Hi, my name is Ron Burger. I am a retired former Senior Vice President of Morgan Stanley and of Craig-Hallum, trading mostly for my own account at present. The picture on the right is from my interview on Louis Rukeyser’s Wall Street Week show, September, 1979. The subject of the show was the Price/Research ratio that I developed.
The purpose of this site is to publish a logical and fact based trading system that you can use to hopefully improve your returns while probably cutting your risk and allowing you to be generously charitable. Simply put, make more, risk less, give more. The system is based on a rebalancing formula involving Gold (GLD), Bonds (TLT) and Stocks (SPY). If you use the system and improve your rate of return, I suggest you donate 25% of your improved profits to the charity of your choice. My reward will be your email telling me the name and amount of your donation. I look forward to keeping a running total of these donations. I am a system developer, not a writer, so I will need your encouragement and your help to spread the news and logic of this system.
The GoldBondStocks system capitalizes on the volatility of the most liquid ETF markets while providing a logical safety net in a world where hyperinflation or depression-deflation could be just around the corner. The foundation of the system is a Standard and Poors 500 position (SPY) that is based on the current drawdown of the index from its all time high increased by 11.1% such that the only position would be SPY if the stock market is down 90%. Currently, with the S&P down from 1565 to 1361, that SPY invested percentage is 14.48%. The remainder is invested equally in Gold (GLD) and Long Term US Treasuries (TLT), currently 42.76% each. These percentages are and will be tweeted each day from @goldbondstocks and this website. You can also sign up for an email to get the posts directly.
The track record of the system, rebalancing daily, provides a return of 150.6%(14.9% compounded) since the first trading day (Nov 18,2004) of all three Exchange Traded Funds (ETF’s) and a return of 121.1%(11.9% compounded) if rebalanced monthly (7 years and 3 months). These numbers do not include the amount of interest/dividends received or the amount of commissions paid. Today, the current yield on TLT is 3% and the current yield on SPY is 2.3%. Since 2004, the yield on TLT has been as high as 4.8% and the yield on SPY has been as high as 3.3%. No one will exactly duplicate the return, but my experience suggests that the more frequent the rebalancing, the greater the return. An aggressive trader with very low commissions will do the best. Commission costs are extemely important and I will address that issue in the future.
I have a number of variations of the system that I have traded at various times that I will explain later. Some variations work better for smaller investors using a broker such as Ameritrade, which allows free ETF trades. Because of the trading restrictions on free ETF’s at Ameritrade, this variation works only for small investors. A conservative variation would leave out SPY and go 50% GLD and 50%TLT. My personal trading varies due to my intraday trading and involves rebate trading, algorithms and 25 years of S&P data analysis. But the system is the foundation for my trading. If you have any trading algorithms, predictive anomalies or systems that might involve these 3 ETF’s, please present them in the comment section.
There are systems that have done much better over this period. But the beauty of this system is the hedge it constantly provides. You constantly capitalize on the volatility of the stock market (SPY) while the remainder of your money is half invested in the best investment for hyperinflation (GLD) and half invested in the best investment for deflation/depression (TLT). You will stick to the system because your emotion of fear will be diminished.
Today the major countries of the world are printing money at rates beyond belief a decade ago. We may be on our way to hyperinflation and Argentina-style politics. But in the end, every hyperinflation is followed by depression/deflation. In Argentina, even money in the bank was untouchable by depositors after the default in 2002. Don’t place too much money with any single bank or broker. In the end, every excessive debt creation is followed by debt liquidation. Every hyperinflation is followed by depression/deflation. No one can predict when the bailouts and liquidity splashes won’t work anymore.
This is a system for large and small investors and for investors seeking return, liquidity and long term consistency. Be aware, however, that short term setbacks happen and the daily system did have a 19.4% maximum drawdown. A side benefit of the system is that your investment will soften the volatility of the markets as you’ll be going against the crowd.
This site would not be here but for the help of Anna Runyan, of Runyan Consulting and the Classycareergirl.com, who quite literally put this blank website before me to get me going. If you haven’t been to her site, go there, especially if you are a young professional.
In closing, may this site make you more money so you can give more money and have peace of mind. Hopefully, we can make the world better while protecting ourselves from disastrous economic policy.