Our Mutual Fund Investment Strategies - How They Work

Take Advantage of Our Proven

Computerized Investment Models

• We invest only in diversified investment funds ... such as mutual funds, index funds and ETFs (exchange traded funds). These investment options avoid the risk of owning individual stocks.
• Our models are based upon the science of "technical analysis"... rather than "fundamental analysis". Our approach uses computers to analyze the underlying supply and demand factors in the market such as volume, breadth, investor sentiment and price momentum.
• Every Model Portfolio is based upon a proven statistical model... built around a core, long-term market timing model that was developed in the early 1990’s. The core model’s logic was based upon the statistical analysis of decades of historical market price behavior, and has successfully identified every major trend-change since.
• We use an active approach to portfolio allocation management. It is a “dynamic” approach to asset allocation... to more efficiently manage risk and opportunities for reward. Our generic Model Portfolios' percentage allocations to the stock market, bonds and various “market sectors” will adapt quickly as market conditions change, providing the opportunity to fully capitalize on bull markets while avoiding increased risk.
• Our strategies tactically shift between market sectors to enhance profits... using our Relative Sector Strength Optimization technology. Sometimes, "Smallcap Stocks" go up a lot more than "Largecap Stocks." Other times... it will be the reverse. You can benefit by having your portfolio focused in the strongest market sector.

Active portfolio management can significantly increase
total returns while controlling risk

The result of our technology is that the generic Model Portfolios will shift allocations in response to changing market conditions... just enough to enhance long-term performance. This is neither a "buy and hold" strategy, nor is it constant "churning". Our goal is a happy medium using as few portfolio shifts as possible to maximize returns while limiting the effect of market volatility ... and typically about one shift per month is needed.



“Dynamic” asset allocation, as an active portfolio management discipline, goes by several names. It is also referred to as active asset allocation and tactical asset allocation. By whatever name, this advanced approach to portfolio asset allocation differs from the traditional approach provided by most diversified investment advisors and planners.

Traditional financial advisors structure an investment portfolio with fixed, unchanging allocations in different types of investments. They operate with an investment philosophy of “buy and hold”, expecting you to hold on to your fixed investment positions for long periods of time -- no matter how poorly some of the investments may be performing, even sometimes in the face of devastating 30% losses or more.

Our advanced, computer-based investment logic doesn't use fixed allocations.  The computer models respond actively to changing market conditions and shift the Model Portfolio asset allocations when needed to manage risk and enhance return.

How does our dynamic approach to portfolio asset allocation know when to shift allocations? The allocation logic is driven by signals from two computerized sub-systems that track the weekly progress of the markets:

• Signals from the long term market timing model... which identify whether the stock market is in:
  • a very bullish trend,
  • a bearish trend
  • or going through a trendless, neutral period; and,
• Signals from the relative sector strength optimization model … which tells us which market sectors are the strongest.

Then, based upon these two signals, the allocation logic in each Model Portfolio sets the percentages for each investment type. In addition, each Model Portfolio is designed around a different maximum risk parameter. The unique allocation logic for each model was determined through computer simulation to contain any losses within each model's maximum risk parameter.

Get in early on every bull market.

These computer-driven signals trigger shifts in the investment allocations of each Model Portfolio – usually done in gradual shifts. When a model's allocation logic recommends a change, we communicate it to you immediately through a Trading Alert advisory email. By shifting allocations tactically as market conditions change, our investment strategies can help you invest early in every bull market.

• Have you ever been afraid to get back into stocks after a big decline in the market?

Our proven trend-identifying technology can help you get over your fears so that you can actually realize the potential gains that are made available to you by investing early in every major bull market.

Avoid stocks during bear markets.

The same statistical technology identifies when bull markets end ... and bear markets begin. The system will tactically reduce the Model Portfolios' stock market exposure to avoid significant losses. Avoiding large losses can substantially magnify the growth of your nest egg over time by helping to ensure you lock in profits.

• Build profits on top of profits...

This is how you can significantly increase the "rate of growth" of your investment portfolio over a period of time, such as 5 years, 10 years or 20 years. To do this successfully, you must be able to:

• participate in the bull markets,
• lock in the profits,
• avoid major loss during the following bear market, and
• get in early during the bull market following that.

In a nutshell, this is exactly what our investment newsletters can help you to do – year in and year out.