Mark Mobius' view on good investing

Mark Mobius is known as a legend in the emerging markets investment and he has spent over 30 years in Asia continued seeking every opportunity in investing in this area. I recently found that he has an active blog and it is worth to mention for those of you are interested. The link is http://mobius.blog.franklintempleton.com/

One of his blog stated that he believed it needed to be optimistic in investing in the emerging markets and the personal qualities are the building for good investing.

"In emerging markets investment, I believe it is necessary to be optimistic. While one can certainly learn numerous technical skills that help in making investments or managing a portfolio, a large percentage of investing is still psychological. Both buyers and sellers act on a combination of instinct, information and logic. The development of certain personal characteristics could play a key role in contributing to your investment success."

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Long on IYR in Trader's Pick Portfolio

Established a long position on IYR as the daily chart triggered a buy signal.

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Long on USO in Trader's Pick Portfolio

Initiated a long position on USO with 50% of the Trader's Pick portfolio. The moving averages on the daily chart triggered the buy signal. The holding period may be just a few days or so since this portfolio is to be designed as swing trade.

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New Long Postion Established

The weekly moving average cross-over had triggered a buy (long) signal on the Ocean Portfolio. Here are the new positions for 4 ETFs at the market closed today:

1. EWZ
2. ILF
3. FCX
4. KOL

I am watching the EFA chart for its entry on the government TSP (401K equivalent) retirement system. When it triggers, I will replace the AGG with EFA.

The inverse SH on the Trader's Pick portfolio was sold with a loss as I anticipated the market may move higher from this point. The desired ETFs that I am watching have not been triggered yet. The watch list included:

1. EFA
2. EWZ
3. ILF
4. FXI
5. TUR
6. EWY
7. ECH
8. EEM

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Do Top Endowments follow Ivy Portfolio strategy ?

I am a great fan of Mebane Faber's research paper titled "A Quantitative Approach to Tactical Asset Allocation" using monthly moving averages to enter and exit an underline stock position. It was first published in the Spring of 2007 and his research was so brilliant that it attracted a lot of followers including myself. I didn't know about his paper until late last year and I wish that I could find out about it earlier so I could avoid the "Crash of 2008".

Faber's Ivy Portfolio book was published in early 2009 which he further described the detailed technique and asset allocation using ETFs with different sectors and how to invest like the Top Ivy League Endowments. The technique is definitely a winner disregard what the Ivy Leagues' investment approach will be.

For curiosity, I looked at one of the Ivy League endowment's EDGAR Report filed by Yale University Investment managed by David Swensen. As of Dec 31, 2009, the endowment's stock portfolio contained 10 equities as follow:

1) BIOD, 2) EFA, 3) GRIF, 4) INFN, 5) OEF, 6) OPEN, 7) SPY 8) TDI, 9) WWW and 10) XTXI

The portfolio contained 3 ETFs, 3 stocks with price under $10 and 1 stock that was issued in mid 2009. It seemed that not all equities managed by Swensen following Faber's Ivy Portfolio using 10-month moving average for either entering or exiting of a position. But it really doesn't matter, I am sure David Swensen knew what he is doing with his investment disregard it was an Ivy Portfolio strategy or not. Again, the Ivy Portfolio by itself already has great merit and one should not ignore as stock investor.

Set trailing stops from 10% to 12%

I realized that most of the ETFs that I am tracking are pretty volatile in terms of price movement. I've been experimenting with different trailing stop setups and found the 12% stops resulted a better outcome than the 10% with fewer transactions. So I re-adjust it to a 12% trailing stop and will see how it plays out.

Potential buy for these ETFs from the weekly charts

The major indexes had some gains this week as the DOW rose 0.9%, the NASDAQ rose 2% and the S&P 500 made 0.9%. The gains were not much but at least it stopped the prices from falling as it was in the last few weeks.

I looked at the weekly charts and found that there are few ETFs which may be a potential buy as a long position in the Ocean Portfolio. These are EWZ, ILF and EFA.

EWZ and ILF are closed above the weekly moving average MA-39 with the MA-4 is above MA-39 and the EFA is also approaching it. To determine the right time to re-enter as the long position, I basically use MACD, RSI and other filters to confirm my entry point. As for now, these three ETFs will be on the close watch list.

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Ocean Portfolio is in cash as of Friday closed

It's been a pretty tough 2 weeks for the Ocean, TSP and Traders Pick Portfolios. All selected ETFs finally hit the protective stop loss targets and were sold out. The Ocean Portfolio is in 100% cash now but after a total loss of 9.14% when I began tracking on 12/11/2009. The other two portfolios were not doing that well either. But with stop loss already established, the damage could be control in a reasonable manner. 

Well, I will wait for the next entry point to get back in. It really doesn't matter either its a Long or Short as long as the trend is established noticeably with the moving averages.  Have a nice weekend.

Markets continue to drop

DOW dropped 286 points and S&P 500 lost another 34 points on Thursday. TUR has been stopped out on the Traders Pick portfolio based on the daily closing price dropped below the MA-39 moving average. I initiated an inverse SH (Short S&P500 ProShares) purchase with 50% of the portfolio and tried to catch the near term down trend market.

Set trailing stops to 10%

With some of the more volatile ETFs such as EWZ, ILF that tend to have deeper price fluctuation, it may need to increase the trailing stops higher to avoid the whipsaw condition. I changed the trailing stops from the current 8% to 10% to see how well it will adjust to this situation.