Trying To Keep It Simple &

Profitable

Jim Quinn (Student Investor)

December 6, 2014

DISCLAIMER

The content of this discussion is provided

as general information only and should

not be taken as investment advice. All

discussion content shall not be construed

as a recommendation to buy or sell any

security or financial product, or to

participate in any particular trading or

investment strategy.

DISCLAIMER (CONT)

The ideas expressed in this discussion are

solely the opinions of the author(s). The

author(s) may or may not have a position

in any security referenced herein. Any

action that you take as a result of

information or analysis provided in this

discussion is ultimately your responsibility.

Consult your investment adviser before

making any investment decisions.

My Philosophy

Preserve Capital

Earn Best risk-adjusted Return

Not a day trader, I am looking for weekly

systems or longer

I look for systems which meet these

requirements

Focus on ETFs and Mutual Funds rather

than stocks to reduce risk

My Philosophy (Cont) I Look for trends

Visuals (ie charts) are Very Important

I am not necessarily a Buy & Hold investor, but

would like to be

Am ALWAYS interested in New Approaches to

Investing

Questions/Comments: jquinn1469@verizon.net

Todays Objectives

Section I – KISS Common Themes

Section II – Preparing for Armageddon

Section III – Misc. Items

Section IV – Market Status

Leave You With a Handout Which is the

Text of This Presentation

Section I – KISS Common Themes

1) Latest Richard Young Work

2) Dual Momentum Introduction

3) Frank Grossman SPY/TLT Rotation

4) Rotation ETFs

Section IA – Richard Young on SS

& Other Methods

Recently there have been a lot of Gyrations with

Sector Surfer (SS); not all public and not all positive

A Lot of Discussion about Forward Walk (FWPT)

Richard Young has been heavily Involved with these

SS actions / reactions and has done his usual through

Research and Testing with SS

This Section Summarizes the Most Recent of His

Results

BackGround Richard Presented His KISS Versions of SS

Portfolios up North a while ago and received some

“corrective” inputs as to his methodology

The Main area of Concern was his lack of use of the

FWPT SS Parameter which Scott Juds NOW

Advocates

After much discussion Scott threatened to remove

any Portfolios from the SS “Hall of Fame” which

did NOT use FWPT

You will notice that most of the HOF strategies now

seem to use FWPT

Recent RY SS Activities

RY has NOW Incorporated FWPT in his SS

Research & PortFolios

In Addition Richard has run a New Series of

Different KISS Portfolios Which are Summarized in

the Remaining Slides of this Section

The Next 4 Slides Show the Results of his MidCap

(VO) & Short Term Bond (VCSH) SS Portfolio

The SS Chart and History (in three Separate Slides)

Content are Shown

RY VIMSX & VFSTX SS Chart

RY VO & VCSH SS History Info

RY VO & VCSH SS History Info

RY VO & VCSH SS History Info

RY Trio Activity/Theory/ History

Three systems //strategies are shown –

ALL are very simplistic with 3 moving parts.

S&P 500 Index , EX-US Equity ACWI Index, &

Lehman Total Aggregate Bond Index

I used mutual funds to get a LONG back test.

ETF’s listed can be used going forward.

I use SS with the INFAMOUS FWPT (Forward

Walk Power Tuning)

The Next Slide Shows the Summary Results for

these 3 Strategies from 1997 Thru 2013

The strategy shown simple takes the three asset class

mutual funds at the end of each month and looks

back 3 months .

Selects the highest performance fund for the

following month.

RY Trio Results 1997 thru 2013

Including CAGRs

RY Trio 2014 YTD & Dec 2014

Picks SS FWPT +10.0% YTD

AGG/VBMFX Bond Fund ---Dec pick

Portfolio Visualizer +12.7% YTD

SPY/VFINX ------------------ Dec pick

G. Antonacci +13.9% YTD

SPY/VFINX ------------------Dec pick

BENCHMARK BUY & HOLD; YTD

VFINX/SPY +13.9%

VGTSX/VEU -0.6%

VBMFX/AGG +5.6%

RY Trio Theory & Thoughts I chose the ACWI world equity index as a bench

mark… The ETF index funds ACWI and VT

follow that index…

As you study the results you get a better

understanding perhaps regarding pluses and minuses

using the different schemes..

FWPT in SS kicked in 2003

The returns are pretty pedestrian ---

However I like the BORING nature of these models

as long as I side step the 2000 >>> 2002 &

2008 draw downs.

RY Dual Momentum Comments

Gary Antonacci ideas come from his BOOK Dual

Momentum Investing

Fred Magner referred this book to me.

The Global Momentum model results shown are

from his work.

His Method will be discussed in more Detail in the

following Section

RY Net-Net

In his Usual Manner RY Has done a Very Through

Study

He is NOW Focusing MORE on VERY SIMPLE

KISS Approaches Which Yield DECENT Returns

with MINIMAL DrawDowns

Section IB – Dual Momentum (DM)

A New VERY SIMPLE Momentum Method from

Gary Antonacci

Book is Very Well Reviewed

URL is:

http://www.optimalmomentum.com/index.html

This Section is a VERY Brief OverView

He Spends MOST of the Book on Theory

Topic Requires MUCH More Investigation

DM Theory DM Combines Relative Momentum & Absolute

Momentum

Relative Momentum between two Equity ETFs

(SPY & VEU) to Determine the Stronger of these

two and then Determine the Absolute Momentum of

the Stronger Equity ETF vs the BIL ETF

DM uses a 12 month LookBack

DM will Invest for the Next MONTH in the

Strongest of these 3 ETFs

This is his GEM (Global Equities Momentum)

Approach

Extended DM Theory

In Addition to his GEM, He Also has Global

Balanced Momentum (GBM) which is 70% Invested

in the GEM choice and also Selects an Absolute

Momentum Winner Between 4 OTHER Fixed

Income Choices

GBM then Invests 30% in the Strongest of These 4

Fixed Income Choices

The Performance Chart of GEM & GBM is Shown

in the Next Slide. The following 2 Slides show the

Monthly Performance of GEM & GBM for the Last

20+ Yrs and their annual Performance vs ACWI

DM Performance

GEM Monthly Performance vs

ACWI

GBM Monthly Performance vs

ACWI

GEM Drops Yel =Neg & Purp < -5%

GEM Statistics 1974-2013

Years Return S/D Sharpe Max DD

All 17.43% 12.64 0.87 -22.72%

1974-83 15.95% 11.77 0.54 -10.95%

1984-93 22.39% 14.60 0.97 -22.72%

1994-03 17.87% 12.21 1.02 -15.37%

2004-13 13.68% 11.83 0.96 -18.98%

Selecting the Next Month GEM

Option The next Slide shows How to Use StockCharts to

Select the Next Month’s Choice for GEM

Put SPY & VEU into a StockCharts PERF Chart

along with BIL

Select a LAST Year Perf Chart

Pick the Better Performing of SPY or VEU and

Then Compare The Winner Against BIL

Select AGG (if BIL is the winner) or the SPY/VEU

winner for the next month’s investment

The Selection for Dec. 2014 is SPY

GEM Selection Chart

More GBM Info Plus The Author does NOT spend a Lot of Time in the

Book on GBM

Further GBM Info will be Presented in the Future if

Possible

In Addition the Author ALSO Advocates a Dual

Momentum Sector Rotation (DMSR) which is Also

Discussed Very briefly in the Book

Further DMSR Info will ALSO be Presented in the

Future if I Can

DM Site

Section IC – Frank Grossman Another Richard Young Favorite; More Info to

follow in the Future

A simple and effective all weather SPY-TLT

strategy.

Variable SPY-TLT allocations adapted to the market

conditions.

18% annual return and a Sharpe ratio of 1.66 for the

last 5 years.

Url is http://seekingalpha.com/article/2714185-the-

spy-tlt-universal-investment-strategy?ifp=0

Section ID – Rotation ETFs

There are also several NEW ETFs which track

Rotation:

1) SCTO and

2) GMOM from Faber

(Both VERY Recently Released; Seem to about a

Month or Two Old)

Section II – Preparing for

Armageddon

A Series of Thoughts / Ideas/ Actions to PrePare you

for a COMING Market Drop

Which Might Occur After 1/1/15????

Section IIA – YOUR 2 MIP #s

In MY Opinion, Your Two MOST

IMPORTANT Numbers are:

1) Your FIXED Monthly Expenses =B and

2) Your TOTAL Assets =A

You Need to Know These to PROPERLY

PLAN

Section IIB – How are U going to

Invest Are u a Moment/Day Trader…..

Are u a B&H Investor; or somewhere in between

Do it ALL yourself or Have it Totally Managed or

somewhere in between

How much time and Effort do u want to spend

TRY it!!!!; Once u think u know

How much time do u have

You WILL have less time and Energy LATER!!

What are u REALLY comfortable with….

What Will U Invest In??

Stocks

Bonds

Mutual Funds

ETFs

Annuities

Etc

I Like ETFs and Funds; Stocks too Volatile

for Me; This is MY STOMACH

VERY IMPORTANT for U to Decide

HOW DID U FEEL RECENTLY ???

How did You Feel during the Recent DrawDown

That Was a Very Good Test Case of -10% Drop

Your Reaction should Guide Your Investing

Philosophy

Notice the Market Gyrations in the Next Chart from

Dr Don

Use Bonds, Contras etc to Ease Concerns

YOU MUST DECIDE YOUR INVESTING

APPROACH

One more thing …

Section IIC – Looking at Your

Positions

Many Things to be Considered if You Plan to Cull /

Sell

This Approach has Helped me Recently Make

Those Decisions

A Way to look at ALL Your

Brokerage Resources Brokerage Roth IRA Reg. IRA Taxable Total

VG 23K 38K 0 53K

Schwab 101K 73K 54K 228K

Fidelity 31K 27K 33K 91K

TD Amer 460K 0 0 460K

Other 0 0 37K 37K

Total 615K 138K 124K 877K

Section IID -Take Appropriate

Positions

As Pointed out to me by Patrick McCarroll, You

need to do some Legwork if you intend to Sell

Positions and Invest them in a Money Market Fund

(MMF)

In 2008 Many MMFs were Closed and Some were

Inappropriate

The Way to Get Around this is to do Research &

TAKE a POSITION in the Funds you want to be in

but do it NOW

Section IIE –DownTurn Planning

Info (A Review Again)

Relates to How U Felt RECENTLY in Market Drop

Market Stress Test

Summarized from WSJ Jason Zweig Intelligent

Investor Column Sat June 14, 2014

Time is NOW to Plan Actions if Market Dives

Based on ACTUAL Research

The PDF File of the article is on our Website under

6/28 talk notes in Gary Noreen”s ToolBox under

“Copy of Zweig’s Article…”

URL is :

http://www.aaiilosangeles.org/sumgrowth.htm

Investing Under Stress

Much more Sensitive to LOSSES

Impaired Short Term Memory

Indifferent to Small Gains

Much more LOSS AVERSE

Less Sensitivity to Reward

Focus More on Short Term Losses rather than Long

Term Gains

Therefore you tend to focus on how much you are

losing rather than what you could gain if you held

on

CAN & SHOULD PLAN AHEAD

Control Your Future Stress

Sell NOW to lock in profits

Focus on Total Value of Assets; NOT on Amount of

Latest Loss

Have info set up to be able to look at this type of

Total Account data

ReBalance NOW

Take Moderate Action NOW

Section IIF – A Recent Bond (and

Stock) Exercise

I Recently tried to Develop a List of Buyable Bond

Funds and ETFs for a Friend of mine

The Exercise Eventually went to Stock Mutual

Funds as Well

The Process Also Really Provides a Method to

Assess Your Portfolio Should You Wish to Cull/Sell

Your Holdings. It can Provide You with a PortFolio-

Wide Look at Your Holdings

Step 1 – Develop a List of any Kind

of Candidates

I got mine from a Series of Places: High Relative

Strength ETFs from Software; Bond Mutual Funds

from Magazines and NewsLetters; Personal

Recomendations; etc, etc

Eventually I also Looked at ALL my Present

Holdings; Which You May also want to do to give

Yourself a Plan as to What to Sell / Hold

Step 2 – Use StockCharts to

Generate Short and Long Term

Charts

Use Perf Charts with YTD and ALL Options

See Next Two Slides

Get TLT StockChart

StockChart Actions

Select Perf Chart, the Symbol to be Charted, “GO”

Then Right Mouse Click the 200 Day Window

Below the Chart and Select “Year to Date and All”

Respectively to get the next two Charts

With the Mouse You can read the Latest YTD and

ALL Percentages

TLT 2014 YTD Chart

TLT ALL Chart

Step 3 – MorningStar (MS) Actions

to Assess Their Opinions of My

Selections

Initial MS Info

More MS Info

Net-Net Results Using these Steps, I Developed a Table of Info for

EACH ETF / Fund which includes :

– SEC Rate of Return (MS)

– YTD Return (SC)

– LifeTime (StockChart ALL) Return

– MS Risk / Return Ratings

– MS Category

– Chart Rating (My Personal Opinion)

You Could Use Other Additional MS or StockChart

Capabilities if you Want to

Section IIG –Best Buys in 2008

DownTurn

From Feb 2014 M/F Issue (under Bear Market

Column)

Also from Aug 2014 ETF Issue (under Bear Market

Column)

AAII ETF Guide Example 8/14

Best Generic Bond Fund Bear

Types from 2008 Market

BEST BEAR BOND FUND RETURNS

Gov L/T +20.5%

Gov Int Term +10.8%

Gov Short Term +6.8%

Muni Short Term +4.7%

Muni Int. Term +4.1%

Mort, Backed +3.6%

Inflation Prot. + .1%

Best ETF Groups in 2008

Contra Stock Market 104.5%

Precious Metals 6.9%

Contra Foreign Stock 70.6%

Bond ETFs Returns are Similar to Bond M/F

Returns

Section III – Miscellaneous Items

Some VERY High Level Thoughts / Ideas

New Fidelity Annuity

Just for Your Info

MetLife / Fidelity Combo

“MetLife Growth & Guaranteed Income”

Low Commission Charges

Guaranteed Income

Insurance Also

CHECK IT OUT THROUGHLY BEFORE YOU

ACT

Retirement Presentation

I Recently gave a Retirement Presentation at the

AAII Retirement Meeting on 11/1/14

The PPT Presentation is on Don’s Site

Seeking Alpha Site

Excellent ETF Site

Daily Message via Email

I Get ”Todays Articles on ETFs & PortFolio

Strategy” via Daily Emails

Dual Momentum etc Came from Here

URL is: http://seekingalpha.com/

Section XI - The Market

Don’t Forget StormGuard

Remember that Sector Surfer (SS) always

contains the StormGuard Feature which

provides the SS Reading of the Market

The Present Reading is on the Upper

RightHand Corner of Any SS Chart

10/06/14 Mkt View vs 2008 Top

11/21/14 Mkt View vs 2008 Top

12/02/14 Mkt View vs 2008 Top

Markets Recent Results

S&P Results

- 5/13/14 188.06

– 6/02/14 192.90

– 7/25/14 197.72

– 8/1/14 192.5

– 10/06/14 196.29

– 11/21/14 206.68

– 12/02/14 207.09

NOTE: The Topping Signal is when the 30 & 40 week

Moving Averages come together and FLATTEN out

3/14 JIRM Group

JIRM Index 11/21/14

JIRM Index 12/02/14

JIRM Index Recent Results

JIRM Index Results

4/4/14 206.5

6/2/14 231.41

7/25/14 229.14

8/1/14 213.49

10/06/14 217.69

11/21/14 232.16

12/02/14 220.19

NOTE the JIRM Index results are Lower or Flat for

the last 6 months

SPY 300, 75 10/06/14 Chart Daily

SPY 300, 75 11/21/14 Chart Daily

SPY 300, 75 12/02/14 Chart Daily

300/75 Moving Average Results

Recent 300/75 Results

(Note that the TakeOut Signal Requires that they be

EQUAL; so this shows how far apart they are}

Date 300 75 Diff

6/2/14 174.20 187.00 12.8

7/25/14 178.94 192.13 13.19

8/1/14 179.43 192.91 13.48

10/06/14 184.43 197.36 12.93

11/21/14 187.89 198.19 10.30

12/02.14 188.61 199.20 10.59

Market Section Net-Net Summary

The TOTAL Market Summary based on the three

Items Mentioned in this Section is:

If Dr Don’s and My Moving Averages Trend UP;

Things Look Positive

At Present the Market Seems to be Continuing in a

Positive Run

Until Dr Don’s 300/75 EMAs and My 30 & 40

Week Moving Averages FLATTEN out; We

continue to be in Good Shape