How to Use iMarketSignals for Retirement Accounts

A Dynamic Asset Allocation strategy applied to bond- and stock-funds increases returns and reduces risk. During up-market periods more money is allocated to stock funds than bond funds, and conversely during down-market periods more money is allocated to bond funds than stock funds.  The up- and down-market periods come from our MAC-US .

Weekly Data Updates relevant to Retirement Accounts

(i) The MAC-US: If sell-spread falls below zero a down-stockmarket is signaled. Subsequently when buy-spread moves from below to above zero an up-stockmarket is indicated.

Fig-2.-8-26-2016.png 9/23/2016: Latest update only available to Bronze members

8/26/2016: The MAC-US model generated a buy-signal 4/5/2016 and thus is invested in the stock-markets. The sell-spread (red graph) is down from last week’s level and has to fall below zero to signal a sell.

(ii) The Recession Indicators COMP, BCI and FRR2-10:  If a recession is signaled it may be advisable to exit stock market completely. These three recession indicators have different lead times: FRR2-10 an average of 14 months, BCIp an average of 20 weeks, and COMP (as well as BCIg) an average of 10 weeks.

Fig-3.-8-26-2016.png 9/23/2016: Latest update only available to Bronze members

8/26/2016: Figure 3 shows the COMP near last week’s  level. No recession is indicated.    COMP can be used for stock market exit timing as discussed in this article The Use of Recession Indicators in Stock Market Timing.

BCI-8-25-2016.png 9/22/2016: Latest update only available to Bronze members

8/25/2016: The BCI at 211.9 is up from last week’s 211.3,  it is above its previous high for this Business Cycle as indicated by the BCIp at 100.0.  Also, the 6-month smoothed annualized growth BCIg at 16.6 is  up from last week’s 16.5.

No recession is signaled.

Fig-3.2-9-16-2016.png 9/23/2016: Latest update only available to Bronze members

9/16/2016: The Forward Rate Ratio between the 2-year and 10-year U.S. Treasury yields (FRR2-10) is near last week’s level and far away from signalling a recession.

A description of this indicator can be found here.

(iii) The Bond Value Ratio (BVR): To determine whether to be invested in long-bond funds or short-bond funds.

Fig-4.-8-26-2016.png 9/23/2016: To view latest update please log in

8/26/2016: The BVR-model avoids high beta bonds (long-bonds) and also intermediate duration bonds.

The Bond Value Ratio is shown in Fig 4.  The BVR is below last week’s level. According to the model, only when BVR turns upward after having been lower than the lower offset-line should one consider long bonds again.

 Monthly Data Updates relevant to Retirement Accounts

(iv) The Unemployment Rate Recession Model:  If a recession is signaled it may be advisable to exit stock market completely.

Fig-8.-8-5-2016.png 9/2/2016: To view latest update please log in

8/5/2016: The unemployment rate recession model (article link), has been updated with the August UER of 4.9%. Based on the historic patterns of the unemployment rate indicators prior to recessions one can reasonably conclude that the U.S. economy is not likely to go into recession anytime soon. However, the growth rate UERg continues to rise (now at -6.17%) and EMA spread of the UER narrowing (now at -0.15), supporting the trend of  the long leading indicator DAGS.

Here is the link to the full update.

(iv) The TIAA Real Estate Timed Account :   If rolling 1-year return falls below 0% model goes to cash. Subsequently when rolling 1-year return moves above 0% a new investment is made.

Fig-10.-8-5-2016.png 9/2/2016: To view latest update please log in

8/5/2016: The  1-year rolling return for the end of last month is 6.16%. The Vanguard REIT Index Fund is at an all-time high;  the good positive returns of TIAA Real Estate Account are expected to continue.   A sell signal is not imminent.

Read more …

Dynamic Asset Allocation Models (monthly)

(vi) Vanguard Systems: Historical performance and current allocations are shown for three systems: 1a, 2a and 3a. The three different systems range from a mix of conservative index funds to moderately aggressive managed Vanguard funds. Each system has three sub-systems with different allocations between bond- and stock-funds (20/80, 30/70 and 40/60). For example, 20/80 signifies a nominal allocation of 20%bonds and 80%stocks during up-market periods, and 80%bonds and 20%stocks during down-stock market periods. The most conservative allocation would be 40/60. Although the models use particular bond funds, it may be advisable to consult the BVR model to determine whether to be invested in long-bond funds or short-bond funds.

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Fig13.2s4b-4-7-2015 9/2/2016: Performance comparison of the iM Vanguard Systems, read more ....

(vii) Vanguard + TIAA Systems: Historical performance and current allocations are shown for four systems: 1b, 2b, 3b and 4a. The four different systems range from a mix of conservative index funds to moderately aggressive managed Vanguard funds in combination with the TIAA Real Estate Account. Each system has three sub-systems with different allocations between bond- and stock-funds & TIAA Real Estate Account (20/80, 30/70 and 40/60). The most conservative allocation would be 40/60. Although the models use particular bond funds, it may be advisable to consult the BVR model to determine whether to be invested in long-bond funds or short-bond funds.

Fig13.2s4b-4-7-2015 9/2/2016: Performance comparison of the iM Vanguard Systems combined with TIAA Real Estates timed, read more ....

 iM-News eMail Service

(vii) Friday’s Weekly Update: A ticked box indicates that you will receive Friday’s update email. (You can toggle the tick by clicking on the box.) The email notifies, subject to membership category, any signals that may have been generated, as well as the current nominal allocations for the above models are publicized.

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