If you are a short-term trader and you aren’t familiar with Mebane Faber’s Timing Model, you are excused. However, if you manage your own 401K, or consider yourself a long-term investor more-so than a trader, you MUST read up on this timing model. I cannot over-emphasize the importance of it for the aforementioned types of investors.
Here are the rules, which cover 5 asset classes:
BUY RULE: Buy when monthly price > 10-month SMA.
SELL RULE: Sell and move to cash when monthly price < 10-month SMA.
- All entry and exit prices are on the day of the signal at the close. The model is only updated once a month on the last day of the month. Price fluctuations during the rest of the month are ignored.
Simple, right?
Since today is the last trading day of the month, I think we should pay attention to what the model is saying.
It is looking as if we are going to get a buy signal on US Stocks (tradeable with VTI) and Foreign Stocks (tradeable with VEU).
This will put the hypothetical portfolio 80% invested, (already being long 10 Year Gov’t Bonds and Real Estate) with Commodities still sitting on the sidelines.
As you were…
Thanks for pointing this out!
No problem. Faber’s paper on this model should be required reading for anyone with a brokerage account.
Very cool!
Although, it looks like we would have to subscribe to read it.
Hawaii, nice to see EPD trying to break into the profit zone today… Of course I will have jinxed it now…
All we need now is AGN to follow the example…
No doubt! I’m hoping, based upon today’s action, that it has bottomed.
I’m counting my coin as we speak. I went for the 2% model this time, so if we make the exit threshold, I’ll be very happy!
About .20 shy of it as I type…
About .9 shy now. Hard not to take it with all of those buckos starring me int he face.
Got it at 37.74! Good enough for me!
out at 37.77
You beat me. I’ve yet to get good with the key board. Did you do a market on close or a limit order or just sit there and time it better?
Nevertheless, I am very satisfied and I’m starting to feel comfortable enough to start using the 2% model!
So for the record by being in the system from the 6th and continuing through the 29th, I have 11 out of 13 wins, with 2 loses at -1.31% and -7.69 %, the larger loss the result of hitting a stop, and my biggest win at 10.76%.
The total percentage gain is currently 1.809%.
I think that’s pretty damn good in these volatile times!!!
Hawaii, I used a limit order at 3:58 set at the ask.
2% is the way to go but it takes some getting used to.
Hey Forrest, how about that AGN today! WooHoo!
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