Buy Signal

By on May 25, 2010

The Tactical Timing System has generated a buy signal. To comply with the system the following positions will be purchased and funded with the sale of the Vanguard Short Term Bond ETF (BSV). The proceeds will be split between the two ETFs below:

Vanguard Total Stock Market ETF (VTI)

Vanguard FTSE All-World ex-US ETF (VEU)

Target Allocation:

45% equities; 55% fixed income

Commentary: Scary problems in Europe along with the prospect for continued slowing in the worldwide housing market has led to a fairly swift correction in worldwide equity markets. Plummeting equities have caused a spike in the TTS fear index and triggered a TTS buy signal.

Paradoxically, sentiment was universally disdainful of bonds at the beginning of the year. Every blogger of influence and Bill Gross, aka the bond king, were negative on bonds, but up to this point fixed income has been the superior investment. Last month I wrote that the market appeared to be ripe for a drop of as much as 30% from the recent highs (see We’ve covered nearly half that in a mere 4 weeks. This summer will be challenging for investors, however, nimble traders should find interesting opportunities in the coming months.

Disclaimer: It is very difficult to outperform a buy and hold strategy. Many investors have found themselves best served over long time horizons by investing regularly in a diversified portfolio of stocks or low cost, broadly diversified indexed stock funds. Information presented is based on analysis of past data and assessments by the Tactical Timing System model. Future performance may not reflect past performance. Profitable trades are not guaranteed. No system or methodology ensures stock market profits. Although accuracy is strived for, no guarantee is made regarding the accuracy of data presented.

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