Month: October 2015

There is a web site alletf.com which contains a Performance Quilt. Including leveraged ETFs in the quilt will illustrate how some ETFs are up over 100% during some years. Looking at the performace chart on stockcharts.com for the last 1000 days (about 5 years) indicates that TQQQ is up 566%, UPRO 366%, SPLX 358%, UMDD 291%, and MIDU 290%. I have never liked buy and hope investing but if you can stand the volatility, it may be worth a shot.
Another web site to look at is etfscreen.com. There are 7 ETFs which have been up more that 100% over the last year. 8 ETFs have been up more than 50% over the last 6 months. 5 ETFs have been up more than 25% over the last 3 months. 16 ETFs have been up over 25% over the last month. Again if you can live with the volitility it may be an investment for you. One ETF, DGAZ, has been up 20% over one week, 39% over one month, 106% over 3 months, 96% over 6 months and 163% over one year.

IBD TBP’s Market Pulse is “Confirmed Uptrend” as of 10/02/15 – a time to buy.

My current investments:
IRA#1 and IRA#2
SRetailing has a price of 106.26, a sell price 101.29, a rank of 01, and is a Hold.
IRA#2
SITServices has a price of 41.68, a sell price 39.68, a rank of 03, and is a Hold.
SSoftware&ComputerServices has a price of 124.58, a sell price 118.35, a rank of 02, and is a Hold.

My portfolio changes this weekend:
IRA #1 – None
IRA #2 – Buy 20% SConsumerDiscretionary

My portfolio market exposure after this weekend’s changes:
IRA #1 – 100% invested
IRA #2 – 80% invested

Sometime ago I mentioned the Power 4 investment strategy suggested on one of the Dorsey Wright Associates (DWA) podcasts. DWA provides the portfolios for 9 PowerShare momentum strategy ETFs. Each ETF – PYZ Basic Materials, PEZ Consumer Cyclicals, PSL Consumer Staples, PXI Energy, PFI Financial, PTH Healthcare, PRN Industrials, PTF Technology, PUI Utilities – are managed in the same manner. The funds are updated each quarter with a minumum of 30 stocks within all within the sector selecting the stocks with the best momentum. A complete list of Invesco PowerShare ETFs and their current holdings holdings (updated daily) can be viewed at https://www.invesco.com/portal/site/us/investors/etfs/.

After DWA started providing the ETFs portfolios, they set up a model called the Power 4. Its goal was to own the top 4 of these ETFs based on performance and go to cash when the top 4 were not positive. I tried to follow this model with limited success – if I had signed up for their web site service I probably would have been more successful. However, two weeks ago Invesco came out with another ETF which does it for me. PowerShares DWA Tactical Sector Rotation Portfolio (DWTR) is the ETF. Each month it is updated with the top 4 ETFs. Current it holds PSL – Consumer Staples, PEZ – Consumer Cyclicals, PTH – Healthcare, and PTF – Technology.

DWTR is expensive for an ETF – management fee of 0.75% per year (which includes the fees for ETFs it holds). However Fidelity Select Retailing Portfolio management fee is 0.81%, with a voluntary cap of 1.15% – a relative low fee for a mutual fund. Fidelity does charge me $8 to buy or sell DWTR, but there is no minimum holding period, orders can be executed anytime the market is open (mutual funds can only be purchased or sold at market close), and stop loss or stop limit order can be used.

Another interesting thing about ETFs, unlike mutual funds, you do not have to pay taxes for capital gains and losses caused by the ETF. Unlike funds which give you a distribution of capital gains and losses, ETFs do not. I’m not sure how it works, but you only pay capital gains and losses as a result of you selling the ETF.

All in all I think this does a better job in momentum investing than I have been doing since 1/6/82. I have switched my Power 4 portfolio to 100% DWTR and am maintaining a 7% stop loss. If it works out as well as I think it should, I may quit following Fidelity funds completely. I am also sure that there are other rotational ETFs, I’ve just not found them.

Returns for the month of September were nothing.
In September IRA#1 0%, IRA#2 0%, PDP PIE PIZ DWAS 0%, QQQ 0%, SPY/RSP 0%, Power4 0%.
For the last 3 months, IRA#1 -21%, IRS#2 -5%, PDPetc -3%, QQQ new -5%, SPY/RSP new -7%, Power4 -4%.
September portfolio changes:
IRA#1 – None
IRA#2 – None.
PDP PIE PIX DWAS – None
QQQ – None – third month for this portfolio.
SPY/RSP – None – third month for this portfolio.
Power4 – None

IBD TBP’s Market Pulse is “Confirmed Uptrend” as of 10/02/15 – a time to buy. It has been 22 days since IBD said we are in an uptrend. I am still conviced the market is headed for trouble, but I only invest based on the numbers. I am buying SSoftware&ComputerServices and MTK as the ETF equivalent.

My current investments:
IRA#1 and IRA#2
SRetailing has a price of 103.61, a sell price 101.29, a rank of 01, and is a Hold.
IRA#2
SITServices has a price of 41.77, a sell price 39.68, a rank of 02, and is a Hold.

My portfolio changes this weekend:
IRA #1 – None
IRA #2 – Buy 20% SSoftware&ComputerServices

My portfolio market exposure after this weekend’s changes:
IRA #1 – 100% invested
IRA #2 – 60% invested

Sometimes Fidelity just really sucks when it comes to customer services. After complaining many times on the phone, in early September I wrote a letter to the CEO explaining that the wait to get a rep on the phone, when I use my userid and password, was excessive – sometimes it was greater than an hour. I also explained that I could call and claim I was not a customer and get a rep in minutes. Somehow they changed their phone system in July. I received a useless answer to my letter claiming staffing problems. If staffing was the problem I should wait about the same time, customer or non customer. Last weekend as I waited 53 minutes on hold, during that wait I called on my cell phone as a non customer and the phone was immediately answered. So I wrote another lettter to the assistant, who had answered my first letter, suggesting he come up with another story. (I first suggest he find another lie to give me, but thought that was a little aggressive.) So I strongly suggest that if you want to talk to Fidelity on weekends, you not use your userid and password so you can get service.
The Federal Reserve should consider ways to make monetary policy more accommodative, including negative interest rates, said Minneapolis Fed President Narayana Kocherlakota. With negative interest, your 1k bank CD pays no interest and you get 999k or less back in a year. It is happening in a couple of countries in Europe.

IBD TBP’s Market Pulse is “Confirmed Uptrend” as of 10/02/15 – a time to buy. It has been 15 days since IBD said we are in an uptrend. I am still conviced the market is headed for trouble, but I only invest based on the numbers. I am buying SITServices and XLK as the ETF equilivant. I am still holding XLY as the ETF equilivant to SRetailing.

My current investments:
IRA#1 and IRA#2
SRetailing has a price of 106.62, a sell price 101.29, a rank of 01, and is a Hold.

My portfolio changes this weekend:
IRA #1 – None
IRA #2 – Buy 20% SITServices

My portfolio market exposure after this weekend’s changes:
IRA #1 – 100% invested
IRA #2 – 40% invested

One of the more interesting podcast I have found is FollowTheMoneyWeekly – ftmdaily.com/ftm-radio-show/ on the net. Two weeks ago Jerry Robinson discussed the problems Saudi Arabia was having since their budget and spending is based on $100 oil. Their investment assets are being sold to support their spending. In the last 6 months up to $70b in assets have been sold and at the current rate will be broke in 2018. Last week he talked about the crisis in the Middle East.

IBD TBP’s Market Pulse is “Confirmed Uptrend” as of 10/02/15 – a time to buy. It has been 8 days since IBD said we are in an uptrend. In my ETF portfolios, I have invested according to the rules I’ve previously mentioned. This week I plan to invest in the mutual funds identified by numbers I keep on Fidelity Funds. SRetailing is the number one fund in my Fidelity analysis and a corresponding ETF is XLY. XLY is not performing as well as SRetailing, but can be purchased, sold at anytime, and among the 20+ ETFs in retailing is the one which most closely matches SRetailing. I indend to buy XLY (instead of SRetailing) in some of my IRAs, maintaing a 7% stop loss.

My current investments:
IRA#1
None
IRA#2
None

My portfolio changes this weekend:
IRA #1 – Buy 100% SRetailing
IRA #2 – Buy 20% SRetailing

My portfolio market exposure after this weekend’s changes:
IRA #1 – 100% invested
IRA #2 – 20% invested

Listening to market experts from the major investment firms on various news shows is always interesting. They cannot says bear market, they cannot say sell. They say market fluctuations will continue or that you should lighten up on your equity portfolio. The Dow Jones Industrial, S&P 500, and Nasdaq indexes are all below their 200 day and 50 day moving average and the averages are moving down – all indications of a bear market.

IBD TBP’s Market Pulse is “Confirmed Uptrend” as of 10/02/15 – a time to buy – maybe. This is the 11th confirmed uptrend in the last 12 month. The previous 10 uptrends lasted between 1 to 50 days. I used market in correction or uptrend under pressure as an ending signal. Seven of the uptrends ended within a week and if I had waited a week, I would have had fewer losses. Especially harmful was the loss caused by the 7/16/15 confirmed uptrend which caused me to buy on 7/20/15. A week after that confirmed uptrend, it ended and waiting a week would have completely eliminated that loss ~20% loss I sustained in SBiotechnology. IBD states that “A follow-through day confirmes that an uptrend is underway” and “Not all follow-through days work”. Therefore I am going to make my buys based on the market pulse reading a week after a confirmed uptrend is issued. So while IBD now indicates it is a good time to start to buy, I am going to wait a week.

My current investments:
IRA#1
None
IRA#2
None

My portfolio changes this weekend:
IRA #1 – None
IRA #2 – None

My portfolio market exposure after this weekend’s changes:
IRA #1 – 00% invested
IRA #2 – 00% invested