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tuffy88
Feb 20 2011

Where does the market go from here? Don't know. Would like to but consider the answer unknowable. The answer to the question is unknowable that is by any human being. Even "Mr. Market" does not know. He will tell you where it has been, but not where it is going. All we can say on the subject is we don't know.

That is my opinion. The market can still be traded though. Just stay on the right side of the trend. I follow the trend in the Big Picture colume of IBD. Other ways of following the trend, but I don't use them. Buy SPY or QQQQ when the "market pulse" section of the Big Picture is in an uptrend, exit and move to SHY (1-3 Year Treasury ETE) when the trend moves into a downtrend. Simple, yes. Too simple, I don't think so. In my opinion more money has been left on the table by acting on calls for "market crashes" or "market meltups" than on anything else.

Right now the trend of the broad market is up. It will stay up until it turns down. No one knows when that will be. I have been long SPY since it turned up in Sptember, 2010. Will stay long until it turns down, whenever that is. That is it. There is nothing else. I posted each and every trade I made trading this way from April, 2003 until the fall of 2009 on this site in real time. On balance a very profitable method, as any oldtimer here as any one here who followed my real time trades could tell you. Traded the same way since then and it has been quite profitable. I quite posting my trades here because the results generated enormous hostility towards me and I decided I did not need that.

What I say next will probably tell you why the hostility. I think all the calls for "market crashes" or "meltup ups" are worse than useless. The do real harm if anyone is stupid enough to trade on them. The only certainly is that the trend will turn down in the future. When, how far, or why is unknowable to anyone reading this. Would I like to know? Sure. When I do exit my trade the price will more than likely be down 2 or 3% from whatever the high on SPY turn out to be. Maybe a little more, but if experience is any guide not more than 5%. I regard it as the price that has to be paid in my trading. There will be whipsaws at times. Also part of the price that must be paid. Very simple way of trading, but far better than guessing tops & bottome.

Charles

tuffy88
Sept 21 2009

Still look in on Traders-Talk most days, at least once, Toni. To answer your question the above quote from my post on August 24th should answer it. I re-entered my position in SPY's in trading account on that date with a 1/3rd position. 2nd third after a 2% advance and 3rd third after next 2% advance. Remain 100% invested in trading account since then. Our main retirement portfolio is now 71% in Vanguard Index Funds (50-50 stock-bonds) 29% in the trading account. When I started the trading account in April, 2003 it was 20% in trading account and 80% in main portfolio. The trading account has outperformed the main account by that much since 2003. And the main index portfolio has been no slouch. It was down 22% at the close of business on 12/31/08. I did no trading at all in that index portfolio except to re balance at the end of 2007 & 2008. That is down from its closing high on October 9,2007 until December 31,2008. The top of the bull market. As of last Friday it was up 19.22% YTD. Getting close to break even since top of bull market. The profits in the trading portfolio make the combined portfolio's well into all time highs.

The reason I don't post much here anymore is that there is really not much for me to say regarding my method of trading.
(1) be invested when the markets are going up.
(a) Never call tops or bottom. Just stay invested when the market is in a confirmed uptrend. Exit only after it goes into a downtrend. NEVER try to predict when that will happen. The market will tell you.
(2) be in short term bond funds (SHY) when the market is in a downtrend.
(a) Never predict a bottom. Just stay in SHY when the market is in a confirmed downtrend. Re-enter only AFTER it goes into a confirmed uptrend. NEVER predict a bottom. Market will tell you.

(3) Repeat.
(4) That is all there is to my style of trading.

Pretty simple. As one poster here posted a few weeks ago The system is "not nearly good enough to get a job on the street." Those street pro's must have made a lot of money in the bear market. So it is a good thing I don't want a job on the street.

Will post when I exit in trading account.

Charles