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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: Mephisto who wrote (48311)	8/28/2000 1:02:12 PM
From: William H Huebl	Respond to of 94695

Here is how I answed someone who asked about the SCY: SCY or SCYR has been around for many years and well discredited in it's original form. It is calculated by dividing the sum of earnings and dividends by interest rates. I use the S&P500 / 13 wk coupon rate. It's original author held that 1.2 was the magical number. Above that it was best to be in equities and below that it was best to be in cash equivalents. The theory was that high values of the ratio means that equities are out-performing returns from interest bearing accounts and low values mean you make more money in interest accounts with no risk! mynvo.com I have been in interest bearing accounts for a little over a year and made over 5% and have had no problems sleeping at night. Over the weekend I spoke with a fellow investor who has been in the markets and has lost 7% so far this year even though he had made over 30% all last year... but he was frankly worried about the markets. I gathered he wasn't sleeping so well! I use the ratio dynamically and relatively... when it is making new lows, that means to me we are at very risky levels indeed. And when it moves back up by .1 - .2, that says to me that the risk is being reduced. However, the last time this happened was several years ago and the markets sold off very strongly... the ratio went to 1.53 they bottomed... that is why I am waiting for 1.5! Does that help? (And I use other indicators - albeit long term - besides!)