No. of Recommendations: 5
I do. But to beat the market, selling some bonds, and buying more stocks when the market is down gives you a big edge.Not really. I believe that in long history bonds & stocks tend to move opposite, but in recent times bonds crashed along with stocks.
Closest I can quickly model your idea is at Portfolio Visualizer. Dual Momentum with 5 month lookback.
68 switches (trades) in 30 years. Almost the same CAGR as buy&hold S&P500, albeit with much lower volatility.
portfoliovisualizer.com - Test market timing modelHowever, a 1 or 2 month lookback -- which I think is what you are contemplating -- is much much worse.
Plain Relative Strength (5 month lookback) was a tad better.
The main thing appears to be that the timing model(s) avoid the large S&P500 bears. Problem is, you don't know when to hop back in to stocks until well after the bottom. You cannot know at the time that it _is_ the bottom.
