Tag: investing stockSort
Historically, the “Optimal Momentum” concept of buying the best performing asset class out of a basket of loosely correlated asset class’s has annualized a return of 17.2% since 1977 with a maximum monthly drawdown of -25%. As a comparison the S&P has only annualized a return of 8% with a maximum monthly drawdown of -52.5%.
Gold looks like its ready for a decline here. There is a bearish divergence between gold stocks and the commodity , typically stocks lead the commodity. The gold stocks ala index HUI are giving us an early warning signal with a break in the uptrend line on April 11th and a series of lower highs and lower lows after the break of uptrend.
This is a bond trading strategy for IEF, The average annualized rate of return is 9.8% with a maximum peak to trough drawdown of 6.5%. This strategy doesn't have a down year, the worst performing year was 2007 with a +3% return, the best performing year was 2009 with a +19.75% return!
Since 1990 this system has an average annual return of 20.4% with a largest peak to trough drawdown of -20%. The system hasn’t had a down year. From 1990 to present (April 2011) This S&P system would have turned a 100,000 account into $4,634,565 without using any leverage. As a comparison buying $100,000 worth of the S&P in 1991 would now be worth $388,428 with a largest equity drawdown of 53%
Bonds and gold - using gold prices to predict bond prices
Stock vs bonds - using bond prices to predict stock returns
Currently the S&P has gone up while bond prices have come down over the last week. This makes bonds a more attractive trade off, and has short term bearish implications for the S&P. Using bond prices to help predict stock returns is a very useful tool, as an example when bond prices are up 5% over a 5 day look back period the average move in the S&P futures was $3,000 over the next 5 days.
This video details some of the mechanics involved in trading the following strategies!
All of the entry and exit rules are based on formulas that have been proven to make money in the past. The entries ARE NOT based on my opinion, ego or news events!
Entries into trades and exits out of trades are simply based on current market conditions that have a predictive value! I hope this video helps.