We examine the top 20 Equity ETFs and provide information that can help you make safe, successful ETF investments. Below, we briefly explain the market entry and exit strategies we use for these investments.

The Fifteen Percent Rule

“The Fifteen Percent Rule” is our market exit maxim. This rule, applicable to most ETFs, dictates that when the ETF declines 15%, you sell. We say most because some ETFs — the emerging market ETF, along with a few others — experience greater volatility, so those exit points are set at a 20% decline to prevent excessive trading.

Although this rule might seem overly simplistic, our goal here isn’t market timing and we don’t claim to have a complicated exit strategy to time the market. Our exit rule of thumb exist solely to limit losses and maintain your market confidence. By limiting your losses, we hope you will be more willing to reinvest when we call for a market entry.

Market Re-entry

Our market entry strategy is more complicated than our “Fifteen Percent Rule” and we can’t explain how it works in a brief paragraph. More importantly, we don’t want to. We don’t want investors to only partially understand how our method operates, invest based on that partial understanding, lose money, and blame the lost wealth on us. We can’t trust that someone new to the site could, after reading a couple-page summary of our entry strategy, understand it as well as the strategy’s developers. And, as mentioned in our values section, we refuse to drown you in investment jargon. We hope you understand our choice to avoid financial pedantry or undeserved blame — our choice to examine the ETFs and update you on their week-to-week viability ourselves. 

You have a right to a healthy skepticism for an unknown re-entry strategy, and your ability to act on that skepticism — if you so choose — is one of the great benefits self-managed ETF investments provide. If a portfolio manager told you he couldn’t or wouldn’t explain his investment strategies, you would either have to accept that reasoning or rearrange your investments. With these ETFs you have complete control over your financial future — you can decide to follow our strategy or not. We at Averting Aversion would, however, like to make two suggestions before you decide to disregard our re-entry strategy.

Firstly, if you do decide to time your re-entry yourself, don’t reinvest due to feelings about market trends. Have a specific point or number for when you would feel comfortable reinvesting in the ETF. This will decrease emotional speculation-incurred losses and let you feel comfortable reinvesting the money you saved. Secondly — and, we’d like to believe, more importantly — you shouldn’t ignore our strategy if you want your assets to appreciate. Our strategy doesn’t get you in at your ETF’s trough — we can’t and won’t claim it will — but through behavioral economic analysis and rigorous market trend examination we’ve uncovered a point at which reinvestment in almost all ETFs has never lead to a loss when it came time to sell again. We cannot be sure if this trend will continue. But, unless you have a well-defined, well-reasoned market re-entry point backed by field experts, we recommend you at least try our method. It won’t have you in at the lows and out at the highs. It will, however, have you right beside us, consistently making money with every trade.