Thread: JTH's Account Talk

The thing that works for me is to try to remember that we're investing, not gambling. Unless there's a recession, the bias of the markets is to go up, because inflation and corporate growth increases value. This is more or less a linear process, punctuated by emotionally driven events that cause volatility. If the overall market didn't go up in general, it wouldn't be an investment: the purpose of investments is to make money, and the only way to do that consistently is to have the market go up. So, if we don't believe that it will be going up consistently, we shouldn't be investing in it. However, we know from long term experience that the markets are a good investment; our goal should be to take advantage of the investment but forsee large recession drops and get out for those.

What this means to us is that we should be essentially buy and holders, to take advantage of the consistent upwards bias of the markets. However, the TSP system has a built in advantage for traders: essentially we can trade without paying any transaction fees. So, the temptation is to churn our accounts, hoping to beat the market by timing it.

My approach is to have a bias to staying in, to take advantage of the overall upward trend. When things look extremely overbought, I tend to get out, but look for a buy in opportunity as soon as possible afterwards. I don't wait to try to time the bottom, when it gets 1 or 2% lower than I sold, I buy back in, and then simply buy and hold to the next overbought. I don't have to time the top or bottom exactly, just have a good bias towards a profit.
This approach sometimes sidesteps a nice profit by getting out too early. Sometimes I buy back in too early, and have to wait through another 5% loss before it recovers. But, with the positive upwards bias of the market, if a person stays in through most of it and doesn't panic and stay out too much, you get a good yearly return. Straight bull market like last year, I do poorer than a buy and holder. Volatile year, I do a bit better. The advantage to me is I think I sidestep risk by sitting out at least part of downturns.

The problem with a lot of technical analysis is that we get too focused on short time segments of the market, and try to take our profits in too small of time intervals. If we use technical analysis to sidestep large downturns, and to predict a good time to sit out for a short time, it works good. If we get sidetracked by all the noise and think that a recession is just around the corner, or a rocket takeoff is just ahead, all the time, we end up overtrading and sitting out of the market too much to take advantage of the generally upward bias that benefits long term buy and holders.

Just my uneducated thoughts, for what they're worth.

JTH, I have read your stuff for years, and what I have always thought was good was that you held through a lot more than a lot of traders. Looking at the longer term trend rather than the short. I think this year you have been a lot more sidetracked into short term timing, at the expense of longer term investing.

It's been a decent bull market year, except for a couple really unpredictable downturns, that were immediately and unpredictably corrected. Trying to react short term to those downturns has locked in a lot of losses for most of the traders on this board. Patiently waiting through the bottoms instead of getting out and missing the rocket ride back up has been a better strategy, of course easy to see that in retrospect!

dave

I think F Fund mat finally be turning for us: Finally over powered the 5 day. Thoughts?

Thanks Dave, I feel much better now, I just needed to gripe and have a public pity-party and get the misery over with. One of the things I didn't point out was that my life has been hectic over the past 6 months and I've missed several IFT deadlines I might have taken, as a result I need to scale the timeframes back so that the IFT deadline is a non issue.

Originally Posted by Bquat

I think F Fund mat finally be turning for us: Finally over powered the 5 day. Thoughts?

Hi Bill

That was an interesting turn of events on Friday, but I would have like to see some substantial confirmation from stocks. My guess would be that perhaps some folks are front-running the winter storm. Either ways, on the .05% box price scale, we have our first bullish price objective since the 1st of 4 Double Bottom Breakdowns that started on Oct 23rd. The new 110.75 price objective recaptures roughly half of the previous decline, from a Fibonacci perspective this falls inline with my expectations. However, we still have 4 lower Os followed with only 1 higher X, combine this with the fact this is not the season for bonds, and I would caution others from taking an entry here, especially without some form of confirmation from bonds. Seasonally speaking we have some weakness over the next few days, but looking out to the broader view, I'll be looking to be getting back into stocks at the earliest and least intrusive opportunity.

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IFT EoB Today, 100C

With 1 Higher O & 2 Higher Xs, we have an ascending trend to work with. I normally wouldn't choose the C-Fund, but in this case, because I started the month in the F-Fund, I needed to shift the strategy to compensate. If the markets continue to rise, I'll reap the rewards, if the markets should choose to decline from here, this will leave 1 IFT to jump into the S-Fund, which on a percentage basis should decline further than the C-Fund.

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I am waiting for a breakout above 2044 or 2045 so I may follow you if that happens. You go buddy.

Here's to JTH getting his mojo working again!

Some interesting price action on the NASDAQ 100, we have a mini ascending triangle forming with the Triple Top @ X2, followed by a higher low @ O3.

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In case you missed it, the Transports have been putting in a strong showing, triggering an Ascending Triple Top Breakout on 6 Nov.

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Ascending Triple Top Breakout: An Ascending Triple Top Breakout is basically back-to-back Double Top Breakouts. These breakouts form three X-Columns that ascend with each breakout. Because there are three X-Columns and two O-Columns, the pattern is just as wide as a classic Triple Top Breakout. The ability to forge back-to-back higher highs shows underlying strength that is indicative of an uptrend. As with the other patterns, this Ascending Triple Top Breakout can form as a continuation or reversal pattern.

Wilshire 4500 fell just short of triggering another Double Top Breakout. After shallow pullbacks, the previous 3 columns of Xs produced sizable gains, if the most recent column of Xs produces similar results, then from current levels we can expect an additional 2.75-3.75% gain.

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The S&P 500 adds another X to the column today, for the upside I'll be looking for 2085, for the downside 1984, we may need to hit the latter before the next leg up.

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