Seasonality System by Norm Fosback

[DouglasRThompson]

Has anyone ever tried the Seasonality System by Norm Fosback? The basic principle is you move your money from your money market account to no-load mutual funds on the last trading day of the month, and back into your money market account on the second trading day of the next month. Your money is only in stocks for a few days each month, but it usually goes up during these days. It's more complicated than that, but that is the general idea.

I did some research via Google, and couldn't find much bad about it. I'm thinking of trying it, but would like some comments from people that have done it, or are still doing it.

Thanks,
Douglas

 

[riskadverse]

This system would be easy enough to test using historical data. I suggest you at least do that before using real money. One problem is mutual funds now usually have additional fees they impose on you if you short term trade them (less than 30/60/90 days). You could avoid that with ETF's.

 

[Ed_The_Gypsy]

As I recall, Vanguard will kick you out if you try that. Cut you a check and say, good-bye.

 

[LOL!]

One could do this with ETFs, free trades and in tax-sheltered accounts. It does sound idiotic to me though.

My take is that the stock market runs along with minor ups and downs for most of the time, but every now and then a few bad days or a few good days happen ... maybe less than 10 days of those a year. If you miss those days you do incredibly well or incredibly badly --- depending on whether you miss bad days or good days.

If I look at a few good days this year, they did not occur on the days you said Fosback likes.

drop: 3/30
gain: 4/1

drop: 4/20
gain: 4/21

drop: 6/22
gain: 6/25

 

[LOL!]

I posted a little bit more about good/bad days timing in a buy-on-big-one-day-dips strategy: http://www.early-retirement.org/forums/f28/market-timing-buying-on-the-dips-46121.html