video cover

This is the second menu of Roger Hagan's "Mutual Fund Timing with Your Own Computer" page.
  • Libraries
  • System Performance
  • The Paradigm Shift Question
  • Other Pages to Visit
  • The Interest Rate Anomaly
  • Do Support/Resistance Levels Help Market Timing?
  • Top Menu
  • Weekly Journal
  • Ordering Page


  • LIBRARIES

    Public libraries in some areas have purchased "MUTUAL FUND TIMING WITH YOUR OWN COMPUTER." Regional libraries in Michigan, Illinois, Ohio, New York, California, Nevada, Utah, and Washington have been buying. Ask the video librarian at your library. If you view the library copy, Email me for the brief summary of the updates since then (free if you send a SASE), or purchase the complete booklet "Update Notes for Mutual Fund Timing with your Own Computer." It will explain many things the video could not. The transcript of the tape is also available from this office. See the Ordering Page.

    clip imageIf you want to encourage your library to purchase this or the other cassettes, refer them to full favorable reviews in Library Journal, July, 1994 ("Hagan's tape is well worth the price and will face brisk demand from investment-oriented library patrons."); Booklist, Dec. 15, 1993 ("Hagan discusses key market indicators, various market conditions, and eight key rules. He clearly explains the daily data entry and computer programming required and the interpretation of the resulting graphs.... This specialized video will interest serious investors."); and Video Librarian, Feb., 1994 ("A good choice for public libraries. Recommended.")

    If you wish, I'll send copies of the full reviews for you to give to the video librarian in your district. Email me at the address on the Ordering Page.


    Top Menu..|..2nd Menu


    Past Performance

    Graph of returns 1968-1994 $3000 initial only This is of course a back test of a recently developed system. Based on daily data since 1/1/68, each developing pattern was analyzed according to the rules of the current system. A sincere effort was made to avoid being influenced by knowing how the market developed after the signal, but unquestionably, real-time trading might have produced somewhat different results. (For actual signals since 1995, view the signal list.)

    On the other hand, this graph, which runs on a scale at left from 0 to 500,000 and at bottom from 1968 to the start of 1995, is conservative in three respects: it does not add in interest earned while in money market funds; it does not use aggressive funds but simply the S&P; 500 Index; and it does not add dividends that would have been earned by the index fund. On this set of assumptions, the S&P; Index grew from 95 to 550 in the same period, 5.8 times its starting value. The $3000 growing while in the market grew to 142 times its starting value.

    A reader In May, 1999, asked some reasonable questions:

    I have been studying your web site and have several questions about the 27-year data example you show.

    (1) You say elsewhere in you web site that your timing model produces 2 to 4 switch signals per year. In its most simple form, would 2 switch signals mean one sell signal followed at some point by one buy signal resulting in one round trip?

    It should say 3 to 4 round trips per year. One round trip is buying and selling stock funds.

    (2) Am I correct in assuming that a sell signal means to switch one's investment from a growth-type mutual fund to a money market mutual fund? Conversely, a buy signal would mean moving one's investment from the money market fund back into the growth mutual fund.

    Correct

    (3) You show 27 years of theoretical performance of your current timing model (1/1/68 - 1/1/95) based upon an initial investment of $3,000. How many sell signals are contained in that 27-year example? Again, I assume that a sell signal is followed at some point by a buy signal.

    There are 76 sell signals. That's the simplest way of saying it. There are more buy signals because some buys were partial, then added to later.

    This backtest was done in 1995, and used the rules developed in 1994 and 1995, but since then the market's new paradigm, described elsewhere in this site, has suggested some refinements, such as recognition of a few changes in application of the rules when the interest rate on the 30 year TBond is above or below 7.5%, and revised interpretation of the relative strength graph and flags. Some of the current rules cannot be applied before 1987 because the Russell 2000 Index was not available daily before then. So an updated backtest is impossible to do covering the entire time period.

    I did a new test from 1987 on a year ago, applying the modifications made until then to the earlier period. I wanted to see that the rules would work in markets of a differing natures. It requires redoing whenever I decide on the slightest change of interpretation. I am more concerned that people measure results in real time. One purpose of this page is to encourage realistic expectations and undercut the myth of ideal mechanical trading systems. I do not believe most claims of timing results based upon backtesting, and I would be suspicious even of mine, since I know how differently one behaves in real time with real money than when doing a backtest with no money riding on it.

    For that reason I make available a list of signals actually taken since 1995.

    Top Menu..|..2nd Menu


    Some favorite funds to last Friday (or date on graph if any).

    The site master menu and submenu for Mutual Fund Timing with a Spreadsheet are just a click away.


    Interesting funds to this weekend

    These funds are graphed against the S&P; 500 and the Russell 2000 small stock index. Whether a line is above or below another is immaterial. The relative slope tells the story: when a fund is doing better than the indexes and when it is not. What's happening now is at the far right.


    34 funds last week and this week

    Vanguard Cap Opp'ty Nas MidCap Gro
    Rydex Basic Materials Sector
    Invesco Telecomm Sector
    Invesco Endeavor Nas BigCap Gro
    Invesco Gro & Inc Bigcap Growth
    The Internet Fund Sector
    Invesco Dynamics MidCap Growth
    Invesco Sm Co Gro SmCap 50% tech
    Invesco Blue Chip BigCap Growth
    Invesco Equity Income BigCap Value
    Invesco Internat. Blu Chip Int'l BigCap
    Invesco Energy Sector
    Amer. Cent. Value MidCap Value
    Invesco Europe Europe
    Invesco Finance Sector
    Invesco Gold Sector
    Invesco Health Sci. Sector
    Invesco Leisure Sector
    Invesco Pacific Basin Asia
    Invesco Technology Sector
    Invesco Utilities Sector
    Rydex Transports Sector
    Rydex Retailing Sector
    Rydex Electronics Sector
    Janus Venture Nas Small Gro 52% tch
    Fremont Microcap SmCap Gr 48% tch
    Oakmark Fund MidCap Value
    Morgan Grenfell Mic SmCap Gr 30% tch
    PBHG Growth MidCap Gro
    Amer Cent Growth BigCap Gro
    Montgomery Em Gr SmCap Gr 14% tch
    Amer Cent Int'l Gro Int'l Gro
    Amer Cent Select BigCap Div Blend
    Amer Cent Ultra BigCap Gro
    Amer Cent Vista Nas Big Cap Gro
    Russell 2000 Index
    S&P; 500 Index
    Nasdaq Composite Index
    These graphs are made from weekly input and are among those described in my second videotape, on selecting and tracking mutual funds for timing.

    To learn how to make them for yourself, see the Ordering Page. My reason for including more than hot equity funds in my representative list is to get a quick window on rotation among sectors and styles, and is described in the tape. I graph only pure no-loads, which may explain why some favorites are not here.

    To see other funds, or any of these funds by themselves, see the excellent "Stockmaster" site. Click on any of the following links to see a fund by itself, graphed against the S&P; 500 Index. The page includes a place to enter the symbol (five letters ending in X) for another fund. You may also find it by name, but the list of names is not complete and slow to load. Best to write down the symbols of the funds you may want to check back on, once you get them. Remember, you will need to bookmark THIS site to return here in case your back button loses track of us. These five are interesting if you are searching for a pseudo-index fund in the American/20th Century or Invesco families. It turns out Benham brought two very good ones into the American/20th Century family when they merged, the first two here. Note: you can look up any fund you want to follow in Stockmaster and bookmark it (the Netscape phrase for automatically adding the URL to your list of favorites) while the graph is on screen.

    American Century Income & Growth Fund
    American Century Equity Growth Fund
    American Century Equity Income Fund
    American Century 20th Century Select Fund
    Invesco Growth Fund

    You can also make use of Yahoo's excellent finance site. They'll even track your portfolio, free. Graphs are cruder but lots of information. Use your "Back" button to return here.

    Stock and Fund Quotes from Yahoo!

    Enter one or more ticker symbols, or you may look up the symbol by company or fund name.

    The week's commentary and the site master menu and submenu for Mutual Fund Timing with a Spreadsheet are just a click away.



    (If you don't understand the system used here and want to, get some of my material. See the Ordering Page. Or check your local library -- the videotape "Mutual Fund Timing with Your Own Computer" is in many public libraries. Be sure to order the Update Notes to help entering the system into your spreadsheet in its most current implementation.)

    Top Menu..|..2nd Menu

    NOTICE ANYTHING? (The Paradigm Shift)

    8.5 years of the market
    The market (S&P; 500) and its 200 day moving average are at the top. Lines at the bottom are just a way of seeing the percentage drop or rise in 3 months. For these lines, each one hundred units is 10%.

    There's food for thought here. Different people take it different ways.

    Floyd Norris in The New York Times back in December, 1995 wrote, about the change of heart of David Shulman, chief equity strategist for Salomon Brothers, LAST BIG WALL ST. BEAR CHANGES HIS MIND. [There is a 1997 update below.] Mr. Shulman had paid much attention to the S&P; dividend ratio, but had concluded that it doesn't help much any more. Norris notes that the dividend yield on the S&P; 500 "had never before fallen below 2.65 percent without dire consequences. Now it is down to 2.3 percent." [2/97: 1.87%. 7/98: 1.38%] Shulman now believes interest rates are more important than stock over-valuation. (I began using interest rates as a key filter in my signal graph in 1994.)

    I like the next observation of Shulman's. As Norris states it: "As recently as September, Mr. Shulman had stuck to his bearish view, citing six factors that he said had been associated with market tops, and were again present. They included a new wave of mergers and acquisitions, corporate executives as cultural heroes, money managers as cultural heroes, glorification of equities in the mass media, academic articles that emphasize the long-run infallibility of equity investing, and a belief in the ability of new technologies to permanently change society.

    "But now, while conceding all those things seemed to still be present, he has concluded that he was probably wrong. Whereas he had been looking for a relatively strong economy, he now thinks that the greater risk is a weaker economy -- an outcome that he thinks would lower interest rates and lead to higher price-to-earnings ratios for many companies."

    Norris, in his headline, is referring to the old market adage that prices peak and fall when the last bear gives up. Shulman says he is a little worried that he may be causing a disaster. I think it is still important to be alert to intermediate-term states of overconfidence and overpessimism, to observe how money moves through a rotation of investments, and to recognize how interest rates modify its actions. And maybe watch out for money managers as culture heroes.

    To me, though, the paradigm shift is real. The money flow chasing the next growth sector creates the growth it is seeking. New money has flowed into stock funds in unprecedented volumes; these new investors are not concerned with income, just growth, so P/E ratios or Price/Dividend ratios do not interest them. For the same reason, bonds will be uninteresting below 8%, and probably below 12% for many, until a 9 month or longer bear market is experienced by this generation of investors. (Four out of five mutual fund money managers were not in the field at the time of the '87 crash. Six out of seven were not in the business at the time of the last real bear market in the Seventies or early Eighties.)

    [Note from Oct. 1998: a four month bear market was not enough to change the paradigm for long.]

    It will end someday. Michael Metz, chief investment strategist at Oppenheimer and Co., points out that money pouring into mutual funds in the first quarter, if continuing at that pace, would total $280 billion for the year. Americans save altogether about $300 billion a year. Certainly not all of it goes into the stock market, so he thinks the present pace is unsustainable. [Update: the 1996 figure was about $225 billion.]

    The challenge is therefore to adapt a timing system or an allocation plan to this hyperactive market without succumbing to its naive optimism. I believe we have achieved this.

    And where does David Shulman stand as of February 14, 1997? Back with the bears. He believes the Dow will end 1997 around 6,000. In December he had predicted even lower, 5,750. In his view, earnings momentum will slow, interest rates will rise because of Federal Reserve actions, and a cut in the capital gains tax will cause a burst of stock selling.

    Keep on timing.


    Other Interesting Pages to Visit

    This list grows as I find worthwhile offerings. It also shrinks as I purge it occasionally. There may be some defunct offerings I have not checked on lately. When I began this, most financial sites were personal and small business pages. By 1999 the big publishers had moved in and made advanced technical pages of great power. So far I am impressed with:

    Valuation Street -- a fundamental view of US financialmarkets for the individual investor. Good discussion of key topics with graphs, such as on money supply.
    The Internet Stock Index. Someday we'll make a graph of this, and watch it against our other lines. It may not signal market tops so much as moments of sector upheavals, or it may signal nothing. Behind this page, the Stockpoint.com quotes page has very useful graphs on which you can place four stocks or funds as well as your choice of indexes: DJ30, S&P; 500, NASDAQ, R2K, NYSE composite, DJ Transports, or PSE Tech Index! In addition you may choose among indicators: Bollinger bands, Relative Strength (vs. S&P; 500 unless you have a second stock or fund chosen), Stochastics, On Balance Volumne, Price rate of change, MACD (moving average convergence-divergence), and volume. You may choose to show one or two moving averages of lengths you specify. Finally, each indicator has a help file that explains it and how it is generally read. Each change you make in a graph requires a new read off the server, but if you choose Java Chart instead of just Chart, the changes are made instantly so long as you stick with that stock or fund. With a Java chart, you can log off the internet if you need your phone line clear and still experiment with different indicators on the graph, and you can zoom in on a portion of the graph to enlarge it. You cannot print it offline, but if you are on line you can choose to print just the graph, not the whole page. A very useful and educational site.
    StockMaster charts. This site has been greatly improved. All graphs are up against an S&P; 500 graph, the way I like them: daily, weekly, or monthly graphs. Comprehensive stock symbol lookup list, very useful. You can only have one fund up at a time, of course, unlike mine which cram a bunch together for comparison.
    Smart Money Magazine. Many current articles, useful news, but the best are the graphs you get when you input a fund or stock symbol. These run in Java and let you specify which index you want on the same graph, and name other funds or stocks to place against it. They come up immediately once the Java loads. It is presented in terms of change to an initial investment of $10,000, so these are probably total return lines with distributions reinvested. Check that, though. This is the kind of comparison I put in my graphs, but with any fund in the nation. Very helpful in seeing whose pattern suits the current conditions.
    CBS MarketWatch. CBS + Data Broadcasting make a nicely functional site with a big index on the page to get to lots of financial information quickly.
    Microsoft MoneyCentral. This site is worth a frequent look as it keeps adding features, such as analysts' consensus reports on stocks. If you want the graphic capabilities, it wants you to download a charting engine, which then requires that you download Windows graphics accessories like the ActiveX portability package, whatever that is. Those paranoid about Microsoft taking over your machine and disabling other programs will hesitate. But I did it, and so far no problems. The graphs aren't that eye-popping when you're done, however.
    Charting Your Future. Good graphs for commodity traders. The top graph is the Dow, with momentum and trend indicators. This graph includes an unexplained Rydex "sentiment" reading, the total assets of the Ursa and Nova funds. If anyone has a calibration for this ratio -- historically where it has coincided with market tops and bottoms -- it would be nice to hear from you, and I'll pass it along here.
    Invest in the Best. Jim Battaglia offers a fee-based subscriber section to select the best sector funds to use and to help time the moves. The free section offers direct access to MetaStock Java graphs of any index, stock or fund, with several technical indicies you can call in. Other graphing sites are also accessed from here, and their use is explained in his text on the "start" page, so the site is good for viewing conventional graphing methods of technical analysis.
    Chip's Charts. One of the chart-displaying sites used by Battaglia. Chip shows a color graph where red over a sector means trouble ahead in his opinion. Part of the basis for Battaglia's sector advice.
    Equis, now owned by Reuters, brings together data and charting services, and some of it is free. The java charting engine is quite cool. I don't pay to have it on my site because you can go use it yourself there.
    Investment Company Institute. The mutual fund trade association. In "current statistics" it shows total money in or out of stock and bond funds each month, but it is terribly late. They discontinued the estimated recent month figure, and now wait for all the final figures, which takes another month. By that time it is useless.
    AMG Data. The company in Arcata, CA that issues reports and estimates of cash moving in and out of mutual funds. The figures don't always agree with the I.C.I. (above) but they are updated weekly, and are free here. These graphs also appear in some other financial mega-sites.
    BigCharts. In addition to nice graphs, it has good reporting, shows big movers up, down, leaders in volume and stocks hitting new highs and lows. Stock graphs include the Arms Index, an indicator referred to much too often considering its reversed polarity and relative uselessness. Hi-Lo statistiscs in its "Broad Market Overview" agree with no others I find, so I wouldn't use them. A nice feature: pages of little graphs of lots of companies experiencing greatest changes in price or volume.
    FundAlarm. An enjoyable site of news about the funds industry, updated monthly. More useful gossip and informed opinion about changes in the fund companies, their management and their performance than found in the papers and magazines. Some good links, too. Go to his "highlights" section for the information and the links. One I found there is:
    Mutual Funds Cafe. A page for professionals in the funds management and marketing fields. It does not gossip, but carries useful essays and interviews, not with fund managers (for this see the Morningstar site), but with executives. The discussion is about their growth plans and strategies. For example, I learned there about big changes in the ownership structure of the American/20th Century fund group, which will bear watching.
    FundBuster. Harry Larson's well-laid-out argument for timing mutual funds, explaining timing, and advertising a proprietary timing advisory service that costs $150 to $200 per year, primarily focussed on Fidelity funds. For people who don't want to do their own. He says he doesn't stay invested when small stocks aren't doing well, but for some reason was in to July 28, 1998, so there must be exceptions.
    Decisionpoint. A tech analysis page with lots of free historic graphs and explanation of a few of the indicators he uses. Makes a noble effort to find value in the McClellan Oscillator. Nice try. Study his historic AD line graphs and see why I don't use the cumulative AD line he and the papers show. It needs a normal range.
    The Timely Investor's Page offers fund and stock charts updated daily with Bollinger bands and Stochastics. An unusual free offering of great use, going through change to a new version. Nice graphs but not with an index on them.
    Ultra Financial Systems shows free stock market timing systems and tutorials. They sell a service based on 47 disclosed timing systems for stocks, bonds and gold, with a 56 year historical database. All the disclosed systems are discussed: a good place to get a summary of a lot of technicians' ideas that form the basis of many systems.
    FreeEDGAR - Offers filings with the SEC, which companies must do quarterly or when they purchse over 5% of the shares of another company. So you can look at a company financial statement, minus the hype in the annual report; see what your mutual fund is buying; look up Paul Allen's investments. Free.
    Waterhouse - stock and fund graphs and low-cost online trading. They do charge transaction fees on some funds, but many are free. More information for non-account members than E-trade offers on their site.
    Morningstar - Although not as detailed as the information in their reports on mutual funds or their CD rom quarterly updates, the Morningstar website free information on mutual funds has all I am usually looking for, including graphs against the S&P; 500, news of managerial changes, and major holdings. I like the analysts' articles and the interviews with fund managers. Recently showed which stocks are owned by the most funds in each of their nine categories; probably still in its archives.
    Internet Financial Connection Mark Johnson's compendium of newsletters and various stock pickers favorite stocks lately.
    Silicon Investor Another Grand Central Station of investors' stuff: charts, opinions. Lively discussion forums populated by more short term traders than those on Motley Fool.
    The Motley Fool If you want to experiment with individual stocks, the Gardner Brothers and their associates running this site have an approach or two for you. The Foolish Four essay is a good place to begin. These guys hate market timers, so go prepared. The book "Motley Fool Investment Guide" is a better introduction to their philosophy, which has however changed a bit since publication.
    Wall Street Directory Huge catalog of sites, links and/or phone numbers: "2500 pages for computerized traders and investors, with more than 2000 products and services."
    Advisor Software An introduction to "style analysis" of funds. Sells a service, but free registration gets you a style analysis of the fund you specify. Surprise: you thought you were in large cap fund? Performance better matches a fund 80% in medium size stocks. Method also provides an evaluation of fund management. Go to "Free Analysis" page.
    CBOE on the Web Very useful, with all current and recent daily option statistics such as call and put volume on the S&P; 100 Index option contract, if you watch the put/call ratio or Bollinger's put/call volume averages, although as I recall, he totals all the option markets for that.
    The Financial Center Has a few newsletter samples, but is better for useful sites it accesses.
    Sheldon Jacobs' No-Load Investor Discusses his theory and model portfolios and lots of ad for, little content from, his newsletter. The AdPad site behind him gives many other links, including info on Bob Brinker's newsletter.
    Financial Web A big list of annotated links to academic journal sites and other sites concerned with economics and finance. A good research launch point by James Garven of Austin, TX, worth scanning occasionally to remain aware of what is available on the web. One site: jokes about economists.
    Mutual Funds Newsgroup Access to a newsgroup on mutual funds, similar to Compuserve's Investors Forum Section 5.
    Paul Merriman's newsletter articles A clean site from the man who convinced me of the value of market timing. He is persuasive. Use these articles on your adult children.
    Time-Tech, a timing service, with current position stated. As of 3/98 the last update was in August. Maybe it's only updated when he gets a signal. Uses high yield bond funds only.
    MTReport, a conservative (less than one switch a year) system not user-reproducible but cheap to access. A second more active system has been added. Frank Kollar uses similar statistics to mine but in a different way. Centers on interest rates.
    The Syndicate, a hobby site by Bill Rini with resources for investors. Does interesting surveys among his readers and shows results. Eg. 40% trade less than once a month, 70% less than three.
    Association of Mutual Fund Investors has a complex timing and fund selection system it describes but does not make public here. You pay $50 to $80 for membership per year, but also another $35, oh and then there's $75 per quarter for details on stock funds, and $75 per quarter for same on sector funds.
    Ted Bos, a business professor in Alabama, has an immense set of links that relate to economics and finance.


    All text and graphs are property of Roger Hagan; copyright 1995, 1996, 1997, 1998, 1999 by Roger Hagan Associates

    Top Menu..|..2nd Menu