The Perfect SectorSurfer Storm AAII Los Angeles SectorSurfer SIG, October 25, 2014

Transcription

1 The Perfect SectorSurfer Storm AAII Los Angeles SectorSurfer SIG, October 25, 2014 Gary Noreen Dunked Surfer

2 Agenda YODA Performance Update SectorSurfer Hiccups When to Get Out Gimpel vs. StormGuard Celeste Portfolio Update More Zillow Madness Supersize IRAs motifinvesting SectorSurfer Advanced Options

3 Disclosures Gary Noreen has had or currently holds positions in some of the securities discussed herein. The information provided herein is for general information only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision. Gary Noreen cannot guarantee the accuracy, timeliness, or completeness of the information herein. The views, opinions and estimates herein are subject to change without notice at any time in reaction to shifting market conditions. Past performance is no guarantee of future results and the opinions presented cannot be viewed as an indicator of future performance. Gary Noreen has received compensation (under $200) for referring people to SectorSurfer. Examples provided are for illustrative purposes only and are not intended to be reflective of results you should expect to attain.

4 YODA Performance August Report SPXTR +8.6% Wikinvest

5 YODA Performance September End SPXTR +8.3% Wikinvest

6 YODA Performance September WSJ

7 September Performance Symbol Name SectorSurfer Strategy FSPHX Fidelity Select Health Care Old Fidelity Retirement Account - 0.9% RSP ETF S&P 500 Equal Weight Young 4 ETFs - 0.2% USD ETF Ultra Semiconductors 2x SOS ETF Ultra (2x) - 2.0% PCYC Pharmacyclics GoWithTheFlow- - FLsurfer ds- 1/d - 5.9% INTC Intel AK 7/id +0.4% PGJ ETF Golden Dragon China ETF Various Sector /d - 8.0% EWZ ETF Brazil SOS ETF Power Mix % EWH ETF Hong Kong SOS ETF World Regions - 7.4% BITA Bitauto Holdings ChinaHedge /d % LBJ ETF Daily Latin America Bull (3x) SOS ETF Ultra Ultra (3x) % YODA Gary Noreen - 7.7% SPXTR S&P 500 Total Return - 1.4%

8 YODA YTD Performance Now SPXTR +8.0% Wikinvest

9 SigFig SPXTR 1 Year +14.5% SPXTR was 2.8% more than SPX last year

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11 UBT: ProShares Ultra 20+ Year Treasury

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13 Hi Gary, Thanks for asking. I hate it when problems show up when on a road trip. We were out in Colorado for the three speaking engagements when the second instance occurred. To make matters worse, the internet at La Quinta and some other places was terrible beyond words the connection being lost about every three minutes and needing to repair the connection each time. So it took me about four hours to deal with the aftermath of the problem Thursday morning whereas is should have been about one hour. Last night as I was trying to implement the fix on the remote server was no better. Okay enough moaning I do feel back to civilization with high speed internet... Problem Cause: At 9:30PM the nightly processing begins with turning off all access to FastTrack data and downloading 60MB in four separate files. During the update the FastTrack DLL must be closed to prevent conflict with the file update process. For three years, the data has come in reliably in under 2.5 minutes, and there is a basic built in double retry should any of the four files fail to download. Furthermore, a system timeout was placed at 5 minutes to ensure that the system would not lockup if the FastTrack update software failed. Of course, there are always ways things can fail that you don t imagine... until they happen. After carefully looking at the log files from those evenings we discovered that both took in excesses of 5 minutes and the error logged indicated a conflict in use of open files likely meaning that there was some internet congestion or momentary outages and the update software was still working on getting the data when our software gave up on it, and when we opened the FastTrack DLL it interrupted the update to one or more of the files leaving it in an apparent unreadable state. Although we check for errors when opening the FastTrack DLL, it reported none, but apparently did not check the underlying data sufficiently. In any case, the FastTrack ticker symbol index system worked for some symbols and not others, thus causing the observed problem. Thursday night, after arriving in Boise, ID, I worked on some system improvements that I considered during the 550 mile drive. The system timeout on the server has been extended much further and two additional tests for integrity have been implemented to ensure the data can be accessed properly before we put it to use and if the integrity test fails it will loop back and start the data download process over again. It s a long winded answer for a complicated little problem but we do now have fault tolerant software in place that directly addresses the pair of data faults in the last two weeks. I would actually be glad for you to convey this to your audience long ago I learned well that almost everyone will tolerate errors, but only so long as they are addressed reasonably and promptly how quickly did you wipe up the spill. There will be a shorter winded version of this in the upcoming newsletter. Thanks, Scott

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16 SOS ETF Ultra Ultra (3x)

17 Master SOS Ultra Ultra (3X)

18 Master SOS Ultra Ultra (3X)

19 Juds News- letter

20 Young 4 Equities

21 Young 4

22 200 Day SMA A key technical level in the stock market was breached on [Oct. 13], ending a years- long streak and making some investors nervous about what lies ahead. The S&P 500 tumbled below its 200- day moving average for the first time since November 2012, ending the fifth- longest streak in history, according to MKM Partners, and calling into question the stamina of the rally. WSJ Morning MarketBeat, Oct. 14, 2014

23 Gimpel Take- Out Sell when 75 day SPY Exponential Moving Average goes below 300 day EMA Get back in when 50 day EMA goes above 200 day EMA Charts from finance.yahoo.com This is a wide market indicator SELL! 75 day EMA 300 day EMA 50 day EMA 200 day EMA BUY!

24 YTD Gimpel Take Out EMAs

25 StormGuard

26 S&P 500 w/stormguard

27 Take- Out Compar- ison SELL! 75 day EMA 300 day EMA 50 day EMA 200 day EMA BUY!

28 Take- Out Comparison Gimpel StormGuard Out In Out In 7/7/94 8/22/94-3% 11/13/00 5/30/03 28% 12/1/00 4/1/02 14% 6/3/02 5/1/03 12% 1/15/08 8/11/09 28% 2/1/08 7/1/09 34% 8/25/11 1/5/12-10% 9/1/11 12/1/11-3% Percentages are gain or loss relative to SPY SELL! 75 day EMA 300 day EMA 50 day EMA 200 day EMA BUY!

29 Celeste Portfolio

30 Zillow August $637/ft 2 Beds: 4 Sqft: 2460 Baths: 3.5 Lot: 0.27 ac $752/ft 2 $599/ft 2 $440/ft 2

31 Zillow October

32 SectorSurfer Weaknesses Bias towards selecting a single or very limited number of equities or sectors Master SOSs seem to pick just a couple of sectors Lose information when removing equities Cherry- picking makes performance seem better than it is likely to be in the future Dependent on founder making fixes from the road Can we rely on it?

33 What to use SectorSurfer for Choose between carefully selected broad sector funds Fidelity Vanguard Faber 4/Young 4 Use in lieu of a wish list for stock investment disciplined way to get in and out May choose top two or three trends instead of just top, or select 2 nd or 3 rd trending based on external information

34 Supersize IRAs scrutiny- of- supersize- iras ? mod=your_money_newsreel_7

35 motifinvesting Mentioned by Don Gimpel at the last AAII Strategic Investing meeting Think of motifs as strategies based on themes you invest in multiple equities in each theme simultaneously Motifs put together by motifinvesting & users Includes social network motifinvesting is a brokerage you invest in a motif like a single equity; motifinvesting goes out and buys the constituent components for you for $9.95 a motif

36 Leadership

37 Professional Motifs

38 Community Motifs

39 Natural Gas Glut Motif

40 Natural Gas Glut

41 Natural Gas Glut Mo0f Details Name Symbol Segment Weight P/E Dow Chemical Co. DOW Chemicals 12.30% 15.7 LyondellBa sell Industries NV LYB Chemicals 11.98% 12.4 Market Cap Dividend Yield Price Change Today 1 MO Return 1 YR Return 3 YR Return 5 YR Return 10 YR Return 56,934,36 2, $ % % 19.39% 89.24% % 54.25%- - 48,327,95 6, $ % % 22.26% % ,776,44 DuPont DD Chemicals 8.33% , $ % % 17.25% 64.00% % %- - NewMarke 4,841,057, t Corp. NEU Chemicals 3.22% $ % % 23.73% % % %- - Westlake Chemical 10,102,27 Corp. WLK Chemicals 2.64% 15.1 PolyOne Corp. POL Chemicals 1.05% 31.3 W. R. Grace & Co. GRA Chemicals 1.02% 22 Celanese Corp. Series A CE Chemicals 1.02% 7.1 Eastman Chemical Co. EMN Chemicals 1.02% 10.2 LSB Industries Inc. LXU Chemicals 0.98% 11.8 Huntsman 5,968,575, 7, $ % % 36.82% % % %- - 3,380,172, $ % % 16.67% % % %- - 6,695,708, $ % % % % % %- - 8,887,638, $ % % 0.47% 40.01% % ,632,24 1, $ % % % % % % ,619, $ % % % 0.06% % %- - Return Since IncepOon

42 motifinvesting Initial Assessment Strengths Helps to identify & invest in hot new areas Social network can both create innovative motifs & inform which to use Weaknesses Motifs not available in SectorSurfer Must come up with your own in- out criterion Cost- efficient way to invest in specialized sectors Strong team & major investors

43 What do I Do Now? No more Master SOSs! Baseline Young 4 Fidelity Sectors, but review first & don t buy unless understood Consider stocks in top dog stock strategies Open & fund motifinvesting IRA

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45 Standard Information

46 Beaver 7 Standard

47 Advanced Information

48 Painted Path

49 Painted Path

50 3- Year Chart

51 Flex Chart

52 YTD Chart

53 Forward Walk Progressive Tuning

54 FWPT

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56 Decision Shift

57 Decision Shift - 3 Days

58 Bias Towards Short Trends

59 No Bias towards Short Term Trends

60 Stronger Filtering

61 Stronger Filtering

62 StormGuard Asymmetric Quick Response

63 StormGuard Asymmetric Quick Response Comes out of the hole sooner after market selloff Triggers sooner by not adhering to month- end trading rules Does not honor fund- specific month- end trading rules Last trade must have been at least 15 days prior

64 StormGuard Asymmetric Quick Response

65 BornOn Date

66 BornOn Date Progressive tuning interval about 6 months At least 5 years of tuning data needed BornOn dates 1/1/2004 & 1/1/2010 recommended because each includes a full market crash/recovery cycle

67 BornOn 1/2/2004

68 Beaver 7 Tweaks Strategy Sortino Ratio SS Score Safety 3 Year Return 10 Year Return Chance of 15% loss in 1 year Beaver 7 Standard % 20.7% 0.29% 19% Beaver 7 w/fwpt default % 20.3% 0.35% 19% Beaver 7 w/fwpt, DS % 18.0% 1.19% 19% Beaver 7 w/fwpt, no bias % 16.7% 1.31% 19% Beaver 7 w/fwpt, short- term bias, strong filter Beaver 7 w/fwpt, no bias, strong filter Max DD % 19.0% 0.52% 19% % 18.2% 1.26% 19% Beaver 7 w/fwpt, SG- AQR % 18.3% 0.67% 23% Beaver 7 w/fwpt Born on 1/2/ % 17.0% 1.58% 19%