S&P500 swoon is really not much to date, despite the volatility

The index at 1886.76 is about 6% off the peak reached on September 18.

Down 10% would qualify as a correction, down 20% as a bear market.

It's still a great time to sell! Your Peter Cundill sell markers are roughly S&P500 1900, 1700 and 1500, depending on how much you want to risk losing. 

VGPMX at 9.63 hasn't been this cheap since 2003

The 2009 low was 9.73.

The thing is, the historical low water mark for this sector fund, which is a stock fund not a pure metals fund, was in August 1998 at 5.05. You could really lose your shirt in this fund even at this bargain price. I'd look for a broader stock market correction than the current 5% before I even thought about it more seriously.

On January 2, 2002 this fund was at 8.56. Following the Peter Cundill rule, you would have sold your entire initial investment in this fund at that price by late 2003 and recouped it because it would have doubled already at 17.12. (Often the easy money is made quickly off the lows, but it did take until February 2002 for the 5.05 price to double to 10.10, not quite four years.) The all-time high for this fund at 40.02 in May 2008 did not come until almost five years later.

How to sell the S&P500 in a bull market using the "Cundill" sell point

The Peter Cundill Sell is the principle that you sell half of your investment once it doubles, recovering 100% of the principal you risked. 

Assume you invested at the last S&P500 closing low, which was on March 9, 2009, at S&P 500 676.53. You multiply times 2 = 1,353.06, and sell half your holdings when the S&P500 rises to that level, according to the idea.

But the S&P500, for example, hit that level way back on April 27, 2011 at 1,355.66. So you doubled your money a long time ago, sold half your stake and recouped your entire principal. But then what? Cundill thought you were free to do anything with the remaining amount invested (which are the profits). The principal has to be reserved for another doubling opportunity.

What would a conservative bet with just the profits have meant from there?

Say you were to wager that the S&P500 would increase not 100% more as before, but only 25% more, because the S&P500 would have to hit 2706.12 to do the former. You are not greedy, just optimistic, you say. Is that a conservative plan? Maybe compared to what has just happened since 2009, but not really, because since 1970 the median annual return only has been north of 12%, half as much as that.

So you decide to let the profits ride, hoping for just an additional 12% on the index going forward. Here are the milestones of 12% from 1,353.06 up to today's current market level (1,949) at each of which you presumably sold half of your stake, gradually exiting the market and its growing risk:

1515.43 (February 2013)

1697.28 (July 2013)

1900.95 (May 2014).

An initial $10,000 invested this way made you $10,000 by April 2011 (not counting dividends).

The remaining $10,000 made you $1,200 by February 2013.

The remaining $5,600 made you $672 by July 2013.

The remaining $3,136 made you $376 by May 2014.

Since then you've had only $1,756 riding the market, making an additional 2.5% to date, or an additional $44. Total made: about $12,292 nominal. And you sell today.

By way of contrast, the buy and hold investor over the same period is up about $18,700, assuming he bought in low like you did and sells . . . TODAY. But trust me. He didn't buy low. And he won't sell today, tomorrow, in time to escape the correction, or any other time. He'll just ride it on down right past the 35% down marker at which point he'd begin waving up at you as he's headed lower. 

The True Meaning of 666

Don't buy stocks, unless you like overpaying, says John Bethel.

Here:

Back in January 2006, I posted about something Peter Cundill referred to over the years — “The Magic Sixes.”

As I wrote at the time:

“The Magic Sixes” are something Cundill got from a man named Norman Weinger of Oppenheimer in the 1970s. They are companies trading at less than .6 times book value (or less than 60% of book value), 6 times earnings or less, and with dividend yields of 6% or more. Cundill remembers that there were HUNDREDS of publicly traded companies in the US qualifying back in those days.

When I posted the above more than five years ago, I ran a screen on Barron’s Online and it gave three stocks meeting the test.

I just ran it again a few minutes ago and it listed one stock meeting the test. And a second that was on the bubble (and might meet it as the stock price fluctuates a bit).

The Magic Sixes isn’t meant to give specific stock tips. It’s used to gauge the broad market — and whether it’s cheap or not.

It’s clearly not here in the US.