Weekend With Dr Invest
by Dr Invest
Over the next few weeks, we will be watching the Dr Invest Portfolio. Please, Please, Please read the past three blogs to understand the invesment method and cycle. I want you to know what I am doing, how I avoid losses, and how I maximize return while minimizing risk.
Look, I already know that you can buy on downtrend and buy on uptrend; I know that regardless where the market moves, you can make money. All this trading only generates fees for the brokerages and puts your portfolio at risk. If you trade, YOU WILL HAVE LOSSES. If you make many trades, you will have MORE LOSSES. The object here is to have more WINS, than LOSSES.
I have demonstrated that by understanding SEASONAL CHARTS, you can make an educated guess at when the market will best perform for a particular stock. Markets do not always follow a SEASONAL TREND, but on a 30 year average, monthly trends are demonstrated.
Anticipating a downturn in January, and having some of my positions sell (stocks, bonds, ETFs, etc.), I did not reinvest. I missed out on the 12% run-up between January and April. Listen, I don't regret being out of the market. The TRUE economic fundamentals have been very poor, regardless of the HYPE of Wall Street. As I have said before, "Is is better to be out of the market, wishing you were in; than to be in the market, wishing you were out!"
I am glad that some people made money, but the vast majority of people will have had purchased mutual funds, or a family of funds, with a 2% load (a fee to get into the fund) and will be reluctant to leave their newly purchased mutual fund when it drops 25% - 30%. This is the problem... you are too much in love with your portfolio to sell it, when it is losing money. So you BUY AND HOLD.
If I had bought positions for my portfolio in January, I would have felt the risk to adverse. Unlike people in a front-loaded (fees) mutual fund, I can sell anytime the market is open. But I just couldn't stomach the risk. So I chose to "stay out of the market". For me, not knowing when the axe would fall, staying out of the market was a good thing.
THE DR INVEST PORTFOLIO
I am following the "Ivy Portfolio Method". Below, I have purchased BND and TIP, putting $555 in each ETF. I will invest this much again in June, and this much again in July, provided the price does not fall below a 10 month SMA (simple moving average). May was chosen to invest in BOND FUNDS because bond funds have a seasonal rise in value from May to November, while STOCKS typically fall during that same period in time. Using a $10,000 porfolio, I divided it by 3. 1/3 went to CASH, another 1/3 is held for STOCKS (when the investment time is most optional), and 1/3 is held for BONDS. So I had $3,333 held for BONDS and I was going to make my BOND purchases over a three month period, investing $1,111 at the begining of each month. Buy the ETFs called, BND and TIP with each purchase meant investing $555.50 in BND and $555.50 in TIP. So there you have it. Below is the outcome of the initial investment and if the BOND market moves as SEASONALLY PREDICTED, we should see and increase each month in our BOND porfolio.
by Dr Invest
Over the next few weeks, we will be watching the Dr Invest Portfolio. Please, Please, Please read the past three blogs to understand the invesment method and cycle. I want you to know what I am doing, how I avoid losses, and how I maximize return while minimizing risk.
Look, I already know that you can buy on downtrend and buy on uptrend; I know that regardless where the market moves, you can make money. All this trading only generates fees for the brokerages and puts your portfolio at risk. If you trade, YOU WILL HAVE LOSSES. If you make many trades, you will have MORE LOSSES. The object here is to have more WINS, than LOSSES.
I have demonstrated that by understanding SEASONAL CHARTS, you can make an educated guess at when the market will best perform for a particular stock. Markets do not always follow a SEASONAL TREND, but on a 30 year average, monthly trends are demonstrated.
Anticipating a downturn in January, and having some of my positions sell (stocks, bonds, ETFs, etc.), I did not reinvest. I missed out on the 12% run-up between January and April. Listen, I don't regret being out of the market. The TRUE economic fundamentals have been very poor, regardless of the HYPE of Wall Street. As I have said before, "Is is better to be out of the market, wishing you were in; than to be in the market, wishing you were out!"
I am glad that some people made money, but the vast majority of people will have had purchased mutual funds, or a family of funds, with a 2% load (a fee to get into the fund) and will be reluctant to leave their newly purchased mutual fund when it drops 25% - 30%. This is the problem... you are too much in love with your portfolio to sell it, when it is losing money. So you BUY AND HOLD.
If I had bought positions for my portfolio in January, I would have felt the risk to adverse. Unlike people in a front-loaded (fees) mutual fund, I can sell anytime the market is open. But I just couldn't stomach the risk. So I chose to "stay out of the market". For me, not knowing when the axe would fall, staying out of the market was a good thing.
THE DR INVEST PORTFOLIO
I am following the "Ivy Portfolio Method". Below, I have purchased BND and TIP, putting $555 in each ETF. I will invest this much again in June, and this much again in July, provided the price does not fall below a 10 month SMA (simple moving average). May was chosen to invest in BOND FUNDS because bond funds have a seasonal rise in value from May to November, while STOCKS typically fall during that same period in time. Using a $10,000 porfolio, I divided it by 3. 1/3 went to CASH, another 1/3 is held for STOCKS (when the investment time is most optional), and 1/3 is held for BONDS. So I had $3,333 held for BONDS and I was going to make my BOND purchases over a three month period, investing $1,111 at the begining of each month. Buy the ETFs called, BND and TIP with each purchase meant investing $555.50 in BND and $555.50 in TIP. So there you have it. Below is the outcome of the initial investment and if the BOND market moves as SEASONALLY PREDICTED, we should see and increase each month in our BOND porfolio.
I would not predict that Bond Funds would move upward very quickly, but they should give a consistent return. Like STOCKS, you need to determine when you cut your losses buy putting a STOP-SELL on each ETF. I would suggest between 3% to 5% would be reasonable.
You don't have to use a $10,000 portfolio, this is just a good example of the method of investing. If you add a ZERO to the end of all the above figures, you will have the example of a $100,000 portfolio.
(note: the above information is for entertainment purposes only and not for investment advice.)
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