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Three-year TimingCube signal anniversary!

Since it has been three years to the day that we went live with our first signal, we would like to pause long enough to remember the road traveled, assess our accomplishments, and thank all our loyal subscribers without whom this service would be meaningless.

On this special occasion, school is out. Instead we will dedicate this week's Trend Timing School editorial to a "Three-Year Anniversary Special Edition".


Signal Update
Current Signal Performance as of
Signal Type
Trade Date
Index
Return since issued
Nasdaq 100
Russell 2000
S&P 500
QQQ

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
QQQ

Note: QQQ returns are included for continuity sake.

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Market Update
It is starting to look as if summer trading sets in a little early this year. This week was another yawner lacking both in direction and credible volume. The major indices ended the week almost where they started with the Nasdaq 100 losing 1.12%, the S&P 500 retreating a fractional 0.13%, and the Russell 2000 inching out a 0.25% gain.
The week saw the usual string of conflicting news. One day, a jump in the Consumer Price Index (CPI) renews inflation fears and triggers selling. Then, investors curiously brush off a larger than expected rise in the Producer Price Index (PPI) and, even more importantly, an all time record U.S. Current Account deficit. Add to the mix the almost mandatory news on terrorism and oil prices. Indicative of the general lack of direction, some news were taken as a positive one day and a negative the next.

This week's lackluster action has done nothing to reverse the trend and accordingly, our signal remains a Sell.

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Trend Timing School
Three-Year Anniversary Special Edition

We have been looking for things that were the same three years ago, and the only one we found was that on June 18, 2001 the signal was Sell, and on June 18, 2004 the signal is Sell.

Back then our membership was small, very small in fact, mostly family, friends and neighbors that were willing to listen, and adventurous enough to try something different. Word of mouth and the reach of the internet helped grow our ranks substantially since then, but it is always reassuring to know that there are actual people that have faithfully (some said foolishly) invested according to the signal, and in fact did better than triple their money in three short years. Despite all the testing and promises going in, few expected the results they got.
We do not want to be boisterous or in any way appear to brag about ourselves, but it is with unconcealed satisfaction that we look back at what we, at TimingCube and the many Trend Timers that joined us along the way, have achieved in such a short period of time.

Before going too far down memory lane we should start with a brief report on the number one reason investors subscribe and remain loyal to TimingCube: Performance.
The table below summarizes the three-year returns for all four strategies, and all three indices. In a business in which advisors and money managers are struggling to consistently keep pace with the markets, our system's "workhorse" strategy, Long and Short, has delivered a fantastic 235% cumulative return on the Nasdaq 100, at a time when the markets lost money or posted minor gains. A 235% return turns an initial $10,000 investment into $33,510!
Not bad in three short years. OK, maybe we are bragging a little.

Even more telling, of the ten completed trades since going live, the most recent one was the biggest gainer at 34%, four others returned between 20 and 30%, one 11%, one less than 1%, and the remaining three gave us single digit losses. Yet, at the end of three years, our annualized return is 50%.
This most clearly demonstrates that if we can just be patient enough, the system will gently chip away small gains, and the occasional loss, all of which favorably compounds into stunning gains before very long.

TimingCube three-year Returns: June 2001 to June 2004

Index
Long Only
Long Only
with
Margin
Long & Short
Long & Short
with
Margin
Buy & Hold
 
Annualized Returns
Nasdaq 100
+22.88%
+44.79%
+49.64%
+106.46%
-5.08%
Russell 2000
+24.89%
+48.14%
+43.31%
+90.18%
+4.80%
S&P 500
+12.85%
+25.18%
+27.81%
+58.16%
-2.33%
 
Cumulative Returns
Nasdaq 100
+85.54%
+203.55%
+235.10%
+780.04%
-14.49%
Russell 2000
+94.78%
+225.08%
+194.33%
+587.88%
+15.11%
S&P 500
+43.73%
+96.15%
+108.79%
+295.62%
-6.84%
 
Cumulative Return of $10,000 investment
Nasdaq 100
$18,554
$30,355
$33,510
$88,004
$8,551
Russell 2000
$19,478
$32,508
$29,433
$68,788
$11,511
S&P 500
$14,373
$19,615
$20,879
$39,562
$9,316

On this third anniversary it seems like the stars have aligned on one auspicious number: 3.

  • The cube in TimingCube, representing 3 dimensions (T3)
  • We now track 3 indices (Nasdaq 100, Russell 2000 and S&P 500)
  • A $10,000 investment grew to $33,510, 3 times the initial investment
  • TimingCube has 3 partners,
    Frank Minssieux, Serge Dacic and Andreas Schreyer -- the 3 Musketeers --

And here for some accomplishments that somehow refused to fit the rule of 3.

  • Expanded original "signal only" service, with a complete support system, loads of information and educational materials
  • Instituted weekly updates and commentaries
  • Added Signal by Phone service
  • Attracted over 4,000 subscribers, doubling last year's ranks
  • Started receiving industry and media recognition for Trend Timing

Maybe more importantly, the assessment of the last three years reveals that financial dreams can realistically be achieved in surprisingly short periods of time.
It does not take miracles or even perfection, just letting the Model do what it was designed to do.

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FAQ of the Week
Question: What is the impact of commissions, fees, and taxes on your results?

As is customary in the investment industry, our results do not factor in the costs one could incur while following our wealth building system. The inclusion of such costs is impractical because of the multitude of investment vehicles choices and individual circumstances which dictate the costs. The information provided below should allow you to make a complete assessment of your specific costs.

Advisory fees
If you use the services of an investment advisor or money manager, you most likely pay an asset-based fee which can range from 0.5% to 2% annually.
Or you could fire your advisor and subscribe to TimingCube, in which case the highest fee you would pay in a year is $359.40. But astute members soon realize that the $299.95 yearly subscription is a bargain.

Commissions

Commissions are the fees your broker charges for trading. They can be as low as $5 per trade at some online brokerage houses, but they can start as high as $30 at others. These are for bare bones market orders, and are generally only good up to some number of shares. If you buy more, there is an additional per share cost, around 1 cent. And if you want to place a limit order or speak to a broker, be prepared to pay a lot more.
Since we trade so infrequently, 3.5 times per year on average, commission related costs are kept under good control.

Dividends
An often ignored cost of short selling, dividends distributed while you are short the security must be paid by you. Check if the stocks and ETFs you plan to short pay dividends, and if so, how much and when.

Expenses
These are the fees ETFs and mutual funds charge to operate. The good news is that these expenses are hidden in the funds themselves, the bad news is that they still come out of your pocket. They are expressed as an annual percentage of assets, and can range from 0.18% for QQQ, to 1.3% for actively managed or index funds such as the Vanguard 500 Index ticker: VFINX, or Fidelity Magellan ticker: FMAGX. For the more fancy leveraged funds the total expense ratio can be over 2%, but this includes any interest costs related to the funds margin trading.

Interest
If you do any short selling or trade on margin, your broker will charge you interest on the funds you borrow to do so. The rates vary with prevailing interest rates, but currently, 6.5% is an average annual rate.

Taxes
Of all the costs we incur while investing, taxes usually win the "most outrageous" prize, hands down. Our previous signal managed to last more than a year and saved us big because long term capital gains are taxed at a flat 15%; lower than most people's marginal tax rate. By trading an average 3.5 times per year we normally pay the higher short term gains rate.
Even qualified retirement accounts are not tax free. Most are tax-deferred which means that you will pay taxes as you withdraw the money in retirement. In order to fairly compare regular and retirement investment, one has to reduce the total retirement account value by the taxes owed at withdrawal.

Ironically, you always need to remember that the more taxes you pay, the better off you are. It simply means you had lots of capital gains to declare, and that your wealth building program is on track.

Warm wishes and until next week.

The TimingCube Staff

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