The Harvest Mode System

The Concept

The Harvest Mode System adapts to different phases of the stock market to be profit-focused when conditions are supportive and protection-focused when conditions are risky. The aim is to match the investment strategy with the current market conditions — to harvest profits when the season is right and to protect capital when the season is harsh.

The system is driven by fundamentals, uses market indicators to gauge the health of the stock market, applies technical analysis techniques to guide trades, and considers seasonality and cycles to develop expectancy. The “mode” is the investment strategy that fits the analysis and current conditions. Here are the key benefits of this system:

  • Risk Management - The base of the system is to not lose big in the market

  • Safer Profits - Make profits when market conditions are supportive

  • Business Sense - Utilize the business and liquidity cycles in your investments

  • Market Analysis - Know when the stock market is healthy or deteriorating

  • Technical Analysis - Align with the market using trend-following techniques

  • Warning Signs - Use warning indicators to know when market risks are rising

  • Seasonality - Profit from seasonal patterns in the market

  • Cycles - Use time cycles to potentially find large movements

  • Manage Downside Risk - Find the point where you can “not care” about risk

  • Investment Selection - Know when to invest in funds or individual stocks

The Harvest Mode System

 

Fundamentals

The Liquidity Cycle is the interplay of Fed Policy, Inflation, Interest Rates and Growth that impacts the stock market. The Liquidity Cycle fuels the Business Cycle. Monitoring these key fundamental factors and understanding where we are in the business cycle is the starting point of the Harvest Mode System. Valuation determines the risk/reward of investments.

Technical Analysis

Market indicators (volatility, volume, breadth, sentiment) gauge the health of the stock market. Trend-following, support and resistance and price structure techniques are used to guide investments. Technical indicators (such as RSI, MACD) fine-tune timing. Warning indicators warn of systematic risk, which could lead to longer bear markets.

Seasonality

Seasonal cycles affect the greater stock market and can also apply to sectors, industries and individual stocks. The Harvest System uses certain bullish seasons to seek profits and certain bearish seasons to reduce risk in case of a correction or bear market. Seasonality uses statistics of market behavior to find opportune times in the market.

 

Cycles

The Harvest System takes into account cycles to guide expectations and identify potential opportunities in various asset classes and stocks. The Presidential Cycle or 4-year cycle and the 10 year cycle are the two base cycles this system follows. Other less popular cycles can be seen as an edge that the Harvest System has.

Mode

After analyzing the factors that Fundamentals, Technical Analysis, Seasonality and Cycles provide, the Mode or investment strategy can be chosen. When conditions are strong, “Alpha Mode” is recommended. When conditions are mixed, “Beta Mode” can be applied. When conditions are weak, “Protection Mode” is necessary.

Risk Management

Risk management is the key to any investment strategy that has staying power. Risk should be accessed through the Harvest Mode System as well as an individual’s own personal situation. As a Financial Professional I can help with both. Downside risk management tactics are also applied to get clients to the place where they can sleep at night.