Today's Market
by Dr Invest
Today we had more WILD SWINGS with the DOW taking a 1% plunge. The Ivy Portfolio with TIP and BND swung into the positive today at .10%. It is not the 2% that I had hoped for by the beginning of July, but anything moving toward the postive better than a negative position.
As discussed in the Weekend Report, you need to be on alert regarding bonds. The FED's continued strong-arm of purchasing bonds and competing with investors, lowers the yeild. This action on the part of the FED will eventually make BONDS as worthless at interest at a bank and force investors to move their money out of the safehaven of bond investments.
For theory's sake, if you invest $100 into TIP (an exchage traded fund) and it grows 1% over a month and then invest another $100 into TIP at the beginning of the next month, your total return for the entire $200 over that month and a day would be .50% or 1/2%.
Keeping this theory going, at the end of second month, if your $200 gained 1% and you invested another $100 into TIP, your total gain for the combined value of the portfolio now at $300 would be .666%.
What is happening, is when you make another investment into TIP it dilutes the original gain but only based upon the percentage you add. Although we added three separate but equal amounts of $100 into our portfolio, the second $100 was 50% of the total portfolio and the third $100 was 33.3% of the the total portfolio. When you add to your portfolio, it dilutes your overall percentage gain but gives you an greater potential if TIP continues to climb. For example 1% of $200 is more than 1% of $100 and 1% of $300 is more than 1% of $200.
The danger of slowly entering a position in a volatile market is that the opportunity could end before buying a full position.
Our Goldman Sachs stock is a good example. Using the Ivy Portfolio, we don't see a buy signal until Feburary 24th and we will not buy until the first of the month on March 1st. For theory's sake, we invest $100 into GS on March 1st, and another $100 on April 1st, and by May 1st, we are getting SELL signals. Because the market is volatile, there was no way to really enter the position before it was time to sell the position.
This is the dilemma, to take a long-term position that will be safe and is not a STUPID SPECULATION. Listen, the market is going to drop 20% and possibly 30%, regaining its footing as we move toward the presidiental election. There is a lot of money to be gained and a lot of money to be lost, but we just don't want to be in that game at this time.
Honestly, holding your money in a brokerage without gain is better than losing 20% or 30% of your portfolio. Even if your timing is not perfect, when the market had declined 30%, there is a greater likelihood that the market will not decline much more. And if you wait until the market begins an upward trend, though you had not "timed the market" perfectly, your can still capture a 20% gain.
Remain patient. Stay alert. Keep a STOP-SELL on your TIP and BND investment set at 3% below the closing price of TIP and BND. By the time October arrives, your gains should be more toward the positive.
(Note: The above article is for entertainment purposes only and not to be used for investment advice.)
Today we had more WILD SWINGS with the DOW taking a 1% plunge. The Ivy Portfolio with TIP and BND swung into the positive today at .10%. It is not the 2% that I had hoped for by the beginning of July, but anything moving toward the postive better than a negative position.
As discussed in the Weekend Report, you need to be on alert regarding bonds. The FED's continued strong-arm of purchasing bonds and competing with investors, lowers the yeild. This action on the part of the FED will eventually make BONDS as worthless at interest at a bank and force investors to move their money out of the safehaven of bond investments.
For theory's sake, if you invest $100 into TIP (an exchage traded fund) and it grows 1% over a month and then invest another $100 into TIP at the beginning of the next month, your total return for the entire $200 over that month and a day would be .50% or 1/2%.
Keeping this theory going, at the end of second month, if your $200 gained 1% and you invested another $100 into TIP, your total gain for the combined value of the portfolio now at $300 would be .666%.
What is happening, is when you make another investment into TIP it dilutes the original gain but only based upon the percentage you add. Although we added three separate but equal amounts of $100 into our portfolio, the second $100 was 50% of the total portfolio and the third $100 was 33.3% of the the total portfolio. When you add to your portfolio, it dilutes your overall percentage gain but gives you an greater potential if TIP continues to climb. For example 1% of $200 is more than 1% of $100 and 1% of $300 is more than 1% of $200.
The danger of slowly entering a position in a volatile market is that the opportunity could end before buying a full position.
Our Goldman Sachs stock is a good example. Using the Ivy Portfolio, we don't see a buy signal until Feburary 24th and we will not buy until the first of the month on March 1st. For theory's sake, we invest $100 into GS on March 1st, and another $100 on April 1st, and by May 1st, we are getting SELL signals. Because the market is volatile, there was no way to really enter the position before it was time to sell the position.
This is the dilemma, to take a long-term position that will be safe and is not a STUPID SPECULATION. Listen, the market is going to drop 20% and possibly 30%, regaining its footing as we move toward the presidiental election. There is a lot of money to be gained and a lot of money to be lost, but we just don't want to be in that game at this time.
Honestly, holding your money in a brokerage without gain is better than losing 20% or 30% of your portfolio. Even if your timing is not perfect, when the market had declined 30%, there is a greater likelihood that the market will not decline much more. And if you wait until the market begins an upward trend, though you had not "timed the market" perfectly, your can still capture a 20% gain.
Remain patient. Stay alert. Keep a STOP-SELL on your TIP and BND investment set at 3% below the closing price of TIP and BND. By the time October arrives, your gains should be more toward the positive.
(Note: The above article is for entertainment purposes only and not to be used for investment advice.)
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