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                  Grow & Protect Book 
    Reading Assignment     Key Vocabulary Terms        
 

             My name is John K. Harris. I am a Ph.D. in accounting and a Professor Emeritus, University of Tulsa. I was a CPA for 30 years. Via self-directed study for the last 23 years, I have become a stock market historian. In 2016, I self-published a book: The Grow-and-Protect Investment Strategy: Evidence and Inspiration (Revised First Edition). It is available on Amazon.  To learn more about my stock market credentials, click here.  My research partner is Kip Karney, a career microbiologist, who like me, is self-taught regarding the stock market.


                    What history (1966 to 11/11/19) and live public testing (11/12/19 to the present) reveals is that the Harris Karney (HK) model—described below—tends to perform very well during periods of various lengths when the stock market—that is, the S&P 500, described below—experiences high volatility. “Tends to perform well” means to outperform (“beat”) buying-and-holding the S&P 500 by a sizable margin, as well as dramatically reducing a portfolio’s drawdown risk.

                    In my opinion, living a life as an efficient and conscientious investor is facilitated by you obtaining information from this newsletter. A book I wrote to accompany the newsletter and the companion website stockmarkethistorian.net are essential tools to achieve that objective: The Grow and Protect Investment Strategy: Evidence and Inspiration (2nd edition, April 2020). The book is available at Amazon; an easy way to order is to go to the website and click on the book cover. The market-timing evidence presented in the book and the website speaks for itself.
 
                    Two main ways to benefit from the book in connection with reading the newsletter are (1) complete the 34-page reading assignment below and (2) become familiar with the key vocabulary terms on p. 3.


                    The updated HK Performance Record appears below, 11/12/19-the present.




HK Performance Record, 11/12/19–11/20/20







  Date S&P 500 HK
Signal Number
HK
Signal
Gain or Loss
from Signal
to Signal
IRA
Balance








11/12/19 3091.84 1 Buy SPY
   N.A.  
$10,000
02/24/20 3225.89 2 Sell SPY & buy SH
  4.34%  10,423
03/04/20 3130.12 3 Sell SH & buy SPY   2.97%  10,733
03/06/20 2972.37 4 Sell SPY & buy SH −5.04%  10,192
03/09/20 2746.56 5 Sell SH & buy SPY   7.60%  10,966
03/10/20 2883.82 6 Sell SPY & buy SH   5.00%  11,515
03/11/20 2741.38 7 Sell SH & buy SPY   4.94%  12,083
03/13/20 2711.02 8 Sell SPY & buy SH −1.11%  11,949
03/16/20 2386.13 9 Sell SH & buy SPY 11.98%  13,381
03/17/20 2529.19 10 Sell SPY & buy SH   6.00%  14,184
03/20/20
2304.92
11 Sell SH & buy SPY   8.87%
 15,418

10/27/20
3390.68
12 Sell SPY & buy SH 47.11%
 22,681

11/03/20
3369.13
13
Sell SH & buy SPY 0.64%
 22,826

11/20/20 3557.54
NA Pseudo Sell SPY* 5.59%
 24,102










    *see my book, 2nd edition (2020), p. 72









             B&H (3557.54 ÷ 3091.84) −1 =  15.06%, or $10,000 x (1+ 15.06%) = $11,506

             The bottom line: ($24,102 ÷ $11,506) −1 = 109.47%; HK beat B&H by 109.47% in the last 12.3 months














                                                                    website last updated 11/22/2020 15:53 CT



























Reading Assignment

From
Page Numbers
Total Pages
Introduction
vii-viii, xii-xiii
4
Chapter 1
3–17
15
Chapter 4
69-75
7
Chapter 14
114
1
Chapter 15
125-127
3
Appendix A
149-151
3
Appendix B
153
1





34

           

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Key Vocabulary Terms (terms are in order by pages in the book, to which the citations refer)



stockmarkethistorian.net  The website that accompanies this book. (p. viii) Carefully examine this website to understand the book’s “big picture” (estimated time required 15–30 minutes). From 11/12/19 to the present, the HK model’s performance has been sensational. The website and the book tell a classic David vs. Goliath story, including the complete HK performance record vs. B&H since launching the model on 11/12/19 as well as backtesting for 2000 to 11/11/19.

S&P 500.  The broad-based large company index that

comprises about 80% of the total market value of all publicly traded U.S. stocks and some 40% of the total market value of all publicly traded stocks in the entire world. The S&P 500 is embedded in the culture such that some investors think a lot about its movements, even while on vacation! (p. 3)

Market risk.  The extent to which an investment’s

value is subject to fluctuation. The greater the possible fluctuations in market value, the greater the investment’s market risk. (p. 157)

S&P 500’s risk.  The uncertainty of its future market

value. In the practical application of this definition of risk, investors mainly concern themselves with the possibility of the S&P 500 declining in market value. There are two simple but useful measures of the S&P 500’s risk: (1) its largest declines and (2) the minimum number of calendar years, following a major decline, needed to avoid a loss. (p. 9)

Buy-and-hold (B&H) strategy.  The strategy of

simply buying-and-holding an asset class, in this book, the S&P 500. This strategy is underpinned by modern portfolio theory (MPT), which is firmly embedded in today’s conventional investment wisdom. (p. 14)

Dark math of the B&H strategy.  For example, a 50%

loss in the S&P 500 requires a 100% gain in the S&P 500 for the B&H investor to be even. (also see pp. 16–17)

Reversion to the mean.  An immutable force affecting

the S&P 500 (and at work in all financial markets). Under this force, periods of high returns tend to occur after periods of lower returns, and in turn, periods of low returns tend to follow periods of higher returns. (p. 12, 123)

Market Timing.  The investor attempts to take advantage of the stock market’s (that is, the S&P 500’s) upward and downward movements. (p. viii)

Technical analysis.  This analysis uses data generated

by the stock market itself or data from any other source to forecast the stock market (in this book, to forecast the S&P 500). (p. 51, 121, 173)

Wealth self-insurance.  For 1966–2015 (50 years), the Grow and Protect (G&P) investor would have paid wealth self-insurance in the 14 years when the G&P model underperformed B&H; all cases were during bull markets. In those years, the mean annual cost of this insurance was 3% of the G&P model’s portion of the investor’s portfolio lost versus B&H.

(p. 65)

Harris-Karney (HK) model.  This is a brand-new

proprietary market-timing model (launched 11/12/19), which succeeded the G&P model and challenges B&H. Chapter 7–15 discuss various applications of the HK model. (p. 69)

Exchange-traded funds (ETFs).  These funds trade

all day like stocks. Two examples are SPY and SH.

(p. 16)

Long (going long). Owning a security such as SPY

that mimics the rises and falls in the S&P 500.

When owning SPY, the HK investor roots for the S&P 500 to rise. (p. 71)

SPY.  An ETF that mimics movements in the S&P 500. SPY goes “long” the S&P 500. For example, if the S&P 500 rises 0.45%, SPY would have a very similar gain, and vice versa. (p. 71)

Short (going short).  Owning a security such as SH

that rises in proportion to falls in the S&P 500, and vice versa. When owning SH, the HK investor roots for the S&P 500 to fall. (p. 71)

SH.  An ETF that inversely mimics movements in

the S&P 500. SH is “shorting” the S&P 500. For example, if the S&P 500 falls by 1%, SH should rise about 1%, and vice-versa. (p. 71)

HK buy signal.  Sell SH and buy SPY. (pp 71–72)

HK sell signal.  Sell SPY and buy SH. (pp 71–72)

HK pseudo buy signal.  It is used to measure HK’s

performance as of a particular cut-off date, such as the end of a calendar year. (p. 72)

HK pseudo sell signal.  It is used to measure HK’s

performance as of a particular cut-off date, such as the date of a bear market bottom. (p. 72)

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What history (1966 to 11/11/19) and live public testing (11/12/19 to the present) reveals is that the Harris Karney (HK) model—described below—tends to perform very well during periods of various lengths when the stock market—that is, the S&P 500, described below—experiences high volatility. “Tends to perform well” means to outperform (“beat”) buying-and-holding the S&P 500 by a sizable margin, as well as dramatically reducing a portfolio’s drawdown risk.

In my opinion, living a life as an efficient and conscientious investor is facilitated by you obtaining information from this newsletter. A book I wrote to accompany the newsletter and the companion website stockmarkethistorian.net are essential tools to achieve that objective: The Grow and Protect Investment Strategy: Evidence and Inspiration (2nd edition, April 2020). The book is available at Amazon; an easy way to order is to go to the website and click on the book cover. The market-timing evidence presented in the book and the website speaks for itself.
 
Two main ways to benefit from the book in connection with reading the newsletter are (1) complete the 34-page reading assignment below and (2) become familiar with the key vocabulary terms on p. 3.
 


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A book I wrote to accompany the newsletter and the companion website stockmarkethistorian.net are essential tools to achieve that objective: The Grow and Protect Investment Strategy: Evidence and Inspiration (2nd edition, April 2020). The book is available at Amazon; an easy way to order is to go to the website and click on the book cover.

The market-timing speaks for itself.

Two main ways to benefit from the book in connection with reading the newsletter are (1) complete the 34-page reading assignment below and (2) become familiar with the key vocabulary terms on p. 3.






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