The Eisert Circuit Breaker Strategy Methodology

1. The strategy starts with a diversified stock mutual fund or exchange traded fund.
2. A layer of management in the form of technical analysis using moving averages is then applied to this investment. The objective is to be fully invested when the indicators are positive and out of the market when they are negative.
3. The investment team at The Retirement Guys Formula constantly monitors the data and makes determinations on when to execute trades. That team of human eyes gives the strategy one more layer of management and they may override the technical data.

Understanding Moving Averages

The Retirement Guys Formula does not believe there is any totally reliable way to predict the direction of the stock market. Still, we want to smoothen out the ride for our investors. Our methodology uses recent history as a guide and then we make changes when we are convinced of a market pivot. An important indicator in this strategy is known as a moving average. We want to be invested when we’re convinced that the market is trending upward, which is evidenced by the short-term moving average being above the long-term average. On the other hand, when the market is in a downtrend, we will utilize short-term fixed income investments to earn a yield on our cash. Moving averages are pretty easy to understand and use as part of an investment strategy. They are helpful for reducing market “noise” and to answer the question: In which direction is this market going right now? A mean is the average of a set of numbers. A moving average is a (time) series of means: it is a moving average because as new prices are made the older data is dropped and the new data replaces it. Our goal in using this technical data is to try to get a clearer sense of the trend of the market and to smoothen out the volatility. This is how we attempt to capture opportunity and avoid major losses.