S&P 500 9-Month Moving Average

This month we’ll look at an investment strategy that’s based on the S&P 500 9-month moving average.  Specifically, if the S&P 500 is above its 9-month moving average invest 100% of capital in an S&P 500 index fund.  Otherwise, hold 100% of capital in cash.

As you’ll see from the above link, the strategy does have some merit, but I would say the results are mixed.

If there are investment topics you’re interested in that I haven’t covered yet please send me an email:

joseph AT StockMarketMovement.com

 

Timing the Market

People like to try to time the market.  But how can they tell when a good time to get in or out is?  In this month’s analysis I look at historically how the market has performed over the next twelve months given its performance over the previous twelve months.  The results seem counterintuitive, but maybe that’s why timing the market doesn’t usually work out very well.

If there are investment topics you’re interested in that I haven’t covered yet please send me an email:

joseph AT StockMarketMovement.com

 

Ride Out or Sit Out a Bear Market

We aren’t quite in a bear market right now, but we’re definitely in correction territory.  The Dow and NASDAQ are down about 10% from their all-time highs earlier this year.

With that as a back drop, the current analysis covers, historically, if it was better to sell and sit out the market whenever there was a drop of 20% from the peak in the previous 200 trading days, or if it was better to just hold and wait it out.

If there are investment topics you’re interested in that I haven’t covered yet please send me an email:

joseph AT StockMarketMovement.com

Dollar Cost Averaging

Suppose you have a large sum of cash that you want to invest.  Should it all be invested at once, or incrementally over a period of time? The fear many people have is that they’ll buy into the market at the peak, and their investment will immediately fall in value afterwards.

In this post we’re going to look at a case study of the difference in outcomes between putting all of the capital into stocks at once, vs. putting 12.5% in each quarter over two years.  Which is better isn’t really clear cut, as there are times each strategy does better than the other.

If there are investment topics you’re interested in that I haven’t covered yet please send me an email:

joseph AT StockMarketMovement.com

 

Lifetime Income: S&P500 Plus Strangle Options

I’ve looked at several strategies that can be used to extract income from an investment in the S&P 500.  One strategy involved purchasing a small amount of call options on the S&P 500 in addition to investing in the index, and another strategy involved purchasing a small amount of put options on the S&P 500 in addition to investing in the index.

The strategy described this month is a combination of the above two, and this combination is called a strangle.  The basic idea is that the put option provides some amount of protection from the market falling, while the call option pays for the put option in the years the market rises.

If there are investment topics you’re interested in that I haven’t covered yet please send me an email:

joseph AT StockMarketMovement.com

Lifetime Income: S&P500 Plus Protective Put Options

This month’s analysis is another twist on the constant payout strategy I covered earlier.  That strategy consisted of putting all capital in S&P500 ETF’s, and drawing out a constant amount each year.  This provides a fixed annual payout for as long as the capital lasts.

In this month’s strategy, all capital is again invested in S&P500 ETF’s, and a constant amount is withdrawn each year.  However, an additional amount is withdrawn and invested in 12-month put options on the S&P500 ETF.  If the market has a significant drop during the year the put options offset a portion of the decline, so that any subsequent market rise will boost capital from a higher base.  If the options are not in the money at the end of the year, the principle balance is lower than it would have been had the options not been purchased.

If there are investment topics you’re interested in that I haven’t covered yet please send me an email:

 

joseph AT StockMarketMovement.com