Make 15 1/2% on AUTO-PILOT & no trading?

Make 15 1/2% on AUTO-PILOT & no trading?
BLASPHEMY! I say!

I have been intrigued by Laundry's "Best Bond Strategy", which he says his fund is up 14% this year and shows a compounded annual growth rate of 20.2%!

He uses 2 bond funds, one is US Treasuries which do well during fear, the other is Junk bond funds which do well during bullish moves.

I wondered what the result would be if you bought an equal dollar amount of both and held them thru the past year.

If my math is correct, using the dividend data at finance.yahoo.com, I came up with 15 1/2% total return.

Here's how I figured it:
$10,000 in JNK (250 shares) and $10,000 in TLT (104 shares)on December 2nd 2010.

JNK was 37.80 per share and now shows a loss of $517 to date.
TLT was 95.96 per share and now shows a gain of $2,363 to date.

JNK paid monthly dividends of around 0.25 per share monthly for a gain of $848 on 250 shares ($330 overall).
TLT paid monthly dividends of around 0.33 per share monthly for a gain of $410 on 104 shares ($2773 overall).
Total gain on $20,000 = $3,104 (about 15 1/2% with seemingly little risk and no trading.)




Obviously taking advantage of extremes could result in dramatically better results.
JNK dropped below $34 on October 4th and TLT topped at over $124!
That would have been a killer switch.
http://stockcharts.c...4510&r=4776.png

Recently, as I mentioned days ago, TLT has double topped but JNK has made a higher low.
I hope to be adding to JNK in the coming week.
http://stockcharts.c...2778&r=8826.png

Edited by Rogerdodger, 03 December 2011 - 04:39 PM.

Roger, Is this something you use? If so, have you considered just using a cross of the dailies, or taking a 2 to 1 position on the cross?

Nice system, thanks for posting. Now if I could just trade it in my 401k.

Roger,
Is this something you use? If so, have you considered just using a cross of the dailies, or taking a 2 to 1 position on the cross?

I never traded "bonds" or their etfs until this May when I "went away in May" and bought a bond fund.
They seem so boring, Like going to Vegas and playing bingo.

But recently ETF's have my attention as an interesting strategy.
I watched JNK make that big spike down and reverse in October but was preoccupied with business and didn't take it.
NOTE TO ME: Kick my self.

Treasuries look so over-extended but are being manipulated, so that throws a kink in the works.
If we see a market dip this week but JNK stays relatively strong, that would be a bullish sign, near term anyway.

http://stockcharts.c...14406&r=841.png

Edited by Rogerdodger, 03 December 2011 - 09:01 PM.

I am thinking it's time for me to have at least 20-40% of my money in the bonds arena and have been giving some thought to putting it with Laundry. I can get his percentage charge down to 1.5% easily and that will take a portion off my plate. I have 3 trading accounts with each of my children being 2nd beneficiary and 3 SEP accounts set up the same way. With the market as wild as it's been and looking to be in a primary Bear mode I rarely have 30% invested at any one time so that leaves 70% sitting collecting next to nothing. Just trying to make things easily and more profitable. JDJ

if interest rates rise bonds may go down...............


http://finance.yahoo...ource=undefined

http://finance.yahoo...ource=undefined

Isn't that always true vitaminm?

if interest rates rise bonds may go down...............

There is no sure thing except that Bill Gross said he was out of bonds in February.
I bet he's out of blonds too.

Compare the returns of switching between bond funds to buy & hold the S&P:

Edited by Rogerdodger, 03 December 2011 - 11:19 PM.

I am thinking it's time for me to have at least 20-40% of my money in the bonds arena and have been giving some thought to putting it with Laundry. I can get his percentage charge down to 1.5% easily and that will take a portion off my plate. I have 3 trading accounts with each of my children being 2nd beneficiary and 3 SEP accounts set up the same way. With the market as wild as it's been and looking to be in a primary Bear mode I rarely have 30% invested at any one time so that leaves 70% sitting collecting next to nothing. Just trying to make things easily and more profitable.
JDJ

Tuffy88 used to post all the time about switching using the Investors Business Daily market trend system.
He would buy SPY when the market was positive and SHY when the market was weak.
I don't see why you couldn't use the same type of system with the bond etfs instead of SPY and get similar price moves plus the dividend bonus.

One might also use a Jack Chan type of system to determine if a certain bond etf were on a buy or sell, and if interest rates were to rise, an inverse bond fund.



Might Be A Great Time To Be A Bond Bear at Forbes(Fri, Dec 2)

http://stockcharts.c...94877&r=929.png

Edited by Rogerdodger, 04 December 2011 - 04:32 AM.

Roger,
Is this something you use? If so, have you considered just using a cross of the dailies, or taking a 2 to 1 position on the cross?

I never traded "bonds" or their etfs until this May when I "went away in May" and bought a bond fund.
They seem so boring, Like going to Vegas and playing bingo.

But recently ETF's have my attention as an interesting strategy.
I watched JNK make that big spike down and reverse in October but was preoccupied with business and didn't take it.
NOTE TO ME: Kick my self.

Treasuries look so over-extended but are being manipulated, so that throws a kink in the works.
If we see a market dip this week but JNK stays relatively strong, that would be a bullish sign, near term anyway.

http://stockcharts.c...14406&r=841.png

That chart looks bullish for the stock market. The 2 other times in which the long treasury fund went above the top band were pretty darn bullish for the stock market. Who owns the long bonds? I figure China has to have a few on their books. They would be stupid not to sell those long treasuries right now and reallocate into assets. Maybe that is the reason why China is willing to build up the infrastructure in the USA and the UK right now. Maybe that is the reason why Caterpillar looks really bullish.