Summary of "It's Not Time To Sell...Yet | Milton Berg"
It’s Not Time To Sell…Yet | Milton Berg
Market Outlook & Macroeconomic Context
- 2026 Market Theme: “Unusual” — Expect increased volatility, corrections, and possibly bear markets due to years of speculation, overvalued stocks, and complex debt situations.
- Inflation remains high, and recession risks persist.
- Despite volatility, there is no immediate reason for individual investors to exit the market.
- Recent market highs suggest continuation, but caution is advised.
Assets, Sectors, and Instruments Mentioned
-
Equities:
- S&P 500 (SPX)
- Nasdaq 100 (via VXN index)
- Russell 2000
-
ETFs:
- VOO (Vanguard S&P 500 ETF) — preferred over SPY due to lower expense ratio
-
Other Assets:
- Gold, silver, platinum, palladium
- Bitcoin (currently in a bear market)
-
Fixed Income:
- Treasury bills (used as a safe asset when the model signals exit)
-
Volatility Indices:
- VIX (S&P 500 volatility)
- VXN (Nasdaq 100 volatility)
Investment Methodology: Milton Berg’s Proprietary “Edge Model”
- Developed over 10 years and publicly available for retail investors since 2025.
- Backtested on the S&P 500 from 1957 to 2025.
Model Characteristics
- Binary allocation:
- 100% invested in S&P 500 or
- 100% in Treasury bills (no partial allocations).
- Average holding period: 1.25 years per trade.
- Average annualized return: 18.5% total return (including dividends), outperforming buy-and-hold S&P 500 at 10.9%.
- Average gain on positive trades: 26%; average loss on negative trades: 1.41%.
- Precise on entry (buy) signals; less precise on exits.
- Exit triggers include market declines of 7-8% to limit downside risk.
- Designed for retail investors; institutional clients use more complex, leveraged, and sector-specific strategies.
- Trade frequency: Approximately one roundtrip trade every 15 months.
- Risk management: Exits market after 7-8% decline to avoid deeper bear markets (e.g., 50% drops).
Model Signals & Historical Performance
- The model issued a buy signal on April 4, 2025, just before a market low.
-
Historical buy signals have preceded significant rallies:
- 1962: Market down 8.83%, model up 18.55%
- 1974: Market down 26%, model up 20%
- 2009 (GFC bottom): Market down 56%, model buy signal day after low; market rallied 69% before next correction
- 2011, 2018, 2020: Other notable buy signals with strong subsequent gains
-
The model avoids many drawdowns by being out during declines and capturing upside by timely re-entry.
- Signals are based on rare market “rarities” or extreme conditions, such as:
- High volume regimes (e.g., highest 5-day average NYSE volume in 375 days)
- Specific volume and breadth thrusts (e.g., 15:1 upside to downside volume ratio on NYSE)
- Patterns like small-cap stocks making a 4-day high one day after a 2-year low (very rare, high-confidence buy signal)
- Does not rely on traditional indicators like moving averages or Fed actions but on statistical rarities and volume-based signals.
Institutional vs Retail Investor Use
-
Institutional clients:
- Use leverage, short sectors, and receive multiple confirming signals.
- Access to more detailed data, sector-level strategies, and multiple signals.
-
Retail clients:
- Receive a simplified, binary model with one buy and one sell signal.
- Advised to buy the S&P 500 (via VOO) or move to Treasury bills.
- Pay $10/month for access, notifications, and bi-monthly reports.
Performance Metrics & Returns
- $10,000 invested in the model in 1957 would have grown to approximately $1.17 billion by 2025.
- Buy-and-hold $10,000 in S&P 500 would have grown to about $10.3 million over the same period.
- Theoretical shorting using model signals yields 22% annualized returns but is not recommended for retail investors due to volatility.
- The model significantly reduces losses during bear markets (average loss 1.41% per losing trade).
Practical Recommendations
- Retail investors should stay long the S&P 500 as per the model’s April 4, 2025 buy signal.
- Do not panic on minor corrections; a 7-8% decline is normal before a bear market.
- Use the VOO ETF for cost efficiency.
- Follow model alerts for buy/sell signals; average one trade every 15 months means low maintenance.
- Avoid timing sectors or individual stocks; diversification via S&P 500 is key.
- When out of the market, hold Treasury bills to preserve capital.
- The model is designed to help avoid large drawdowns while capturing most of the upside.
Disclaimers
- This is not financial advice; model performance is backtested and theoretical.
- Past performance does not guarantee future results.
- Model precision is higher on entries than exits.
- Institutional clients have access to more complex strategies and data.
Presenters and Sources
- Milton Berg — Founder and CEO of MB Advisers, creator of the proprietary “Edge Model.”
- Adam Tagert — Host of Thoughtful Money, interviewer.
Additional Resources
- Website for retail subscription and more information: www.miltonbergedge.com
Summary
Milton Berg presents a rigorously backtested, volume- and rarity-based quantitative model that signals when retail investors should be fully invested in the S&P 500 or fully in Treasury bills to avoid large losses. The model boasts an 18.5% annualized return since 1957, significantly outperforming buy-and-hold strategies, with low trade frequency and clear binary signals. Despite an unusual and volatile market environment expected in 2026, the model currently advises staying long, with risk managed by exiting after moderate declines. Retail investors can subscribe for $10/month and receive straightforward, actionable signals without the complexity of sector or stock picking.
Category
Finance
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