NOVEMBER 2011 PRO-FOLIO TRADE INSTRUCTIONS
OverviewRead last month's post - nothing has changed. Even with the recent agreement by the Fed to lend money to Euro banks at really low rates - nothing has changed. Sure the market spiked but truthfully the Fed's offer to help is like the proverbial band-aid on a bullet wound. It does nothing but allow the Eurozone to kick the can down the road another few months.
As a result of current conditions, Pro-Folio remains on the sidelines for 4 of our 5 investments. Here are the trade instructions:
The Pro-Folio model evaluates its holdings on a monthly basis. As of the last trading day of October (31st), we have the following trade signals:
SPY - AVOID
EFA - AVOID
IYR - AVOID
DJP - AVOID
IEF - HOLD
For existing investors:
Make no changes in your portfolio. You should keep 20% of your portfolio invested in the remaining 1 holding of the Pro-Folio model as shown above. The other 80% of your portfolio value should be in cash or money market funds.
For new investors:
If you are new to Pro-Folio this month, you should divide your portfolio into 5 equal parts, and invest an equal amount of money in each of the securities shown above marked "HOLD" or "BUY". Because you didn't invest in the components of the model at the time when the buy signals first turned positive, your returns on these initial trades may not be reflective of model's typical expected returns. DO NOT invest in SPY, EFA, DJP, or IYR right now. Stand by with that portion of your portfolio in cash, awaiting the buy signal.
These are very uncertain times in the financial markets. US treasury bonds, despite all the debate and worry about our debt ceiling and such, are still considered the safest financial instrument in times of uncertainty, as demonstrated by the recent increases in US bond prices. The world's investors are running to safety.
Fortunately for us, the Pro-Folio model has proven its worth over 36 years including the 2008 market crash, so we can continue to follow it precisely and expect that the value of our holdings will be preserved.