Price Inertia

[Tomanyiron]

Knowing how inaccurate my predicting the future market movements, have caused me to hunt a more accurate day-to-day "price inertia”. I’ve had too much reliance on chart patterns and too little on actual price movements. I believe a good system must be rooted in the numbers. So far the formula I am working with has shown a good backtested success rate.
The study is somewhat comforting, because it’s telling me there may be a few errors now and then. However in the big picture of things, they never have to be big. As long as I accept the errors when they become evident, and take corrective action.

My calculations on the price inertia for the TSP funds.


Commentary: The two funds with the highest potential as of today are the I fund and the C fund.

The EFA (I fund) has been in a long up-trend most of the year. It had a little slump last of March into mid April. Since then it has been running like gangbusters. No doubt it has the highest price inertia NOW.

The S&P-500 (C fund) has had a similar year, but with a larger slump in March to mid April, with a bottom on April 13. That bottom is only evident in hindsight. And no one knows how long it will last. The last 5 trading days has been about flat. However as of EOD May 3, 2017 that up-inertia is still intact.

The other two funds (F and S) have down-inertias for the past few trading days, (3 for the S fund, and 7 for the F fund).

[wisepierre]

Can you explain this price inertia a bit more?

[crondanet5]

And why did you choose to IFT C Fund today?

[Tomanyiron]

Can you explain this price inertia a bit more?

Without giving too precise details with the actual formula, I will say this; it is based on recent price movements. The final number is similar to what you might get from an exponential moving average. And as with EMAs more weight is given to the latest price. The “weight” part of the formula is not set in stone. I have not backtested more that two years. And may need some tweeting or even a finagling factor, once I have more time to look back further.

I know this does not clear things up for you. And our good mathematicians on the site are scratching their heads. But it’s a personal idea, I’m making into numbers.

[Tomanyiron]

And why did you choose to IFT C Fund today?

Cron (as of yesterday’s close) this system is telling me I should be in the C or I fund. Should have been in the C fund since April 21. The I fund a lot sooner. I got no time machine so I can't fix the past.

When I take stock of my medium risk tolerance and look at how far the I fund has come this year, I opted for the C. This may be an error, there is going to be some now and then. With each day’s close comes a new set of calculations. Can’t say much more than that now.

[Tomanyiron]

You know after some serious deliberations, I have decided to change my IFT from C to I.
Considering this is my first IFT for May, I have the ability to change to C later if it presents itself as a better alternative later. And still have the free G to escape both if need be.

[crondanet5]

Following me again, eh?

[skiehawk11]

Price inertia = momentum

I've done seasonal studies in the past. One method you may find interesting is looking at the historical return of a given day and then factor in the prrevious day, previous month and previous quarter momentum calcs.

This will enable you to see if certain momentum factors have greater weight during different times of the year.

[Tomanyiron]

Following me again, eh?

Yeah, and you led me wrong. Why didn't you transfer yesterday, when the I was down? You caused me to miss out on 1% gain.

On another note, the good news is we are not on everyone's contrarian list anymore. Very few submitted opposite IFTs.

[Tomanyiron]

One method you may find interesting is looking at the historical return of a given day and then factor in the previous day, previous month and previous quarter momentum calcs...

Thanks Skie, you just made me feel stupid.

Yea, I see what you are saying, but right now I'm working on what this system (as is) would have done in the years starting just before the 08 financial crash until now. If I find out I've been too naïve, I will incorporate some of the things you suggested.

[Aitrus]

Another investing strategy would be to strap a piece of toast to a cat's back, then toss it into the air. The key is to make sure the toast is buttered.

If the cat lands on its feet, stocks will continue up like normal. If the toast lands buttered side down, then bonds are in for a bull run. If the contraption just spins in midair due to opposing forces of natural law, then capitalize on the fact that you just invented an engine capable interstellar travel.

[Tomanyiron]

Another investing strategy would be to strap a piece of toast to a cat's back, then toss it into the air. The key is to make sure the toast is buttered.

If the cat lands on its feet, stocks will continue up like normal. If the toast lands buttered side down, then bonds are in for a bull run. If the contraption just spins in midair due to opposing forces of natural law, then capitalize on the fact that you just invented an engine capable interstellar travel.

Hey, I didn't start this thread as a joke. You guys got me distracted. I was laughing, lost my place backtesting, and now I'm going to have to start all over again.

[Tomanyiron]

“People evaluate the evidence of their everyday experience to make judgments, form beliefs, and decide on courses of action, and they sometimes misevaluate that evidence and make faulty judgments, form dubious beliefs, and embark on counterproductive courses of action” Thomas Gilovich
I hope he wasn’t talking about me.

Updated stats for EOD 5/4/17
Ride on the trend, just hope I’m not too late to profit.

[Jokerswild]

Aitrus and Tomanyiron are hilarious. Keep up the great work on all accounts. One thing I find especially alarming IMO, is that there are only 14,674 members on this site, and we already know that many haven't touched their accounts in years. With that number in mind, I've found this site to be the epicenter of resources and knowledge on wiser investment strategies for our TSP accounts. I don't have a figure, and I'm sure Tomanyiron or Aitrus would create a chart since they seem to like these things , but how many people in this world have a current TSP account and aren't part of his great site They are missing out significantly. Had I known about this site from the beginning, there is no doubt I'd have so many more $$$$$s after my name. Keep up the great work everyone

[Tomanyiron]

Had I known about this site from the beginning, there is no doubt I'd have so many more $$$$$s after my name.

I keep thinking about all the mistakes I made because of my naïve notions. If I had started sooner most would have been tried and eliminated already. Probably still making some, but I've got to be smarter now due to TSPCenter.