SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : Value Line Investment Survey
VALU 36.66+0.1%Oct 31 9:30 AM EDT
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
From: OldAIMGuy11/28/2007 7:54:43 AM
   of 219
 
Re: Market Risk Indicator................

In looking at Value Line's various bits of precalculated data each week we decided to make an indicator out of their "Appreciation Potential" (AP) that's reported in the Summary and Index section each week.

To get it to show direct correlation with the stock index activity, we are using it as (100 - AP). So, this week they were showing 55% AP, so our indicator is showing 45 instead. The reason for this is that we were looking for an indicator which would give us an approximation of what we felt was required Cash Reserves for owning individual stocks. Here's how it is graphing so far:


As market risk moves upward, so does the suggested cash reserve. When we see markets relax, lower risk and go through a correction the level of cash suggested also declines. Looking back through some history, it appears this trend has been in place a long time. Back in late 2002 - early '03 the value actually shows a negative 10% or so. In other words, when the bear market bottomed this would have been suggesting being fully invested and even considering margin.

A quick glimpse at periodic data points going back through the '90s and even some in the '80s indicates this could be a very consistent benchmark. With more data over time we hope to see continued correlation to market moves, both up and down.

Best regards,
Tom
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News