General Market Index (GMI) table

I happened to see an article over the weekend presenting an analysis that showed that by missing the best market days over many years one would have severely underperformed a portfolio that just stayed invested in the S&P500. Therefore, the author urged, just remain invested. However, these studies conveniently ignore the fact that many similar studies have also found that by missing the worst days in the period one would have vastly outperformed a buy and hold S&P500 portfolio. Here is one example from a story published by investors.com  in 2006.

Thus if one could time the market and exit during turbulent times one does best. So, that analysis implies, exit the market during major declines. The fallacy from all of these analyses is that they assume the investor missed all of the best or worst days over many years. How could someone do that consistently over a multiyear period?  None of these analyses makes any sense to me. If a financial advisor used such a study to keep me in the market I would run…

If this were a normal market environment, the indicators I follow are so  oversold that I would have to begin to re-enter an index ETF in stages. The put/call ratio of 1.26 and the T2108 at 7% would indicate an imminent bounce. But the event risk from the likely pandemic suggests that bad news could pull the rug out from under the market at anytime. So I am safely on the sidelines in all of my accounts. All of my great trading gurus said there were times to be out of the market. I really do not care if I miss a 5-10% move up. I am trying to avoid a 20-50% decline instead. Anyone who feels compelled to remain long in this market should join gamblers anonymous.

The GMI remains Red, at 1 (of 6).

I went to cash in my smaller 457 university pension account on Friday. It had grown so high and I did not want to take a chance of losing much of the gain. I would rather miss out on an advance than suffer a decline. When this virus threat is over I may be brave enough to reinvest. The GMI2 has fallen to 4 (of 8) but the GMI remains at 6 (of 6). If I flew on instrument I would be fully invested. But too much concerns me. I also sold most of my positions in my trading IRA but retained a large position in GLD, which has done well. Next time I want to ride gold,  I will instead buy the 3X leveraged bullish gold ETF, UGLD.

A pandemic reminds me that we are all one species inhabiting this planet. A virus does not care what race or nationality we are and what country or state we belong to. Boundaries and countries are artificial concepts that tend to foster differences between people. These manmade differences get in the way of creating a world where everyone is taken care of. I remember that the first astronauts looked down at the earth and marveled that they saw no boundaries,  states or countries. Perhaps one day we will create a system for allocating the planet’s resources and the right to survival more humanely and equitably for all human beings….