Post New

I have always invested in stocks, you know, companies, and kept going during bear markets because we are told that we can't know when it will start and when it will stop. So don't sell your stocks, man, stay the course. Buffett doesn't sell, right?

I used to invest in companies that grow fast and for those, the bear market started somewhere in 2021. At least one year later, they were still going more down than up. I had enough and wondered if there wasn't anything better to do.

So I started looking at ETFs, thinking that maybe one sector of the economy is doing well and I could start making money again. That search led me to leveraged ETFs that do -2x and even -3x of what the index does.

As for the answer to when to start betting against the market, it came from Mungofitch. Thanks to him, I discovered $NAHL, or the Nasdaq 52w New Highs - New Lows. That thing went negative in November 2021 and that would have been a pretty good time to start selling stocks.

My goal now is to at least eliminate negative years with the help of $NAHL and then maybe make money in any market with those ETFS.

As for the answer to when to start betting against the market, it came from Mungofitch. Thanks to him, I discovered $NAHL, or the Nasdaq 52w New Highs - New Lows. That thing went negative in November 2021 and that would have been a pretty good time to start selling stocks.

My goal now is to at least eliminate negative years with the help of $NAHL and then maybe make money in any market with those ETFS.

Is this perhaps more of a mechanical investing approach than indexing, or have I just not fully understood given my very vanilla approach to investing?

I have started to look more closely at indexing for multiple reasons. The first is simplification of our accounts. I have not been able to get anyone in my family interested in investing, and we need a hit by a bus strategy in the event something suddenly happens to me without warning, (like getting hit by a bus!) I need to autopilot our finances so that DH or the kids could take over if need be. Alzheimer's runs deep in my family, so I also want to protect our assets from myself should those signs subtly manifest without true recognition. I've had enough experience with family to know that the beginning signs tend to be well masked by those impacted, but if they understand what I am doing, it will be easier for them to see if I am off kilter.

The third is risk reduction. At a certain point conservation of principal over time is necessary, particularly since now retired. We could stick our assets into interest bearing accounts earning 2% and never even touch principal, but not making my money work for me is contrary to my nature, so a simplified approach with moderate risk via indexing could be a good plan. We neither need to be aggressive in our investments, nor perhaps should we be, because the result of losing much of our assets would be catastrophic.

And selfishly, I would like to 'retire.' Will probably keep a small portfolio of individual stocks just for fun, but to keep all of our assets in a concentrated portfolio of 10-15 stocks puts too much pressure on me to chose the right stock. I want this to be more fun than work.

Am leaning towards equal weight indexes, like QQQE and RSP, with supplementation via individual stock picks. I also consider my recent BRK.B acquisition to be more of a value index than a single stock, and have limit orders to buy more should it go down below my initial position. Have just started looking at the other QQQs, like S and J, needing to get started in serious contemplation and avoiding analysis paralysis!

Am currently rather cash heavy after taking cash value for a couple of pensions, and having bailed out of all bond funds before interest rates started to rise. Am in the process of repositioning our assets after taking them back from a financial planner, who rather messed up my aggressive portfolio that was too volatile for marital harmony. DH finally saw the light that the FP was not good for us, and I have learned my lesson about volatility not being digestible by all. Hoping a compromise can be found here, but as of yet have no real plan formulated.

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.

IP

Is this perhaps more of a mechanical investing approach than indexing, or have I just not fully understood given my very vanilla approach to investing

My 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/fuVbjeSb

The 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...

I can only wish you and your family to stay healthy! And avoid buses...

Ah! Humor used well in a foreign language tells me you do just fine with English!

Your post makes sense to me, and I confess I loved my brief stint of mechanical investing, but volatility is not the friend of a successful marriage in this family. The ups were more numerous than the downs, giving us a very nice end to one heck of an investing roller coaster ride via mechanical investing, but DH is not particularly a fan of volatility. Only vanilla investing from here on out, no shorting of stock. With no earned income to resupply buying power in case of a down market, retirement investing for us must be more conservative.

It's very cool however how two people look to use indexing in very different ways.

IP

...but DH is not particularly a fan of volatility.

There's nothing wrong with being conservative with money. In the investing equation, sleeping well is very important.

There's nothing wrong with being conservative with money. In the investing equation, sleeping well is very important.

Nothing wrong at all. In fact, like writing up posts, having to explain why I want to invest in a certain way and reach a consensus with DH, is a great way to make sure I fully understand what I am doing. We often come at things from a different perspective, and IMO that's synergistic, with the sum of the parts being being greater than the individual components. One must also consider non-monetary stressors on investing. I have no desire to shorten his life by piling on stress.

IP,
whose most important investment has been the decades with DH

I went with ETFs sometime in 2001 or 2002 while I was sitting out the first crash. I had been in mutual funds since 1984/85 and had made a bunch of money. I felt good that I had been able smart/lucky enough to avoid the brunt of that crash and was wondering what I'd do if this happened again someday? In my readings I discovered things like moving averages and long term market timing. I knew that mutual funds in general, don't like it when people sell too much all at once. Even the long term signals can lead to whipsaws and didn't want any problems with mutual funds admonishing me to buy & hold etc. That's when I discovered SPY, QQQ and the like.
All the 'historical numbers' and diversity of indexing with the option to easily side step big down drafts and catch big up drafts without having to annoy other fund investors or managers and complicate their lives.

When I first started investing I went with mutual funds but as the years went by I grew annoyed with the capital gains they distributed, especially during down years and slowly moved to stocks. Generally with stocks I avoided speculative stocks and did the usual things you do when younger, sell after things fall, then don't get back in until you miss a chunk of the recovery.

I'm nearing retirement and will be moving to mostly ETFs and funds like Distillate US Fdmtl Stblty & Val ETF DSTL. I want to simplify things.

Only recently have I gotten into fixed income products such as treasuries, CDs, MYGAs. Currently don't own any bond funds but that will probably change. Mostly I have various treasuries although I haven't gone much into TIPs as some people have.

My biggest annoyance is all of the accounts I have. I like to diversify but even within some place like Fidelity I have around 8 accounts due to some inherited accounts and a HDHP savings account.

So, yeah I plan to move mostly into a few indexes and make life easier. While my accounts are down I actually have been actively selling some losers this past week to offset some large gains on my Apple stock that a sold very early in the year.

I think moving forward my goal is about 50/50 stocks/fixed income until I get social security and then may move more aggressive since my withdrawals should be very low (except for whatever the RMDs are).

Post New

Berkshire Hathaway FAQ

---

Contact Shrewd'm
Contact the developer of these message boards.