No. of Recommendations: 3
Is this perhaps more of a mechanical investing approach than indexing, or have I just not fully understood given my very vanilla approach to investingMy post was a bit... incomplete.
You are right, using $NAHL to decide when to get out of the market can be mechanical. I have not looked too far in the past but I think that using $NAHL would help avoiding most of the down periods, but I think it is quite lagging in telling us when to get back in the market. I'm pretty sure someone has tested this on longer time period but just by looking at 2020, $NAHL would have told us to get out by the end of February, helping us avoid the March Madness. However, it goes back above 0 only at the end of April, so we would have missed some of the fun. That's by following a moving average of 13 days:
https://schrts.co/fuVbjeSbThe part I barely mentioned in my post is that since some ETFs do the opposite of the indexes, we can use them to make money in a bear market. For example, according to Yahoo, $SH (ProShares Short S&P500) is up 17,7% YTD. I could live with that kind of bear market returns. But I'm not sure what kind of returns we would get in the long run by being totally mechanical with $NAHL.
Here's the part I didn't mention in my post: since the market kind of zig-zags in a year like 2022, I'm trying to catch both the ups and downs. In other words, I'm watching indicators to see if it's time to be long or short. That part is not totally mechanical because the indicators are lagging and none of them works all the time. So it requires some 'judgement' and maybe a bit of voodoo.
This is also quite a recent approach for me because I decided to stop trying to swim against the stream around September. So this is a work in progress that is giving me positive results... so far.
Very interested in suggestions for retirees in their early 60's, as well as suggestions for how to formulate an autopilot for a young man in his mid 20's.Since I'm not qualified, I wouldn't dare recommend anything, hopefully somebody else can.
I can only wish you and your family to stay healthy! And avoid buses...
