How To Manage Trading And Portfolios With Paper And Pencil Only

• Money transfer between Charles Schwab Checking Account and two Goldman Sachs Bank’s online Savings Accounts through ACH (Automatic Clearing House), that seems not to be known broadly, but it is the most secured, fast, and free money-transfer service, provided by the U.S. government.
• For five weeks, 10 withdrawals ($42,400) to GS and 6 deposits ($20,200) from GS. Notice some countercyclical or contrarian transfers which made withdrawals when getting gains, and deposits when having losses. During weeks (10/21-11/25) $22,200 (= $42,400 – $20,200) transferred to Savings (which earns 3.0% APR at Marcus: Goldman Sachs Bank) from Charles Schwab Checking account which had more money from two brokerage accounts (in Charles Schwab and TD Ameritrade) which gained more in the current upswing market.

Table 2: The C/C Ratio, The Shadow A-A Decision, S&P 500
				“A-A D”		S&P 500
DATE	TRD	SAV	C/C R	“STOCK”	“BOND”	CLOSE	%Ch
10/21/22	100	77.3	43.6%	56.4%	43.6%	3,752.75	2.37%
10/24/22	95.8	80.6	45.7%	54.3%	45.7%	3,797.34	1.19%
10/25/22	91.5	84.0	47.8%	52.2%	47.8%	3,859.11	1.63%
10/26/22	96.3	84.0	46.6%	53.4%	46.6%	3,830.60	-0.74%
10/27/22	94.3	85.1	47.4%	52.6%	47.4%	3,807.30	-0.61%
10/28/22	96.1	85.1	47.0%	53.0%	47.0%	3,901.06	2.46%
10/31/22	94.7	85.9	47.6%	52.4%	47.6%	3,871.98	-0.75%
11/1/22	95.0	85.9	47.5%	52.5%	47.5%	3,856.10	-0.41%
11/2/22	97.6	79.6	44.9%	55.1%	44.9%	3,759.69	-2.50%
11/3/22	96.7	79.6	45.1%	54.9%	45.1%	3,719.89	-1.06%
11/4/22	98.5	78.5	44.4%	55.6%	44.4%	3,770.55	1.36%
11/7/22	95.6	81.9	46.1%	53.9%	46.1%	3,806.80	0.96%
11/8/22	95.8	81.8	46.1%	53.9%	46.1%	3,828.11	0.56%
11/9/22	101.0	81.8	44.8%	55.2%	44.8%	3,748.57	-2.08%
11/10/22	107.7	80.3	42.7%	57.3%	42.7%	3,956.37	5.54%
11/11/22	99.4	85.9	46.3%	53.7%	46.3%	3,992.93	0.92%
11/14/22	98.6	85.9	46.6%	53.4%	46.6%	3,957.25	-0.89%
11/15/22	89.4	97.0	52.0%	48.0%	52.0%	3,991.73	0.87%
11/16/22	84.6	99.2	54.0%	46.0%	54.0%	3,958.79	-0.83%
11/17/22	82.4	99.2	54.6%	45.4%	54.6%	3,946.56	-0.31%
11/18/22	81.7	99.2	54.8%	45.2%	54.8%	3,965.34	0.48%
11/21/22	79.7	99.2	55.4%	44.6%	55.4%	3,949.94	-0.39%
11/22/22	85.6	94.4	52.4%	47.6%	52.4%	4,003.58	1.36%
11/23/22	87.2	94.4	52.0%	48.0%	52.0%	4,027.26	0.59%
11/25/22	81.7	99.2	54.8%	45.2%	54.8%	4,026.12	-0.03%
		MEAN	48.4%	51.6%	48.4%	3,883.43	0.39%
NOTE
1. TRD: Two Trading A/Cs. SAV: Two Savings A/C.
2. The figures are index, based on the $ value of TRD on Oct. 21 (100).
3. C/C R: The C/C Ratio. “A-A D”: The Shadow A-A Decision.
4. “STOCK”: The Shadow Stock Component.
5. “BOND”: The Shadow Bond (actually, C/C R) Component.
7. CLOSE: The S&P 500 Index’s Closing
8. %CH: The Percent Change.
9. Data Source: Yahoo Finance

Click to enlarge

The New Control System: The C/C Ratio and The Shadow A-A Decision

As shown in Table 2, the new system:

· consists of two components: a) The C/C Ratio that is a single real component, and b) The shadow “A-A Decision” that has the shadow “Stock” and the shadow “Bond”: The former is the residual of the C/C ratio, and the latter is a duplicate of the C/C Ratio which is the only fixed income or bond category.

· The single control (the C/C Ratio) has a range (i.e., 30% to 40%), which gives a room to move toward to either the target of the C/C Ratio (i.e., 40%) or the target of the shadow “A-A Decision” (i.e., “Stock”: “Bond” is 60%:40%).

· During between Oct. 21 and Nov. 25, the C/C Ratio has moved along 48.4% (average), recording a peak (55.4%) on Nov. 21, and a trough (43.6 %) on Nov. 21). It started at 43.6% on Oct. 21, and ended at 54.8% on Nov. 25 (Friday).

· You can clearly see my contrarian strategy, which is a pillar on top of two pillars in the System (C/C Ratio and the Shadow A-A Decision). When the S&P 500 was in a lower range between 3,750-3,800 on Oct. 21 and Oct. 24, the C/C Ratio was smaller (e.g., 43.6% and 45.7%, respectively). When the S&P was higher (e.g., around the 4,000 level) in the last two weeks, the C/C Ratios were boosted to be higher than 52%.

The Concluding Remark

Market cycles, business cycles, and inflation seem not to be well-analyzed by any heavy software: They are still analyzed mainly with a pencil-and-paper approach, (as Burns and Mitchell did), with a minimum help from computers, as is investing.

As shown in the post, my simple approach surely yields some fruits on the highly complex topic to monitor the trend of market cycles. The incoming data in a few weeks are crucial for the fate of the current upswing of the market.

The Standard and Poor’s 500 Index (S&P 500) is tracking the performance of 500 large companies. The S&P 500 is a sort of the global benchmark for major equities because SPY (which is the S&P ETF) is trading globally all the time so the movement of the S&P is most important for the current Uptrend in the coming weeks.

Six Long-Term Portfolio Templates with Charles Schwab ETFs

For Long-Term (in three years or longer) investors, three portfolio templates with six Charles Schwab (“CS”) ETFs:

· Six CS ETFs: Schwab U.S. Broad Market ETF (SCHB), Schwab International Small-Cap Equity ETF (SCHC), Schwab International Equity ETF (SCHF), Schwab U.S. Aggregate Bond ETF (SCHZ), Schwab U.S. TIPS ETF (SCHP), and SPDR Bloomberg Barclays International Treasury Bond ETF (BWX).

Three CS Portfolios:

· A: SCHB (50%) SCHZ (50%)

· B: SCHB (30%) SCHC (20%) SCHZ (40%) BWX (10%)

· C: SCHB (30%) SCHC (15%) SCHF (5%) SCHZ (30%) SCHP (15%) BWX (5%)

“We are thus led to put forward for most of our readers what may appear to be an oversimplified 50–50 formula. Under this plan, the guiding rule is to maintain as nearly as practicable an equal division between bond and stock holdings.” (From Graham’s “The Intelligent Investor”)