To this date, I have tried to employ to the best of my ability asset allocation, diversification, and cost averaging to grow my portfolio. My portfolio is predominantly invested through a 401 K program at work. Over the last 13 years I have experienced two market crashes in 2002 and 2008, and after this last market crash I consider myself lucky to have seen my portfolio return to cost basis. In both cases, I failed to sell when the market fell, but increased my contributions during these periods. I have always been afraid to sell because I did not have a tool that would indicate when to buy and sell. However, after dismal results, I decided that I need a better investing strategy. I still intend to employ asset allocation, cost averaging, and diversification, but I am going to add a buy and sell strategy to this equation. However, buying and selling (exchanging) within a 401K portfolio offers the following unique challenges:
- Frequency of permitted exchanges is restrictive
- Mutual funds trade only at the close of the trading day
- Fund managers can hold trades up to 7 days from the day a trade was requested
The strategy of this method is relatively simple. Most funds contain a money market fund. The idea is to use the money market fund as an exchange to a cash (or short position) when a sell signal is generated and to exhcange from the money market fund when a buy signal is generated. The percent allocation can be determined based on bearish or bullish market conditions and an individuals aversion to risk. This is not a new concept, but in conjunction with the "oracole" formula I believe that this will improve the chances of a portfolio to avoid significant losses and capitalize on possible gains.
The primary goal of the "oracole" formula is to provide the average long term investor with a simple tool that can help them avoid the pitfalls of emotional trading. Emotional trading often cause even seasoned investors to buy into a rising market too late or miss a selling opportunity that would prevent significant losses in ones portfolio. Applying the "oracole" formula does not mean that an investor will never realize a loss, but it is designed to minimize those losses. However, with this tool an investor should never experience significant losses as can be experienced during major market crashes.
Please feel fee to comment or contact me via email and let me know if you have any interest. I will be happy to let you know the status of any stock, etf, or mutual fund according to my analysis. As with the ancient Greek Oracles, once you have the forecasted information it will be yours to do with as you please.
