Important: parameters changed.

As a result of back testing I decided to change parameters for both SPY and Bonds from 2,7 to 3.5,7 and 2.3,6 respectively. I removed all the funds from the table as their parameters also need to be adjusted.

I left our old parameters in place in both charts and the table for the time being.

There is no change in signals for bonds, so we stay in. I have a sizable position in bonds in my 401K account as of today.

There is a difference in SPY. We bought SPY according to our 2,7 signal, so we should stay in. I suggest those who did not buy, stay in cash and wait for a signal with our new parameters.  Those who did, watch closely 122 area. If we get a buy signal from our new parameters then you stay in and switch to the new parameters at that time. If we do not get this signal soon that would mean SPY will likely pull back, so cash in the gain and wait for a signal on the new parameters.

Feel free to e-mail if there is a question.

Just came across a site I recommend everyone to check out

Seems like the author, Michael Hanton, also did not believe in "Mutual Funds will take care of themselves" approach and has done a very good job in developing a system that helps him and his readers to manage their retirement (and investment) money.

Here is a link: 401K Trend

Why is that so many BS articles

like this
http://www.ivillage.com/401k-how-actively-should-you-manage-it/7-a-219565

and not that much information on what it really takes to manage large amount that has been being saved for many years, sometimes three-four decades.

"The good news is that although you shouldn't ignore the account altogether, an annual checkup is really all you need. At that time, check that your investments are diversified according to your needs and goals. Diversification is the key to successful investment management".

Yea, right. One checks his account on December 31 of 2007, slightly adjust his allocation and happily celebrate New Year leaving his account alone until the next checkup at the end of 2008. Give me a break.

Interview with Welles Wilder

One of the reasons I want to mention this interview here is to draw your attention to what the author of the system we follow here (with a very slight modification) had to say about it:

"I think the Volatility System is the best, but most overlooked system in the New Concepts Book. In 1993, Futures Magazine did a study on trading systems, and declared then that the Volatility System was the best system up to that time".

Here is a link to the interview.

I do understand that this is not the best system available today, yet it is powerful enough and at the same time simple enough to become my prime candidate as a tool for managing 401K.

Buy signal on S&P

We did get a buy signal. That's been expected - see my previous post. Though it is a surprise for many including myself we have to execute. Yes, we may lose money as market seems to be overbought and due for a pullback, yet the worst thing to do would be trying to outguess the system. Rules are rules. We have to buy and be prepared to accept a loss if that is what we will end up with. Here is a chart.