TimingCube - Four-year anniversary special edition - investment performance,trends timers,trend followers,trendless market,options trading

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Four-year TimingCube signal anniversary!

Today marks the fourth anniversary of our first live signal to the day (the Trade Date was on June 18, 2001). As has become a tradition, on the anniversary of our first live signal we take a little time out and instead of a formal Trend Timing School article we pause to look back and, more importantly, to thank all of you, our loyal subscribers, without whom Trend Timing would be meaningless.

Signal Update

Current Signal Performance as of

Signal Type	Trade Date	Index	Return since issued
		Nasdaq 100
		Russell 2000
		S&P 500
		QQQQ

Cumulative Returns since First TimingCube Live Signal () as of

Index	Long Only	Long Only with Margin	Long & Short	Long & Short with Margin	Buy & Hold
Nasdaq 100
Russell 2000
S&P 500
QQQQ

Note: QQQQ returns are included for continuity sake.

Market Update

Markets have resumed their march higher after marking a pause during the previous two weeks. The action of the S&P 500 clearly illustrates this as the large-cap benchmark moved higher every day of the week and is now within striking distance of its 52-week high. Consumer inflation numbers for May were released on Wednesday and were better than expected: the CPI fell 0.1%, its first drop in 10 months. As Alan Greenspan stated last week, inflation indeed appears to be under control, which is a positive for stocks. Consumers seem to be more optimistic too: the University of Michigan's consumer confidence index for June was greatly improved from its May level. The news helped markets shrug off higher oil prices on Friday. Trading volume was very high the last day of the week, in large part due to the fact that Friday was a so-called "quadruple-witching" day, which marks the quarterly expiration of options and futures.

For the week, the Russell 2000 and S&P 500 respectively gained 2.85% and 1.57%. As for the Nasdaq 100 , it finished 1.12% higher. All three indices remain above their 50-day and 200-day (EMA) exponential moving averages. Our active Buy signal remains in effect.

Trend Timing School

Four-year anniversary special edition

Today, Trend Timing School is out. Instead of the traditional article on a particular investment topic we will do a short a review of the previous 12 months.

As always, we try to keep in mind why you, our subscribers, use the TimingCube service in the first place: investment performance. The overall Trend Timing philosophy we pioneered is certainly of value, and so is the investment education and guidance we attempt to provide on a weekly basis. But in the end, if the signals issued by our Model do not yield market beating results, we do not expect even our loyal long-time subscribers to stick around.

Performance
By most measures the last 12 months have been a challenge for all investors, including trend followers. This has been the longest trendless market stretch in recent memory, with all indices remaining within a fairly narrow range and ending the period close to where they started. We survived the uncertainties of a Presidential election, a major turning point for interest rate policy and a year long series of rate hikes by the Federal Reserve Board, and exploding energy prices. Considering the market environment we are pleased with the results achieved by our Model. As many investment advisors and newsletters frequently got whipsawed into losses, our Model issued three signals (two Buys and one Sell) which have returned small but positive results. The most recent trade is of course not a done deal until the next signal, but so far it looks promising.

While the 12-month gains have been substantially lower than what we are used to see during trending markets, all four strategies as applied to our three favorite indices have produced substantial gains. The Nasdaq 100 , which traditionally is our best performer, has taken a breather this year as the Russell 2000 has been leading. As can be seen in the table below, the Russell 2000 has the best cumulative return for the two Long Only strategies, and has substantially narrowed the gap versus the Nasdaq 100 for the Long and Short strategies. Overall, a positive year and substantial progress for our wealth building system.

Four-year TimingCube performance

12-month accomplishments
In addition to the 52 brand new Trend Timing School issues we published during the year, here are some of the most noteworthy accomplishments.

Added about 25% more subscribers. We are now close to 5,000 active Trend Timers
Initiated a Managed Accounts service for people who like the Trend Timing approach to investing but feel more comfortable having professionals take care of the trading (see www.MarketTrendAdvisors.com). Note that in just barely over half a year of existence the service already has over 160 clients and $30 million under management
Introduced options trading as an alternative to ETF and mutual fund investment vehicles (see the January 21, January 28, February 4, and February 11, 2005 Trend Timing School articles)
Launched the new and improved "Results" page with such new features as the TimingCube Chart and Yearly Returns (see the January 14, 2005 Trend Timing School article for details)
Added loads of new content such as Glossary, What to Trade section, Trend Timing School and FAQ of the Week indexes, Site Map, etc. (see July 16, 2004 FAQ of the Week)
Numerous news articles about TimingCube and Trend Timing (see the "In the news" page
Introduced SmartPhone support (see July 9, 2004 FAQ of the Week)

FAQ of the Week

Question: Why did IWM lose 50% of its value overnight?

Since last week, a number of panicked subscribers wrote us to ask what happened to the share price of IWM, the Exchange Traded Fund (ETF) which tracks the Russell 2000 index. The answer is simple: a 2-for-1 stock split is what happened. Stock splits are just one more way in which ETFs resemble common stocks.

On June 8, 2005, IWM closed at $123.43. Then, before the market opened on June 9th, shareholders were given one additional share for every share they owned, and the share price was reduced by 50%. On June 9th the stock closed at $62.32, and although it appeared to have lost close to 50%, it was actually up slightly in real value from the previous close. Such stock splits are fairly common, absolutely harmless, and for all practical purposes have no effect on the owner of the shares.

The only issue is that if you attempt to calculate the return on your IWM shares, or if you keep a log of historical prices, you will need to adjust all pre-split values, including your purchase price, by reducing them by 50% in order to get correct and consistent results. For your convenience we make all such adjustments on our "Results" page, and you can find the split-adjusted historical values for previous signals on the TimingCube Charts.

Example for IWM:

Go to the "Results" page
Go down to the "Performance by individual security or index" section
Type IWM in the ticker symbol space then click "Go"
In the new window, click on "TimingCube Chart"
Place your mouse pointer on the signal you are interested in (red/green diamonds)
The displayed Trade Price is the split-adjusted open price for that signal