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THE FUND TRADING INDEX SYSTEM

• What the System Is

  The Fund Trading Index System (FTI System)  is a system of selecting mutual funds using calculated numbers called trading indexes (TIs).

• The Meaning of Trading Index

  A trading index (TI) is a measure of the price trend of a fund.  It is a small decimal number.  If the number is positive, the fund's prices have been trending upward.  If it is negative, the price trend is downward.  The magnitude of the number reflects the steepness of the trend.

• How TIs Are Determined

  TIs of mutual funds are computed from past price and other data using a unique set of formulas devised by Dr. Ben Buckner, creator of the system.

• The Funds Tracked

The entire universe of funds available in mutual funds brokerage accounts is searched periodically for funds. Selections are carefully made using various criteria, creating an inventory of funds felt to have the highest potential for making high returns using this system.  Mutual funds available from Fidelity, T. Rowe Price and Vanguard are tracked in separate lists.  Fidelity VIP and VALIC annuities are tracked.  

• Where To Get TI Data

  The TIs of the funds having the highest upward trends are displayed each week in the Weekly Trading Indexes section of our web site.  They are updated on Saturdays.

• How TIs Are Used

  Users of the FTI System make individual decisions about buying, selling, holding, or trading funds by comparing their TIs.  The best choices are those having the highest positive TIs.  If none have positive TIs, that is a signal to be in money market.

• Application of the System

  1.  Self-Directed Approach

  You make decisions about fund holdings and trades, using the trading indexes and other variables, following procedures explained in the book, in the tutorial, and from the information provided to paid subscribers, and make trades accordingly.  You pay brokerage trading fees (if applicable), and occasional fund redemption fees if such funds are held.

  2.  Guided Approach

  You follow our model portfolios given in the weekly reports to paid subscribers, or use them as a basic guide, and make trades within your account as needed.  With this approach, you do not need to interpret data as much as the self-directed user does. You pay brokerage trading fees (if applicable), and occasional fund redemption fees if such funds are held.

  See Approaches for more details.

   

• Getting Started

  1.     Sign up for our free email newsletter.

  2.     Buy and read the book.

  3.     Study the tutorial on this web site.

  4.     Read past newsletters available in the historical section.

  5.     Make some simulated trades using your free 6 weeks membership (with book purchase).

  6.     Select a subscription and sign up.

  7.     Open one or more of the following accounts.

  a.      Open a mutual fund account with one or more of the following mutual fund companies:  Fidelity, T. Rowe Price, Vanguard.

  b.     Open a mutual fund brokerage account, preferably one having at least 4,500 funds available, with fixed transaction fees of $75 or less for a complete transaction (both buying and selling.)  Fidelity is our preferred brokerage.

  8.     Purchase your funds according to the weekly TI lists, the weekly reports, and your risk tolerance or personal preference.

  9.     Follow the FTI System faithfully each week, and read the newsletters.

  10. Continue to review this web site and the book Using Mutual Fund Trading Indexes until the system is thoroughly understood.

   

Fund Companies

We track nearly the entire set of mutual funds from Fidelity, T. Rowe Price, and Vanguard.  Opening up a mutual fund account with each company provides the following advantages over a brokerage.

1.  There are no trading fees.  Note, however, that a Fidelity brokerage account will not be charged trading fees for trades within their fund family.

2.  Funds can be sold and bought on the same day, allowing your money to always be fully invested.

3.  There have been no complaints about short-term trading restrictions.

The primary disadvantage to using a mutual fund account versus a brokerage account is that brokerages have a wider selection of fund styles available, and can give us higher returns under certain market conditions.

Brokerage Companies and Minimum Investment

One of the search criteria for funds is to maximize the number of funds available in Fidelity, Ameritrade, Scottrade, and Harris Direct mutual funds brokerage accounts. Our choice is Fidelity Brokerage, due to superior service and fewest complaints about trading restrictions. Trades made in our "Guided Approach" assume the use of a Fidelity Brokerage account. However, at $75, their fees are the highest of the group for a complete exchange between funds (with Harris Direct closely following at $70). Ameritrade and Scottrade fees are approximately half of those of Fidelity and Harris Direct.

Although there are some "budget" brokers that charge as little as $5 per trade ($10 total for buy and sell), their fund offerings are fewer. The minimum fees, for maximum use of the system, are probably in the order of $30 for a complete transaction. This means that the minimum balance in any fund should be around $10,000 using a brokerage account, in order to keep the % loss from any single trade 0.3% or under (see table below). If the balance in the account is at the minimum, only one fund at a time would be held and traded. As it doubles, two funds could be held, etc.

For balances less than about $10,000, trading only Fidelity funds within a Fidelity brokerage account is recommended, until the balance increases. Brokerage fees are not paid within a Fidelity account when trading only among their funds. If you want to trade among other brokerage-available funds, an alternative is to use one of the above lower priced brokers until the account balance reaches a level where the Fidelity trading fees for brokerage-available funds do not represent a high percentage cost.

Brokerage companies, trading fees, and minimum balances are discussed in the book and from time to time in newsletters.

Since mutual fund brokerage companies charge transaction fees, paying high fees on low balances can seriously deteriorate percentage returns. The following transaction minimums are suggested for those managing their own accounts (approach 1 or 2 above).

* total of buy and sell,
 assuming short term trading

Further Comments on the System

The funds used in the FTI System draw from funds available in our choices of brokerage companies, representing a universe of thousands of funds, in hundreds of fund families.  They are screened, using various criteria, such that we maintain a large inventory of top-rated funds, and refresh this inventory constantly with other funds that are trending upward at any given time.  See Funds.

This system operates on the assumption that the fund with the highest trend (highest TI) will continue to outperform most other funds for a period of time, and thus earn more for the investor. This has proved to be true more often than not,  Your profits are high over the long term because you are always invested in the top fund or funds and when their trends continue, profits outdistance those of other fund choices.

The results of earlier back-testing using only Fidelity funds showed an annualized gain of 37.7% for the eight years 1994-2001. This compares with annualized returns ranging from 9.9% to 12.5% for some financial advisors and managers who deal exclusively with Fidelity funds. The returns for each year were consistently ahead of the others, as well as the major market indexes. After 2001, we began using the wider universe of funds available in mutual funds brokerage accounts. Later back-testing showed consistent annualized gains of over 45% for the five years 1998-2002 using the brokerage-available funds with a one-fund aggressive approach. For 2002, the actual returns for the most aggressive method was +17.1%, and for more conservative methods, using from one to three funds, it ranged from +2.0% to +12.2%. For 2003, the results varied from +48.1% for the Conservative Growth strategy to +60.7% for the Aggressive Growth strategy. More details can be seen in the Results section.

The system involves tracking the best performing funds at any point in time, and is not necessarily limited to any one fund company. During the 1994-2002 period, an average of fewer than six trades per year were made, when only one fund at a time was held. Typically, the investor holds only one fund in a portfolio, being the one having the highest TI. A system of holding two or three funds at a time has also been developed.  The long-term risk is extremely low, as the system takes the investor out of all markets when the TI signals all show a "bear market" or uses the "bear" funds. There is no reckless timing or speculation involved. There is, in fact, no need to even know what the overall market or the economy is doing, what the investment pundits are saying, what the Federal Reserve Board is doing, or what other variables are influencing the markets.  This is why we try not to bore you with needless commentary about the economy and such factors in our newsletters and reports.        

The system is designed for a person who wants to look at the market and funds only once a week, sometime between Saturday and the close of the markets the following Monday. The concept is to spend a few minutes over the weekend looking at the TIs which are updated on our web site on Saturdays, and make decisions about trades at that time. A sale of a fund, if any, is made over the Internet or by telephone, sometime before the market close on Monday. If trading through an account with the fund company, a purchase can generally be made at the same time (exchange).  If operating through a brokerage account, a purchase is made on Tuesday to complete the trade. Thus, there is no preoccupation with the markets through most of the work week. The system is "user friendly", easily applied by someone with little or no knowledge of stock markets or investing, and requires between perhaps 10 and 30 minutes each week, depending on whether or not trades must be made and how many accounts you have.

This investment system is a major change to the common approaches to investing. It does not employ asset allocation, portfolio theory, efficient frontier, economic and other forecasting, involved analyses or strategies, timing, astrology, or theories about investing. For full success using the FTI System, the user must dispense with these other methods and not allow emotion or predictions touted by the media to influence investment decisions.

Many more details about the system are given in the book.  See Book.

Advantages of the Trading Index System

1. You are led to the best performing funds at any time.

2. You are steered away from specific funds and fund styles that are trending down.

3. You can avoid the fears and related emotions usually associated with investing.

4. You lower the overall risk generally associated with investing in variable funds.

5. You have an uncomplicated method for managing your investments.

6. You save time in not having to decide which market analyst might be right this year.

7. You can listen to financial news and not allow it to influence your investment decisions.

8. You can view changes in the economy or world events affecting the markets as simply news.

9. You can remain in control of your investments.

10. You can reduce the time being preoccupied with the market and your investments, freeing you for other important things in life. 

Creation of the FTI System

Dr. Ben Buckner spent a great deal of time researching this system of investing in mutual funds, developing this web site for users of the system, and writing the book entitled Using Mutual Fund Trading Indexes. He made a concerted effort to develop and refine a workable system after being dissatisfied with his own investment returns. His knowledge of stock markets and investing was mostly self-taught. He read numerous books, audited a graduate course on financial planning and investing, and learned much from the "college of hard knocks" as he learned how market timing, asset allocation, and other approaches to investing kept his returns just "average". Not being one to be satisfied with "average" anything, and feeling the disappointment of seeing his hard earned retirement money decline during certain market conditions, he searched for a better way of investing. That search led to development of the FTI System. His background as a measurement scientist and analyst, along with his discomfort in losing money in mutual funds using traditional approaches, provided the analytical approach and stimulus to develop the FTI System. At first it was for his own use. Then, it was shared with close friends and family members. Now it is made available through the book and this web site, so that others can benefit from the system.

Personal Notes

Your investments deserve more time and attention than most people have been taught to give them. Your retirement future is at stake. We feel that managing our investments is a personal responsibility. We are all given many gifts and talents and to bury them or allow them to go unmanaged is not a responsible act. Hopefully, after becoming involved in using the FTI System you will agree that we have all been misled by well meaning people who seem to encourage us to take a "hands off" approach to investing in mutual funds. Investing in mutual funds is not something that needs to be guided by so-called "experts". You can take control, using the FTI System, and will be glad you did!

Be sure to read and study the other sections on this web site, especially the tutorial and historical.  Then, go to the membership section to get on the free email newsletter list, buy the book, and sign up to have access to the weekly Trading Indexes.

Disclaimers

There is always risk involved when investing in mutual funds, both in the long-term and in the short-term, using any technical or other system. We cannot guarantee that past results of applying the Fund Trading Index System will be duplicated in the future or that returns will always be ahead of the major market indexes. We cannot guarantee that all data on fund sales and redemption fees are accurate. We are not directly associated with any fund or brokerage company.  All performance figures assume re-investment of all dividend and capital gain distributions.  We assume no responsibility for misuse or misinterpretation of the rules for using the FTI System.

We intend to provide at least 50 updates of TIs each year. It is possible that one or two weeks could be skipped each year, due to technical or other problems.

        Happy Investing!

        FTI Staff (Biographies)

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