Tracking Sy Harding’s STS
It’s April and we are closing in on the unfavorable season for equities whether you subscribe to Sell-in-May or an advanced seasonal strategy. Sy Harding called his advanced strategy the Seasonal Timing Strategy (STS) and very few active market timers (including Sy’s own active investing) beat this simple objective strategy over the full market cycle. As you may know very few active market timers beat the indexes they compete with. The seasonal strategies do, but again over the full cycle and not every year. I know because I researched many market timers and strategies and finally adopted my own version of the seasonal strategy.
What’s attractive about the concept (besides its results) is how simple it is to execute and how it fits perfectly with the index tracking funds in most retirement accounts. I was looking for the best strategy for the Government’s Thrift Savings Plan (TSP) which is similar to a 401K and his strategy fit like a glove. What I have learned talking to many people is that they otherwise do not care about investing, finance, and especially the impossible task of financial research. But they find themselves toward the end of their careers with a large enough retirement nest egg that forces them to start worrying about it. And they should worry about it.
Those who rode either of the last two stressful bear markets found out how quickly one can lose several years salary (not savings) in the market. Those who followed Sy’s strategy found it missed most, but not all, of the deep market losses. They started the next bull market so far ahead of their buy & hold peers that even if they missed a few percent gains during a bull market year, their nest egg grew larger because their gains applied to a larger account. But the seasonal strategy does not always lag during bull market years, some years it outperforms due to deep market corrections that occur during the summer or fall. Typically the seasonal strategy captures most of the gains of the bull market while taking on half the market risk. Long term Sy Harding followers already know all this.
If you are unfamiliar with Sy, I discuss him and his strategy on my website here. Unfortunately his service is no longer available so I decided to keep track of his seasonal strategy’s performance along with my own. I created a webpage for our members with a simple real-time chart of the DIA ETF with his MACD indicator. You can view the MACD indicator and I will update the dates for each of his investment windows open and when he would recommend a buy or sell. I will also send out a e-mail notification for members for Sy’s STS timing. The webpage is simply so you can anticipate and see real-time what the MACD signal is indicating.
Sy used the closing price on 20 April for the first-look at the MACD. If the MACD is already on a SELL at the closing price of 20 April, then he would issue an allocation change for the next day and he would track performance on the closing price of 21 April. For those using the DIA ETF he recommended multiple trades throughout the trading day on 21 April to get an average price. All sound advice.
Anyone who signs up prior to 18 April for my service will receive our e-mail and status on his timing. Unlike Sy Hardings $275 per year service our basic timing service only costs $85 per year. My cost is lower because I do not include all his weekly reports for his other timing services. I do give a Spring and Fall Summary at this rate that covers the indicators I am looking at to determine if we are in a bull or bear market. This informs seasonal investors how much exposure they should take on during the favorable season for equities. My service is tilted to those investing in TSP accounts presently, but it applies to all retirement accounts since TSP invests in the same index funds available to everyone. And the same for our bull/bear indicator. Learn more about my service. Also visit my free blog for TSP & Vanguard Smart Investors called Perspectives.
Michael H. Bond