Another model that can be use by investors is the Market Timing Model. I like this model for the following reason
- Requires very little homework
- Avoid bear markets
- Did I mentioned it was simple ?
- Open a monthly Chart of SPY or other ETFs
- place a 10 month
- BUY if PRICE > AT THE END OF THE MONTH
- SELL if PRICE < AT THE END OF THE MONTH
That's it !! But here's the catch , you need to find a good selection of ETFs for this strategy to be successful. Start with the following : SPY , IEF , GLD .
This is perfect for long term investors, who don't have time to look at their portfolio every day, or week. I strongly recommend that you read the "IVY PORTFOLIO" by Mebane Faber for more detail. Hope this help.
- Draw-down can be an issue ( for the spy since 2002 MAX DD has been ~ 6 %, low)
- Need to wait till the end of the month to either go in or out of the trade. This could be problematic for some traders. Could use the "SP 100 above 200" mode with this model to find better entries and exits.
This required a lot of patience and discipline. As you can see , trades can last from 1 months to well over 3 years. It's important that you sit on your hands and follow the system. That is the only way you will be profitable with this.