Frequently Asked Questions
ETF Trading Programs
Q.1 What is unique about the way you trade ETFs?
Both Jeff and Vince have decades of experience in financial modeling and forecasting. Vince received much of his training during his thirty years as a civilian employee of the Navy. He has been using advanced mathematical and engineering models longer and more effectively than the competition. Jeff was a college professor who worked extensively with quantitative modeling of sophisticated state and local tax issues before beginning his financial career 1987.
Q.2 What are Oscar and Felix?
Oscar and Felix, just like The Odd Couple, are two of our sector rotation programs that could hardly be more unlike. The Felix approach is cautious. It is out of the market when there is any significant danger. The Oscar approach is opportunistic. It leaves the market when things are bad, but is always looking for a re-entry point.
Q.3 How have your ETF trading programs performed in the past?
Over a seven-year test period, Felix gained 190% before costs. Much of the advantage came from avoiding the 2008 decline.
Great Stocks Trading Program
Q.1 How was the Great Stocks concept developed?
I analyzed my stock picking record for a ten-year period from 1987-97. It was very good, but would have been even better if I had never looked for the “home run” shots. I decided to stick to solid companies in good business lines – great companies.
Q.2 I hear everything is overvalued right now. How do you find a cheap stock?
As part of my market education I read thousands of analyst reports from “sell side” brokerage firms. I could tell that most were not very good, just repeating information from the company and using a standard method. Sometimes someone would have real insight about important changes. I developed an understanding of what analysts were looking for in different companies and what it would take for them to upgrade or downgrade a stock.
Q.3 What is your target performance?
We look for stocks that we expect to double in three years. That is an annualized gain of about 24%. Trying for more than this is too aggressive and too risky. Since we do not hit the target on every stock, our expected performance is a bit lower. We have beaten the market by an average of about 8% a year for over ten years. The long-term gain in stocks is over 8% per year, so we are trying to maintain a 16% return. We expect the market to resume the traditional pattern, and we expect to continue to outperform. Having a target is very helpful. It helps us to focus on stocks with plenty of upside, but without the speculative risk. While we are not swinging for the fences, we get our share of home runs anyway.
Enhanced Fixed Income
Q.1 I'm interested in getting invested, but I want to minimize risk. What do you have to offer?
Our approach to fixed income investing emphasizes the concept of total return. We recognize that reaching aggressively for yield carries higher risks, risks that may not always be obvious.The Enhanced Fixed Income program is relatively new, but the techniques are not. I have been advising bond and options traders for nearly 25 years. This program brings together investor needs, the current market opportunity, and my own skills.
Q.2 Why is dividend ownership important for fixed income investing?
A company that has solid dividends, and dividend growth, is a company that displays confidence in the future and is willing to share current earnings returns with investors. This corporate philosophy is attractive to retirement investors as well as pension fund managers.
Q.3 What is the total return concept and how does it apply to me?
If you are managing your own retirement account, your job is to generate needed income while not outliving your resources. If you did not need to worry about any heirs, you would implement a plan that gradually depleted your "nest egg" to augment your current income. Just fine, as long as you do not do so too quickly. If your portfolio is growing, you can sell a little each year. There is no rule saying that you can only derive current income from bonds or dividends. For a professional manager, this is obvious. For most retirement investors it is a mystery.