My latest No Load Fund/ETF Tracker has been posted at:
http://www.successful-investment.com/newsletter-archive.php
Up, up and away was the mantra as all major indexes gained for the third week in a row.
Our Trend Tracking Index (TTI) for domestic funds/ETFs remains below its trend line (red) by -5.14% thereby confirming the current bear market trend. 
The international index now remains -11.39% below its own trend line, keeping us on the sidelines. 
For more details, and the latest market commentary, as well as the updated No load Fund/ETF StatSheet, please see the above link.
Comments 7
Ulli – I have been following your blog for about a month and I appreciate all your instruction. I do have a question about stops. By having a stop that is checked at the end-of-the-day [to avoid being scalped], how would you avoid a very big one-day downturn in the market? Also, what is your feeling about using a parabolic SAR to set stops, either as a sell stop order or checked manually at EOD? Thank you – Tom
Tom,
Using only ETFs and mutual funds, I never have experienced an unreasonably sharp drop after my sell stop got triggered.
Sometimes after reaching the 7% level, I got stopped out at around 8% or so.
I can’t comment on our parabolic SAR as I have never used it.
Ulli…
I used the down market on Friday to open my own simple hedge position utilizing the steps outlined by Ulli in his ebook.
I am committing < 10% of portfolio value to this first attempt at the simple hedge strategy. That amount is what I’m comfortable with at this time. I looked for two mutual funds that met the following conditions: 1.) No transaction fees at my custodian,
2.) No load funds,
3.) Beta greater than 1 (I targeted the 1.2 range),
4.) Diversified,
5.) I did not concern myself too much with exactly where these funds stood on the statsheet rankings.
I choose first fund FLCGX and second a slightly more aggressive fund in ARGFX. It could be said that these funds are not exactly apples to apples with the S&P; because they are mid-cap orientation. However, I was looking for something that would give the hedge a nice pop should the current uptrend continue.
I merely simulated Ulli’s spreadsheet ledger for my hedge and I have posted this ledger for anyone to view. Click this link for the page. I will keep it updated at least weekly if not more often.
Good luck to all with your hedges,
G.H.
GH,
Thanks for sharing your thoughts; I think this will help many readers setting up a hedge. Your 5 points are close to how I select funds/ETFs.
Ulli…
I should add one more thing while describing my entering the hedge.
I purchased the ETF SH at 3:56pm yesterday. This was an attempt to start the hedge position with as close to closing prices as possible. I don’t remember if this was discussed in the SimpleHedge document but if not I know Ulli has addressed it in the blog someplace.
As you can see in my ledger, SH gave up 10 cents in the final four minutes before the close, and this deficit is reflected in the red shaded areas. It is, of course, a negligible effect. The essence of what the hedge is trying to accomplish is not tarnished.
G.H.
G.H.
Since your mutual funds are mid-cap, did you consider Short MidCap400 ProShares (MYY) instead of SH?
StarBright,
No, I did not consider any other short vehicle other than one that directly inversed the S&P; 500.
To my way of thinking, what I'm looking at is the fact that the short term trend is upward so if I'm going to enter into any kind of strategy at all it is going to be expecting a continuation of this trend, with the hedge as protection.
But I want long funds which move at or above the the movement of the short position. Otherwise all I could realistically expect from my hedge is 0% one way or the other. And since I'm following a short term trend up, I want the longs to outpace the short.
I hope I explained this clearly enough,
G.H.