This chart plots the US dollar against several major currencies and as you can see, ahem, the dollar looks like it is going lower against all of them.Over the last few years there have been a few spikes like the one that started last week. More often than not these admittedly big moves draw a lot of folks to jump on the bandwagon and then the move retraces somewhat.
This is not so much a prediction but a reminder that this movie may not be much different than other movies.
I do think the dollar will drift lower over the next couple of years but 2% moves in just one day are tough to hold on to with out some correction.
7 comments:
tomk...OT, re prior post...questions, questions.
Since you are a bond person, I think, consensus at cnbc is that you guys are the smart ones..so pardon the many questions but others may be curious too about your process.
For ATR(average true range per time period), do you plot this as an overlay of price chart...how do you view it and how do you monitor it..can you set it up as an alert? I have heard that atr is, indeed, one of the best ways to create a stop. It is decisive and you can use your multiple to guestimate most likely point of continuing decline
When you integrate timing, do you do this with your entire portfolio or just the one third you post as the model?
Can you share allocations(general model) to other two thirds? Are they buy-hold, or more static?
When you change level of exposure, are you modifying each existing position?
By any chance are you in a 401k that allows easy manipulation of percentages without the traditional broker interaction? I used to have this but went to Fidelity due to increasing limits placed on exchanges (not called trades).
If you exit a country or sector what are the reasons you do so besides the atr violation, and how do decide replacement? How many countries are sectors do you allow at one time?
FWIW, in my self directed ira the 3 day settlement rule does not keep me from making a sell and a buy same day. Is your limitation specific to your 401k self directed account?
Appreciate your open sharing of YTD return.
Personally, the hardest part of using a relative strength model is the beginning. At that point it is hard to have confidence. Leadership is often either extended or not yet clear. Hard to see/feel forest from the trees. In retrospect, though, this model is very compelling and once I'm in the saddle it's a beautiful thing. The other hardest part is not getting too complicated. The more complicated the easier to get distracted and harder to stay to the discpline. I'm going in the direction of the above 4-5 position broad index and only one focused position to accompany each broader one.(In a taxable account, I would never do this.) Thanks again!
Roger, did you read this article on Marketwatch.com? Would like to hear your thoughts?
http://www.marketwatch.com/news/story/democrats-demographics/story.aspx?guid=%7B887B239E%2D40DF%2D47CB%2DA614%2D274802B78136%7D&siteId=
The relevant passage:
> Band does argue in his latest letter that divided government can be quite good for stocks. But he is more focused on demographics. His argument: " ... the largest group of savers and investors America has ever seen will soon be living on their assets consuming them, if you will to replace their lost work income. It's a no-brainer they will turn their portfolios of growth stocks and growth mutual funds into income-producing dividend stocks.
"The result: Dividend-paying stocks will outperform growth stocks for the rest of your investing life."
TomK, I did not see that article. For readers you can click here to read it. I'll write full post on it but two things for now, dividend paying stocks have always outperformed over long periods of time, no? Shorter periods have seen growthy stocks lead too but dividend payers ususally do take it.
For now I kind of think that the retirement of baby boomers en masse presents more problems than anything else, maybe starting toward the end of the next decade or thereabouts?
Re anon 9:57
1) ATR is calculated in a spreadsheet. I download data daily from Yahoo and update my stops as needed. Note, I calculate ATR for 75 days - most folks (short term traders) use a much shorter time period. I don't have the luxury of placing stops on Profunds, but I try to watch the 75 dma of the underlying index as a mental stop.
2) This timing model is only used for this strategy.
3) 50% is a buy and hold strategy. The first figure is my target allocation, the second is my actual allocation:
U.S. Large Growth 7.0% 7.9%
U.S. Large Value 7.0% 7.9%
U.S. Small Growth 7.0% 7.8%
U.S. Small Value 7.0% 7.9%
U.S. Micro Cap 7.0% 8.1%
International Large Blend 7.0% 7.6%
International Large Value 7.0% 8.3%
International Small Growth 7.0% 7.7%
International Small Value 7.0% 8.3%
Emerging Mrkts 9.0% 7.8%
U.S. REITs 3.5% 0.0%
International REITs 2.0% 0.0%
Energy commodities 2.0% 2.2%
Industrial metals 1.0% 0.0%
Precious metals 0.5% 0.0%
Speculative: Water, Alternative/Clean Energy, etc. 1.0% 0.0%
U.S. Short-Int Term Corp Bonds 6.0% 7.1%
U.S. mrk-weighted bond index 6.0% 7.2%
U.S. TIPS 6.0% 4.2%
3). No, I generally use 10 positions. Commissions are a huge deal and that's one of the reasons I use Profunds for sectors. Sure, their expense ratios are outrageous, but my max expenses for trading sectors are limited to approx 1.6% per year.
4)I exit a country or sector when it drops in rank. For example, if a country drops from 3 to 1, I'll usually exit that position. Sectors are a little easier to deal with because I don't have to worry about running up huge commissions. Generally, I try to be patient and not over-trade.
5) Yeah, there is definitely a mental barrier to getting started.
tomk, you are a scholar and a gentleman. I assume that in the static portfolio that the categories are not filled with etfs. For instance, intl small cap growth and value don't exist, yet. Gosh, when it comes to putting it into practice, the active portfolio is a lot of work that could easily become compromised. I hope you'll keep us posted with your process. FWIW, since you mentioned dividend plays, there's a cef, BQY mentioned in IndexUniverse article as a defensive position. Could be compared to DOO and OEF, but has the benefit of active managment,as well as very high yield, for better or worse. A combination of all three may have merit. Is the mega cap going to have long term leadership? Years ago when globalizaion was reviewed on one the Rukeheyser shows...in the 90's...some guests said the key factor will not be the countries, as consensus has it due to political dynamics, but large global countries that cross borders. Have an opinion on the megacap long term? Perhaps, too early to consider it a theme.
I'm using DOL and DLS as proxies for Intl. value for now. I really don't have an opinion mega-cap or any cap/style long term. You can see I've placed my bets pretty evenly :-)
I was wondering about the picture insert that you chose for this "Technical Analysis" piece. Who is jumping of that cliff?
Are they...
1)Lemmings?
2)U.S. exporters?
3)Investors? (given todays results)
4)Steeler fans? (Ya...I'm one)
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