as of 6/02/15 and The 3 rd & 4 th charts shows a list their Symbols in the 3rd column and their YTD return in the 4 th column as of 6/02/15 & respectively Note that Chart has flattened out since 6/02/15

22 Helen s Daily ETF Chart as of 6/02/15

23 Helen s Daily Chart as of 6/16/15

24 Helen s ETF List with YTD Gain (4 th Column) as of 6/02/15

25 Helen s ETF List with 3 Week Gain (11 th Column) as of 6/19/15

26 Section III - R. Young s Latest Picks. YTD Results as of 53015

27 RY ETFs Daily Chart as of 6/16/15

28 RY ETFs Daily Chart as of 6/19/15

29 R. Young s Latest as of 61615; YTD Return in 4 th Column

30 R. Young s Latest as of 61915; 5 Day Return in 10 th Column

31 Section IV - Selecting the Next Month GEM Option The next Slide shows How to Use StockCharts to Select the Next Month s Choice for GEM Put SPY & VEU into a StockCharts PERF Chart along with BIL Select a LAST Year Perf Chart (253 Days) Pick the Better Performing of SPY or VEU and Then Compare The Winner Against BIL Select AGG (if BIL is the winner) or the SPY/VEU winner for the next month s investment The Selection for June 2015 is SPY

32 GEM Selection Chart 3/30/15

33 GEM Selection Chart 6/16/15

34 Section v - Dual Momentum s Latest Twist Came upon this in Seeking Alpha on 6/13/15 Lowell Herr Writes Articles for Seeking Alpha on a regular Basis He is Situated in LA Area His basic URL is He also publishes at Seeking Alpha where his URL is The Seeking Alpha site is where his Interesting Article is; URL is:

35 Dual Momentum s Latest Twist His twist is to apply the DM approach to the Faber IVY 10 Portfolio The Next 8 pages details his article Verbatim and are copied here to fully describe his methodology Note that using Mr. Herr s methodology more than triples the rate of return of his BenchMark VTTVX Fund. VERY INTERESTING

36 Dual Momentum s Latest Twist Beginning with the ten (10) ETFs identified in Mebane T. Faber and Eric W. Richardson's book, The Ivy Portfolio, the following analysis shows how the IVY portfolio would have performed from June 30, 2006 through 6/11/2015 when a momentum model is applied to these ETFs. The ETFs using in this analysis are the IVY 10 plus SHY, our cutoff or "circuit breaker" ETF. Rank the ETFs as shown in the following table. Review period is every 33 days.

37 Dual Momentum s Latest Twist Look-back periods are 87 days with a 30% weight, 145 days with a 50% weight, and 20% assigned to a 14-day mean-variance volatility setting. ETFs performing below SHY using this ranking system are sold out of the portfolio. Select the top two performing ETFs and invest equal percentages in each. If there is a tie, invest in equal amounts in the three or four top performing ETFs. The absolute momentum model identifies ETFs that are ranked above SHY.

38 Dual Momentum s Latest Twist The ranking model identifies the relative momentum between the various ETFs. IVY 10 ETF Rankings: The following table (generated from spreadsheet) shows both the absolute and relative momentum for the 10 IVY ETFs. The following table includes 6/11/2015 data. GSG and VB are the top two performing ETFs based on the three metrics used to come up with these rankings. If one were to follow this model today, we would invest equal dollars in GSG and VB.

39 Dual Momentum s Latest Twist, from Lowell Herr

40 Dual Momentum s Latest Twist IVY 10 Back-Test Results: How has this investing model worked since June 2006? The following graph shows a Monte Carlo calculation where the dark black line is the average performance of the IVY 10. The red line is the performance of our stock-bond benchmark, VTTVX. Note the light gray lines as they show other probabilities or noise around the review days. In reality, investors are likely to make trades from 2 days before the review period to as many as 5 days after the review period. Call this trading noise. Even the worst light gray line outperforms the VTTVX benchmark.

41 Dual Momentum s Latest Twist

42 Dual Momentum s Latest Twist Here are a few salient points when Dual Momentum is applied to the IVY or Faber 10. Portfolio return = 240% vs. 77% for the VTTVX index fund. Maximum draw-down (DD) for portfolio is 27% vs. 45% for VTTVX. Average annual DD for portfolio is 14% or under 15%, what might be considered an acceptable level. Average Compound Annual Growth Rate (CAGR) = 14.7%.

43 Dual Momentum s Latest Twist Trades per review period = 1.7. Tax considerations may dictate one use this model only with taxdeferred accounts.

44 Section VI - Rob Bernsteins Latest as of 52015

45 Potential Matching ETFs Category ETF YTD Return Floating Rate FLOT.37% Japan EWJ 17.44% Preferred PFF 1.965% Healthcare XLV 12.5% BioTech IBB 26.34% Europe EZU 10.79% Junk Bonds JNK 3.0% Defense XAR 8.51% MidCap MDY 7.24%

46 Next Rob Bernstein Meeting

47 Section VII Frank Grossman Another Richard Young Favorite An example strategy of his: A simple and effective all weather SPY-TLT strategy. 18% annual return and a Sharpe ratio of 1.66 for the last 5 years. Seems to be a Paid Site; see next page. You can subscribe and he will send signals Url is

48 Section ID Frank Grossman

49 Latest Frank Grossman Item 5/29/15 Picks the Top 4 Country ETFs from around the World 20% CAGR for the last 20 Years A POTENTIAL future topic; as are his other Approaches shown on previous Slide, Can we Emulate them

50 Section VIII Armagedon Review A Series of Thoughts / Ideas/ Actions to PrePare you for a COMING Market Drop Which Might Occur on X/X/15???? You have Seen these Before; But I want to MAKE SURE you Understand the Point and HAVE these Ideas over the Summer

51 The Market is Your Portfolio ONE OF THE TRUEST AND MOST IMPORTANT STATEMENTS I HAVE EVER HEARD REMEMBER IT!!!!!

52 YOUR 2 MIP #s In MY Opinion, Your Two MOST IMPORTANT Numbers are: 1) Your FIXED Monthly Expenses =B and 2) Your TOTAL Assets =A You Need to Know These to PROPERLY PLAN

53 Best ETF Groups in 2008 Bear Contra Stock Market 104.5% Precious Metals 6.9% Contra Foreign Stock 70.6% Bond ETFs Returns are Similar to Bond M/F Returns NOTE: NO Guarantees, but Worth A Look!! Where is the $ Going?? During Bear

54 Best Generic Bond Fund Bear Types from 2008 Market BEST BEAR BOND FUND RETURNS Gov L/T +20.5% Gov Int Term +10.8% Gov Short Term +6.8% Muni Short Term +4.7% Muni Int. Term +4.1% Mort, Backed +3.6% Inflation Prot. +.1%

55 Market Stress Test Summarized from WSJ Jason Zweig Intelligent Investor Column Sat June 14, 2014 Time is NOW to Plan Actions if Market Dives Based on ACTUAL Research The PDF File of the article is on our Website under 6/28 talk notes in Gary Noreen s ToolBox under Copy of Zweig s Article URL is :

56 Investing Under Stress Much more Sensitive to LOSSES Impaired Short Term Memory Indifferent to Small Gains Much more LOSS AVERSE Less Sensitivity to Reward Focus More on Short Term Losses rather than Long Term Gains Therefore you tend to focus on how much you are losing rather than what you could gain if you held on

57 CAN & SHOULD PLAN AHEAD Control Your Future Stress Sell NOW to lock in profits Focus on Total Value of Assets; NOT on Amount of Latest Loss Have info set up to be able to look at this type of Total Account data ReBalance NOW Take Moderate Action NOW

58 Section IX - The Market

59 3/30/15 SPY Weekly Chart

60 6/25/15 SPY Weekly Chart

61 3/30/15 SPY Daily 75 & 300 Chart

62 6/25/15 SPY Daily 75 & 300 Chart

63 Market Section Net-Net Summary The TOTAL Market Summary based on the Items Mentioned in this Section is: If Dr Don s and My Moving Averages are Trending UP; Things Look Positive At Present the Market Seems to be Continuing in a Positive Run Until Dr Don s 300/75 EMAs and My 30 & 40 Week Moving Averages FLATTEN out; We should continue to be in Good Shape