Here’s a snapshot of Iain’s recent trades (it’s so easy when someone shows you how!):
BUY
FDX – January 30th 2017: $194.57
SELL
MSFT – February 3rd 2017: $63.50 = $814.45
OPEN TRADES as at February 3rd 2017
Powerful Time-tested Investing Strategies to Grow Your Nest Egg
Tom says
February 9, 2017 at 9:19 pmCode IJH violates good management rules by allocating so much to one position.If it tanked the loss would outstrip any gains on other wins as proportion is 10 times higher.Any reason for this trade such a big allocation in proportion to others.Thanks
Gary Stone says
February 10, 2017 at 1:05 pmTom,
Firstly, these are not Buy and Hold positions. Each position is managed with a well-defined unambiguous exit mechanism. And a (re)entry mechanism for that matter. IJH (and each currently open position) has a Trailing Stop Loss that trails up as IJH continues to rise. The TSL is currently set at $163.41 for IJH). Meaning that if IJH fell to this price we would exit the position on the open the following day, thereby locking in around a 5.7% gain.
This is according to Iain’s Investment Plan (a copy of which is on this website and in the book) which has been researched in huge detail on historical data (research results are also provided on the Resources page of this website). We know that executing this Investment Plan has an edge to do better than the S&P500 Total Return over the long term. As it is currently doing.
These exits also ensure that should the market experience a severe bear market Iain’s Investment Plan will be to be 100% in cash sitting on the sidelines awaiting re-entry signals to get money back into the market.
Also, IJH is an index ETF that tracks the S&P400 index so it’s price movement is not anywhere near as volatile as that of an individual stock.
So to answer your question, IJH being an index fund, an investor could put 100% of their capital into IJH, reinvest the dividends, and never sell until retirement is reached and draw down commences for income. This would be equivalent to the mindset that investors have with investing 100% of the retirement money with a single 401(k), active mutual fund, or Super fund.
What Iain’s Investment Plan does is place 65% of capital into IJH, instead of 100%, and exits (and re-enters) it on average 2 – 3 times a year to protect against a severe bear market and also achieve a better return from IJH that merely buying and holding it. The remaining 35% of capital is spread across any 5 of 10 stocks at any given time to get a little more growth, always protected by exit signals should the market have a severe down turn.
Regards
Gary