Managed Funds Navra US Fund distribution

Discussion in 'Shares & Funds' started by perky, 7th Oct, 2006.

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  1. Simon Hampel

    Simon Hampel Founder Staff Member

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    I find that short term MA's give a signal too early. This might be fine for shorter term trading of shares, but for funds, which I still primarily have a buy-and-hold strategy with, I don't intend to act quite that quickly.

    My cycle timeframes are close to 6 months ... eg if a fund has a slight downtrend over a 6 month period, but then starts to pick up again (eg Platinum Japan fund), that's fine with me - I'm happy to hold through that period, and will start buying again once upwards momentum is restored.

    If a fund moves downward enough that the 200 day MAV turns negative (eg Platinum Japan from Oct 2002 - July 2003), I would consider selling out of this - better to reuse the funds in something that is likely to provde some return rather than to hold onto something that has dropped so far so quickly.

    The problem I haven't quite reconciled yet is that the 200 day MAV lags too far behind the action and doesn't turn negative for quite some time after the fund is already way down. It does confirm that the fund is into longer term negative territory though, and isn't likely to go up again for a while (until the unit price rises back up above the 200 day MAV at least).

    I kind of want the best of both worlds - I want a signal that tells me the fund is trending downwards for more than a couple of months, and tells me early enough so that I can sell out before it gets too low. But I don't want to sell out if it's only going to drift down a bit before picking up again. mmm ... perhaps I need a crystal ball :rolleyes:

    I also find the 100 day MAV too volatile to be useful - it lags too much and moves to much, giving too many signals that are too late to be useful. Perhaps I need to experiment with something between 100 and 200 days to get the right balance.

    I'm not that concerned about sell signals anyway - selling is a last resort ... I'm happy to hold through a downturn - as most of the funds I'm currently watching typically have downturns that last a maximum of 6 months before heading upwards again.

    Once I get my data cleaned up a bit, I'll start posting some charts so we can discuss this with real historical examples.
     
  2. Andrew Allen

    Andrew Allen Well-Known Member Business Member

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    Sim, have you considered running your own AIM system? :)

    Actually there are some robust methodologies out there from some of the better Aussie educators for the person with a full time job but 30 mins spare on the weekend and who is prepared to trade off weeklies.

    Alan Hull and Jim Berg are two people that provide simple systems with proven track records.

    'It aint rock science' as Rolf Latham once said to me.
     
  3. Tropo

    Tropo Well-Known Member

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    Sim,

    MMA is a more powerful tool than just one or two MA because it gives info about strength of the trend and how strong the support is.

    The long term averages confirm the trend direction. Enter long if the crossover is on the upside and sell when crossover is downside.

    Sure - you can play with all sort of combinations (you even should) to tune your system. But I do not think that you will find “the best of both worlds”.

    One more...try use weekly chart instead of daily if your time frame is 6 months.

    As a good exercise play with a weekly XJO, DOW etc... charts and try all sort of tools (MA is lagging indicator and does not work in the sideways moving market) so you may get some good results.

    Do not underestimate sell signal. Statistically S.Market is trading sideways most of the time, so if you sell poor performer and find good one, your money will work harder for you all the time (eg: it took nine years for the Market to recover from the 1987 correction). Time is money !!.

    In the end of the day, it does not matter if you use 150MA, MACD, Stochastic etc… or just support & resistance lines - as long as your system will suit your personality.

    Have Fun !!.:D

    PS – Yep…..Crystal ball would be very handy from time to time…:rolleyes:
     
  4. Simon Hampel

    Simon Hampel Founder Staff Member

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    The problem is that I'm not trading shares - I'm investing in funds. Sure, I will sell out of a fund that is really trending downwards because the underlying market is heading down ... but the fund managers should (in theory) be able to add value beyond that of the underlying market - so I don't want to be second guessing their actions ... I want to give them the opportunity to do their job.

    Trading funds I think can be counter-productive in many cases.
     
  5. Simon Hampel

    Simon Hampel Founder Staff Member

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    AIM system ?
     
  6. Andrew Allen

    Andrew Allen Well-Known Member Business Member

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  7. Simon Hampel

    Simon Hampel Founder Staff Member

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    Thanks Insight !!!

    Or should I say "damn you" for giving me an entire new area of research to take up my already busy schedule :D :D :D

    Funnily enough, from my initial couple of minutes of reading the information on that site - it seems that I'm already a reasonable way down the track of formulating a very similar system for managing my investments. It's quite satisfying to see that I'm not completely crazy and that there is actually a large body of existing thought and knowledge that has gone into this type of investment management.

    You've just made my life a whole heap easier, Insight - now I don't have to reinvent the wheel, I can leverage a lot of the work of other people in refining my system.

    I'll start documenting things as I go - I think people might find it interesting to see it develop over time.
     

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