For the week the three best performing areas within my portfolio were found in commodities, emerging markets and a dividend payer. My funds held representing these areas were PCLAX +1.91% ... NEWFX +1.64% & DWGAX +1.59% ... and, SVAAX +1.26%. In comparison, the equally weighted S&P 500 Index fund VADAX, that I sometimes use for equity ballast, was +0.70% for the week.
Linked below are the Lipper Indexes. You can view to find the leaders.
http://www.barrons.com/mdc/public/page/9_3020-lipperindx.htmlWondering what worked best for you?
Have a good weekend.
Old_Skeet
Comments
You did very well this week, each week it seems different funds of mine take the top prize. I guess that means Im pretty diversified. If everything went up in a week, that means they would all go down together. Sometimes Im very surprised what does well. UBVSX is in that category, 2nd best ytd of all my positions.
Would you mind giving us a market barometer update?
- I’m curious what you believe an “overbought” reading for the S&P implies for whatever action(s) one should take? I realize you are not offering investment advice, but it still leaves open the question of what an overbought reading might suggest the investor should do? Some obvious choices are: (1) Ignore the overbought reading and stay put, (2) move some or all of the overbought asset to cash, (3) move some or all of that overbought asset into a different asset - perhaps one having a reading of “underbought”.
- Are your metrics based primarily on valuations or on technicals? Perhaps a 50/50 slice of each?
- While it might be discouraging to be buying into an overbought market, a really long time horizon helps. Had you poured all your $$ into the S&P when it was arguably overbought in the 1997-98 period, I believe you would still be very happy with your return today, some 20 years later.
Appreciate any thoughts.
Here is the defination of overbought. The term a stock is "overbought" when the stock reaches a point in trading where technical indicators suggest the next price move of the stock will be down. When a stock's price has risen too far, too fast and it is beginning to look expensive to investors, it is overbought.
While I'm not an analyst and just a retail investor much like others on the board I have been working on someting to measures market value. Through my fifty plus years of investing I developed my barometer to aid me in determining better times to add new money to my portfolio. This lead me to develope a market barometer to help measue value in the S&P 500 Index. With this, I came up with three main feeds in my barometer plus some minor feeds. The barometer's three main feeds are a breadth feed, an earnings feed and a technical score feed. These three feeds are scaled and when combined produce a barometric number. The barometric number is then scaled into extremely overbought, overbought, overvalued, fair value, undervalued, oversold, and extremely oversold scalings. When looking for direction I often use the minor feeds to help determine this. A higher barometer reading indicates there is more investment value in the Index over a lower reading. At the first of the year the barometer had a reading of 183 which based upon the barometer metrics indicated the Index was extemely oversold. Presently, the barometer reading of 133 indicates that the Index is extremely overbought. So, in two months the Index has moved from extremely oversold to extremely overbought. Remember, at the end of last year many hedge funds were closing and sold into a vaccum on Christmas Eve. This selling pressure drove stock prices extremely low. Also, the FOMC had been on an interest rate increase campaign plus a number of other market distractors were taking place as well. This selling pressure created an extremely oversold market. As we have now progressed into the new year there has been good investor interest in stocks and their prices have been driven upward through some furrious buying to the point that they are now reaching a buying climax and by the metrics of the barometer become extremely overbought.
As you know (or should know) markets can stay overbought and oversold for extended periods of time. However, for the past couple of weeks I have detected a softening in the money flow. This means, to me, investors have been booking some profit. In addition, there seems to be a good number of companies recently reporting a decline in their earnings and anticipated revenue growth. Will it be enough for the Index to pull back? Perhaps. So, unless there is some news event that would entergize the market and encourage investors to pay up even more for stocks I'm following the barometer reading and looking for a nearterm pullback.
Just because I'm looking for a pullback does not mean that it will take place. But, until I see some higher barometer readings (indicating there is more investment value in the Index) I'm not putting any new money to work at this time. And, since I have no open special investment positions (spiffs) I'm not selling at this time either as the barometer generally drives my purchase and selling of spiffs. If I had any spiffs in play I'd have already closed them.
I hope this helps you have a better understanding of Old_Skeet's investment mythology because my market barometer has help me have a better understaning of stock market movements. With this, I'm posting this for information purposes only. It is not meant (or should not be taken) as investment advice.
I’ll agree that’s one good way to describe near-term conditions and to time one’s entry and exit points if one is a market trader. But it doesn’t help much with understanding valuations over longer periods (5, 10, 20 years). You said: “... markets can stay overbought and oversold for extended periods of time.” That may possibly be. However, if it were really the case there would seldom be a need to change the barometer from oversold to overbought within a few weeks’ or months’ time. So I’d modify that statement to read: “... markets can stay overvalued and undervalued for extended periods of time“.
What’s the difference? Valuations are based on the intrinsic worth of the individual companies within the index. While complex, that involves appraising different attributes like: underlying assets, debt levels, bond ratings, profit margins, P/E ratios, pending litigation, competitive market advantages and long term growth prospects. In a nutshell: Valuation is much harder to measure than a temporary overbought or oversold condition based largely on a 3-6 month chart.
Warren Buffet was on CNBC this morning and so is on my mind. I do feel his successful methodology leans very heavily towards the “valuation” end of the spectrum and much less so towards temporary technical overbought / underbought nomenclatures.
There are many successful ways to invest. Thanks for your insights into your barometer and how you apply it.
Often times I reference Ron Rowland's Leadership Strategy which I have linked below for easy viewing.
http://investwithanedge.com/market-leadership-strategy
Notice that the most out of favor position within the strategy is micro caps. Well, I've been thinking for sometime to add a micro-cap fund to my portfolio. Now might be a good time for me to open a starter position before the micro caps get discovered and start catching strong money. In this way I can start the holding through a position cost average process and build it over time as it moves up in the pecking order within the strategy.
I have linked below a micro cap fund that I've had under review for a while. It is off its 52 week high by a little better than 10%. Once you open the link click on fact sheet. Perhaps, its available load fee on some platforms.
https://www.gabelli.com/Template/fundinfo.cfm?tid=MzA4NWM=&pid=det&rid=7111=edoc_dnuf
I wish all ... "Good Investing."