The Full Model sold ALB and bought BHE with a better than 1% favorable gap.
Tuesday, March 31, 2015
Wednesday, March 25, 2015
Sunday, March 22, 2015
3/22/2015 The Boring Trade
|
Sector Model
|
XLU
|
-2.39%
|
|
|
Full Model
|
Date
|
Return
|
Days
|
|
UVV
|
12/2/2014
|
17.14%
|
110
|
|
JOY
|
12/8/2014
|
-21.00%
|
104
|
|
RS
|
12/11/2014
|
-2.11%
|
101
|
|
GNW
|
1/20/2015
|
1.10%
|
61
|
|
AGCO
|
1/23/2015
|
7.48%
|
58
|
|
ALB
|
2/10/2015
|
0.75%
|
40
|
|
ISBC
|
2/17/2015
|
0.85%
|
33
|
|
MPEL
|
2/25/2015
|
-8.29%
|
25
|
|
SSYS
|
3/3/2015
|
-6.38%
|
19
|
|
PWR
|
3/9/2015
|
-1.02%
|
13
|
|
(Since 5/31/2011)
|
|||
|
S&P
|
Annualized
|
12.52%
|
|
|
Sector Model
|
Annualized
|
23.01%
|
|
|
Full Model
|
Annualized
|
19.45%
|
|
|
S&P
|
Total
|
56.71%
|
|
|
Sector Model
|
Total
|
120.06%
|
|
|
Full Model
|
Total
|
96.75%
|
|
|
Sector Model
|
Advantage
|
10.49%
|
|
|
Full Model
|
Advantage
|
6.93%
|
|
|
Previous
|
2015
|
||
|
S&P
|
53.06%
|
2.39%
|
|
|
Sector Model
|
122.60%
|
-1.14%
|
|
|
Full Model
|
101.13%
|
-2.18%
|
It’s been a while, so I’m including the full returns.
The Sector Model recovered at the baseline, but further
weakness in the broad market could cause it to fall below it for an extended
time. The baseline is not a base, but an
average, around which the model should fluctuate over time:
That said, XLU is not a positive choice for the broad market
and doesn’t do so well for itself either.
For the Full Model, the choice of industries is a bit more
positive:
|
TOBACCO
|
Bear
|
|
UTILCENT
|
Bear
|
|
CHEMDIV
|
Bull
|
|
ELECTRNX
|
Bull
|
|
ENGCON
|
Bull
|
|
HEAVYTRK
|
Bull
|
|
PUBLISH
|
Bull
|
|
RAILROAD
|
Bull
|
|
RECREATE
|
Bull
|
|
COAL
|
Top
|
|
GASDIVRS
|
Top
|
The majority is still bull, per a Sam Stovall type of
analysis.
Mr. Market is smoking a cigarette while he is trying to stay
warm in an early spring that’s still snowing in the North East. He’s trying to stay up with the latest news
while driving a truck and listening to the radio.
We’ve entered one of those times where everyone is so
uncertain of the future market direction that they are funneling money into the
most boring set of industries they can.
Will the Fed raise rates or won’t they? Are they raising
rates because the economy is good, or is the economy bad because they are
raising rates? Is energy cheap? Will it get even cheaper?
Notice that “market up” or “market down” always hangs in the
balance.
The big money is going for the boring trade.
Boring is less exciting, but more profitable in the long
run.
Tim
Monday, March 9, 2015
3/9/2015 Trade Notice
The Full Model sold ESI and bought PWR with a 3.61% favorable gap (rounded down to 3% in the records).
Sunday, March 8, 2015
3/8/2015 When "normal" is a pain in the butt
Sector Model
|
XLU
|
-6.81%
|
|
Full Model
|
Date
|
Return
|
Days
|
ESI
|
8/4/2014
|
-47.80%
|
216
|
UVV
|
12/2/2014
|
22.44%
|
96
|
JOY
|
12/8/2014
|
-23.66%
|
90
|
RS
|
12/11/2014
|
-5.69%
|
87
|
GNW
|
1/20/2015
|
5.07%
|
47
|
AGCO
|
1/23/2015
|
10.21%
|
44
|
ALB
|
2/10/2015
|
5.16%
|
26
|
ISBC
|
2/17/2015
|
-2.91%
|
19
|
MPEL
|
2/25/2015
|
-8.01%
|
11
|
SSYS
|
3/3/2015
|
-0.89%
|
5
|
(Since 5/31/2011)
|
|||
S&P
|
Annualized
|
12.13%
|
|
Sector Model
|
Annualized
|
22.10%
|
|
Full Model
|
Annualized
|
20.00%
|
|
S&P
|
Total
|
53.97%
|
|
Sector Model
|
Total
|
112.28%
|
|
Full Model
|
Total
|
98.86%
|
|
Sector Model
|
Advantage
|
9.97%
|
|
Full Model
|
Advantage
|
7.87%
|
|
Previous
|
2015
|
||
S&P
|
53.06%
|
0.60%
|
|
Sector Model
|
122.60%
|
-4.64%
|
|
Full Model
|
101.13%
|
-1.13%
|
What do you do when you’re wrong?
Do you pretend you are right or do you look at what is wrong
so that you can fix it?
My wife is a doctor and has this problem when she is
sick. She refuses to admit that she is
sick and doesn’t slow down enough to get well.
In terms of stock investing that means recording your wins
and your losses, and analyzing the difference between them.
That kind of analysis also keeps you on track when something
seems wrong and may not be.
ESI was wrong, and I embedded that lesson into the
fundamental parameters of the full model.
What about XLU?
To answer that, here is a chart for the Sector Model since
Steve Cohen launched a fund that followed it:
I warned for most of last year that the 30% returns were an aberration;
and that at some point the model would revert back to its benchmark.
It has now done so.
In other words, the model is behaving as expected. Sometimes it will be above the benchmark and
sometimes below, but as long as it tracks that benchmark it will be behaving
normally.
No matter how annoying “normal” can sometimes be.
Tim
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