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ETF Core Strategies

Aim: To trend-trade general equity ETFs so as to ride rallies and buck busts in the Australian share market.

ETF Rotation Strategies

Aim: To back the local and foreign sector ETFs with the strongest price gains over both short and long terms.

Using our Signals

This section explains various ways that MarketTiming’s signals can be used to manage the timing risk associated with entering or exiting either the Australian share or gold markets..

The specific investment vehicles used for switching between exposure to a listed share or gold fund and cash should be decided in consultation with your investment adviser. Possibilities include share ETFs with the ASX codes STW, SFY, VAS and IOZ and gold ETFs with the ASX codes GOLD and PMGOLD. Note that the ETF with the strongest liquidity is STW.

How to Begin with MarketTiming’s Signals

For the Conservative Share Strategy (around 2 signals a year), we would suggest that an existing Buy signal be phased in slowly over two months, say 20% initially and then 20% each two weeks thereafter so that you don’t find yourself buying at the top or selling at the bottom of an intermediate wave cycle in the market. Or if the strategy has been on a Sell signal just wait for it to change to a Buy signal.

For the ETF Local and Global Rotation Strategies (each expected to have about three ETF switches a year), only buy an ETF after MarketTiming’s Weekly Update bulletin has advised you to do so.

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How to Respond to Subsequent Signal Changes

Our latest market timing signals are shown as either:

  • Buy’ (meaning it’s opportune to enter or remain in the share or gold market using an exchange traded fund with ASX share codes STW, VAS, SFY and IOZ, or GOLD and PMGOLD)
  • or ‘Sell’ (meaning it’s prudent to exit or stay out of the market and keep your funds instead in a government-guaranteed cash management account).

It is always best to enter the share market on a ‘Buy’ signal. For all of our strategies, this should be done the first trading day after a ‘Buy’ signal is issued by MarketTiming.

It is always best to exit the share market on a ‘Sell’ signal. For all of our strategies, this should be done the first trading day after a ‘Sell’ signal is issued by MarketTiming.

 

MarketTiming monitors whether a change in signal has been triggered on a weekly basis. When there is a change to any of our timing signals, subscribers are sent informed through our Weekly Update bulletin issued on a weekend (normally Saturday afternoon). Signal changes are also shown on the subscriber-only “Our Signals” section of this website.

It is best to strictly adhere to the current signal of whatever strategy you adopt, whether you agree with that signal or not, otherwise you are unlikely to succeed. Second guessing the market’s future direction is the road to ruin. Keep your own opinion, emotion and ego out of it and instead become a mechanical investor who has faith in a demonstrated model for timing the market.

Expect small losses on some signals as the price for big gains or savings on others. Reserve your judgment on each strategy until you have used it for three to five years. Then compare your risk adjusted results (both return and volatility) with the All Ordinaries Index over the same period.

Market timing is not a ‘dash for profit’, but a disciplined ‘long march’ that rewards the patient. If market timing a particular share fund is too slow for your temperament then you might do better joining the fast lane and becoming a daily or swing trader of individual stocks. However, be warned, most traders lose money unless they are highly skilled, experienced and disciplined or use a completely automated professional trading system.

MarketTiming’s Approach

The best way to completely remove emotions and subjectivity from the investing process is to use a fully mechanical signalling service like MarketTiming’s.

Fastidiously applying the signals and strategies of our computerised timing system should enable you to avoid much of the downside of a market contraction while gaining much of the upside of a market expansion. But you will need self-discipline to succeed and be prepared to accept occasional losses (because no market timing system is perfect) so as to win over the medium to longer-term.

Back-testing of our Conservative Strategy shows it produced over two wins while ‘In’ the market following a ‘Buy’ signal for each losing one, and that the average win was over five times the average loss. By contrast, while ‘Out’ of the market following a ‘Sell’ signal, this strategy produced about two wins (by avoiding a market fall) for every three instances of a loss (by missing out on a market rise). However, this unfavourable imbalance was more than compensated for by the average loss avoided (i.e. signal win) being thrice the average gain missed (i.e. signal loss).

ETF Core Strategies

Aim: To trend-trade general equity ETFs so as to ride rallies and buck busts in the Australian share market.

ETF Rotation Strategies

Aim: To back the local and foreign sector ETFs with the strongest price gains over both short and long terms.

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