Everyone and their dog watches the 200 day and 50 day MA’s. My timers are based on both fundamental analysis and price momentum/trend. I spent my time in the past with commercial software trying to find TA strategies that would be beneficial to me but I wasn’t successful. I think you have to get the fundamentals right and then you have to buy when the wind is on your sails. At least, that’s what works for me. Buying a stock simply because it is cheap or has a good yield will give you the results that investors got when they bought bank stocks on dips last year.

I have compared commercial timers against mine (just Google “timer QQQQ” to get a list) but none worked as well as mine when applied to my 2X ETF models. I’m not saying there aren’t better models out there. Rather I haven’t found them or they are private.

There was a study published on the SSRN (social science research network) last year which concluded that a simple market timing model based on moving averages beat buy-and-hold by a slight margin. The premise of what I do is to get in the market when an upward trend has developed and ride it with 2X ETF’s. These leveraged ETF’s aren’t for everyone given the volatility. However, some investors may consider allocating a portion of their portfolio to 2X ETF’s.

Getting back to the 200 day moving average, there are so many investors watching it that some watch the 190 day MA to be ahead of the crowd. Likewise with the 50 day MA. I know some guys who have TradeStation accounts which allows backtesting of many strategies but I have never heard one of them say that using the 50 day MA and 200 day MA produced stellar returns.

Fred

@CC. I did buy cashable GICs in my RSP when the interest rates on them were just a bit above 4%, but unfortunately I only bought 2-yr durations at the time. According to Mark Carney, our overnight rate will stay at 0.25% until the end of the Q2 in 2010! So, if that rings true, the interest rate will STILL be at these incredibly low levels when my cashable GICs mature! Ugh! I should have gone to a longer duration – as only hindsight is 20/20.

@Fred: Michael’s post refers to market timers as a group; it doesn’t preclude the possibility that there might be consistent winners.

@Jon: Shhhh! We don’t want to give the procrastinators more excuse!

Tax deadline is only if you owe the government money, I think. I’m always so sure of myself.

Yes market timers have to get it right on both signals but you don’t have to get it right every time to beat buy-and-hold.

Of course, two signals don’t provide a long term history. For a long term history, you can consider my Nasdaq and Russell 2000 long/short models both of which have compound annual growth rates 20% higher than buy-and-hold for the past nine years. Name a mutual fund that has beat the US markets by 20%/year for the past nine years.

Fred