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Computerized Investing > February 2011

Staying in Front of the Market With the “Stock Market Dashboard”

PRINT | | | | COMMENTS (46) | A A   Reset

by Wayne A. Thorp, CFA

According to investment guru Sir John Templeton, “bear markets have always been temporary. And so have bull markets.” The stock market follows cycles where it rises, falls and moves sideways. It is virtually impossible to predict where the market is going. However, according to Leslie Masonson’s book, “Buy—Don’t Hold” (FT Press, 2010), you can listen to the market telling you where it is headed.

In his book, Masonson states that the market is always doing one of three things:

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Discussion

Jerry from AZ posted over 3 years ago:

This dashboard reading would be nice to have generated automatically each week.


Kenneth from SC posted over 3 years ago:

Bought the book and I like it. The Dashboard is available at

http://www.buydonthold.com/category/blog/


George from NC posted over 3 years ago:

We need a current calculation on the
AAII site available 24/7. It should also show the latest Leading Economic Indicators. This would be a great member benefit.


Sally from CA posted over 3 years ago:

It would be nice to see this each week in the Thursday Investor Update.


Chuck from WY posted over 3 years ago:

Interesting approach, but I don't buy in to selling everything just because the market is turning down - think MLPs and closed end funds or large dividened paying stocks.


Robert e. from KY posted over 3 years ago:

Could dashboard reading be generated automatically each week and posted on AAII Website?


Kenneth from WI posted over 3 years ago:

You still have to decide what sectors to invest in, or doesn't that matter?


Jim from CO posted over 3 years ago:

Yet another good way to analyze market direction. Always a good idea to have a sense of market direction when considering potential investments.


Ramesh from OH posted over 3 years ago:

Masonson has adapted and simplified what used to be called the Elves Index developed by Bob Nurock who presented his TMI or Technical Market Index every week at the Louis Ruckeyser's Wall Street Week show on PBS. Nurock had ten indicators and recommended buying at +5 or more and selling at -5 or less for intermediate term results. TMI worked extremely well and racked up a great record. Ruckeyser, however, was a perma bull and banished Nurock when his index remained, correctly, negative for some time.


Richard from AL posted over 3 years ago:

I would like to see this posted each week on the AAII site.


Steve from GA posted over 3 years ago:

This does not appear to address foreign markets.


David from FL posted over 3 years ago:

Wonder if you could use the negative ratings to buy puts/sell calls to protect your positons or short the indices or use the short ETFs????


Hal from MN posted over 3 years ago:

Has this been back-tested? I too would like to see this on the Thursday Investor Update.


David from VA posted over 3 years ago:

a good company, good stock can still be affected by macro economic conditions,regardless of how good the micro company numbers look, especially the smaller shadow stocks. It would be nice to have a short summary like the dash board on AAII. Would keep memebers from having to "dash" all over the nets trying to develop a sense of the latest "numbers". Some of the dahboard input seems as valid as the investor sentiment following.


David from VA posted over 3 years ago:

a good company, good stock can still be affected by macro economic conditions,regardless of how good the micro company numbers look, especially the smaller shadow stocks. It would be nice to have a short summary like the dash board on AAII. Would keep memebers from having to "dash" all over the nets trying to develop a sense of the latest "numbers". Some of the dahboard input seems as valid as the investor sentiment following.


Donald from PA posted over 3 years ago:

I'll add another call for the dashboard to be included in the Thursday Update. Good idea.


Tom from IL posted over 3 years ago:

please post dashboard results for us weekly


Ron from FL posted over 3 years ago:

Let's take a vote.I would also like to see the dashboard posted weekly.


Gil from CA posted over 3 years ago:

It would be a wonderful member benefit if the weekly computations, as well as a running cumulative score, could be posted on the AAII website, or even better, sent to us by email.


Stephen from VA posted over 3 years ago:

I too would appreciate a weekly email of the the dashboard results.


John from ME posted over 3 years ago:

When you highlight and then abondon it to one's own devices it causes one to wonder if this is a ploy. If it makes as much sense as it seems it should be an integral part of your site and other trading platforms.


Matthew from CA posted over 3 years ago:

In order to have confidence in the Dashboard, I would like to see the results of a 10 year (or more) back-test involving some version of the Dashboard and a broad index such as the SP 500. Are there back-test results available in the book or elsewhere?


John from NC posted over 3 years ago:

Add one more to the list requesting a weekly report on this site. Right along side the sentiment survey results.


Karl from PA posted over 3 years ago:

I too agree it would be nice to have these reports each week.


Larry from CA posted over 3 years ago:

Here's another vote for AAII to provide this info weekly. Right now Masonson provides this on his blog, but there's no guarantee how long he'll continue to do so.


Eric from MA posted over 3 years ago:

The tally on his blog disagrees with the AAII tally - so if you are going by what someone is feeding you, vs just using this to build your own concepts - you should be careful that they are doing it in a way you feel is correct.


Geoff from AR posted over 3 years ago:

Leslie Manson back-tested his "Stock Market Dashboard." He compares the S&P 500, NASDAQ, and a 15 ETF portfolio. The ETF portfolio provides worthy returns but take note, he invests in ETF's using relative strength and attaches 10% trailing stops. Hardly a true comparison considering he does not apply trailing stops to neither the S&P 500 nor the NASDAQ. Dashboard over the back-tested time period outperforms buy-and hold but did not fully protect you from 2007-2009. Go to the FAQs section of www.buydonthold.com and down to the question "What are the back-tested results of the Dashboard using the ETF strategy that you proposed with the top-ranked six-month relative strength?"


William from PA posted over 3 years ago:

Please post weekly. Thanks!


Alan from CA posted over 3 years ago:

Here is my "vote" for the dashboard results to be posted weekly, or better yet, emailed weekly as a new member benifit. Thanks!


Robert from MI posted over 3 years ago:

Outstanding article. Has anyone looked up what date the dashboard went -3 before the tech bubble and the recession (crash)of 07/08. Also when did it go +3 in 09?

This is the most powerful tool if it truly works. Being able to pick the best sectors with the best stocks doesn't matter much if the overall market tanks.

Is this something the author would allow on AAII site? Worth paying for if it works.

(My mantra: 2008-never again in my portfolio)


Irwin from IL posted over 3 years ago:

I like the concept. In considering others requesting a weekly "snap-shot" I would prefer something more realtime if possible.


Gerald from VT posted over 3 years ago:

Has anyone compared the Dashboard to the VectorVest approach? They are similar in some ways. I would love to see the Dashboard back tested, posted weekly and compared to VV.


Britni from CA posted over 3 years ago:

This indicator has lost 7-8% on the SPY since its last sell signal 11/12/10.
:-)


John from PA posted over 3 years ago:

I'm 'time-constrained'(lazy?); if this has been back-tested and proven (to AAII satifaction) to yield good results (otherwise, why would it be reviewed here?), it would be valuable to have results published regularly by AAII, as a service to members. Individual 'digging' would be wasteful of valuable resources. Also, a 'Dashboard Scoreboard' could demonstrate its long-term record/usefulness.


Kenneth from CO posted over 3 years ago:

I came late to this article and decided to check out buy-don't hold web site. Masonson has now changed the dashboard because it missed the drawdown in 2007 and the upside in 2009. He now uses only four of his indicators and calls it version 2. Goes to show, you can publish anything that seems to predict the market and make more money this way then by trading your theory.


Sanman from TX posted over 3 years ago:

I Vote for weekly update.


Al from MA posted over 3 years ago:

I also vote for a weekly update


Hugh from OH posted over 3 years ago:

Need to see this dashboard with more frequency


Jean from MA posted over 3 years ago:

Every week would be great


Jean from MA posted over 3 years ago:

Every week would be great


Richard l. from IL posted over 2 years ago:

As has been pointed out before, in March 2011, Masonson revised the Dashboard described in this article.

Version 2, as he calls it, now has only 4 Indicators, vs 8 in the original described here. He says the revisions "simplify and improve the timeliness of the Dashboard signals".

For more, follow the links in the first item in his blog's FAQ section:

http://www.buydonthold.com/faqs/

His analysis of the Version 2 performance for 2011 concluded that during the year's "....unstable non-trending market environment, the Dashboard’s trend-following strategy did not perform well", at a "negative 6.16%". The analysis is here:

http://www.buydonthold.com/site/wp-content/uploads/2012/01/Dashboard-V2-Review-for-2011-With-Table-1l.doc

I think the Dashboard is useful but requires close attention to his recommendation to use Trailing Stop orders and, in sideways markets, to set them below support levels. I also wait to buy until prices fall near support levels, rather than exactly when the Dashboard signals BUY.

I would appreciate comments about these ideas.

Dick


Wayne from IL posted over 2 years ago:

Thank you for pointing out the revised dashboard. I will take a look at it for a future CI article. Wayne A. Thorp, CFA, editor, CI


James from CO posted over 2 years ago:

Please do publish the Dashboard every week.


Kim from NC posted over 2 years ago:

I concur with all of the requests of AAII publishing it once a week. What a great tool to help us out. I don't agree with selling everything, but would like to have a certain amount set aside in a separate account to give it a try for a few years


Charlie from FL posted over 2 years ago:

Here is my vote for AAII publishing the dashboard. My preference is for real time updates.


Joe from MD posted over 2 years ago:

I'm for AAII to publish the dashboard weekly.


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