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Thread: When I plan to get out of equities

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    When I plan to get out of equities

    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.

    SP500vsMarginROC.jpg

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    Expects Yuge Games nsacpi's Avatar
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    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
    Last edited by nsacpi; 07-21-2017 at 03:42 PM.
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    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.
    Last edited by Enscheff; 06-13-2022 at 04:17 PM.

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    Expects Yuge Games nsacpi's Avatar
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    Not bad. Through a somewhat different approach I concluded 2900 on the S&P500 is a good target for getting back in.
    "I am a victim, I will tell you. I am a victim."

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    3100 is my target to buy in
    "I can't fix my life, but I can fix the world" said the socialist

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    Expects Yuge Games nsacpi's Avatar
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    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.
    "I am a victim, I will tell you. I am a victim."

    "I am your retribution."

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