There is a plethora of market timing newsletters ready to take investors’ money. The problem is that the vast majority are worthless and dangerous to your wealth. One way to engage in market timing without doing the work yourself is to subscribe to a market timing newsletter or timing service and scrupulously follow its buy and sell signals.
The first part of this chapter will cover market timing newsletters, and the second part will focus on other related resources. Today, there are hundreds of market timing newsletters or services published in hardcopy or on the Web. New ones appear all the time, and old ones with miserable track records disappear into the night. The problem is determining which, if any, meet your specific needs with a long-term track record.
MARKET TIMING NEWSLETTERS AND SERVICES
In general, to locate market timing newsletters or services, if you did a search on www.google.com or www.bing.com, you would come up with hundreds of thousands of entries. You will find not only advertisements for a number of the newsletters but also the good, the bad, and the ugly. You then can go to specific sites to see what they offer and get a sample issue or perhaps a 30-day free trial. Each newsletter’s or service’s performance record should be available for viewing against a comparable benchmark. Be aware that some unscrupulous individuals provide inaccurate track records, and some services have only backtested and optimized a trading system that has minimal real-time performance statistics. And the advertising claims of some of the purveyors are outrageous. Caveat emptor!
Another option is to use the services of the Select Information Exchange, which has a Web site (www.stockfocus.com) that provides trial subscriptions to over 200 newsletters and advisory services, of which 30 focus on market timing. You then can decide if you are interested in a trial of four newsletters for five months for $69. The exchange also can be reached at (800) 743-9346.
INDEPENDENT MARKET TIMING NEWSLETTER TRACKING SERVICES
After scrutinizing Google’s offerings and reviewing those of the Select Information Exchange, you still may find yourself unsure of what to do because neither provides an analysis of the performance of their product offerings. The marketing hype and testimonials of many newsletters are often grossly misleading. Fortunately, three independent tracking services are available that verify the performance of market-timers. They publish their results at least monthly for subscribers, and one service provides daily access. Having these services is just like having Consumer Reports for timing newsletters—getting the facts rather than the hype. You need the truth, not the baloney sandwich.
The Timer Digest newsletter, edited by Jim Schmidt since 1987, tracks the performance of over 100 market timing models published in newsletters. Schmidt follows the timing signals in each newsletter, as would a typical subscriber, including those provided by e-mail or a telephone hotmail service. All newsletter signal changes are benchmarked against the Standard & Poor’s (S&P) 500 Index. All market timing newsletters are ranked against each other, and the timers are listed in each issue of Timer Digest. The newsletter focuses only on the timing of their signals, not on their investment recommendations.
Timer Digest is published every three weeks in newsletter format (hardcopy or a .pdf file that can be downloaded from the Web site, www.timerdigest.com). This information is supplemented with a biweekly hotline service (accessed via the Web site or telephone) that is updated on Wednesday and Saturday nights. The hotline reports any signal changes from the timers as well as their latest opinion. The newsletter ranks the top stock, bond, and gold timers based on their latest 52-week performance.
The top timers are those with the best stock market performance over the past 52 weeks compared with the S&P 500 benchmark. The latest market call (bullish or bearish), performance data, and signal date from each of these timers is printed in the newsletter, along with the timer’s latest market commentary (one to two lines). Over time, since the evaluation encompasses a rolling 52- week period, there are different top timers. Thus only those with the best performance out of the 100-odd timers are highlighted. In addition, the “top 5” bond and gold timers are shown, with their performance, buy and sell signals, and brief market comment.
The “Top 10 Consensus” tells the current recommended position of the majority of these stock timers—that is, either a bullish or bearish call on the market. In addition to providing the top timers for the past 52 weeks, Timer Digest also lists the stock timers for the most recent six and three months, along with their timing performance compared with the S&P 500 benchmark and the date of their most recent signal. Additionally, the “top 5” bond and gold timers are ranked, and a consensus reading (bullish or bearish) is also provided with the same information just mentioned.
How have the 100 timers tracked by Timer Digest performed recently? Publisher Jim Schmidt indicates that about 25 percent of the timers beat or matched the S&P 500 Index in 2007, which was up 3.53 percent, and approximately 60 percent beat that benchmark in 2008 (S&P –38.5 percent). Only 22 percent beat it in 2009 (S&P +23.5 percent), and through September 30, 2010, 30 percent beat or matched the index (S&P +2.34 percent). The relative performance of all the timers monitored versus the benchmark was strong during the volatile bear market period. This doesn’t necessarily mean that the timers actually had positive returns but that they lost less than the S&P 500.
For the year ending in 2008, the “Top 10 Consensus” as a group had a performance index of 122.15 compared with the S&P performance index of 61.51. The performance index is set at 100.0 at the beginning of each year for each timer and for the index. And timing signals assume either long or short positions in the S&P 500. Thus, for the one-year period ending in 2008, the “top 10” timers performed 60 percentage points better than the benchmark, certainly an outstanding performance and one of the record variances for a one-year period since Timer Digest’s inception.
Thus far in 2010, the “Top 10 Consensus” as a group had a performance index of 107.31 (base reading is 100) compared with the S&P performance index of 102.34. Thus, for the current nine-month period, the top timers performed almost 5 percentage points better than the benchmark.
Table 12-1 shows the performance of the top timers relative to the S&P 500 benchmark at year end 2009. Overall, the “Top 10 Consensus,” designated as “T.D. Consensus” in the table, beat the S&P 500 Index in all but the one-year time period. In strongly positive years, timing does not usually beat buy-and-hold. However, over longer, range-bound periods containing fewer predictable bull and bear cycles (as in the recent decade), timers tend to excel. Also provided is the same table but for the period ending at year end 2002 for comparison purposes (Table 12-2).
In Table 12-1, the more recent period, the “T.D. Consensus” performance was more than double the benchmark for 10 years and between 60 and 85 percentage points higher for the three-, five-, and eight-year time frames.
Timers who can maintain such consistent standings, year after year, are exceptional. The longer they remain as top performers on the three-year lists and longer, the more credibility their forecasting recommendations have. As I pointed out earlier, the timers may not beat buy-and-hold in all time frames, but they are worth their weight in gold during bear markets.
One-, Three-, Five-, Eight-, and 10-Year Lists
Christopher Cadbury, Cadbury Timing Service
Dale Woodson, Woodson Wave Report
Joseph Granville, The Granville Market Letter
Three-, Five-, Eight-, and 10-Year Lists
Dan Sullivan, The Chartist
Ike Iossif, Aegean Capital
Steve Hochberg and Pete Kendall, Elliott Wave Financial Forecast
Five-, Eight-, and 10-Year Lists
Mark Leibovit, VRTrader.com
Three-, Five-, and 10-Year Lists
William Corney, No-Load Portfolios
One-, Three-, and Five-Year Lists
George Slezak, Stockindextiming.com
Five- and Eight-Year Lists
William Ferree, Ferree Market Timer
Three- and Eight-Year Lists
Holly Hooper, Mutual Fund Strategist
One- and Five-Year Lists
Carl Swenlin, Decision Point Alert
How has the Timer Digest “Top 10 Consensus” performed? According to the Hulbert Financial Digest, an independent newsletter rating service, for the 10 years ending June 30, 2010, Timer Digest’s average annual return for the “Top 10 Consensus” was 8.1 percent compared with –0.8 percent for buy-and-hold (Hulbert uses the Wilshire 5000 as the benchmark, not the S&P 500). Schmidt’s Fidelity Select program (buying the strongest single Select fund based on a proprietary evaluation) was up an average of 3.6 percent for this same period (but had more risk). On an overall basis for the 15-year period ending May 31, 2010, the average investment portfolio recommended by Timer Digest has risen 191.1 percent compared with 178.3 percent for the Wilshire 5000.
Timer Digest is a comprehensive newsletter and timing service that offers investors unbiased information at a reasonable price ($225 annual subscription cost). For more information, contact the newsletter at (203) 629-3503 or on its Web site at www.timerdigest.com.
Hulbert Financial Digest
Another publication that tracks the performance of investment and timing newsletters on an apples-to-apples basis is the Hulbert Financial Digest (HFD). Mark Hulbert founded this monthly newsletter in 1980. The HFD became part of MarketWatch in April 2002. Its goal was to provide investors with an unbiased investment newsletter rating service. The focus of HFD is not strictly on market timing newsletters. Instead, it encompasses a broader spectrum of investment advisor newsletters. However, market timing newsletters make up a subset of the universe covered by Hulbert. Currently, about 180 newsletters (relating to mutual funds, stocks, sectors, timing, and so on) and 500 portfolios are tracked against the Wilshire 5000 Index (a broad-based index of the entire market).
Every monthly issue of the newsletter ranks the top seven performing newsletters for total return and risk-adjusted return over the last 5-, 10-, and 15-year periods. There is also information on the most- and least-recommended mutual funds and stocks based on mentions among all letters tracked by the HFD. Another section of the newsletter provides the average market exposure to stocks, gold, and mutual funds for the market-timers tracked. In addition, profiles of newsletters show their performance since 1980 to the present time compared with the Wilshire 5000 benchmark. The profiles describe the newsletter, its objectives, strategies, and performance. Each issue also contains a lead article covering a subject of current interest and two newsletter profiles. Twice a year, the newsletter provides a 16- page report on the track record of each newsletter’s portfolio over the last 5-, 10-, and 15-year period, if available. Also, the performance over the past year is shown in the January edition of the next year.
In the January 2010 issue of HFD, there is an analysis of the top 15 newsletters in 2009 and their performance over prior periods compared with the Wilshire 5000 Total Return Index. This analysis indicated that the top 15 newsletters had an average annualized return in 2009 of 99.1 percent compared with the benchmark’s 28.3 percent return. Six newsletters returned more than 100 percent, and the worst performer was up 60.9 percent. Eleven of these newsletters outperformed the benchmark of a five-year period. Over 10 years (only 10 of these newsletters had data), they averaged an annualized return of 5 percent compared with –0.3 percent for the benchmark, and 9 of the 10 newsletters beat the benchmark. Over a 15-year period (9 of these funds had data), they averaged equal performance to the benchmark, although three funds had a better performance. Among the best-performing newsletters in these four periods were the Turnaround Letter, Global Investing, The Investment Reporter, The Ruff Times, and The Dines Letter.
For more information on the HFD ($69 annual subscription cost via mail and $49 via e-mail), contact HFD at (866) 428-6568 or www.marketwatch.com.
TimerTrac.com tracks and ranks the performance of approximately 700 market timing strategies offered by hundreds of market-timers from the United States and abroad. TimerTrac independently verifies the performance of market timing services by receiving their real-time signals and measuring them against other timers and against specific index benchmarks and updates its database daily. In the case of trading through Rydex or ProFunds, the signals are verified through group trading data. Some of the timing strategies are based on using the Rydex or ProFunds, index funds, exchangetraded funds (ETFs), closed-end funds, sector funds, and mutual funds. Asset classes tracked include growth stocks, small- and midcap stocks, high-yield bonds, precious metals, Treasury bonds, and leveraged and unleveraged funds.
TimerTrac.com tracks long, intermediate, and short term, as well as fast timing, as defined in Table 12-3, but does not track trading.
Sample Report of Top Performers
The partial report presented in Table 12-4 contains the top performers over the five-year period from August 31, 2005, through Tuesday, August 31, 2010, compared to the S&P 500 Index (–13.20% over this same time period). You can see that all 19 beat the benchmark, although the last two shown had a negative performance. However, on a relative performance basis, they both beat the benchmark by 11 percentage points. Subscribers can determine any time frame for measuring performance, as well as selecting the benchmark.
Looking at the trades during the five-year period, there is a wide variance among the top performers. Interestingly, Market Systems II had the best performance by a wide margin, with a gain if 120.05 percent, but it also had the largest number of trades at 629. The next-best performer, IndexTrades.net short term, had only 76 trades and a 64.67 percent gain. This was compared with a –13.2 percent performance of the S&P 500 Index.
Shown in Figure 12-1 is a TimerTrac.com chart of the market timing performance of three strategies AccuFundTrader.com measured against the S&P 500 Index. Two of the strategies (ultraaggressive and moderate), the two top lines on the chart, respectively, easily beat the benchmark, whereas the aggressive strategy underperformed as of October 5, 2010.
A TimerTrac.com summary of the returns of the three strategies (aggressive, moderate, and ultra-aggressive) is provided in Table 12-5.
A typical description of AccuFundTrader.com’s ultra-aggressive strategy is provided in Table 12-6.
Subscribers to TimerTrac.com can
- Research performance and information on 682 timing signals
- Find real-time market timing signals
- Compare one timing signal with others
- Contact market-timers directly
- Rank timing signals over different time periods—six months, one year, or any custom time period
- Apply a timing signal to many indexes to determine which one performs the best
- Apply a timing signal to the Rydex or ProFunds family of funds to determine which funds and signals work best
For more information, contact
59 Canterbury Lane
Logan, UT 84321
Phone (888) 697-3577 or (435) 245-1711
E-mail: [email protected]
Subscription cost: Quarterly: $89.95; semiannually: $129.95; and annually $179.95
THREE MARKET TIMING NEWSLETTERS
Three newsletters that offer different perspectives on market timing are included in this section. Other newsletters that you’ve located by using the independent rating services mentioned previously also may provide you with the type of information that you are looking for.
Formula Research Newsletter
For investors interested in learning about the latest in timing models, one newsletter—Formula Research—provides unique, time-tested, profitable models. Since October 1991, Nelson Freeburg has been its editor and publisher and is an active trader and investor. Freeburg is a master systems builder and developer of systematic timing models and trading systems for stocks, bonds, commodities, and ETFs. He provides research to over 1,000 clients—institutional and individual—in over 25 countries. As you will recall, Freeburg’s extensive model testing was frequently referenced in prior chapters. Freeburg is a popular speaker in the United States and abroad.
Formula Research is neither a stock tip sheet nor a market timing service. It offers neither investment advice nor opinions on where the markets are going. Freeburg’s sole objective is finding, developing, and rigorously testing market timing models and strategies using standard statistical testing routines. His extensive research, published over many years, has produced a large number of timing models that produce consistent performance while outperforming the S&P 500 Index. All timing models are strictly mechanical and fully disclosed.
Each issue of the newsletter provides a proprietary trading system with high performance and limited risk. Freeburg’s writing is crisp and to the point. If he is testing a system developed by someone else, he provides complete attribution and credits the individual for his work and then does his own research using different sampling periods and other variations to improve on the originator’s work. For more information on the newsletter, contact:
4646 Poplar Avenue, Suite 401
Memphis, TN 38117
E-mail: [email protected]
Subscription: $295 for 12 issues
Past issues are available for $30 for subscribers and $45 for nonsubscribers.
Sy Harding’s Street Smart Report
Sy Harding, mentioned previously for his contribution to seasonal investing, also provides investment and market timing advice via his online eight-page newsletter Sy Harding’s Street Smart Report, published every three weeks since 1988. The information provided covers:
- Markets: U.S. and global stock markets, gold, bonds, and the dollar.
- Two strategies: The seasonal market timing strategy described in this book and a nonseasonal market timing strategy based on technical and fundamental analysis.
- A specific active portfolio: This is provided for each strategy, with periodic recommended holdings and ongoing buy, sell, and hold signals on each. Holdings may include ETFs, mutual funds, and stocks, including short sales and “inverse” ETFs on sell signals.
Sy Harding’s Street Smart Report can be obtained online and is also available in the following formats:
- The hardcopy newsletter is published and mailed every three weeks and is available for .pdf download or printing. Included are telephone hotline updates and online Internet access.
- The online Internet newsletter alone includes updates, additional commentaries, and other educational materials from the Street Smart School and the Street Smart Library.
- Both subscriptions include a copy of Sy Harding’s book, Beat the Market the Easy Way. Annual subscriptions cost $275. Monthly subscriptions cost $25.95.
For further information on the newsletter, contact:
Asset Management Research Corp.
505 East New York Avenue, Suite 9
DeLand, FL 32724
Phone: (386) 943-4081
Mutual Fund Prospector
Eric Dany has published the Mutual Fund Prospector (MFP) newsletter since December 1998. His goal is to provide a simple mutualfund timing strategy that provides solid long-term returns. He has accomplished this goal because the MFP model portfolio from January 1999 through September 2010 has risen 110.6 percent versus the benchmark return (Vanguard Total Stock Market Index Fund) of only 26.6 percent. His MFP aggressive portfolio had an even better return of 188.7 percent. His research indicated that “equity-style timing” is a strategy that produces excellent returns. Rather than focusing on the more traditional market timing approaches, Dany concentrates on selecting actively managed mutual funds that are performing well not only in the large-cap, midcap, and small-cap areas and international areas but, more important, where “value” or “growth” is the dominant theme. Then he selects the appropriate funds to take advantage of the situation.
Each month, Dany publishes his 12-page newsletter that is sent to subscribers over the Internet. It contains his current recommended portfolios, his view on the market, latest news about the mutual funds that he follows, and a detailed six-page listing of the topperforming funds in all the asset classes mentioned earlier. He then assigns a score to each one that he refers to as “nuggets.” The higher the nugget rating, the better is the potential for a positive return.
The Mutual Fund Prospector’s model portfolio active core consists of 11 funds, with one core broadly based market fund accounting for about 31 percent (as of September 30, 2010) of the weighting, with 69 percent invested in actively managed funds (seven equity-based funds and three bond funds). The percentages in the active funds can vary based on Dany’s analysis of market conditions and which equity styles are outperforming the market. Dany also offers an aggressive portfolio for investors with a higher risk tolerance. The Hulbert Financial Digest tracks the performance of these portfolios.
For more information about this newsletter, contact the firm at: [email protected] or at (866) 541- 5299. The newsletter costs $129 a year or two years at $199 in North America.