It’s not DCA. It’s lump-sum-is-statistically-superior-lowest-TER-is-the-only-thing-that-matters.
I didn’t say that and I don’t subscribe to that. You can make reasonable predictions.
Almost inevitably though you will be wrong some of the time. And off about the exact timing most of the time.
What I do believe though: we‘re currently seeing inflation rates and interest rate hikes not seen in a generation. The bottom will not be determined or determinable by connecting a couple of dots on a price chart.
A better approach may be looking at the news and asking yourself: Do I feel that this (downturn) is going to continue - that we’ll see even lower valuations in a month or two?
Thanks for sharing the Larsson indicator that has helped you outperform and congrats !
In theory if the indicator consistently outperforms the market it ought to be proprietary information. Since by letting others copy the opportunity to make outsize profits disappears over time
I agree with you the market is not always efficient and i was intrigued so researched a bit. It seems the indicator produces the same results as some Simple Moving Average strategies. Mr Larsson may be packaging these up and charging a fee
Even if correct that is not to say SMA strategies are without worth. They can be used to limit downside and if I recall correctly you retired so that would be important. The trade off might be capping returns by missing big “up” days in the market
Or perhaps the comments online are completely wrong and this is something new the market has not caught on to yet. Anyway, congrats again for the outperformance which is the main thing
You are absolutely correct. It’s the same idea as most SMA strategies and similar results can be achieved with them, it’s not about beating the market, but exposure to it. It’s neither black magic nor rocket science.
Most big “up” days are between big “down” days so I am not missing them.
A 30 SMA on a bi-weekly stock chart will get you a similar exit point:
No, the bottom is not determined by some points in a graph. I expect more big drops, a long bottom and see no reason for a fast recovery. An indicator for reentry when the trend turns is all I need.
There is no crystal ball to tell the future, but there are pattern in the charts that can be used to make a high probability guess what’s happening in the markets mid term.
I’ll be wrong many times, but more often I’ll be right, so that’s fine.
You can try to predict as much as you want, and this is what this thread is about. But can you profit from your predictions and outperform the broad market? And do it for 10 years?
You know, I have spent quite a lot of time analysing US ETFs. There are lots of them that are claimed to be backed up by an experienced managerial team and a super clever strategy. I won’t go back to these data (okay, I will) and just tell you my impression. There are not many strategy ETF that were launched more than 3 years ago.
Yeah I noticed that.
When we’re outside in the park with my kids and it starts raining and I tell my daughters to go inside until it stops they get it immediately.
If I apply the same logic to the stock market and tell people here that I am seeking shelter during a crash I am clueless idiot because I have no idea how long it rains, and maybe it doesn’t rain and anyway we like getting wet
Well I guess the ETF industry did some great marketing…
Basically IPO and momentum were outperforming the broad market. From the market cap weighted indices, Top 50 was the most performing. SPHQ quality was outperforming only on risk-adjusted basis.
So, show me how your strategy have outperformed the broad market.
OK I try to clarify.
Imagine that you are only invested during the time the index is above the red line (30 SMA) and get out of the market when index is below the red line is below. You take 90% of the profits but avoid 70% of the losses
It sounds great in theory, like all these wonderful multi-factor, sector rotation, market state funds (I look at ETFs because it is easier to find information and we can actually buy them). But somehow they are not overperforming and closing after few years.
I did the calculations once with the EMA 200 line and I think it works at least with IB where trades are cheap. However, I think I would not be sufficient data driven to stick to this approach. Maybe I will learn it in the future. From the past we can see actually that you can get superior return with these strategies. The question is if you can get a significant better return including the false trigger points. Interesting topic indeed.
What I have never really understood is the average with these strategies. While I see that with the EMA 50 or EMA 30 you enter again lower than you exit what about the impact of missing the buy at the super low entry points assuming that the total amount of money (in my case 5000Chf each month) remains the same?
The online articles that I could find conclude that SMA investing has lower risk compared with buying and holding but no evidence of higher return
This makes some intuitive sense since if I look at the charts you posted there would have been several big “up” periods you missed and others where you would have been foreced to buy- selll -buy -sell etc regularly
You would miss out on dividends when out of the market too.
And if it was so easy someone would have figured it out by now and we would all be trying to do it…
@Wolverine has an entire thread on the topic, wonder what he thinks
For short periods moving averages, 2016 comes to mind. 2018 may also have some false positive situations. For longer ones (200D and the likes), you’d be looking in the range of 2010-2014 for those I have on the top of my mind.
Yeah you are right 2015-16 the msci world was hovering around the MA without clear direction…staying put would have been better, at least in saving fees
This is all back fitting. There is no guarantee that the chosen threshold would work again in the future. And then when things don’t seem to work, people get hitchy and deviate, and start using 25 instead of 30 eg trying to adjust etc .
So investing is in reality the mastering of discipline. It may be that a moving average strategy reduce volatility, but it requires discipline & an alert system that could be stressful.
Many, many strategies have worked great in back fitting from 2010 - there has been a big upwards trend with clear patterns.
If we enter a sigsaw, horizontal market that last 4+ years, a sma based system get crushed and keeping discipline impossible
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