May 5, 2008
Do you think: 'Market Timing
Doesn't Work' - Think Again!
This article compares the returns
of the Market Timing Model offered by Stock Traders
Daily to the returns of the Stock Market using Market -
based ETFs. Specifically, the Market Timing Arm of
the Investment Rate will be compared to DIA (Diamonds
Trust), QQQQ (Powershares QQQ), and SPY (SPDRs) over a
period of 8.5 years. We will compare the returns
over 3 months, 6 months, 1, 3, and 5 years, and since
inception.
The results suggest that Market
Timing Models, at least the Market Timing Arm of The
Investment Rate Model offered by Stock Traders Daily,
provide superior results to that of the Market itself;
Market Timing Models,
therefore, are a better
strategic approach to Investing in US equities over
time.
The Investment Rate Model combines
two important Research and Timing Tools: First, The
Investment Rate is long term Fundamental Analysis of the
market, measuring Investment Inflows into the Economy
over extended periods of time. It is a Leading
Economic and Stock Market Indicator. In fact, The
Investment Rate has been touted as the "Most Accurate
Leading Longer term Stock Market and Economic Indicator
Ever Developed." This is a powerful statement,
but the second part of this Model exponentializes that
power. The second part of the Investment Rate
Model is the Market Timing Arm of the Model.
The Market Timing arm of the
Investment Rate Model, if followed from 1.3.00, provided
returns of 212%, vs. a 14% return from the Dow Jones
Industrial Average. The power of this Model, which
is a non-leveraged long/short US equity model, is
virtually unparalleled. These results are
impressive, and warrant a detailed evaluation.
The following table provides
detailed comparative returns:
The Investment Rate vs. The Market:
|
Column1 |
IR* |
DIA* |
SPY* |
QQQQ* |
|
3 Months |
5.90% |
5.50% |
4.90% |
11.50% |
|
6 Months |
16.70% |
-3.70% |
-6.00% |
-10.00% |
|
1 Year |
42.10% |
-2.26% |
-6.60% |
4.29% |
|
3 Year |
22.00% |
8.40% |
10.20% |
12.38% |
|
5 year |
21.50% |
10.30% |
10.28% |
14.40% |
|
Inception |
25.00% |
1.66% |
-0.40% |
-5.70% |
* The returns
figures do not include dividends. Inception was
1.3.08. 3 year, 5 year, and inception data are
average annual returns. As of 5.2.08.
In every instance, with the exception of the 3 month
return of the QQQQ, the Market Timing Arm of The
Investment Rate has outperformed the market, and by a
wide margin in most cases. In fact, the best
indicator is the performance since inception. The
IR has returned 212%, or 25% on average every year since
inception. DIA returned 14%, or a mere 1.66% on
average every year during the same period. The IR,
which is a Market Timing Model, crushed the returns of
the Stock Market, and it has been a much better approach
to investing in US equities over this timeframe.
If you don't think Market Timing Models work, think
again.
In addition, if you are a die-hard Buy and Hold
Investor, you may want to reconsider your strategy based
on fundamental research as well. According to the
Fundamental Arm of the Investment Rate the market is
entering into the 3rd major down period in US History.
Buy and Hold in vestment
strategies have been poor strategies at the beginning of
the prior two down periods. These strategies
resulted in 75% and 50% declines, and recovery took 26
years and 10 years respectively. The Investment
Rate tells us that, officially as 2007 came to an end,
the 3rd major down period in US History has begun, and
buy and hold strategies are a poor investment choice
accordingly; instead a proactive approach should be
adopted instead. Our Market Timing Models provide
exactly that; we provide a proactive alternative to long
term investments.
The prior two major down periods in US History,
according to the Fundamental Arm of the Investment Rate,
were better known as the Great Depression and the
Stagflation period of the 1970s; neither of these were
good times to buy and hold, as everyone knows. We
have already entered the 3rd major down period according
to the Investment Rate; this is a leading indicator, and
an advanced warning of what lies ahead for our Economy.
Become familiar with the Investment Rate and the
associated Market Timing tools either by going to our
website directly, or by joining us on Wednesday for a
Free online webinar where we will discuss in detail the
fundamental research stemming from the Investment Rate,
the past results of the Market Timing Arm, and the
forecasts that the entire model provides respectively.
Click here to RSVP for the Free Webinar:
https://www1.gotomeeting.com/register/425072533
Click here to navigate to our website:
http://www.stocktradersdaily.com/Main/freetrial/index.html
Good Trading
Stock Traders Daily
http://www.stocktradersdaily.com
1.866.213.2067
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