Mr. Terry Laundry of the T Theory Foundation has a timing strategy he calls, "T Theory's Best Bond™ Strategy." Both T Theory and Best Bond are trademarks of Mr. Laundry's company. For more information about Mr. Laundry visit his company American Shareholder Investment Corporation and his T Theory Observations. He noted in his Feb. 20th posting that the T Theory will have a new URL soon.
Best Bond Strategy in a nutshell... When things are good U.S. investors put money into stocks and when things are bad investors put money into U.S. treasuries. Best Bond follows two funds to track these events: Fid. Hi. Income (fagix) for stocks and Van. U.S. Long Term Bonds (vustx) for treasuries. To put this into perspective - when things are going well fagix price should rise because investors are buying stocks and in contrast vustx price should drop because money is coming out of it to buy the stocks. And in theory the opposite is true - when things start to go bad money is pulled out of stocks (fagix price will drop) and that money goes into US treasuries (vustx price will rise.)
But when should you do this? What are your triggers? See Mr. Laundry's Feb. 20th postings about buying and selling frequencies.
I took it upon myself to work this strategy using the Simple Moving Average (SMA) price cross-over strategy. The strategy attempts to determine the best time to buy and sell using the Best Bond strategy which is to buy when the prices crosses over the average and to sell when the prices crosses down the average. Here's the scenario - one fund is designated as the primary and, obviously, the other the secondary. The primary triggers all buy/sell events. When the primary's trigger says buy all of the secondary's stocks (which should be the only one your holding) are sold to buy the primary and when the primay says sell all of its stocks are sold to buy the secondary's. I made fagix the primary because it has the best year-to-year return for the past 10 years; therefore vustx is the secondary.
Fidelity has a 90 day waiting period. A fund isn't held for a minimum of 90 days there is a 1% sales charge.
Another assumption - no fees or charges are applied. When I have time I'll run some code that takes th 1% charge if sold before holding it for 90 days.
Another assumption - Yahoo quotes (used for data) is correctly adjusted for dividends.
All investing starts with $10000 and begins about 11 years ago. Bottom line - use a SMA period of 15 days. Here are the results for runs of 2 to 89 day periods
Here are the trading results for the 15 day SMA period.
2000-05-23 bought vustx shares 1937 @ 5.16
2000-09-15 sold vustx shares 1937 @ 5.50
Cash now at 10658.58
2000-09-15 bought fagix shares 2513 @ 4.24
2000-10-02 sold fagix shares 2513 @ 4.16
Cash now at 10457.54
2000-10-02 bought vustx shares 1894 @ 5.52
2001-02-16 sold vustx shares 1894 @ 5.94
Cash now at 11253.02
2001-02-16 bought fagix shares 2737 @ 4.11
2001-02-27 sold fagix shares 2737 @ 4.07
Cash now at 11143.54
2001-02-27 bought vustx shares 1848 @ 6.03
2001-06-29 sold vustx shares 1848 @ 5.93
Cash now at 10958.74
2001-06-29 bought fagix shares 2922 @ 3.75
2001-07-11 sold fagix shares 2922 @ 3.72
Cash now at 10871.08
2001-07-11 bought vustx shares 1820 @ 5.97
2001-11-15 sold vustx shares 1820 @ 6.40
Cash now at 11653.68
2001-11-15 bought fagix shares 3246 @ 3.59
2001-12-04 sold fagix shares 3246 @ 3.61
Cash now at 11718.60
2001-12-04 bought vustx shares 1833 @ 6.39
2002-05-09 sold vustx shares 1833 @ 6.30
Cash now at 11553.63
2002-05-09 bought fagix shares 3174 @ 3.64
2002-05-13 sold fagix shares 3174 @ 3.62
Cash now at 11490.15
2002-05-13 bought vustx shares 1835 @ 6.26
2002-10-11 sold vustx shares 1835 @ 7.11
Cash now at 13049.90
2002-10-11 bought fagix shares 4264 @ 3.06
2002-10-30 sold fagix shares 4264 @ 3.16
Cash now at 13476.30
2002-10-30 bought vustx shares 1933 @ 6.97
2003-03-14 sold vustx shares 1933 @ 7.40
Cash now at 14307.49
2003-03-14 bought fagix shares 3725 @ 3.84
2003-04-01 sold fagix shares 3725 @ 3.98
Cash now at 14828.99
2003-04-01 bought vustx shares 2023 @ 7.33
2003-06-19 sold vustx shares 2023 @ 7.80
Cash now at 15779.80
2003-06-19 bought fagix shares 3483 @ 4.53
2003-08-11 sold fagix shares 3483 @ 4.42
Cash now at 15396.67
2003-08-11 bought vustx shares 2162 @ 7.12
2003-12-31 sold vustx shares 2162 @ 7.43
Cash now at 16066.89
2003-12-31 bought fagix shares 3187 @ 5.04
2004-01-08 sold fagix shares 3187 @ 5.13
Cash now at 16353.72
2004-01-08 bought vustx shares 2198 @ 7.44
2004-03-26 sold vustx shares 2198 @ 7.80
Cash now at 17145.00
2004-03-26 bought fagix shares 3408 @ 5.03
2004-05-25 sold fagix shares 3408 @ 4.89
Cash now at 16667.88
2004-05-25 bought vustx shares 2292 @ 7.27
2004-10-04 sold vustx shares 2292 @ 7.82
Cash now at 17928.48
2004-10-04 bought fagix shares 3389 @ 5.29
2004-10-13 sold fagix shares 3389 @ 5.31
Cash now at 17996.26
2004-10-13 bought vustx shares 2283 @ 7.88
2005-02-17 sold vustx shares 2283 @ 8.17
Cash now at 18658.33
2005-02-17 bought fagix shares 3279 @ 5.69
2005-03-08 sold fagix shares 3279 @ 5.74
Cash now at 18822.28
2005-03-08 bought vustx shares 2332 @ 8.07
2005-07-11 sold vustx shares 2332 @ 8.49
Cash now at 19801.72
2005-07-11 bought fagix shares 3431 @ 5.77
2005-07-29 sold fagix shares 3431 @ 5.83
Cash now at 20007.58
2005-07-29 bought vustx shares 2381 @ 8.40
2005-12-02 sold vustx shares 2381 @ 8.28
Cash now at 19721.86
2005-12-02 bought fagix shares 3388 @ 5.82
2005-12-07 sold fagix shares 3388 @ 5.82
Cash now at 19721.86
2005-12-07 bought vustx shares 2376 @ 8.30
2006-03-28 sold vustx shares 2376 @ 8.25
Cash now at 19603.06
2006-03-28 bought fagix shares 3234 @ 6.06
2006-05-09 sold fagix shares 3234 @ 6.17
Cash now at 19958.80
2006-05-09 bought vustx shares 2491 @ 8.01
2006-09-18 sold vustx shares 2491 @ 8.42
Cash now at 20980.11
2006-09-18 bought fagix shares 3356 @ 6.25
2006-09-20 sold fagix shares 3356 @ 6.25
Cash now at 20980.11
2006-09-20 bought vustx shares 2471 @ 8.49
2007-01-11 sold vustx shares 2471 @ 8.63
Cash now at 21326.05
2007-01-11 bought fagix shares 3206 @ 6.65
2007-02-01 sold fagix shares 3206 @ 6.72
Cash now at 21550.47
2007-02-01 bought vustx shares 2514 @ 8.57
2007-05-14 sold vustx shares 2514 @ 8.76
Cash now at 22028.13
2007-05-14 bought fagix shares 3133 @ 7.03
2007-06-26 sold fagix shares 3133 @ 6.98
Cash now at 21871.48
2007-06-26 bought vustx shares 2591 @ 8.44
2007-12-07 sold vustx shares 2591 @ 9.31
Cash now at 24125.65
2007-12-07 bought fagix shares 3491 @ 6.91
2007-12-20 sold fagix shares 3491 @ 6.85
Cash now at 23916.19
2007-12-20 bought vustx shares 2536 @ 9.43
2008-05-05 sold vustx shares 2536 @ 9.56
Cash now at 24245.87
2008-05-05 bought fagix shares 3458 @ 7.01
2008-05-09 sold fagix shares 3458 @ 6.97
Cash now at 24107.55
2008-05-09 bought vustx shares 2500 @ 9.64
2008-09-22 sold vustx shares 2500 @ 9.82
Cash now at 24557.55
2008-09-22 bought fagix shares 3807 @ 6.45
2008-09-30 sold fagix shares 3807 @ 6.13
Cash now at 23339.31
2008-09-30 bought vustx shares 2369 @ 9.85
2009-01-20 sold vustx shares 2369 @ 11.26
Cash now at 26679.60
2009-01-20 bought fagix shares 5604 @ 4.76
2009-02-11 sold fagix shares 5604 @ 4.84
Cash now at 27127.92
2009-02-11 bought vustx shares 2507 @ 10.82
2009-07-15 sold vustx shares 2507 @ 10.08
Cash now at 25272.74
2009-07-15 bought fagix shares 4096 @ 6.17
2009-07-31 sold fagix shares 4096 @ 6.72
Cash now at 27525.54
2009-07-31 bought vustx shares 2651 @ 10.38
2009-12-04 sold vustx shares 2651 @ 10.49
Cash now at 27817.15
2009-12-04 bought fagix shares 3575 @ 7.78
2010-01-13 sold fagix shares 3575 @ 8.24
Cash now at 29461.65
2010-01-13 bought vustx shares 2896 @ 10.17
2010-06-04 sold vustx shares 2896 @ 11.12
Cash now at 32212.85
2010-06-04 bought fagix shares 3938 @ 8.18
2010-06-07 sold fagix shares 3938 @ 8.14
Cash now at 32055.33
2010-06-07 bought vustx shares 2864 @ 11.19
2010-10-13 sold vustx shares 2864 @ 11.92
Cash now at 34146.05
2010-10-13 bought fagix shares 3752 @ 9.10
2010-11-03 sold fagix shares 3752 @ 9.24
Cash now at 34671.33
2010-11-03 bought vustx shares 2988 @ 11.60
2011-02-23 sold vustx shares 2988 @ 10.76
sma 15 Cash now at 32161.41
2000-09-15 sold vustx shares 1937 @ 5.50
Cash now at 10658.58
2000-09-15 bought fagix shares 2513 @ 4.24
2000-10-02 sold fagix shares 2513 @ 4.16
Cash now at 10457.54
2000-10-02 bought vustx shares 1894 @ 5.52
2001-02-16 sold vustx shares 1894 @ 5.94
Cash now at 11253.02
2001-02-16 bought fagix shares 2737 @ 4.11
2001-02-27 sold fagix shares 2737 @ 4.07
Cash now at 11143.54
2001-02-27 bought vustx shares 1848 @ 6.03
2001-06-29 sold vustx shares 1848 @ 5.93
Cash now at 10958.74
2001-06-29 bought fagix shares 2922 @ 3.75
2001-07-11 sold fagix shares 2922 @ 3.72
Cash now at 10871.08
2001-07-11 bought vustx shares 1820 @ 5.97
2001-11-15 sold vustx shares 1820 @ 6.40
Cash now at 11653.68
2001-11-15 bought fagix shares 3246 @ 3.59
2001-12-04 sold fagix shares 3246 @ 3.61
Cash now at 11718.60
2001-12-04 bought vustx shares 1833 @ 6.39
2002-05-09 sold vustx shares 1833 @ 6.30
Cash now at 11553.63
2002-05-09 bought fagix shares 3174 @ 3.64
2002-05-13 sold fagix shares 3174 @ 3.62
Cash now at 11490.15
2002-05-13 bought vustx shares 1835 @ 6.26
2002-10-11 sold vustx shares 1835 @ 7.11
Cash now at 13049.90
2002-10-11 bought fagix shares 4264 @ 3.06
2002-10-30 sold fagix shares 4264 @ 3.16
Cash now at 13476.30
2002-10-30 bought vustx shares 1933 @ 6.97
2003-03-14 sold vustx shares 1933 @ 7.40
Cash now at 14307.49
2003-03-14 bought fagix shares 3725 @ 3.84
2003-04-01 sold fagix shares 3725 @ 3.98
Cash now at 14828.99
2003-04-01 bought vustx shares 2023 @ 7.33
2003-06-19 sold vustx shares 2023 @ 7.80
Cash now at 15779.80
2003-06-19 bought fagix shares 3483 @ 4.53
2003-08-11 sold fagix shares 3483 @ 4.42
Cash now at 15396.67
2003-08-11 bought vustx shares 2162 @ 7.12
2003-12-31 sold vustx shares 2162 @ 7.43
Cash now at 16066.89
2003-12-31 bought fagix shares 3187 @ 5.04
2004-01-08 sold fagix shares 3187 @ 5.13
Cash now at 16353.72
2004-01-08 bought vustx shares 2198 @ 7.44
2004-03-26 sold vustx shares 2198 @ 7.80
Cash now at 17145.00
2004-03-26 bought fagix shares 3408 @ 5.03
2004-05-25 sold fagix shares 3408 @ 4.89
Cash now at 16667.88
2004-05-25 bought vustx shares 2292 @ 7.27
2004-10-04 sold vustx shares 2292 @ 7.82
Cash now at 17928.48
2004-10-04 bought fagix shares 3389 @ 5.29
2004-10-13 sold fagix shares 3389 @ 5.31
Cash now at 17996.26
2004-10-13 bought vustx shares 2283 @ 7.88
2005-02-17 sold vustx shares 2283 @ 8.17
Cash now at 18658.33
2005-02-17 bought fagix shares 3279 @ 5.69
2005-03-08 sold fagix shares 3279 @ 5.74
Cash now at 18822.28
2005-03-08 bought vustx shares 2332 @ 8.07
2005-07-11 sold vustx shares 2332 @ 8.49
Cash now at 19801.72
2005-07-11 bought fagix shares 3431 @ 5.77
2005-07-29 sold fagix shares 3431 @ 5.83
Cash now at 20007.58
2005-07-29 bought vustx shares 2381 @ 8.40
2005-12-02 sold vustx shares 2381 @ 8.28
Cash now at 19721.86
2005-12-02 bought fagix shares 3388 @ 5.82
2005-12-07 sold fagix shares 3388 @ 5.82
Cash now at 19721.86
2005-12-07 bought vustx shares 2376 @ 8.30
2006-03-28 sold vustx shares 2376 @ 8.25
Cash now at 19603.06
2006-03-28 bought fagix shares 3234 @ 6.06
2006-05-09 sold fagix shares 3234 @ 6.17
Cash now at 19958.80
2006-05-09 bought vustx shares 2491 @ 8.01
2006-09-18 sold vustx shares 2491 @ 8.42
Cash now at 20980.11
2006-09-18 bought fagix shares 3356 @ 6.25
2006-09-20 sold fagix shares 3356 @ 6.25
Cash now at 20980.11
2006-09-20 bought vustx shares 2471 @ 8.49
2007-01-11 sold vustx shares 2471 @ 8.63
Cash now at 21326.05
2007-01-11 bought fagix shares 3206 @ 6.65
2007-02-01 sold fagix shares 3206 @ 6.72
Cash now at 21550.47
2007-02-01 bought vustx shares 2514 @ 8.57
2007-05-14 sold vustx shares 2514 @ 8.76
Cash now at 22028.13
2007-05-14 bought fagix shares 3133 @ 7.03
2007-06-26 sold fagix shares 3133 @ 6.98
Cash now at 21871.48
2007-06-26 bought vustx shares 2591 @ 8.44
2007-12-07 sold vustx shares 2591 @ 9.31
Cash now at 24125.65
2007-12-07 bought fagix shares 3491 @ 6.91
2007-12-20 sold fagix shares 3491 @ 6.85
Cash now at 23916.19
2007-12-20 bought vustx shares 2536 @ 9.43
2008-05-05 sold vustx shares 2536 @ 9.56
Cash now at 24245.87
2008-05-05 bought fagix shares 3458 @ 7.01
2008-05-09 sold fagix shares 3458 @ 6.97
Cash now at 24107.55
2008-05-09 bought vustx shares 2500 @ 9.64
2008-09-22 sold vustx shares 2500 @ 9.82
Cash now at 24557.55
2008-09-22 bought fagix shares 3807 @ 6.45
2008-09-30 sold fagix shares 3807 @ 6.13
Cash now at 23339.31
2008-09-30 bought vustx shares 2369 @ 9.85
2009-01-20 sold vustx shares 2369 @ 11.26
Cash now at 26679.60
2009-01-20 bought fagix shares 5604 @ 4.76
2009-02-11 sold fagix shares 5604 @ 4.84
Cash now at 27127.92
2009-02-11 bought vustx shares 2507 @ 10.82
2009-07-15 sold vustx shares 2507 @ 10.08
Cash now at 25272.74
2009-07-15 bought fagix shares 4096 @ 6.17
2009-07-31 sold fagix shares 4096 @ 6.72
Cash now at 27525.54
2009-07-31 bought vustx shares 2651 @ 10.38
2009-12-04 sold vustx shares 2651 @ 10.49
Cash now at 27817.15
2009-12-04 bought fagix shares 3575 @ 7.78
2010-01-13 sold fagix shares 3575 @ 8.24
Cash now at 29461.65
2010-01-13 bought vustx shares 2896 @ 10.17
2010-06-04 sold vustx shares 2896 @ 11.12
Cash now at 32212.85
2010-06-04 bought fagix shares 3938 @ 8.18
2010-06-07 sold fagix shares 3938 @ 8.14
Cash now at 32055.33
2010-06-07 bought vustx shares 2864 @ 11.19
2010-10-13 sold vustx shares 2864 @ 11.92
Cash now at 34146.05
2010-10-13 bought fagix shares 3752 @ 9.10
2010-11-03 sold fagix shares 3752 @ 9.24
Cash now at 34671.33
2010-11-03 bought vustx shares 2988 @ 11.60
2011-02-23 sold vustx shares 2988 @ 10.76
sma 15 Cash now at 32161.41
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