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As an investor who's had his ups and downs over the last 20 years, especially over the last 2 years, it became apparent to me that there must be a better way. I assembled a slew of statistics, narrowed them down and found a model that is very accurate at indicating when to make portfolio changes. This model has signalled every recession and every bull run since 1970. It does not call market tops or bottoms - it does provide an exit point near tops and an entry point near bottoms. It beats the buy and hold stategy significantly.
For example, a $10,000 investment beginning Feb 1971 (earliest data I have for the Nasdaq) would have returned (including a 20% capital gains tax through the last signal) through November 2001 month end vs buy and hold (untaxed):
DJIA = $165,321 vs $104,157
S&P500 = $180,635 vs $110,885
Nasdaq = $589,535 vs $168,810
Importantly, an exit point was called before the 73/74, 80, 82 and 90/91 recessions and at the end of March 1987 and Feb 2000. More importantly, you would have been in the market for the major bull runs in the 80's and 90's.
Another important point is that it did not call an exit point in late summer, early fall 1998 - the model continued to signal a good market - as such, that would have been an excellent time to add to positions.
When we speak of exits we don't mean to get out of the market entirely, although you can do that and you will still beat the buy and hold strategy. What you really need to do to significantly beat the market is to stay fully invested but rotate into defensive positions at the exit points. It is this rotation that makes the difference.
For your entry positions, you can pick individual stocks (much riskier) or index stocks. We have chosen index stocks for the model because they're easier to track, appeal to most investors and most importantly, they work. As such, if you are an aggressive investor, chose the Nasdaq (QQQ). If you are a conservative investor, chose the DJIA (DIA). If you are undecided, chose the S&P 500 (SPY). For the Defensive position, we have chosen the Drug stock sector represented by the PPH. Attached is a portfolio of the index tracking stocks you can invest in. It is important to note that these index stocks have not been around since 1971. As such, we have used the averages themselves for the model through the OUT signal in Feb 2000 and the index stocks since then.
To visit our web site, please proceed to maximuminvesting.com
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