Thursday, October 4, 2012

10/4/2012 Quarterly report

Performance comparison for the 7/1/2012 to 9/28/2012 quarter is:

1)      6.35% SPY

2)      10.30% Full Mousetrap portfolio

3)      8.99% Small portfolio

Year to date is:

1)      16.43% SPY

2)      16.21% Full Mousetrap portfolio

3)      17.83% Small portfolio

Performance from 5/31/2011 (when the models were launched) is:

1)      11.26% SPY

2)      24.81% Full Mousetrap portfolio

3)      20.03% Small portfolio

SPY is the simple spyder ETF that tracks the S&P 500, including dividends.

The Full Mousetrap portfolio (for an investor with more than 20,000 to invest) rotates through ten stocks based on technical industry selection and fundamental stock selection.

The Small portfolio (for an investor with 20,000 or less to invest) rotates through two ETFs.  One ETF is a secular hold, which rotates once every 5-10 years on average between IAU (gold) or BND (bonds), based on whether we are in a secular bull market (favoring bonds) or a secular bear market (favoring gold).  The second ETF rotates several times a year between sectors.  It is currently holding XLF (financials).

We can see a little parabolic bump on the Small portfolio as we went into Bernanke’s third round of quantitative easing.  Whether this will continue into a bubble is unknowable, but it will bear watching.

That said, we appear to be entering a global recession in spite of the best efforts of central banks to delay it.  Value stocks (which are the selections of the full Mousetrap) tend to have a difficult time going into a recession, but ultimately outperform as we near the bottom and the market begins to rebound. 

A successful market timer would outperform – but that assumes he is successful.  Most traditional methods of timing stopped working after automated computer trading began to anticipate such moves in the general market.  And in these days of quantitative easing, “bear markets” may just go sideways instead of down, making timing even more problematic.

For these reasons, my own model does not use timing.  It is designed to go down less, and up more, and over time should continue to grind out an advantage over SPY.







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