Learn how to value stocks with the Discounted Cash Flow model using Warren Buffett's "owner's earnings" and more! You can get 50% off by using coupon code UA-cam2022. nathanwinklepleck.xperiencify.io/valuation/order/ (I"m a terrible salesman, but that roof ain't fixin' itself!!! 🤪)
Thanks for the video Nathan. Just curios, do the calculations take account the taxes for gain/loss? If there is no, that might change things a little for taxable accounts
Biggest lesson i learnt in 2022 in the stock market is that nobody knows what is going to happen next, so practice some humility and follow a strategy with a long term edge.
Nobody knows anything; You need to create your own process, manage risk, and stick to the plan, through thick or thin, While also continuously learning from mistakes and improving.
Uncertainty... it took me 5 years to stop trying to predict what bout to happen in market based on charts studying, cause you never know. not having a mentor cost me 5 years of pain I learn to go we’re the market is wanting to go and keep it simple with discipline.
@@yvonnejoordan staying in touch with an Investment-Adviser. Based on firsthand encounter, I can say for certain their skillsets are topnotch, I've raised over $700k since 2017. Just bought my 3rd property for rental. Credit to Yvonne Annette Lively.. my Investment-Adviser.
@@tateoften Yvonne Annette Lively really seems to know her stuff. I found her online-page, read through her resume, educational background, qualifications and it was really impressive. She is a fiduciary who will act in my best interest. So, I booked a session with her.
If it is possible to mechanically (algorithmically) out-perform, then start a fund and do it. There are two core problems others have encountered when they think they have identified a consistently out performing strategy. Either the strategy requires judgement rather than simple application of an algorithm which makes it impossible to consistently and reproducibly execute, or the advantage disappears as soon as many people actually start following the algorithm (i.e. the fund grows too large including others following the same algorithm). The meta level problems include the concept of return to risk and how long will you need to wait for the excess return to be realized. For example, small cap value has a history of outperformance, but is much higher risk (academic risk or volatility) so risk adjusted returns aren't as dramatically better as they first appear, and sometimes small cap value has underperformed for as long as 40 years. Could you actually wait that long? There is also some question now if since the knowledge spread some years ago about the outperformance of small cap value, if the advantage has disappeared. If you have that doubt in your mind, how long can you continue waiting while under performing?
Nice Video. You have clearly put a lot of work in this. Thank you. Minor Quibble .. the stocks bottom long before earnings and the economy. The tests are not foolproof
12,4 is in perfect world 1) As u said you ll sell below ma200 and buy above. You can lose up to 1-2% every time But you can do stoploss signal and loss 0,01-0,05% depending of DOM 2) Every crossing you pay comissions 0,01-0,05% depending of broker Also you can use ma20 for example to lower number of crossing 3) Every time you spend in cash position you dont get dividents. Even if it is 10% of time and average divs are 2% p/y - your loss is 0,2% per year So every time you sell you can park your money in some reverse repo etf for example with 0 risk Idk how to test, but ma200 is technically upgadable
Thanks for the valuable information. I have been working on developing the 200 days movig average and this would be super useful information. 👍 I feel sorry for those put stupid comments about your great vedio.
I always enjoy watching your videos. Thank you. With this video I expected that there will only be buying if the s&p 500 falls below the 200-day moving average (relatively cheap) and then you do nothing. Maybe you can do a back test on that too. I am very curious!!
You sir are a super bright light of quantitative investment brilliance & diligence that should make the CFA community proud to have you as a member in a UA-cam sky full of hucksters and scam artists who promise the unachievable based on absolutely nothing more than fast talk and ridiculous assumptions. I really, really appreciate the tools and perspective you bring to the table to share with us.
I did similar testing myself recently and came to the same exact results. Buy and hold gives much better returns, but with large loss potential. While trading on weekly/daily chart swings, you are fully shielded from market collapse, but returns are 1/2-2/3 that of buy'n'hold.
Nathan: I would love to see a simulation of how the smaller drawdowns of this strategy affects the 4% rule (How much money you need to retire). In theory, does using this strategy enable you to withdraw MORE than 4% of your capital annually without significant risk of running out of money?
It appears to me that the key for success is to wait until the market tanks, even if it takes years. Then average the bottom. Possible? How many have the courage to hang on before throwing in the towel. Do institutions hang on? Of course, They sell short. How? Average Joe is playing with thousands of dollars. Institutions; billions!!! The market tanks with only a small percentage of shares traded. The computers are set to match B/A. No buyers??? Today the market is in competition with the 9 month CD's and Short term treasury notes paying 4.7%. I expect that long term treasury bonds will rise to 5% or more. When one looks at the stock market, you are seeing numbers. Behind those numbers you are seeing cites that are crumbling under the weight of crime and drugs with no end in sight. Office buildings are empty and business are closing. So what are we investing in? A phantom economy? Just numbers???
Thanks for sharing it with us. Another trend following strategy could be using 2 moving averages like 30 and 90. When 30 line crossess the 90 line then you buy the index. When 90 line crossess the 30 line then you sell the index.
Much simpler is to buy something and sell 5% if it moves up 15% If it moves up another 5% sell 5% If instead it moves down 15% then BUY 5%. If it drops another 5% then buy 5% more. If it drops after selling you need a 25% drop for the next buy. If it goes up after buying you need a 25% rise for the next sell. With every BUY you raise your price comparison by 50% of the buy amount. No emotion, no judgement. ZEN investing. It is safer with funds than individual stocks. Start with 50/50 stock and cash. If cash is used up, do not buy more until you have another sale.
Just do something that will earn you money while you sleep, no matter how little. A pandemic is the perfect way to open your eyes to really see what life could be like without your usual income stream and everyone had to stay home. Well I never felt it because I invested in a trading company where I earn 4 digits per week. The best thing you can do for yourself is invest more and spend less.
Talking about investment, the forex market is by far the biggest and most popular market in the world, traded globally by large number of individuals and organization
FLORENCE YAGODA is the best broker, I have tried lots of professionals but only exceptional income trading with FLORENCE YAGODA strategy now earning over $15,300 every 10 days.
Silicon bank failure motivates me to liquidate most of our holdings tomorrow, Monday, into cash. Too many red flags starting with yield curve and ending with major bank failure. Just too many. 200 day moving average penetration also influences.
I'm going to look at the original research (thank you for the link). Prima facia it doesn't seem that this would be useful to a real world investor. The indicators used are lagging but the stock market is a leading indicator. I would think that in almost all cases the market would breach it's 200DMA long before these indicators go negative.
If you are using a 200 day moving average, it means that the increment of the chart is days as opposed to minutes, hours, or weeks. If you set the chart to 1 year, 5 years, or 10 years, the moving average should be the same as long as it is using Days.
this seems like classic curve fitting. I can take a million different variables and present the ones that performed in the past. Be very careful. It might even be wise ot diversify strategies and have a certain % B&H and certain % as market timing.
Well if anyone ever sees my late note here 11 months after this video came out; one obvious question is if there is any fund out there or ETF that follows this strategy? I have a finance degree and you would have made a lot of money if you would have looked at what I have done most of my life AND THEN DO JUST THE OPPOSITE. Every time I go away from buy and hold it is a loser. I would mind this strategy but I don't think I am smart enough to even follow the averages and the macro signs. Thus my question, is there and advisor or fund that would operate this way?
TIMING TURNOVERS- many (most?) 401k’s, 403b’s, etc.- have rules that restrict the number of times that participants trade out/back-in the same funds - with an average 7-out/7-in (or 14 turnovers) - it is likely that this scheme will not be able to be used in Employer Tax Deferred Accounts
Buy-and-hold dividend growth investing and rental real estate, combined with a little bit of options trading to scratch the itch has served me well! 2% above market returns is pretty stellar though. Would definitely take a closer look if a team of managers rolled out an ETF version!
I wonder though, how much in taxes has your strategy accrued compared to just buy and hold on the market you beat by 2%. It would seem to me with dividend taxes, real estate income taxes, and short term gain taxes on the options, you would need to beat the market by (tax rate + 1%)
@@getxzootedimo9992 thanks to operating as a small business and having a low taxable income after deductions, I pay very little income taxes. I recommend reading “Tax Free Wealth” by Tom Wheelwright. Taxes tend to be the biggest concern once you accumulate meaningful wealth. Minimizing them as much as possible is critical.
I found the FRED charts for both Retail Food and Industrial, but I cant find on FREDs chart how to change to 'percent change from a year ago' option. Anyone have that info? Thanks!
@@NathanWinklepleckCFA I read that as "Chatbot" and assumed he was talking about ChatGPT. When I re-read it and realized he had written "chabot", I tried to look that up but didn't come back with anything that appeared related.
Everybody should stop using arithmetic average or mean value as it is very misleading. Geometric average is more accurate about returns, especially on the long term. You don't gain 11 percent every year from sp500 especially if you invested closer to a crisis and lost half of it in a few years.
Learn how to value stocks with the Discounted Cash Flow model using Warren Buffett's "owner's earnings" and more! You can get 50% off by using coupon code UA-cam2022. nathanwinklepleck.xperiencify.io/valuation/order/ (I"m a terrible salesman, but that roof ain't fixin' itself!!! 🤪)
Thanks for the video Nathan. Just curios, do the calculations take account the taxes for gain/loss? If there is no, that might change things a little for taxable accounts
There is already a tile on your roof with my name on it.. Rest assured
Biggest lesson i learnt in 2022 in the stock market is that nobody knows what is going to happen next, so practice some humility and follow a strategy with a long term edge.
Nobody knows anything; You need to create your own process, manage risk, and stick to the plan, through thick or thin, While also continuously learning from mistakes and improving.
Uncertainty... it took me 5 years to stop trying to predict what bout to happen in market based on charts studying, cause you never know. not having a mentor cost me 5 years of pain I learn to go we’re the market is wanting to go and keep it simple with discipline.
@@yvonnejoordan staying in touch with an Investment-Adviser. Based on firsthand encounter, I can say for certain their skillsets are topnotch, I've raised over $700k since 2017. Just bought my 3rd property for rental. Credit to Yvonne Annette Lively.. my Investment-Adviser.
@@tateoften Yvonne Annette Lively really seems to know her stuff. I found her online-page, read through her resume, educational background, qualifications and it was really impressive. She is a fiduciary who will act in my best interest. So, I booked a session with her.
Simplicity is king . Buy and hold the S&P double down contributions on the draw downs...
Even better you can safer sell covered calls for 13% min Mayne even 20% if you are savy
If it is possible to mechanically (algorithmically) out-perform, then start a fund and do it. There are two core problems others have encountered when they think they have identified a consistently out performing strategy. Either the strategy requires judgement rather than simple application of an algorithm which makes it impossible to consistently and reproducibly execute, or the advantage disappears as soon as many people actually start following the algorithm (i.e. the fund grows too large including others following the same algorithm).
The meta level problems include the concept of return to risk and how long will you need to wait for the excess return to be realized. For example, small cap value has a history of outperformance, but is much higher risk (academic risk or volatility) so risk adjusted returns aren't as dramatically better as they first appear, and sometimes small cap value has underperformed for as long as 40 years. Could you actually wait that long? There is also some question now if since the knowledge spread some years ago about the outperformance of small cap value, if the advantage has disappeared. If you have that doubt in your mind, how long can you continue waiting while under performing?
Excellent explanation of the strategy. Thank You
Interesting approach. Thanks for being forthcoming about your roof. If I happen to buy a ticket and win the lottery, your shingles are paid for.
Nice Video. You have clearly put a lot of work in this. Thank you. Minor Quibble .. the stocks bottom long before earnings and the economy. The tests are not foolproof
What?
12,4 is in perfect world
1) As u said you ll sell below ma200 and buy above. You can lose up to 1-2% every time
But you can do stoploss signal and loss 0,01-0,05% depending of DOM
2) Every crossing you pay comissions 0,01-0,05% depending of broker
Also you can use ma20 for example to lower number of crossing
3) Every time you spend in cash position you dont get dividents. Even if it is 10% of time and average divs are 2% p/y - your loss is 0,2% per year
So every time you sell you can park your money in some reverse repo etf for example with 0 risk
Idk how to test, but ma200 is technically upgadable
Thanks for the valuable information. I have been working on developing the 200 days movig average and this would be super useful information. 👍 I feel sorry for those put stupid comments about your great vedio.
Back-tests often exclude the impact of transactional costs and taxes. Buy and hold, baby!
I always enjoy watching your videos. Thank you. With this video I expected that there will only be buying if the s&p 500 falls below the 200-day moving average (relatively cheap) and then you do nothing. Maybe you can do a back test on that too. I am very curious!!
You sir are a super bright light of quantitative investment brilliance & diligence that should make the CFA community proud to have you as a member in a UA-cam sky full of hucksters and scam artists who promise the unachievable based on absolutely nothing more than fast talk and ridiculous assumptions. I really, really appreciate the tools and perspective you bring to the table to share with us.
Wow, thank you very much!!
As usual Nathan, very useful video. A simple explanation of a somewhat complex paper.
👍
Glad it was helpful! Thanks Marco! It is a complicated and super long paper
Great video, can you provide links to the two FRED web pages please? Having trouble finding the percent change YoY charts on their site. Thanks!
I did similar testing myself recently and came to the same exact results. Buy and hold gives much better returns, but with large loss potential. While trading on weekly/daily chart swings, you are fully shielded from market collapse, but returns are 1/2-2/3 that of buy'n'hold.
Nathan: I would love to see a simulation of how the smaller drawdowns of this strategy affects the 4% rule (How much money you need to retire). In theory, does using this strategy enable you to withdraw MORE than 4% of your capital annually without significant risk of running out of money?
Thank you for the study 📚 damn debacles! 😅
Can you apply and backtest this strategy to your coffee can portfolio?
It appears to me that the key for success is to wait until the market tanks, even if it takes years. Then average the bottom. Possible? How many have the courage to hang on before throwing in the towel.
Do institutions hang on? Of course, They sell short. How? Average Joe is playing with thousands of dollars. Institutions; billions!!! The market tanks with only a small percentage of shares traded. The computers are set to match B/A. No buyers???
Today the market is in competition with the 9 month CD's and Short term treasury notes paying 4.7%. I expect that long term treasury bonds will rise to 5% or more.
When one looks at the stock market, you are seeing numbers. Behind those numbers you are seeing cites that are crumbling under the weight of crime and drugs with no end in sight. Office buildings are empty and business are closing. So what are we investing in? A phantom economy? Just numbers???
Thanks for sharing it with us. Another trend following strategy could be using 2 moving averages like 30 and 90. When 30 line crossess the 90 line then you buy the index. When 90 line crossess the 30 line then you sell the index.
That fell apart pretty hard 8/2022---10/2022
Did you even watch the video? The problems with MA strategies was addressed in the first 5 minutes.
What about considering short treasury bond as second economic indicator or return on capital invested/enployed
Much simpler is to buy something and sell 5% if it moves up 15%
If it moves up another 5% sell 5%
If instead it moves down 15% then BUY 5%. If it drops another 5% then buy 5% more.
If it drops after selling you need a 25% drop for the next buy.
If it goes up after buying you need a 25% rise for the next sell.
With every BUY you raise your price comparison by 50% of the buy amount.
No emotion, no judgement. ZEN investing.
It is safer with funds than individual stocks.
Start with 50/50 stock and cash. If cash is used up, do not buy more until you have another sale.
Just do something that will earn you money while you sleep, no matter how little. A pandemic is the perfect way to open your eyes to really see what life could be like without your usual income stream and everyone had to stay home. Well I never felt it because I invested in a trading company where I earn 4 digits per week. The best thing you can do for yourself is invest more and spend less.
Talking about investment, the forex market is by far the biggest and most popular market in the world, traded globally by large number of individuals and organization
i have always wanted to get into investment but i am scared not to fall in the wrong hands , who is your pro ?
FLORENCE YAGODA is the best broker, I have tried lots of professionals but only exceptional income trading with FLORENCE YAGODA strategy now earning over $15,300 every 10 days.
I have been trading with her, profits are secured and over 100 percent return on investment.
You can search her name on the internet to reach her
Buy and hold differ taxes and accumulate dividends and probably reinvest at lower prices.
How to set this up with a trading bot?
Silicon bank failure motivates me to liquidate most of our holdings tomorrow, Monday, into cash. Too many red flags starting with yield curve and ending with major bank failure. Just too many. 200 day moving average penetration also influences.
I imagine a smart investor could increase returns by switching from holding long to selling short during market falls.
Good presentation. Thank you.
I'm going to look at the original research (thank you for the link). Prima facia it doesn't seem that this would be useful to a real world investor. The indicators used are lagging but the stock market is a leading indicator. I would think that in almost all cases the market would breach it's 200DMA long before these indicators go negative.
What time period do you set your charts for because that makes a huge difference in identifying the 200 d?
If you are using a 200 day moving average, it means that the increment of the chart is days as opposed to minutes, hours, or weeks. If you set the chart to 1 year, 5 years, or 10 years, the moving average should be the same as long as it is using Days.
Nathan my friend ...this is doubly interesting
Now change it from sold bought to long short. How does it turn out?
Selling means paying taxes...
You should have a LOT more views and subscribers, IMO.
Thanks! 😊
this seems like classic curve fitting. I can take a million different variables and present the ones that performed in the past. Be very careful. It might even be wise ot diversify strategies and have a certain % B&H and certain % as market timing.
Well if anyone ever sees my late note here 11 months after this video came out; one obvious question is if there is any fund out there or ETF that follows this strategy? I have a finance degree and you would have made a lot of money if you would have looked at what I have done most of my life AND THEN DO JUST THE OPPOSITE. Every time I go away from buy and hold it is a loser. I would mind this strategy but I don't think I am smart enough to even follow the averages and the macro signs. Thus my question, is there and advisor or fund that would operate this way?
TIMING TURNOVERS- many (most?) 401k’s, 403b’s, etc.- have rules that restrict the number of times that participants trade out/back-in the same funds
- with an average 7-out/7-in (or 14 turnovers) - it is likely that this scheme will not be able to be used in Employer Tax Deferred Accounts
Buy and hold with potentially 50% DD doesn’t make sense in retirement.
Buy-and-hold dividend growth investing and rental real estate, combined with a little bit of options trading to scratch the itch has served me well! 2% above market returns is pretty stellar though. Would definitely take a closer look if a team of managers rolled out an ETF version!
I wonder though, how much in taxes has your strategy accrued compared to just buy and hold on the market you beat by 2%.
It would seem to me with dividend taxes, real estate income taxes, and short term gain taxes on the options, you would need to beat the market by (tax rate + 1%)
@@getxzootedimo9992 thanks to operating as a small business and having a low taxable income after deductions, I pay very little income taxes.
I recommend reading “Tax Free Wealth” by Tom Wheelwright. Taxes tend to be the biggest concern once you accumulate meaningful wealth. Minimizing them as much as possible is critical.
So the rules for this are at 8:00 correct? Cause I'm considering doing this
Do you have links to the two charts. I cant find them on FRED website.
Love your videos and I'm commenting just for the algo.
So I take it no ETFs follow this strategy atm?
Not sure about that
I found the FRED charts for both Retail Food and Industrial, but I cant find on FREDs chart how to change to 'percent change from a year ago' option. Anyone have that info? Thanks!
Click the Edit Graph button.
I wonder what chabot would say about this strategy?
Who’s that?
@@NathanWinklepleckCFA I read that as "Chatbot" and assumed he was talking about ChatGPT. When I re-read it and realized he had written "chabot", I tried to look that up but didn't come back with anything that appeared related.
@@NathanWinklepleckCFA An AI system
Everybody should stop using arithmetic average or mean value as it is very misleading. Geometric average is more accurate about returns, especially on the long term. You don't gain 11 percent every year from sp500 especially if you invested closer to a crisis and lost half of it in a few years.
💯
Thxs for the video. Meb Faber has the ETF you mentioned...is there one for this strategy?
If this really worked, you would see mutual fund managers use it.
That data is so cool, but man it seems like a lot of work 😅
Interesting approach. Thanks for being forthcoming about your roof. If I happen to buy a ticket and win the lottery, your shingles are paid for.