Today's Market
by Dr Invest

There's not much to say, especially if you are invested in BOND FUNDS (TIP and BND) as I suggested at the first of May. Everything I have suggested is happening and it seems that the unraveling has begun for the Summer.

I was surprised that there are still fund managers and financial advisers protesting that the economy is sound and secure that that now is a buying opportunity for stocks...they continue, that you will never be able to get stocks any cheaper. Honestly, it seems that I'm watching a late-night re-run of The Twilight Zone.

No one need remind me that the market is accelerating in downward trend. I almost hear the whistle and whine of a plane in a nose dive.

HERE'S HOW I'M HURTING

The above title is SATIRICAL. I've been largely in cash for the past three months. Mother fate taunted me to return to the market and join in the opportunity for double digit returns from stocks; but I rejected the temptation, feeling the risk just too high. I'm glad I stayed away from the market.

Seeing that seasonal charts show a decline for stocks in May, I purchased two BOND ETFs. One was TIP and the other BND. By looking at ETFreplay.com, I backtested these two ETFs, feeling that with stocks falling and bonds rising in value, I could see returns of 6% to 7% by investing into TIP and BND. (read the blog from May 1st until now, to see how I would accomplish this.)

So on May 2nd, I purchase equal shares of TIP and BND, placing a 5% stop-loss below the purchase price. The GAIN over the past 14 days has been .62%. That is slightly over 1/2%. Listen, these are BONDS and TREASURIES and your not going to see a dramatic rise in value in a month. Likewise, you shouldn't see a dramatic fall in value either. I would be thrilled to see a 1% gain in the value of this selected portfolio investment each month. That would give me 8% by years end, and much more than the return of a Certificate of Deposit.

STAYING ON TRACK

The continued fall of stocks in the market until the end of October, should keep TIP and BND performing. 1/3 of the total portfolio will be devoted to these two stocks, and another 1/3 will be invested in other STOCK ETFs at the end of October should the market return to an uptrend.

While using this investment strategy, there is the FACT that the FED might well attempt another QE-3 or TWIST, upsetting the markets yet again, and moving them toward some unknown direction. Adaptability will be needed to keep your investment track.

I would like to think that by August, a 3% return from TIP and BND would have been recorded. For me, I will begin moving my stop-sell closer to the daily closing price as new profits are accounted for. By August, I will have moved my stop-sell within 3% of the closing price, and by the end of August, would hope to see a 1% profit secured.

Keep following the blog. Hopefully I can demonstrate the investment model.

THE INVESTMENT MODEL

The investment model is the Ivy Portfolio. I am watching the 10 Month Simple Moving Average, and will not sell TIP or BND until their price falls below the 10 month SMA.

(note: the above article is for entertainment purposes only and not to be used as investment advice.)