Sector Surfer Redux Jim Quinn (Student Investor) February 1, 2014
DISCLAIMER The content of this discussion is provided as general information only and should not be taken as investment advice. All discussion content shall not be construed as a recommendation to buy or sell any security or financial product, or to participate in any particular trading or investment strategy.
DISCLAIMER (CONT) The ideas expressed in this discussion are solely the opinions of the author(s). The author(s) may or may not have a position in any security referenced herein. Any action that you take as a result of information or analysis provided in this discussion is ultimately your responsibility. Consult your investment adviser before making any investment decisions.
My Philosophy Preserve Capital Earn Best risk-adjusted Return Not a day trader, I am looking for weekly systems or longer I look for systems which meet these requirements Focus on ETFs and Mutual Funds rather than stocks to reduce risk
My Philosophy (Cont) I Look for trends Visuals (ie charts) are Very Important I am not necessarily a Buy & Hold investor, but would like to be
Todays Objectives Section I A Reading List Section II SectorSurfer 101 Section III My SS Thoughts Section IV - Feel of the Market Leave You With a Handout Which is the Text of This Presentation
SectorSurfer Considerations Another Investing Approach Has MANY Many Variations May be for Some Investors
Section I Reading List One Man s Opinion Note : ALL OffLine; I do not do a lot online Barrons Kiplingers Magazine WallStreet Journal AAII Magazine Quarterly & Yearly NewsPaper Reports Investors Business Daily (IBD)
Weekly Barrons Mostly Dedicated to Investing Material Covers Stocks, Bonds, Mutual Funds, ETFs, Hedge Funds, Options, ETC MANY, MANY Very Good Columnists WSJ Derivative, But Much Better But Remember ALL are Their OPINIONS
Monthly Kiplinger Magazine Only $12 to $15 per Year GREAT for Beginners Have Their Own Set of Selected Diversified Funds which They Track Every Month Covers Investing, Personal Finance, & Other Pertinent Points-of-Interest Very Basic, Grounded and Down-to-Earth Many Good Columnists
Wall Street Journal Mostly a Business Reporting Paper Section 4 s can be Very Good; ie about Retirement, Investing, Small Business, Wealth, etc First Monday of Every Month (Usually) has an Investing Section Every Saturday (Second Section) has a 4 Page PullOut Centered on Investing Jason Zweig also Usually has an Article on First Page of Second Section on Saturday SunDay WSJ (Online) can be Good
AAII Monthly Magazine Excellent Articles usually very short (2-3 pgs) Dec 2013 has a composite list of Year s Articles Arranged by Category (See next Slide) Have Many Very Good Guest Authors Regular Contributors are also Very Good At $29 per Year a BARGAIN
AAII Article List 2013; Dec 13
Quarterly Etc NewsPaper Reports Most Major Papers have a Quarterly Section on Investing / Mutual Funds / ETFs etc Barrons, LA Times, New York Times, Etc Some also have Year-End Handouts Many financial Mags also have a Year- Beginning Issue; Money, Forbes, Fortune, etc
Tom Petruno Others Wherever I can find him Investors Business Daily Mostly Stock Info in my Opinion Very Good Info but I don t Follow it Also has many chargeable offshoots Daily Breeze Scott Burns is a Very Good Columnist on Saturdays
Section II Sector Surfer 101 Aimed at the Beginner Triggered by my Assessment of Level of Knowledge at the 1/04/14 AAII Retirement Meeting Also More Sector Surfer Meetings will be coming; therefore This is a good time to do an Overall Review REMEMBER: SS is Just a TOOL so CAVEAT EMPTOR; We are telling you HOW to use SS, NOT What to Invest In
SS 101(Cont) Hopefully We Will Also Leave you with a Set of Printed Notes via the HandOut of This Presentation which should assist you in traversing and using the SS WebSite See the Next 2 Slides as an example of this Presentation Format The Intent is to Leave You with a Written Set of Directions which Tell You How to do things and Show You where you can find the Info on the WebSite
Example Slide #1 Go to the My Strategies Tab under the Top Level My Account Tab From now on a Location like this on the Site will be Designated as: My Account > My Strategies The Next Example Slide, #2 shows the Picture of the WebSite Address Referenced by the Above Address. The Referenced Slide will ALWAYS be in this Format
Example Slide #2
Sector Surfer (SS) Basic Purpose The Idea of SS is to allow You to Create Portfolios (Strategies) Containing up to 12 Stocks / ETFs / Mutual Funds per Portfolio SS can then Monitor each of these Portfolios and tell you (Via Email Alert) which ONE of the components of the Portfolio you should Own and when to switch to another component or to go to CASH if You Designate this as an Active Strategy It will also tell you when to switch out of cash and back to the Best Rated component
Accessing YOUR Strategies Go to the My Strategies Tab under the Top Level My Account Tab My Account > My Strategies The Next Slide shows a Complete Active Strategies List and a Partial SandBox List (The last line on the Page limited by the Size allowed on the Slide) After You Create YOUR Strategies, This is where they will ALWAYS Reside on the Site. The Next Slide shows the the WebSite Representation
Accessing YOUR Strategies
Active Strategies vs SandBox The Contents of the Previous Slide tells what SS does when you designate your Strategy as an ACTIVE Strategy, which you may or may not have to pay for. SS also has a SANDBOX Capability which allows you to PLAY with and TEST Strategies (to a certain degree) but NOT make them Active Strategies. Most Recent Trade information is NOT Provided for SandBox Strategies; and NO email alert is Provided
Available SS Strategies The SS WebSite probably contains hundreds (if not More) of Working SS Strategies You can Use ANY ONE of these strategies as Your Own if you so Desire The BEST Way to understand any SS Strategy is to look at its Performance Chart You can see any Performance Chart by Double Clicking on its Chart Icon; Represented by either the little multicolored box on the My Strategies page or by the CHART Symbol in a strategy ID Definition
Sample SS Chart
Sample Chart Explanation The Previous Slide is a SS Chart Example Each Item on the Chart is Explained on the WebSite at the location: Sector Surfer Info > Using Sector Surfer Which is Shown on the Next Slide ALL the Chart Info are Defined in the Items in the RightHand Column Strategy Charts
SS Strategies & Charts Defined
Finding An SS Strategy You can Find Available SS Strategies at Several Different Areas on the Site: 1) Hall of Fame 2) Example Strategies or 3) Model Strategies
Accessing a SS HOF Strategy The Content of the Next Slide can be found on the WebSite at: My Account > Hall of Fame From this Point you can see the Chart Contents (by clicking on the Chart Icon), See the Numerical Performance (Col. 1), and Capture the Strategy ID in Col. 6 (If you want to Import this Particular Strategy)
Hall of Fame Example Chart
Accessing Other Strategies Other SS Strategies can be accessed on the WebSite at: Sector Surfer Info > Example Strategies and Sector Surfer Info > Example Strategies> Model Portfolios The Model Portfolio Area Contains MANY Very Interesting Portfolios, Including Scott Jud s and his Son s IRA Portfolios
Example Strategies
Model Strategies
Model Strategies (Cont) It will Take More Effort to Get to the Pertinent Details of these Strategies You must Save the Model Strategy ID to be able to Access a Strategy You Like
Creating Your Own Strategies YOUR Own Strategies can be created by : 1) Generating a NEW ( Custom ) Strategy, 2) Importing an Existing Strategy and using it as is, or 3) Importing an Existing Strategy and Modifying its Contents and then using the modified Version
Hall of Fame Example Chart
Identifying a Strategy For example, HOF or Model Strategies both are Identified by the Strategy-ID shown in the Previous HOF Chart Model Strategy IDs are shown in the Next Slide Which Shows the 4 Model ID #s of the Conservative ETF Model Portfolio. You must Dig down Several Levels to See These IDs You Must ID a HOF or Model Strategy Before You can Import it to Use It as Your Own
Model Strategy IDs
Importing a Strategy There are 2 Ways to Import a Strategy: 1) On the My Strategy Page Click the S button which will Open a Window Allowing You to Select any Free or Premium Strategy. (As the Names Imply these Strategies are Free or Chargeable); or You Can 2) Find a Hall of Fame or Model Strategy that You Like and Capture its Strategy-ID # (via a CTRL C) and the Paste that Strategy-ID # into the Ïmport a Strategy box (Via a CTRL V) on the Select a Strategy Pop-Up Shown on the next slide Also Accessed by Clicking the S Button
Importing a Strategy: the Pop-Up
Getting to the Strategy Pop-Up You Can Reach the Previous Slide by Going to the WebSite at : My Account > My Strategies > S Please Note That In Order to Effectively use the Strategy Pop-Up Box, You Should have Selected the Name(s) of the Free or Premium Strategie(s) You want to Look At
Strategy Creation on the Website Website Instructions for Creating a Strategy can be found at: SectorSurfer Info > Using SectorSurfer > My Strategies Page As Shown on the next slide
Creating a Custom Strategy On the My Strategy Page, Each Line Represents a Single Strategy Click Any Blank Space and the Find a Mutual Fund, ETF or Stock Pop-Up (as Shown on the Following Side) Will Appear Find Whatever PortFolio Item You want, and Select it (Via the Use Selected button) Continue This Selection Process Until You have ALL your Desired Components in Your Strategy. You Can See the Returns of Your Selections by Clicking the Chart Icon
PortFolio Item Selection
Editing an Imported Strategy This Process is VERY Similar to the Process of Creating a Custom PortFolio Previously Described After Importing ANY PortFolio, Just Click on the PortFolio Item You Wish to Change, and the PortFolio Item Selection Slide (See Previous Slide) Will Pop-Up. You Can Delete or Replace The Selected Item by Using the Delete Current Fund or Delete Current Fund AND The Use Selected Buttons Respectively
Other Strategy Options Clicking the I Symbol Associated with ANY Strategy Will Present the Following Slide Clicking the Show Advanced Options button on that Slide will Present the SubSequent Following Slide which Shows the POP-Up which allows the Selection of the Shown Advanced Options. Most are Beyond the Scope of This Presentation Today. However One is of Particular Interest to Me; The White Reference Index which will be Discussed in the Next Section; Section III
Basic Options Slide
Advanced Options Slide
Charges Slide
Some Personal Opinions He Includes Some Investment Opinions on the Site; prudent. etc ThroughOut Site which can be good I Believe that the COMPOSITE of ALL the Funds and ETFs Contained in all the Sample PortFolios on the Site PROBABLY are a VERY GOOD set of Items to Consider for Your PortFolios Many EXCELLENT Capabilities (Screener) not in the Scope of This Talk Many Very Interesting Ways to Look at Items if
Section III My View of Sector Surfer I Feel the Best Way to Learn SS is to Experiment with Different Items of YOUR PortFolio in the SANDBOX before You Create an Active Strategy Try Items ALONE to see what Their Performance is Add Items one-by-one Checking the Performance Chart as You Add Them I Have BARELY Scratched the Surface of What it can do
Single PortFolio Items While I was Experimenting with and Focusing on SS for this presentation, I Spent a Good amount of time Creating Single Item PortFolios I liked This Approach since it Allowed me to see how this Single Item had Performed With and WithOut SS over the Last 20 Years
Setting the White Reference Index One Trick I Learned was the Ability to Compare A Single Item s Performance to ITSELF while in SS. In the My Strategies Page one of the Advanced Capabilities You can Control is The White Reference which is what your Item s performance is Compared to; usually thr S&P 500 Index. The Next Slide Shows how You can Set this Capability
Advanced Options Slide
White Reference Setting (Cont) You Can Set this Capability to the Average Setting which will Compare Your item s Performance to that of the Average of Your PortFolio s Performance. If you have a Single Item in Your PortFolio, You are Comparing the Items Performance to Itself. The Next Slide Shows the Performance of GURU compared to itself. The Second Slide Shows the Added Value of Using SS To Time Your Buys and Sells for DODGX. Using this Technique Allows You to see the Performance of the Item for 20 years
GURU vs Itself
DODGX vs Itself
Sample SS PortFolio Returns The Next slide Shows Pertinent Info for HOF Safety Strategies as They were ranked at the Last Meeting The Second Slide Shows the Same Data for Richard Young s Selections at the Same Meeting NOTE: These data are Past Results The Results are VERY Interesting
Safety Sector Surfer Returns Strategy 10 yr Ret Sharpe Ratio Max DD #1 33.7% 1.56 15% #2 31.4% 1.58 15% #3 33.6% 1.59 15% #4 33.6% 1.39 15% #5 25% 1.04 14% #6 12.5% 1.54 7% #7 21.3% 1.15 14% #8 18.1% 1.22 10% #9 12.1% 1.56 7%
Ry Sector Surfer Returns Strategy 10 yr Ret Sharpe Ratio Max DD Faber 4 20.9% 1.77 17% SPY 11.5% 0.75 17% GURU 18.6%* 1.63 18% VG Inc. 12.2% 1.55 8% JNK & VXF 16.7%* 1.74 13% MDY 13.8% 0.92 23% VXF 14.3% 0.94 24% * Returns are for 6+ Yrs NOT 10 Yrs
RY Faber 4
Sector Surfer Power
RY GURU Etc
RY VANG. INCOME
RY JNK & VXF
RY MDY
RY VXF
Section IV - The Market
Importance of Market Feel The Next 8 Slides Discuss the IMPORTANCE of Understanding As Best As Possible What The Market (i.e. S&P 500) is Doing at any Given Time Presently We are Still in a Bull Market; but be CAREFUL VIP: You MUST be IN During Bull Runs
What Is A Bull Run UpTrending Market; Higher Highs and Higher Lows Consensus is QE Will Continue to Lead Market Higher Per Ian Woodward: Follow Best Stocks Groups as DownWard Indicator JIRM Index Canaries
Market Example Pre Dec 2013
Market: 01/25/2014
Exiting a Bull DownWard Break thru the Channel Bulls Last About 5 Years; Thus 2009 thru 2013; Could Happen in 2014 Bears happen more Often in 2 nd Presidential Year (2014); See Chart Bears Happen SLOWLY; 1.5 2.25 YRS, Thus Plenty of Time to React Bears Also Happen When Markets Diverge; i.e. Dow Up but A/D Down
2 nd Year of Presidential Cycle
Avoiding DrawDowns Use 300/75 DMA Moving Averages 4%/8% Rules Protective Puts to Protect PortFolio
Ian Woodward S&P 8% Rule
Ian Woodward Nasd. 8% Rule
LATE BREAKING NEWS!!
Investing is a Constant Battle Very FEW (If Any) Methods Have Worked Long Term You Are ALWAYS Battling the Big Boys with all Their Talent & RESOURCES Must ALWAYS be Aware of Market Status MUST Be Nimble & Creative ALWAYS Look for New Approaches
Net-Net for Investing Discussion Try to PRESERVE CAPITAL Try To Keep It Simple (KISS) Don t WithDraw $ For Monthly Expenses From Volatile Investments If Possible AVOID MAJOR DRAWDOWNS Don t Just Sit Thru a 2008; DO SOMETHING
SS 101 Net Net We have Told You How to Use the Basic Version of SS: HOW TO USE IT; NOT WHAT TO INVEST IN Those Suggestions could come in Later Sessions; Specifically 02/22/2014 @ Culver City