Trading Indexes Newsletter
2004-3
January 19, 2004
Dr. Ben Buckner, Editor
FTI System Trades and Returns for 2003
-- Part 1
Actual Trades Using Guided
Approach
The
following are trades for 2003 for each of the three methods used in the Guided
Approach using the Brokerage-Available mutual funds. These are the ACTUAL
returns. Next week, in Part 2, we will show the trades using the new rules
and methods of selecting funds, most of which began to be used in early
May. The trades for the annuities will also be shown next
week.
Each strategy is assumed to have started with $100,000 on
12/31/02. Brokerage fees are assumed to be $35 per exchange ($70 for a
complete trade), using Harris Direct. I used this because HD has Fidelity
funds available and I wanted to track the strategies using all possible
funds. This is about the same as the $75 Fidelity charges (they charge for
either the buy or the sell of a fund, but not both). Anyone having copies
of the Weekly Trading Indexes and Weekly Reports for 2003 can verify these
trades as based on the FTI System trading scheme. Anyone having kept the
weekly lists of TIs for the mutual funds would be able to check the TI
differences and justification for trades. NAVs can be checked through
www.bigcharts.com (historical).
When a trade is signaled for a mutual fund, we assume that the sale is made on
the Monday following the trade signal and the proceeds (minus the trading fee)
used to buy the new fund on Tuesday.
If dividends were declared during a
holding period, the number of shares increase at each distribution of
dividends. Since PEMDX has a monthly dividend, the shares are increased
monthly. The number of added shares is the dividend divided by the share
price, multipled by the number of shares. Monthly dividends can be
approximated by looking at Yahoo fund profiles. If there was a short term
redemption fee, the shares are reduced. This occurred only twice during
the year, both in the Moderate Growth strategy.
PEMDX was used on 12/31
instead of SITEX, even though the latter had a slightly higher TI. This is
because PEMDX had already been purchased in 2002 and this was carried
over.
The year-to-date gains are shown in percent at each transaction
point to mark the progress of each strategy.
Brokerage-Available Funds -- Aggressive
Growth:
12/31 Holding PEMDX at
$9.25 10810.811 shares
$100,000
01/27 Sell PEMDX at
$9.30 10880.708
shares $101191
(shares increased for dividend)
01/28 Buy BEGBX
at $12.61 8019.079
shares $101121
+1.2%
02/24 Sell BEGBX at
$12.69
$101,762
02/25 Buy QRACX at
$7.74 13138.516
shares $101,692
+1.7%
03/17 Sell QRACX at
$7.30
$95,911
03/18 Buy PEMDX at
$9.94 9641.968
shares
$95,841
-4.2%
05/19 Sell PEMDX at
$10.83 9734.180
shares
$105,421 (shares increased for 2 months
dividends)
05/20 Buy RKGRX at
$12.09 8713.908
shares $105,351
+5.4%
08/25 Sell RKGRX at
$15.26
$132,974
08/26 Buy OBEGX at
$24.50 5424.663
shares
$132,904
+32.9%
09/29 Sell OBEGX at
$25.24
$136,918
09/30 Buy SASPX at
$8.10 16894.875
shares
$136,848
+36.8%
11/03 Sell SASPX at
$8.78
$148,337
11/04 Buy USCOX at
$6.10 24306.067
shares
$148,267
+48.3%
12/31 Holding USCOX at
$6.56 24496.553 shares
$160,697 +60.7% (shares increased for
dividend)
Brokerage-Available Funds --
Moderate Growth:
Fund 1 of
2:
12/31 Holding PEMDX at
$9.25 5405.405 shares
$50,000
01/27 Sell PEMDX at
$9.30 5440.354
shares $50,595 (shares
increased for dividend)
01/28 Buy BEGBX at
$12.61 4006.764
shares $50,525
+1.2%
02/24 Sell BEGBX at
$12.69
$50,846
02/25 Buy QRACX at
$7.74 6560.185
shares $50,776
+1.6%
03/24 Sell QRACX at
$6.73
$44,150
03/25 Buy FDCAX at
$16.94 2602.128
shares $44,080
-11.8%
03/31 Sell FDCAX at
$16.48
$42,883
04/01 Buy KSCOX at
$11.02 3885.033
shares $42,813
-14.4%
05/05 Sell KSCOX at
$11.68
$45,377
05/06 Buy OBEGX at
$17.97 2521.268
shares $45,307
-9.4%
06/02 Sell OBEGX at
$19.11
$48,181
06/03 Buy RYMKX at
$17.48 2752.371
shares $48,111
-3.8%
07/07 Sell RYMKX at
$18.69
$51,442
07/08 Buy OBEGX at
$23.29 2205.745
shares $51,372
+2.7%
10/13 Sell OBEGX at
$27.09
$59,754
10/14 Buy PTEMX at
$10.65 5604.097
shares $59,684
+19.4%
12/01 Sell PTEMX at
$11.15 5548.056
shares
$61,861 (shares reduced by 1%
redemption fee)
12/02 Buy VALUX at
$24.01 2573.546
shares $61,791
+23.6%
12/31 Holding VALUX at
$24.56
$63,206 +26.4% = YTD gain Fund 1
Fund
2 of 2:
12/31 Holding EUROX at
$13.68 3654.971
shares
$50,000
01/21 Sell EUROX at
$13.45 3581.871
shares $48,176 (shares
decreased by 2% redemption)
01/22 Buy CNZLX at
$11.39 4223.544
shares $48,106
-3.8%
02/24 Sell CNZLX at
$11.44
$48,317
02/25 Buy PSPFX at
$4.66 10353.508
shares $48,247
-3.5%
03/10 Sell PSPFX at
$4.51
$46,694
03/11 Buy PEMDX at
$9.89 4714.289
shares
$46,624
-6.8%
05/19 Sell PEMDX at
$10.83 4759.374
shares $51,544
(shares increased for 2 months dividends)
05/20
Buy CHTTX at $16.47
3125.320 shares
$51,474 +2.9%
06/16
Sell CHTTX at
$18.46
$57,693
06/17 Buy HRTVX at
$40.06 1438.427
shares
$57,623 +15.2%
08/18
Sell HRTVX at
$42.76
$61,507
08/19 Buy SASPX at
$7.45 8246.599
shares
$61,437 +22.9%
11/03
Sell SASPX at
$8.78
$72,405
11/04 Buy USCOX at
$6.10 11858.219
shares $72,335
+44.7%
12/31 Holding USCOX at
$6.56 11951.152
shares $78,400
+56.8% = YTD gain Fund 2 (shares increased for
dividend)
Moderate Growth gains = $63,206 + $78,400 = $122,051 = +41.6%
YTD
Brokerage-Available Funds --
Conservative Growth:
Fund 1 of
3:
12/31 Holding PEMDX at
$9.25 3603.603 shares
$33,333
01/27 Sell PEMDX at
$9.30 3626.902
shares $33,730 (shares increased
for dividend)
01/28 Buy BEGBX at
$12.61 2669.325
shares $33,660
+1.0%
03/24 Sell BEGBX at
$12.30 2680.337
shares $32,968 (shares
increased for dividend)
03/25 Buy LLPFX at
$22.52 1460.841
shares $32,898
-1.3%
04/07 Sell LLPFX at
$23.19
$33,877
04/08 Buy PHYDX at
$9.01 3752.155
shares $33,807
+1.4%
05/05 Sell PHYDX at
$9.34
3772.349 shares $35,234
(shares increased for dividend)
05/06 Buy RKGRX
at $12.12 2901.299
shares $35,164
+5.5%
09/29 Sell RKGRX at
$15.92
$46,189
09/30 Buy KSCOX at
$14.48 3184.992
shares $46,119
+38.4%
10/13 Sell KSCOX at
$15.00
$47,775
10/14 Buy RSSGX at
$20.09 2374.558
shares $47,705
+43.1%
12/22 Sell RSSGX at
$20.16
$47,871
12/23 Buy UMBIX at
$35.23 1356.829
shares $47,801
+43.4%
12/31 Holding UMBIX at
$35.86
$48,656 +46.0% = YTD gain Fund 1
Fund
2 of 3:
12/31 Holding CNZLX at
$11.03 3022.061
shares
$33,333
03/03 Sell CNZLX at
$11.36 3022.061
shares
$34,331
03/04 Buy RYGBX at
$11.24 3048.097
shares $34,261
+2.8%
03/24 Sell RYGBX at
$10.74
$32,737
03/25 Buy BABSX at
$8.17 3998.355
shares $32,667
-2.0%
03/31 Sell BABSX at
$7.87
$31,467
04/01 Buy KSCOX at
$11.02 2849.098
shares $31,397
-5.8%
06/16 Sell KSCOX at
$13.19
$37,580
06/17 Buy HRTVX at
$40.06 936.335
shares $37,510
+12.5%
12/31 Holding HRTVX at
$51.14 980.154
shares $50,125
+50.4% = YTD gain Fund 2 (shares increased for dividend)
Fund 3 of
3:
12/31 Holding PSAFX at
$11.69 2851.441 shares
$33,334
03/03 Sell PSAFX at
$11.81
$33,676
03/04 Buy PEMDX at
$9.78 3436.147
shares $33,606
+0.8%
06/09 Sell PEMDX at
$11.22 3484.584
shares $39.097 (shares
increased for 3 months dividends)
06/10 Buy
LLINX at
$11.34
3441.537 shares
$39,027 +17.1%
10/27
Sell LLINX at
$13.16
$45,291
10/28 Buy KSCOX at
$15.53 2911.824
shares $45,221
+35.7%
12/31 Holding KSCOX at
$16.55 2940.048 shares
$48,658 +46.0% = YTD gain Fund 3 (shares increased
for
dividend)
Conservative Growth gains = $48,656 + $50,125 + $48,658 = $147,439 =
+47.4% YTD
Summary for
2003:
Return Trades Funds Held
Aggressive
+60.7%
7
1
Moderate
+41.6%
16
2
Conservative
+47.4%
14
3
DJIA
+25.3%
S&P
500
+26.4%
NASDAQ
+50.0%
Russell 2000 +45.4%
Midcap
400 +34.0%
BARRA
Value +29.0%
Wilshire
5000
+29.4%
Balanced
+19.9%
Discussion:
Our goal for the Aggressive Growth strategy
using brokerage-available mutual funds is to be ahead of all of the major market
indexes listed above on an annual basis.
The goal for the Moderate Growth
method using brokerage-available mutual funds is to beat the Wilshire 5000 on an
annual basis.
The goal for the Conservative Growth method using
brokerage-available mutual funds is to beat Balanced Index funds on an annual
basis. The Balanced Index is based on 60% allocation tracking the Wilshire
5000 and 40% tracking the Lehman Brothers Balanced Bond Index.
As can be
seen, all three FTI strategies using brokerage-available mutual funds were well
ahead of their respective goals on 12/31/03.
The system is working the
way it is designed. However, as you look at the returns for each of the
six tracks of funds, one of them is significantly lower than the others.
Observe the return for Fund 1 of the Moderate Growth strategy.
Aggressive
(1 fund) +60.7%
Moderate (Fund
1) +26.4% (low)
Moderate
(Fund 2)
+56.8%
Conservative (Fund 1) +46.0%
Conservative
(Fund 2) +50.4%
Conservative (Fund 3)
+46.0%
Note that the Moderate Growth method suffered a large drop early
in the year when QRACX was held four weeks and dropped in price significantly
during the last two weeks of that hold. This, and the 1-week hold of FDCAX
were the main problems. In the Aggressive Growth strategy, QRACX was held,
but only three weeks. The price drop was not nearly as large as what
happened in that fourth week with the Moderate Growth, but still contributed to
a lower return than could have been. The Conservative Growth strategy had
consistent returns among the three funds held. There were no major
mistakes made using this strategy. QRACX was a mistake affecting the other
two strategies. It was added to the active inventory late in its trend,
and rather abruptly. This fund has high risk of short-term drops, as we
found out. After that experience, we did further research, including some
extensive backtesting of fund styles and risk factors, and the result was an
improved method of selectin!
g funds and deciding when to switch them
on. It also led to changing the trade signal from 0.20 to 0.30 TI
difference.
With the improvements made in the way funds are researched
and adopted for our inventory, and adoption of the 0.30 TI trading difference,
the 2004 returns ought to be better protected against sudden drops and losses
caused by premature trading. Next week we will show 2003 trades that would
have been made for the brokerage-available funds had we used the new rules and
fund selection procedures. The improvement over the above is quite
impressive. We will also show the 2003 trades for the various annuities next
week.
Invitation to Subscribe:
I encourage anyone not yet using this system to
read the sections of the website and compare your returns with those we have
been enjoying (see home page). Then, consider subscribing to this
system. Newsletters 2003-14 and 2003-15, on "Choices and the Time Value of
Money" are good reading to see what a few percent difference in annual returns
on investments can make in the long run. They are available upon
request. Also, Chapter 19 and page 161-65 of "Using Mutual Fund Trading
Indexes" is recommended reading.
To subscribe to the Weekly Trading
Indexes and/or buy the book, click on www.fundtradingindexes.com and follow
the instructions.
Ben Buckner, PhD,
Creator of the Fund Trading Index
System
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