When I plan to get out of equities

[Enscheff]

I posted this in a non-related thread, but figured I'd dump it here too.

I am tracking the total margin debt as reported monthly by the NYSE. I am keeping an updated 12 month rate of change calculation going. That rate has gone over 0.04 only twice during the time I have data. Both times accurately predicted the 2001 and 2008 market meltdowns. Getting out of equities in 2008 due to that metric saved me a boatload of money.

The rate is currently bumping safely along the 0.015 mark.

224

[nsacpi]

funny...using a completely different criterion (ratio of S&P 500 to potential GDP) I got out yesterday...i'm sure i didn't get out at the top...but i want to be able to buy at a lower level....i probably will focus more on non-U.S. equities when I get back in

[Krgrecw]

If trump lets the tech companies bring back thier money from Ireland that might blow up in your face.

[Enscheff]

Quick update on this...

The 12 month ROC on total margin debt peaked at 4.386% back in March 2021. This allowed me to start tracking it's decline and make the following trades:

12/30/21 sold 50% at SP500 close of 4778
3/17/2022 sold 25% at SP500 close of 4411
4/14/2022 sold 25% at SP500 close of 4392

I missed the absolute market peak by 2-3 days, and have missed the bulk of the bloodbath in equities...only down 3.07% YTD, mostly due to buying all the way down with 401k contributions.

I expect the 12 month margin debt ROC to bottom out ~20 months after it peaked, which will be sometime around October (but obviously forecasting it matters not...I will track it and react accordingly). I expect the bottom of 12 month margin debt ROC to be roughly -4.5%. If this impending recovery plays out similarly to the one in 2009, the ROC bottom should coincide almost precisely with the SP500 bottom at a bit under 3000. At that point I will push 50% back in, then push in 25% more as the 12 month margin debt ROC raises towards 0.

[nsacpi]

Not bad. Through a somewhat different approach I concluded 2900 on the S&P500 is a good target for getting back in.

[sturg33]

3100 is my target to buy in

[nsacpi]

That's in the right ballpark. It's impossible (without a great deal of luck) to hit the low or the high. So better to scale in a little too soon than too late.