Do you make investment changes the day of/day after the cross, or only at the end of a calendar month, since the switch is based upon a monthly moving average?
Hi, the investment changes are made the day of/after the cross. It's a bit confusing with the name, but it's calculated each day new, basically each day minus the last 10 months and not after the month has passed. Hope that helps.
Hi, not sure what you mean exactly. The strategy is based on any index fund which replicates the S&P 500. The 10-month SMA you can find in most stock sites like yahoo finance for example. It's basically just buy and sell when the 10-month SMA crosses the chart of the index and then wait until it crosses again. I write in a future article about some other asset classes and how they have performed using this approach. Hope that helps.
Just to elaborate, let's say for example, I have stock AAA, and I am looking at the past 10 month SMA of the stock and compare it to the last 30 days SMA, if this last 30 days SMA is above the past 10 month SMA price then I should buy the stock, is that correct? I am trying to understand a simple example implementation of this when it comes to a stock example. Thank you
Ah got it. This backtest is solely based on the whole index, not on single stocks. It's basically following the market sentiment as a whole. I need to check how far it can be applied to single stocks, currently no information on that but it's noted for a future article.
Do you make investment changes the day of/day after the cross, or only at the end of a calendar month, since the switch is based upon a monthly moving average?
Hi, the investment changes are made the day of/after the cross. It's a bit confusing with the name, but it's calculated each day new, basically each day minus the last 10 months and not after the month has passed. Hope that helps.
Thank you
Can you please showcase in excel a simple example of this method implementation?
Thank you
Hi, not sure what you mean exactly. The strategy is based on any index fund which replicates the S&P 500. The 10-month SMA you can find in most stock sites like yahoo finance for example. It's basically just buy and sell when the 10-month SMA crosses the chart of the index and then wait until it crosses again. I write in a future article about some other asset classes and how they have performed using this approach. Hope that helps.
Just to elaborate, let's say for example, I have stock AAA, and I am looking at the past 10 month SMA of the stock and compare it to the last 30 days SMA, if this last 30 days SMA is above the past 10 month SMA price then I should buy the stock, is that correct? I am trying to understand a simple example implementation of this when it comes to a stock example. Thank you
Ah got it. This backtest is solely based on the whole index, not on single stocks. It's basically following the market sentiment as a whole. I need to check how far it can be applied to single stocks, currently no information on that but it's noted for a future article.
Thank you - looking forward to it.
That’s interesting, and kinda makes sense. Are you using/plan to use the strategy yourself?
No. I personally buy-and-hold quality businesses. And sometimes the occasional special situation that falls into my lap.