GWM Core Equity Folio Management

GWM Core Equity Management

Core Equity Folio Management


GWM Model Portfolios are diversified by both asset type and strategy. The Core Equity Folio is designed to hold assets longer term. We still want to avoid major bear market down-turns, but that being said, we want to give more leeway to this folio by using a less sensitive market direction indicator.

Going forward the Core Equity Folio will hold broad market ETFs such as SPY (S&P 500 index fund), QQQ (NASDAQ 100 fund), etc.



Percentage of Stocks Trading above Their 200 Day Moving Average Indicator

A longer-term indicator with a very good track record is the ‘Percentage of Stock Trading above Their 200 Day Moving Average indicator. The chart below illustrates the effectiveness of this management approach.

It kept us in the market from October 2010 through May 2011. Making the old saying, “Sell in May and Go Away” ring true, the market then suffered big declines and a great deal of volatility from May 2011 through December 2011. This indicator helped us avoid this messy period.

We have now been on a buy signal since January 12th 2012.


Indicator Explanation

The upper panel of the chart is our signal generator. When the blue line crosses above the red line a buy signal is generated. When it crosses below we get a sell signal.

The lower panel contains the price chart for an index which represents the broad market. I have added red and green lines and arrows to illustrate when the indicator told us to be in or out of the market.

(Click on chart for easier viewing. Then click the white X in the upper right corner to return to the blog)

Make hay when the sun is shining

There are occasional whipsaws with this indicator, but by and large this indicator has proven to be very effective for long term investors.



• I need to thank HGS Investor strategist, Ron Brown, for the development and advancement this excellent long-term indicator.