Dennis - Your interpretation of the signals is not quite on the money, so I want to clarify things before you, or any other SI member, subscribes to The Sector Fund Strategist. First, when a fund is rated a Hold, or a Buy, or an OK to Buy in a weekly issue, and then is rated as a Sell the following week, it means that the fund was recommended for sale DURING the previous week. That info would have been passed on to you via my midweek updates, which are issued Tuesday thru Friday morning, by 9:30 AM NY time, whenever necessary (new signals or significant market events). If Energy Services, for example, was being recommded as a Sell for the first time in the 10/31 issue, it would have been rated as a NEW SELL in that issue, meaning a sale at the Monday opening was recommended. I hope that adequately explains the difference.
That weekend (10/24 and 10/27) was a unique situation that created another quandry, one which is remarkably similar to what is going on this weekend. Remember, the newsletter is completed, transmitted by e-mail, fax and First Class mail on Saturdays. My lengthy Telephone Hotline message, sumarizing the week's activity and listing the top funds and their rankings, is also recorded on saturdays, primarily for all 1st Class subscribers who do not receive their issues for a couple of days.
On Monday morning (10/27) I awoke at 4:30 AM to discover that the Hong Kong market had collapsed. Ideally, I would have wanted to notify all subscribers that the weekend Hold signals were being overridden, and that a sale at the opening on Monday was now being recommended. This info could have been sent as a follow up emergency message to e-mail subscribers, but fax subscribers access their updates by phone, and there were many 1st Class subscribers who probably hadn't even called in to hear the Weekend message. Notifying one class of subscriber, without providing the same info to others, would obviously be totally unfair since everyone is paying for the equivalent info and service.
because of this, I had to wait until the 10/27 session had concluded, then issue a new hotline early on Tuesday morning, advising the sale of all previously rated Hold funds. Fortunately, I was personally called by many subscribers that Monday, and was able to give them my sell advice on the phone. Many of them, however, being especially attuned to how I think, had already liquidated their holdings, most of them at the opening. I was stuck in a situation that really had never occured before, and I was extremely pleased that so many people understood exactly what I would have advised, if I was able to tell everybody the same thing at the same time.
Things are similar this weekend, and during the past week I did issue a few Buy signals, albeit with the advice to only put very small amounts in these funds, since a head first dive into the equity pool is not advisable at this time. In today's issue I explained how the same thing could happen on Monday like occured two weeks ago, but I stated in advance that all positions should be held through whatever turmoil might occur. If there is a God is heaven, however, Hong Kong will view Wall Street's relative stability on Friday in a favorable light, and will not cave in like what happened on 10/27.
Where the 29 day holding period and redemption fees are concerned, I really do not take them into consideration at all. In my opinion, the action of the funds themselves dictates when a Buy signal is issued, and when it is time to sell to lock in profits. In a rapidly churning market, where sector trends change rapidly, frequent trades are often required. On the other hand, between mid-April and early October of this year, trends remained intact for significant period of time. Many funds were held for 4,5, or even 6 months before sell signals were warranted.
I have seen other Select Fund advisors issue a sell advisory for a sliding fund on the weekend, but tell their subscribers to sell on Wednesday, for example, since that would be the 30th holding day and they would avoid the 3/4% redemption fee. In this particular case, by the time Wednesday rolled around, the fund had declined by another 6 1/2%. Waiting two days to save 3/4% was a costly move to make in this example. Basically, I believe that when it is time to sell, it is time to sell, and continuing to hold a failing fund simply to save 3/4% often cost you much more in the end.
In addition, you have to remember that my Buy and Sell signals are based on my TA. Many subscribers do not buy and sell exactly as I indicate, which can make a difference in their personal decisions. For example, on 10/27, when Energy Services moved into Sell territory, that closed out a position that I had established on May 9th, with approximately a 55% gain. At that time, the fund had dropped about 12 or 14% from its previous peak.
If, for example, a subscriber had purchased Energy Services threee years ago, they might certainly be willing to ride it down a lot further since their gain to date was probably 150 or 200 percent. The actual holding periods of each subscriber, therefore, is something that I cannot possibly take into account. What I can tell them, however, is that based on my last Buy signal, and my current reading of the charts, now is a good time to sell and lock in profits.
I hope this adequately describes the events surrounding the issue you received, and answers your other questions as well. Hopefully, you will be subscribing soon, and if you need additional information, please give me a call at anytime at the number on the newsletter.
Have a great weekend, and may peace, sensibility, and the mellowness that has characterized the Asian nations for centuries return in full bloom on Monday.
regards,
Bernie Kaplan |
