Thinking inside the box

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Key points

  • Conviction means putting money where your mouth is. Consider borrowing to invest outside of superannuation and investing the profits back into your SMSF.
  • A consistent approach has resulted in performance of 5.16% against 2.90% for the ASX 200.
  • Flexibility around the filters allowed for the purchase of Woodside Petroleum.

 

Last month (16 October), I made my usual strong statements (with my usual high degree of conviction) about the market. I was so convinced by my argument that, a couple of days later, I borrowed a material amount of money against my home equity and invested it in a 50:50 portfolio of ETFs representing the ASX 200 and S&P 500 (IOZ and IVV in my case).

In less than a month, I am up about 9% on that geared (outside of super) portfolio. My notion was (and is) that I forecast a ‘box’ each six months as I discussed last month. The box gives not only my 12-month-ahead forecast but also the high and low that might occur during that 12-month period. It so happened that the ASX 200 and the S&P 500 both just touched my predicted lows when I wrote last month. As soon as my Fear Index gave the signal to buy (two days later), I bought (and discussed it on Switzer TV on the 21st October).

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