LOL!'s Market Timing Newsletter

[LOL!]

So I am back from travels.

While I did sell IJS before I left, IJS closed last Friday at higher price than I sold it for, but I did buy some (not all) back at a lower price when I was away and that bit has gone up almost 2%.

I have no trades planned in the near future as long as there are no big moves either way in the markets. Asset allocation is right where I want it to be.
286

 

[NW-Bound]

Good thing my bet on the S&P dropping was closed out last Friday with that option hedge expiring. Else, I would have lost that fancy steak dinner today when the S&P moved up 1.08% with the French election result.

My stocks are up 1.45% today. Will see what tomorrow brings, but we are going out to eat later tonight. No, it's not to celebrate today's market rise; my wife said yesterday she wanted to eat out today. I may drink another glass of wine to celebrate today's market result.

 

[LOL!]

My portfolio is just cooking along now. Today it gained on its benchmarks and reached an all-time high.

For those following along at home, they should have been well-rewarded by reading this thread.

 

[NW-Bound]

My stocks went up significantly more than the S&P the last two days. Today, they trail the index as can be expected.

All of the covered calls that I wrote as hedges now end up being in the money, and unless something drastic happens, they will get exercised and I will lose these stocks and have more cash when the options expire the end of May. This is OK, as it reduces my AA in these hot sectors.

I look for something to buy, and one of the sectors not doing great is energy. So, I add a bit to my oil service ETF holding, and also to an agricultural stock.

 

[LOL!]

The market is not cooperating with my endeavor to not place trades. Lots of things have popped in the past week.

My last tranche of IJS is up more than 5% in one week, so I am now overweight in US small-cap value, but I just don't want to sell here because one of the worst performing equity asset classes for 2017 is US small-cap value. I think that may be partly because of its big gains in 2016. I also don't want to sell any IJS because that would require me to pay a short-term holding fee which I already did this month. Yes, if I had simply held onto to all that IJS, my portfolio would be up even more, but I'd like to think I made a rational set of trades to gain about 2% on money that was initially in a bond fund.

Nevertheless, the portfolio has hit an upper rebalancing trigger, so I chose to sell VEA (large-cap foreign developed) which is up about 10% year-to-date and down a little bit so far today. Once again this is in a tax-advantaged account, so no commission and no tax liability. With the proceeds, I bought more shares of the short-term corporate bond index fund VCSH.
960

 

[LOL!]

Since I had only rebalanced back down to just below a trigger point, the portfolio hit that trigger point again last week and I sold off some shares bought in April that had small gains. Then monthly bond ETF dividends showed up and they were reinvested back into bond funds.

The asset allocation is hovering right around the upper rebalancing trigger point, so there may be more small trades in the next month if markets continue to go up. Otherwise, it looks like a relatively calm period for the next 7 weeks or so until June dividends get paid with the FOMC meeting thrown in for spice.
129

 

[LOL!]

Things got exciting a few minutes ago, so I sold some AGG (US bond index) and bought some IWN (Russell 2000 value).

I intend to sell some small-cap value in the next few days if IWN goes up and buy back bonds if bond ETFs go down.
163

 

[LOL!]

And it's just a couple days later that IWN is up about 1% while AGG is down about 0.2% from the last trades noted in the previous post.

I want to be cautious and since it is a Friday, I intend to sell some IJS in about the same dollar amount of IWN that I bought. This will be a no-commission trade. I will buy BND with the proceeds which is also a no-commission trade.

The immediate question right now is: Do I do it now or wait until later in the day? I'm going to wait to see what else happens today since the market has only been open an hour.

Or I can chicken out and sell half soon and half later.

460

 

[LOL!]

Just sold IJS near high (so far) of the day.
Bought VCSH (instead of BND) with the proceeds.
509

 

[LOL!]

And IJS closed almost 0.6% lower than today's high. Intraday trading Rulz!

 

[LOL!]

As I've noted and folks should have noticed, my portfolio is a small-cap and value-tilted portfolio with something like 50% of the equities classified as small- and mid-cap leaving just about 50% classified as large-caps.

Small-cap value funds did great in 2016 with returns for buy-and-hold investors of between about 25% and 32%. But in 2017, these SCV funds are doing very poorly. Here are the YTD returns from morningstar.com of some ticker symbols:

-0.18% VSIAX
-0.25% VBR
-2.67% IJS
-2.88% IWN
and compared to Vanguard Total Stock Market Index fund:
+6.68% VTSAX

So my portfolio has about 15% in the above SCV ETFs which has really hurt returns so far in 2017. Readers can see that I've made a bunch of trades in IJS, IWN, and VBR in 2017. I should've sold them all and bought DGS. But followers will see that I sold DGS. Ugh!

Another way to think of this is that 15% of the portfolio didn't get a potential 7% return which means the portfolio got a return reduced by 0.15 x 7% = 1.05% just because of the overweight to SCV.

But you know I would not be posting this unless my trading in these ETFs had outperformed all the negative numbers above. Doing 3% better than a -2.88% return when large-caps are up 7% is small consolation, but I'll take it along with the good returns of international funds so far in 2017.
756

 

[LOL!]

With more big gains in the past week, it is time to rebalance by selling something as the portfolio has hit a high trigger point. I intend to sell the last of my IJS (small-cap value) because I'm actually overweight in US small-cap value despite its horrid return so far for 2017. The last couple of days has made it shine.

I intend to buy VCSH with the proceeds.

I'll post an update when I get back from lunch.
460

Update: I submitted a limit order and prices have steadily deteriorated, so they are no where near the limit price I set. I doubt the order will get executed now and I don't want to sell at current prices, so unless something pops now, I'll hold through the weekend at least.

 

[LOL!]

Last Friday, I tried to unload the remaining IJS and was not able to sell at the price I wanted. The price waned after my last posting through this week until yesterday and this morning when it went back up to where it was last Friday.

So this morning, I carried out my plan and sold all remaining shares of IJS and bought VCSH. My asset allocation plan is now back within the range that I want it be.

Next up: The FOMC meeting is next week where FFR is expected to be raised. Also some quarterly dividends will be paid by many of my ETFs, so I will have to manually reinvest those.
612

Update: Ack! Sold too soon!

 

[LOL!]

Later today the FOMC will announce its foregone decision on FFR. I did not expect bond index funds to jump this morning by about 0.4%. Since bond funds do not usually go up in one day by 0.4% or more, I am thinking of selling some shares before the announcement if they are still up in a few hours with the intent to buy them back later in the week.

Because I have itchy fingers, I am going bike riding to be away from the internet. I'll post an update when I get back after I take a shower.
247

 

[audreyh1]

Later today the FOMC will announce its foregone decision on FFR. I did not expect bond index funds to jump this morning by about 0.4%. Since bond funds do not usually go up in one by 0.4% or more, I am thinking of selling some shares before the announcement if they are still up in a few hours with the intent to buy them back later in the week.

Because I have itchy fingers, I am going bike riding to be away from the internet. I'll post an update when I get back after I take a shower.
247

Monthly CPI came in at -0.1, a big surprise.

 

[redduck]

Trades completed. I made the trades in 2 separate tax-advantaged accounts. In an IRA I sold VCSH and bought VSS with the money. So I was doubled-up in VSS+VEA while I took a shower...

... I am thinking of selling some shares before the announcement if they are still up in a few hours with the intent to buy them back later in the week.

... I'll post an update when I get back after I take a shower.

I guess you really aren't a dirty market timer.

 

[LOL!]

Alright, I'm clean and refreshed. I see now that AGG and BND are trading up more than 0.5%, so I've sold all my BND and [-]will look to sell[/-] have sold all my AGG in another account. [Note: I still own lots of AGG / VBTLX / etc in other accounts.]

I intend to buy back AGG in the account I sold BND in (to avoid the TDAmeritrade 30-day restriction) and to buy back BND in the account I sold AGG in --- but either after they are 0.25% lower or within a week or so. Or maybe I will buy BIV instead.

Actually, in case there is some bouncing around this afternoon to a lower price, I'm submitting limit orders now to buy back at those lower prices. And in case AGG goes up more this afternoon, I am submitting a limit order to sell even more AGG at a higher price. AGG is selling now a few cents below where I just sold it.
380

 

[LOL!]

So far, so good. It looks like I caught the high prices of the day for AGG and BND. They are down about 0.20% since then. Only a little bit more to go ....

Update: Bought BND and BIV after they had dropped 0.25% from where I sold things earlier today and they have gone up a few cents since. Double win!

 

[LOL!]

It was a good week for market timing. Because of the intraday trading I don't think backtesting could've spotted the bond ETF trades in advance just from looking at closing prices. Also, one couldn't do it with mutual funds.

Here's the chart:

691

 

[LOL!]

A few minutes ago I sold all the IWN that I had bought back on 5/17. I cannot give a good reason to do so. It was up since yesterday, but it has gone up even more since I sold it. Other small-cap value ETFs (IJS, VBR) were down when I sold it and so was the general market. I guess I was thinking that I would buy more total US stock market with the money in order to keep my asset allocation to stocks and US stocks about the same.

So with the money, I will buy more VTI if it drops more from here (it is down little bit so far today) and report back when that happens.
621

 

[LOL!]

So I did buy some VTI (total US stock market), but I bought some more shares of the bond ETF BIV since it had dropped by almost 0.4%. I picked a number of shares that allowed me to round-up the total number of shares to the nearest thousand.

Does anybody else buy shares just to get to a nice round number?

 

[Sunset]

Yep, but I wait and include the amount in a bigger purchase , today I did a 130 share buy instead of 100, just to round up to 500 even.

 

[NW-Bound]

It's a habit of mine, but I always deal in round lots. Makes no sense, but habits die hard.

It does allow me to write contracts on all the shares when I want to though.

 

[LOL!]

Yes, it is nice own a nice round number of shares, but ...

I have found that buying odd lots often gets a decent price because the broker has to be fair, but does not need to "publish" the order. This is particularly useful for buying something like DGS which does not trade a lot of shares and thus has a wider spread. A limit order for a round lot for DGS at halfway between the bid and ask prices will just sit and sit while a market order for an odd lot will execute right away around the halfway point or better --- at least at my brokers.

And today unfolds nicely. IWN will close lower than I sold it for, BIV will close above where I bought some shares. Even VTI is not too far below where I bought some shares. And in an odd twist, I sold on odd lot of VTI in another account just to reduce the number of holdings in that account earlier near its high of the day or about 0.8% higher than it will close at.

All this looks like it will help me gain on my benchmarks.
743

 

[LOL!]

IWN is up 1% this morning and BIV has lost money. I would have been better off not making any of those trades yesterday.

Or I should have bought back IWN at the end of the day instead of buying VTI and BIV.