A helpful indicator for those who follow a systematic long-term investment approach.
What it shows: It shows the 60 Day Cumulative Return of BND Vanguard Total Bond Market ETF against the 60 Day Cumulative Return of BIL SPDR Bloomberg Barclays 1-3 Month T-Bill ETF.
Why: This Indicator will provide you a sense of where the economic environment is at, if the indicator shows that the 60 Day Cumulative return of BND is ABOVE BIL, it means that it's a good idea to go Risk ON in the stock market; On the other hand, if the inverse is true, it means that is a good idea to go Risk OFF in the stock market.
Example Uses: Warren Buffet often advice Investors to just buy a S&P500 index tracking ETF like SPY consistently and you will likely to be making money in the long-term.
With this indicator you will be able to make the Buffet Strategy even simpler: when the indicator shows Risk ON, buy the SPY; when the indicator shows Risk OFF, consider hedges like IEF iShares 7-10 Year Treasury Bond ETF.AMEX:SPY
Appreciate your time in making this indicator! I have reviewed the code and it looks fine, though I have noticed some strange behaviour. It appears that there have been a number of events recently that the indicator was Risk On when it should've been Risk Off. Would appreciate if you could help me understand if I am missing something, or perhaps there is a bug.
For example, on 3/4/2022 (March 4) the indicator says it is Risk On. However on that day, BND closed at 81.86, and 60 trading days previously, on 12/7/2021, it closed at 85.26. This is a loss of -3.99%, where as in the same time period BIL was down -0.01%. The indicator should be showing Risk Off.
Currently (5/13/2022) the indicator is about to go back into Risk On territory, though by my calculation BND is down -6.49%. Perhaps I am not understanding it correctly, though I would appreciate if you could help me understand it, or see if there is something that isn't making sense in the code. Thank you very much for your time!
For example, on 3/4/2022 (March 4) the indicator says it is Risk On. However on that day, BND closed at 81.86, and 60 trading days previously, on 12/7/2021, it closed at 85.26. This is a loss of -3.99%, where as in the same time period BIL was down -0.01%. The indicator should be showing Risk Off.
Currently (5/13/2022) the indicator is about to go back into Risk On territory, though by my calculation BND is down -6.49%. Perhaps I am not understanding it correctly, though I would appreciate if you could help me understand it, or see if there is something that isn't making sense in the code. Thank you very much for your time!