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muck

Muck's Model

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At risk of hijacking my own thread ...

 

...one way to reduce is to slow the % of contributions that go to that fund...

 

Or, like BC said, just rebalance things every so often. As an aside, I used to be a pension consultant (advising pension funds on how to allocate their capital), and one of the rules of thumb we came up with is that if a particular asset got more than 15-20% above the target % of the whole pie, it would be reduced and reallocated ... or ... if it was more than 10-15% below target, we would sell something else to allocate towards it ...

 

So, if the target allocations were something like this:

30% large cap US equities

20% large cap non-US equities

10% global small cap equities

20% intermediate term US government bonds

10% non-US investment grade bonds

5% commodities

5% private equity

 

...that, if, say, "large cap non-US equiities" ever got to be more than 23-24% of the whole pie, then it would be reduced back down to 20% and the amounts harvested would be reallocated to the asset classes that had been underperforming...or...if, say, "global small cap equities" dropped to 7% of the whole, then anything above the targeted percentage would be harvested in order to re-allocate to the "global small cap equities" to get it back to 10% of the whole pie...

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How will you confirm a top?

My first confirmation which will have a lower probability will be a bearish engulfing candlestick on the weekly chart. The next higher probability confirmation will be the same pattern on a monthly.

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My first confirmation which will have a lower probability will be a bearish engulfing candlestick on the weekly chart. The next higher probability confirmation will be the same pattern on a monthly.

 

99% of the people on this MB will have no idea what you're talking about ...

 

...at risk of getting it wrong, I'll try...

 

Candlesticks are a way of representing changing prices on a graph. In this case, a "bearish engulfing candlestick" would be to look at this weeks prices compared to last weeks prices (or monthly) and if last week (month) was a positive week (month) and this weeks' (months') opening price was equal to or higher than last weeks' (months') closing price ... and ... this weeks' (months') closing price was equal to or lower than last weeks' (months') opening price, then you would say that this weeks' (months') candle "engulfed" last weeks' (months') candle. This is considered to be a bearish indicator for market technicians (i.e., those who look at graphs, rather than fundamentals, to get a sense for where things are heading).

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99% of the people on this MB will have no idea what you're talking about ...

 

...at risk of getting it wrong, I'll try...

 

Candlesticks are a way of representing changing prices on a graph. In this case, a "bearish engulfing candlestick" would be to look at this weeks prices compared to last weeks prices (or monthly) and if last week (month) was a positive week (month) and this weeks' (months') opening price was equal to or higher than last weeks' (months') closing price ... and ... this weeks' (months') closing price was equal to or lower than last weeks' (months') opening price, then you would say that this weeks' (months') candle "engulfed" last weeks' (months') candle. This is considered to be a bearish indicator for market technicians (i.e., those who look at graphs, rather than fundamentals, to get a sense for where things are heading).

That's a good description although I'd argue that the highs/lows can't just be equal but must lie outside the previous week as to where it engulf's the prior week's price activity.

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I don't fiddle with it hardly at all but this particular amount is fairly large as a proportion of the overall cake and it needs reducing.

 

 

Muck covered it.... regulal rebalancing, either on a set time period or by using what are often referred to as bands as muck described (i.e you have the target allocation as muck noted and set the min/max percentage that is acceptable) to determine when an asset group needs to be rebalanced.

 

Good practice to get into

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FWIW, here's a good image of a 10 year monthly chart (each candlestick or bar represents a full month). You can see that most of the major tops end with this pattern: http://bigcharts.marketwatch.com/charts/bi...&mocktick=1

 

Here's a 5 year weekly chart: http://bigcharts.marketwatch.com/charts/bi...&mocktick=1

 

You'll have to click on them to enlarge.

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Brent ... your links aren't very easy to read ... the 'red' candles aren't showing up ... just the green ones ...

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My first confirmation which will have a lower probability will be a bearish engulfing candlestick on the weekly chart. The next higher probability confirmation will be the same pattern on a monthly.

 

I am way disappointed. I thought you would say "Mars is bright this evening" or "when a 32 meteor shower is visible to the north, then sell short".

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For those just sorta checking in for the first time ... a refresher ...

 

This model looks at fundamentals and market psychology in a proprietary method to determine whether the market is weak ("-1"), normal/buy ("+1") or strong buy ("+2").

 

While there are no promises that a +2 will make money or that you should definately be short if a reading of -1 is seen, over the last couple of decades, weeks with a +2 outperform weeks that are +1 and weeks that are -1 tend to go down.

 

Caveat emptor.

 

PS -- No decisions from my prospective client, so it's still free for now here. :wacko:

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Muck, what's the model saying for next week? I know sometimes you release on Thursday. Looking like I could get that bearish engulfing this week, will wait to see what happens rest of today and tomorrow. I shorted the ES late last week at 1332.50 and looking to hold it.

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Muck, what's the model saying for next week? I know sometimes you release on Thursday. Looking like I could get that bearish engulfing this week, will wait to see what happens rest of today and tomorrow. I shorted the ES late last week at 1332.50 and looking to hold it.

 

I don't believe I've ever released on Thursday ... maybe Friday morning, but I don't think ever on a Thursday.

 

A few things still won't be known until tomorrow, but it looks like it'll probably be unchanged from last week ... +2 ...

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Due to popular request, and having the data available tonight, I thought I'd let whomever is interested know that next week will be another "+2" week.

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"+2" again

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barring something unusual tomorrow, we should be at a +2 again

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barring something unusual tomorrow, we should be at a +2 again

I'm wondering what your model determines as 'unusual'. The volatility of the last 2 weeks alone should be a warning to all investors that the market is, at the very least, indecisive right now.

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I'm wondering what your model determines as 'unusual'. The volatility of the last 2 weeks alone should be a warning to all investors that the market is, at the very least, indecisive right now.

 

Buy low, sell high. :wacko:

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Sorry for the delay ... +2 again ...

 

It's possible that we'll slip down to a "+1" next week, but in any event it'll probably be "+" something.

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Tentatively, it looks like we'll be a "+1" by tomorrow's close.

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Another "+1" week.

 

...anyone still looking at this, or am I wasting my time?

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Another "+1" week.

 

...anyone still looking at this, or am I wasting my time?

I for one am following it carefully. Thanks for making it available to us.

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