MLR - Quantitative easing (QE) market manipulation since 2009

Published : June 25 2013 at 11:35 ET

QE manipulation has pushed markets higher since 2009. That said, MDM has well outperformed S&P 500 and Dow Jones Industrials prior to 2012, has outperformed small cap Russell 2000, and performed almost in line with the NASDAQ Composite. Outperformance is naturally more pronounced when using certain 2x and 3x vehicles.

That said, 2012 was the toughest year on record as the Market Direction Model and the trend following wizards, a group of fund managers interviewed in Michael Covel's book "Trend Following" and Jack Schwager's "Market Wizards" series, finished the year down, double digit percentages in many cases. Read point 4 here about the wizards:

Such periods always come to an end. Patience is required to deal with such tough times, but there is some solace in knowing such periods always come to an end, often when least expected, such as in October 1998 and October 1999 when the markets looked as if they were going to fall off a cliff, but instead roared higher. This is also true in recent years when the market looked as if it was going to fall apart, yet found its footing, spurred on by QE.

The Market Direction Model remains nimble and flexible as the market is at an inflection point in either direction.

This information is provided by Virtue of Selfish Investing, LLC (VoSI) is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. VoSI reports are intended to alert VoSI members to technical developments in certain securities that may or may not be actionable, only, and are not intended as recommendations. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change without notice. Entities including but not limited to VoSI, its members, officers, directors, employees, customers, agents, and affiliates may have a position, long or short, in the securities referred to herein, and/or other related securities, and may increase or decrease such position or take a contra position. Additional information is available upon written request. This publication is for clients of Virtue of Selfish Investing, LLC. Reproduction without written permission is strictly prohibited and will be prosecuted to the full extent of the law. ©2016 Virtue of Selfish Investing, LLC. All rights reserved.