Slack Investor Market Timing Experiment brings no joy
Slack Investor is aware that there are some people who state that they can ‘time the market’. Marcus Padley, and others, offer such a service to their subscribers.
Slack Investor doesn’t dispute Padley’s claims and has admiration for those who can perform this amazing feat. However, he is convinced that, without following daily, or even hourly, fluctuations in the markets, that this stuff is best left to professionals. The market swings are just getting a little too rapid, short-term and meaningless.
As the result of the China/USA trade talks, the US will lower tariffs from 145% to 30%, while China’s tariffs on US goods will drop to 10% from 125%. This caused the S&P 500 to surge and create enough momentum to trigger the 11-week Directional Movement System (DMS). Slack Investor uses the change in slope of the DMS in his market timing experiment to determine a BUY signal.
Slack Investor’s market timing is below par on the US market and he will be glad when his 25-yr index experiment with this small part of his portfolio (<2%) will be over in 2029. On current figures, his market timing for the US Index is 18% behind the ‘Buy and Hold’ strategy. Not very good!
Slack Investor should stick to his strengths
What Slack Investor is good at, is finding profitable and growing companies – that are not too expensive.
In the ongoing examination of my portfolio, Slack Investor has resolved to slowly concentrate the companies that he owns so that they are at the upper end of profitability, growth and affordability. This means a bit of weeding on the companies with a low Slack Factor and, a bit of buying on those with a high Slack Factor.
In the past few weeks, he sold his positions in Macquarie Group (MQG) and Cochlear (COH). Both are solid companies but, they were either, getting too expensive – or slowing down in growth. Both had a relatively low Slack Factor.
To decide what to buy, Slack Investor got off the couch and went to the Market Screener site to gather information on the companies where he would like to increase his holdings.
| Name | Symbol | PE (2027) | ROE (2027) | EPS GROWTH (3-YR AV) | SLACK FACTOR |
|---|---|---|---|---|---|
| Telix Pharmaceuticals | TLX | 23 | 27 | 50 | 59 |
| Supply Network | SNL | 31 | 38 | 18 | 22 |
| Codan | CDA | 22 | 23 | 20 | 21 |
| Megaport | MP1 | 58 | 18 | 64 | 20 |
| Pro Medicus | PME | 130 | 53 | 36 | 15 |
| XRF Scientific | XRF | 17 | 18 | 13 | 14 |
| CSL | CSL | 19 | 18 | 14 | 14 |
| Cochlear | COH | 34 | 25 | 13 | 9 |
| Macquarie Group | MQG | 17 | 12 | 9 | 6 |
The standouts, with a high Slack Factor, were TLX, SNL, CDA and MP1. MP1 is a newcomer to the Slack Portfolio and hasn’t got much of a track record yet. SNL is a great growing company but is already over 10% of the Slack Portfolio. That leaves TLX and CDA. I bought more of both of these to build up their positions in the portfolio.
Keep knitting.
Discover more from Slack Investor
Subscribe to get the latest posts sent to your email.