Stock Timing Model Provides 33rd Buy Signal in Last 55 Years
The cornerstone of the investment philosophy of Pring Turner Capital Group rests on our core beliefs of building wealth consistently while reducing portfolio risk. Over several decades and through many varied market conditions our disciplined approach, crafted with many layers of risk management, has allowed clients to meet their goals of achieving steady returns with low volatility.
As of August 1st, one of our proprietary intermediate timing models, used to determine our tactical asset allocations, confirmed its first buy signal since 2007, and 33rd buy signal since 1954. The model uses a series of momentum indicators to indicate appropriate times to over-emphasize equities in portfolios. The historical performance of the S&P 500 when the model issues a buy signal indicates that stock prices should rise in the months ahead.
*Performance Figures through August 31, 2009
In order to judge performance properly investors should not only ask, “What is your return performance?”–That is only half of the question. “How much risk did you take to generate that return?” is a more important question. When the model is in effect not only are the return figures excellent (18.36% vs. 3.17% Annualized Return), but equally if not more significant is the fact that volatility of returns is lower (11.68% vs. 14.38% Annualized Standard Deviation). Essentially, the S&P 500 has experienced excess returns with less risk when the model issues a buy signal, an ideal time for portfolio managers to increase equity exposure. The model does not imply that the market can not go up without a buy signal, but instead it is an especially good indication of stock market growth in the future.
The green sections show the performance of the S&P 500 when the model issues a buy signal.
Interesting… I woudn’t touch the market even with a 10 foot pole.
Thanks for the read and input Jaime… As always the past does not guarantee future results but the model does have a good track record. I am interested in learning more about what tools/indicators you use to monitor your absolute return investment strategies, using ETFs, short selling and market timing. What specifically makes you cautious about the current market conditions? (I know there are many reasons to be cautious)
The main reason is P/E… we are seeing a S&P 500 trailing P/E ~ 120. Maybe the market is on a big momentum, but eventually it will have stick to fundamentals.
Funny you should mention P/E, as I was reading an interesting article about P/E valuations the other day. The article is a bit long but I think it has some great information regarding the historical P/E of the market. This might be of interest to you Jaime: http://www.crestmontresearch.com/pdfs/Stock%20PE%20Report.pdf
What theme are you using? Can’t wait to start my own blog.
Unbelievable, but your post opened in me new ideas