The Full Story
HOW IT WORKS
The chart, left, is the "Turner Capital Total Market Index" (TMI) and is one of our primary indicators of whether to have a bullish, bearish or neutral investment bias.
The black line is an equal-weighted percentage change of a composite index of the S&P 500, the NASDAQ, the Russell 2000, and the DJIA.
The yellow band represents the one-standard-deviation of normal volatility above and below the 200-day moving average of the composite index. The wider the band, the higher the volatility.
When the total market (black line) is above the 200-day moving average and trending higher, the market is considered bullish. When the market is below the 200-day moving average and trending lower, the market is considered bearish. And when the 200-day moving average is flat, the risk is highest and the market is considered to be "in transition".
We rely heavily on the slope of the total market index and, in particular, when the slope changes. When the 200-day moving average changes slope from positive (bullish) to flat (transition) to negative (bearish), our quantitative algorithms signal "Trend Inflection Points" (TIPs); initially as a warning and then, once the change in slope is confirmed, we get a TIP alert (green triangle for a new bullish trend alert or red triangle for a new bearish trend alert).
We measure where the market is and never guess where the market might be in a month or a year or many years from now. Guessing is a very poor investment strategy, but if you know where the market is, and you set your investment strategy to match the market, then your portfolio will be nicely in-sync with the market. This is how we keep our client portfolios on the right side of the market.
The chart on the right represents a back-test of the application of our quantitative algorithms as applied to trading the S&P 500 from January 1990 to the present. As you can see, the performance is approximately double that of a buy-and-hold strategy. But, in addition to significantly outperforming the S&P 500, the downside risk of loss is dramatically reduced by moving into a bearish investment bias (we use inverse ETFs) when the market is below its 200-day
moving average and trending lower, following a Bear-TIP Alert. Keep in mind that this chart represents a back-test and not actual trading. The back-test was performed by a computer program using actual S&P 500 prices. Buys and sales were made automatically according to our rules and algorithms.
It is also very important to understand that past performance does not guarantee any success or lack thereof in future returns. This back-test is to represent a concept and to provide a means for us to test the efficacy of our algorithms over long periods of time and multiple types of markets.
The Three Most Important Questions to Ask Your Current Advisor
1. "Do you plan to change the way you manage my money in a bear market?" If so, please explain:
-
"What is your bear market strategy and please be specific?"
-
"Tell me, exactly, how will you know when to invoke a bear market strategy?"
2. "If you are NOT going to change the way you manage my money in a bear market, tell me how much you are willing to let me lose before you move me to cash?"
3. "Will, you ever move my portfolio to 100% cash? If not, why not?"
Most asset managers do not know how to assess when risk is low enough that they should have you fully invested in fundamentally strong, up-trending stocks. We do.
Most asset managers do not know how to assess when risk is so elevated that the prudent action is to take profits and move to cash. We do.
We have clear, positive answers for the above 3 questions. We have a plan already in place to take advantage of both bull and bear markets. Talk to us and we'll show you exactly how we do it.
We have a completely different strategy for bull markets than what we have for bear markets. We will NOT let you lose significant capital in bear markets. In fact, our strategies are designed to grow your capital in bear markets.
We are not afraid to move to cash. Indeed, we consider cash as a strategic investment strategy that we employ when markets are in transition (moving from bull to bear or from bear to bull) and are in the highest time of risk.
Most investors do not realize that the key to making consistent profits in the market is knowing where the market “IS” and to stop guessing where the market “might be” in the future.
Our client portfolios are never surprised by a bear market (the next one could be massive) or how/when to capitalize on bull markets. Our “Market-Directional” approach to money management is far better and far less risky than buy-and-hold or typical market-timing. We let the market tell us where it is and we know the market will always continue on its current trend until it doesn't. Our market trend analysis algorithms alert us when the market has changed direction. This way, we know when to be bullish, neutral or bearish... and always in sync with the market.
If you are afraid of losing 30%... 40%... 50% or more in the next bear market, but do not want to miss out on the bull trends, consider putting some of your capital to work with us, where our objective is to grow and protect your capital in all markets... bull or bear!
DISCLAIMER