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Random Ravings From the Lunatic Fringe

May 7, 2009 3:10 am by Dean Morel

Am I the lunatic fringe? Or am I extrapolating too much from my two cowlicks? S&P500 2009 May 05

Roger Nusbam often opines about the using the 200 DMA for defensive action. I agree with him that is an excellent objective trigger to keep a close eye on and use to close positions. However, just because something is a good defensive trigger does not mean it is a good offensive trigger as well. Look at the chart above. Re-entering at the 200 DMA would mean you missed out on a 40%+ rally. While virtually no-one would have bought at the exact market bottom there was a lot of opportunities to buy a lower prices. There is absolutely no need to use the same trigger for selling and buying. While it may work for Roger and for you to do so, it certainly does not work for me. As I often say finding what works for you is one of the keys to investing. In general I find too many academics and investors using one trigger or dimension to base mulitple decisions on. With plethora of triggers this makes little sense to me, but as I said each to their own.  

Screening for Trends

Either way you should attempt a fusion between fundamental and price action factors. via  Screening for Trends — Seeking Alpha.

That looks exactly like something I’d write, but in this case the author was Richard Shaw. While Richard said you should attempt a fusion approach he then went on to talk exclusively about using a technical approach aided by computers. The approach that works for me is to use technical signals for objective triggers and fundamental information for subjective triggers.

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