Move the Decimal

Over the course of the last month, I have witnessed a number of my trading friends who were sitting in a full cash position, watching the stock market go up day after day.  For those of us who were fully invested, our accounts grew larger and larger, while my trading friends were just treading water.

The market took us up over 7% in a just a few short weeks, as we had the best January for the market since 1997.  My trading friends were getting antsy, and kept waiting for a pullback so they could buy in, but it just didn’t happen.

Finally, after six weeks of the market rocketing higher, I began to see them capitulate, one by one.  They just couldn’t take it anymore, and began to jump on board the roaring train!  “Go, go go!” they yelled, hoping to finally make some money.  But it wasn’t to be.  Sure enough, we began a market correction.

Friends, if you let your emotions determine your trading decisions, you’re guaranteed to lose money in the stock market.  The market is ruled by rich and powerful organizations with supercomputers to examine every trading decision to ensure that they make millions every day.  If all you have going for you is emotion, you’re gonna get slaughtered in the battle.

Let me provide some scientific evidence from “Short Term Trading Strategies That Work”, a trading book I’ve read that has some sage advice.  The following statistics are from Jan 1, 1995 through Dec 31, 2007.  Over that 13 year period, the S&P went from 459.27 to 1450, a gain of over 200%!

Myth:  Buy Every Time the Market Makes a New 10 Day High, Sell When the Market Crosses Below the 10 Day MA:

How would you have done?  Would you have:

A)  Made a fortune, and now you are super rich, and fly to place to place in your own Learjet.

B)  You made good money, and can pay for your kids’ college education, have money to retire on, and have a second home in a tropical paradise.

C)  You outperformed buy and hold.

D)  You lost money, even though the market tripled in value.

Myth #1 sounds like good advice, doesn’t it?  Buy into strength!  Sell into weakness!

However, in reality, this advice would have caused you to have been wrong 58.9% of the time and you would have LOST MONEY!  Incredible!

So how can you use this information to your benefit?  Simple.  DO THE OPPOSITE.  If you bought the market when it makes 10 day lows, and sell when it makes a new 10 day high, you would have made 1048.70 S&P points while being invested only 28.81% of the time.  Plus, 73.5% of your trades would have been profitable!

Lessons to be learned here:

1)  Don’t blindly buy the breakouts even though all the headlines say the news is wonderful!

2)  As the markets are making these new highs, the odds are increasing that a short term pullback is near.  Now is not the time to be adding new positions.

3)  Buying market pullbacks is a superior strategy.  Use these statistical odds to your favor, not your gut emotions.

4)  Don’t get caught up in the hype when the markets are making new highs.  If you find yourself becoming mesmerized by the talking heads on CNBC, the headlines in the WSJ or IBD, stop and think about how you can improve your odds of success, not what the media is saying.

We here at MoveTheDecimal want you to think differently.  Maximizing the returns on our money is the bottom line.  Please use the information in this post to your maximum advantage in the future.

Best wishes,

John

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Here are the year end results for our MoveTheDecimal Timing System vs. the S&P 500 for the past 5 years:

There’s good news and bad news with these results…

First the bad news:

Very unusual and choppy market action caused our system to lose 2.2% since 11/18, while the market gained 3.5%. (Our system zigged while the market zagged and vice versa).  It was especially disappointing to see our 3X System have a negative return for the year.

We all know there is no perfect mechanical timing system, and any trend following model is going to have periods of underperformance. Although it’s very frustrating to lag the market during this period of time, I know that my system will keep me in the market during major upswings, and get me out during market crashes, which is very comforting.

Now the good news:

This makes five consecutive years of my timing system outperforming the stock market. Compounded annual growth rate of our timing system is +12.4% compared to -2.4% for the S&P 500.

We would recommend that you keep your eyes on the CAGR (Compound Annual Growth Rate) of each of our models.  If you look at the year by year results, you’ll see that they can be quite volatile.  However, the CAGR will smooth out that volatility, and provide a more accurate picture of your long term results using each of our systems.

We are now working on several improvements to our models to further enhance our performance, and avoid the whipsaws that the market occasionally provides.

Here’s to a healthy, happy, and prosperous 2012!

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If you read the headlines about how the Stock Market is doing, you know it’s been awfully rough lately.  Historically, the week of Thanksgiving has been one of the best performing weeks of the year.  However, this year, the Dow and S&P posted their worst Thanksgiving week since the Great Depression on a percentage basis.

So how did our Move The Decimal Systems do?  Very well, thank you.

Our Timing System is designed to keep you in the markets when they’re doing well, and move you to the safety of cash when the market begins to head lower.  That’s exactly what they did during this latest market downturn.

However, if you really want to grow your wealth, the best way to do that is by using either one of our 2X or 3X timing systems.  While the Stock Market fell every day last week for a total loss of 4.68%, our 2X and 3X Systems gained 9.8% and 24.9%, respectively. (Yes, those are weekly returns).

I personally use the 3X System in my 401k and Roth IRA accounts, and am absolutely amazed at how fast they’re growing.

Moral of the story:  If you find yourself complaining about how terrible your investments are doing because of the Stock Market, perhaps it’s time to change your investment strategy.  We here at Move The Decimal believe we have one of the best systems to build wealth at any price.

To your success,

John Ross

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There are many headlines out there about how bad the Stock Market is performing.  There is no doubt in my mind that the world’s financial system could be seriously put to the test in the very near future.  Once the first domino falls (Greece goes bankrupt), then the entire European financial system could buckle… or worse.

Many people don’t realize just how huge a deal that would be.  The European economy is much larger than the economy of the United States.  Unfortunately, we have a very tightly bound world economy.  There are numerous banks and huge corporations in the U.S. with balance sheets filled with European debt.  Once their debts go bad, it will rock our entire financial system as well.

So far, no one has any idea how to stop the freight train that is headed our way.  Politicians just keep kicking the can down the road, hoping to keep the catastrophe away for just a little while longer.

Meanwhile, world riots continue to increase in number and intensity, as bankrupt governments announce austerity plans.  The bitter pill is hard to swallow for the masses, but I don’t believe they haven’t even gotten a taste yet of how bad it might truly get.

Yes, this is a gloomy post.  But I’d much rather see the truth than pretend it doesn’t exist.

If you read my blogs, or have thought about using my Move The Decimal Timing System, I beg you to consider preparing yourself for what may be just around the corner.  Now is not the time to pretend that everything is going to go back to normal, and your investments will do fine in the long run.  I truly believe that many millions of people will be wiped out in the coming financial collapse. Please, don’t be a victim.  Protect yourself now, before you regret it later.

Here are the investments results of the Stock Market and our three Timing Systems during the “Worst Quarter Since The Financial Meltdown”:

S&P 500:  -14.3%

Move The Decimal Timing System:  +0.9%

Move The Decimal 2X Timing System:  +23.2%

Move The Decimal 3X Timing System:  +40.3%

To your success,

John Ross

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For the week ending Aug 5…

S&P 500:  Down 7.19%

Nasdaq:  Down 8.13%

Timing System:  No Losses

2X Timing System:  Up 14.85%

3X Timing System:  Up 35.49%

Aren’t you glad you’re a subscriber?

To your success,

John Ross

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As you know, I’m a Senior Engineer at a large Aerospace company.  The company offers a matching 401k plan through Fidelity Investments, so I fully participate up to the match.  (Never turn down free money).  So when the company offered to host a Fidelity Workshop titled:  “How To Manage Your 401k”, I thought I’d check it out to see if there was anything to glean.

Let me preface this by saying that I have absolutely nothing against Fidelity.  I realize that the Fidelity rep is there to sell mutual funds.  For Fidelity, it’s all about “assets under management”.  The more money they have under management, the more money the company makes in fees, etc.  The company rep’s job is to “toe the line”.

That being said, here’s the basic advice the Fidelity rep provided:

Diversify.  Hold about 6 – 8 mutual funds (depending on your risk tolerance) in various small cap, large cap, value and growth mutual funds, and sprinkle a little international and bond funds for good measure.  As you get closer to retirement, increase your bond holdings and decrease your stock exposure. (Duh. Ya think?)

Think long term.  Over the past 50 years, stocks have outperformed any other asset class, including bonds, gold, or real estate.

Don’t time the market.  So what if the stock market went down today.  Don’t worry about the day to day gyrations.  If you lose sleep over stock market activity, maybe stocks aren’t for you.

That’s about it.

My tongue was bleeding I was biting it so hard.

Here’s my take on the advice given:

Diversify.  Someone please explain to me why I should hold 6 – 8 mutual funds, when I can always be in the top performing fund at all times?  I perform a simple relative strength analysis (shown in a previous post)  which keeps me in the top performing fund at all times.  Why water it down with a bunch of lackluster performers?  Fail.

Think long term.  On this point, I do have to agree with the rep, to some degree.  True, stocks have beaten other asset classes over the past 50 years, but how about over the last 10 years?  I can guarantee you that since 2000, if you’ve been holding 100% stock funds, you’re portfolio value is down.  Don’t believe me?  Take a look at the chart of the S&P 500 on the home page of this website.  Does it look like it’s gone up to you?  Fail.

Don’t time the market.  Are you kidding me?  How can this Fidelity rep say this and still look at himself in the mirror?  Why would anyone want to go through another bear market like we did from 2000 – 2002 or 2007 – 2009?  Why sit back and let the market wipe out 50% of your account value?  I literally wanted to get up and scream at this nonsense!  Thank God for self control!  Big time FAIL!

I believe we are in a completely different investment environment than we were in 10 or 20 years ago.  You can no longer just “buy and hold” and expect to do well with your investments.  It takes work to make sure you don’t lose your hard earned money.  I’m utterly amazed that most people just watch thousands of dollars disappear from their retirement accounts and just accept it as part of the game.  That just doesn’t make any sense to me.

After the seminar, I felt bad for all the employees, as they shuffled away afterwards, holding their little mutual fund return sheets and wondering what they should do next.  I realize that this poor little Fidelity rep is just doing his job, and maybe he believes what he’s saying.  I’ve been in his shoes, delivering investments seminars.  I’ve also seen the brainwashing that goes on in the Financial Services industry.  It’s a racket designed to benefit the investment companies, not these poor employees!

I also realize that the vast majority of people truly don’t have a clue on how to make real money in the stock market.  They need a lot of hand holding, so these investment companies have to provide “guidance” that’s dumbed down to the most basic level.

I refuse to accept “average” returns.

Friends, you can do so much better than this, and it’s not complicated at all.  If you don’t understand technical analysis well enough to know the difference between a MACD and a Stochastics Indicator, don’t worry!  That’s what our service is for.  We take care of all the technical details, we watch the markets every day, and we simply provide you with a “Buy” or “Sell” signal.  All you have to do is act accordingly.

Look, we put our money where our mouth is.  Sure, we occasionally lose a small amount on a short term whipsaw trade.  There is no perfect system, and no one has a crystal ball.  But over the past four years, our system has blown away even our highest expectations.  We have yet to see any system anywhere that matches our performance, regardless of price.

So if you’re invited to a 401k workshop at your company, don’t expect to receive anything of real value.  It’s the same mantra that’s being pounded into the heads of sheeple through countless other seminars, magazines and TV and radio shows.

If you truly want to go above and beyond the masses, you’ll need to make a decision to do something that other people don’t do.  Actively managing your money can be one of the most liberating feelings in the world.  We truly want to make a huge difference in the lives of a small number of investors.  It’s our fervent hope that this our service will help you grow your investments to levels you never thought possible.

To your success,

John Ross

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When talking with people about investments, I’m a bit surprised at how many people aren’t sure what the differences are between a Roth IRA and a regular IRA.

For those of you who aren’t sure, let’s take a quick look at how they function.  These differences can make a big impact on your standard of living in the future.

Regular IRA

When you put money into a regular IRA, you get an immediate tax advantage.  Let’s say you put $5,000 into your IRA this year.  You can now take a $5,000 deduction on your 2011 income taxes.  That’s a good thing, right?

Well, yes.  But is it your best choice?

You have to look into the future to see what happens when you take money out of your IRA.  Let’s say you use our services here at MoveTheDecimal, and your $5,000 grows to $50,000.  To make this simple, let’s say you take the entire $50,000 out in one lump sum.  Because you got a federal (and state) tax break for investing in your IRA, you will have to pay taxes on the entire withdrawal.  If your federal tax rate is 28%, and your state tax rate is 10%, that’s 38% of your money going to taxes.  In dollar terms, that’s $19,000 you’ll have to pay in taxes.  Ouch!  All you’ll have left of your $50,000 is $31,000.

Roth IRA

Now let’s see what happens if you put your money in a Roth IRA instead of a regular IRA.  Let’s assume you put the same $5,000 into a Roth IRA.

First the bad news.  You don’t get an immediate tax deduction.  When you complete your taxes next year, you won’t be able to deduct $5,000 from your income.  That means you’ll have to shell out $1,900 more in taxes than if you had put your money in a regular IRA (assuming the same 38% federal and 10% state tax brackets) .

But let’s look into the future when you take your money out of your Roth IRA.  (Just because it’s a Roth IRA doesn’t mean it can’t be invested exactly like a regular IRA).  Again, let’s say your $5,000 grows to $50,000, and you take the entire $50,000 out in one lump sum.

Because you paid your taxes up front, there are no taxes due at withdrawal.  The entire $50,000 is yours to spend as you wish.

Which One Makes the Most Sense?

So the question is, would you rather use a Roth IRA, and pay $1,900 in taxes now, or use a regular IRA, and pay$19,000 in the future?  Seems like the Roth IRA is the logical choice.

Technically speaking, they are both exactly the same.  I’ve used an Excel spreadsheet to prove to myself that paying the taxes now vs paying them in the future is exactly the same.  In other words, if you use the Roth IRA, and pay the $1,900 now, that money could have been invested.  And if it grew at the same rate, it would grow to $19,000.  That’s the same amount you would pay in taxes had you had used a regular IRA!

So if they both work exactly the same, is there really any advantage to using one over the other?  The short answer is YES!

Here’s Why I Recommend Using the Roth IRA Instead of a Regular IRA:

First, looking back on my experience of helping retirees with their finances, one of their chief concerns is reducing taxes in retirement.  When people get to retirement age, they tend to invest more conservatively.  If they have a modest retirement account (401k, IRA, Roth IRA, etc.), they will probably have to pull money out just to pay the bills, pay for their health care, and make ends meet.  That means that if they have to pay taxes on every dollar they pull out, it hurts them even more.

So psychologically speaking, if you can feel more at ease in retirement by not having to worry about paying taxes on your withdrawals, the Roth IRA wins hands down.

Secondly, imagine that you have a fairly significant sum of money put away.  The example we often use here at MoveTheDecimal is $100,000.  If you had used our Stock Market Timing System from 2007 – 2010, your account could total over $1.2 Million.  Wouldn’t you like that account to be completely tax free?  Otherwise, Uncle Sam is going to have his hand out when you start taking money out of your account.  I’m sure he’ll thank you very much for doing such a good job of investing for him.  In essence, he’s your silent investment partner, sharing in your gains and losses.

Third, if you use a regular IRA, the government REQUIRES you to begin taking withdrawals in the year after turning 70 and a half.  Think of it this way:  because the government gave you a “tax break” up front, allowing you to deduct your contribution, they want to get their money back, with interest.  With a Roth IRA, because you paid your taxes up front, there is no requirement to take withdrawals, at any age.

Finally, and most importantly, is the issue of future tax rates.  If you are paying any attention to what is happening here in the U.S. and around the world, you are seeing governments everywhere slashing spending and raising taxes to keep themselves from going bankrupt.  If taxes go up in the future, the Roth IRA is by far the superior vehicle to use.

Prepare Yourself Now for the Future

I believe there is a very high probability that we are going to see basic services slashed, and taxes raised at the Federal, State, and local levels.  I’ve studied the history of tax rates, and know that we’ve had Federal tax rates as high as 70%.

From what I’m seeing on the news, there are more and more people unemployed, under-employed and completely given up looking for work.  The government must give them handouts for them to survive.  U.S. corporations have shipped most of our jobs overseas and shuttered our factories in order to increase their profits.  The U.S. government has done nothing to stem the tide.

There are very few jobs to be had, which means the working class is having to support more and more of the unemployed.  One in seven Americans are now on food stamps.  Illegal aliens pour into our country and demand that the government feed them, house them, and give them free health care and education for their children.  The list could go on and on.

As our country slips more and more towards a socialist state, there are millions of people who are angry at anyone who is successful and making money.  “It’s not fair!” they scream.  “Why should they have money, when there are so many other people in need!”

I predict that not only will taxes go dramatically higher in the future, but also that the APPEARANCE of having wealth will draw criticism from future society.  Having money in the bank and being self sufficient will not only be socially taboo, but could one day become dangerous, as angry, hungry, unemployed mobs look to take their frustrations out on people who appear to be “wealthy”.  “Take from the rich and give to the poor” will become the norm, even if it means using physical force to do so.

If taxes do go dramatically higher in the future, as I predict, there is no question that the Roth IRA is the logical choice over a regular IRA.  Pay your taxes now at these historically low rates.  You’ll want to avoid the massive tax rates we’re likely to see in the future.

To your success,

John Ross

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High paid professionals

What profession makes a lot of money per hour?  Doctors?  Lawyers?  Dentists?

Without a doubt, these professionals can make hundreds of dollars an hour.

I’m going to show you how you can make 10 times as much money as even the highest paid professional.  And the work you’ll be doing is going to be some of the easiest work you’ll ever do.  As a matter of fact, it will only involve sitting at your computer, making a few keystrokes and a few clicks of your mouse.

This is going to take a little bit of math, so stay with me on this…

The Average Investment Account

National statistics say that the average balance in U.S. retirement accounts in 2007 was approximately $60,000 for people ages 45-54.  But let’s be conservative and say you only have $50,000 in your account.

Let’s also assume that you are a wise investor, and you follow the investment advice of the sages and put your money in the lowest cost stock market index fund you can find, such as the Vanguard S&P 500 Stock Market Index Fund.  This assures that your annual expenses in the fund are minimized (only 0.19% annualized).  You also elect to ignore the ups and downs of the stock market, viewing your investments on a long term horizon.

If you had $50,000 in your account on Jan. 1, 2007, it would be worth approximately $44,350 by the end of 2010.

However, if you had used the Stock Market Timing System employed here at MoveTheDecimal.com, your $50,000 account value would be worth $86,550!

That’s a $42,200 difference!

This Doesn’t Happen Automatically, It Takes Work on Your Part

Now, over that four year period, it would have taken some work on your part.  You would have had to get on your computer, log in to your investment account, and place the order to sell your shares in one fund, and purchase shares in another fund.

Whew!  Grueling, I know!  You can wipe the sweat from your brow and relax now.

That probably would have taken you about 15 minutes, maximum.  But again, let’s be conservative and say it took you twice as long – half an hour.

Now let’s multiply that half an hour by the number of times in that four year period you had to work.  There was a total of 20 times from 2007 – 2010 that you would have had to log into your account and perform your trades.  At half an hour a pop, that’s a total of 10 hours of your time in that four year period that you would have had to perform your work.

Since you made a $42,200 difference in your account, and it took you 10 hours of your hard work to make that difference, dividing $42,200 by 10 hours equals $4,220 per hour for your time.

Congratulations, you just made over $4,000 an hour!

Keep in mind, we’re being conservative here.  If we had used the national average investment balance of $60,000, and the realistic time of 15 minutes to make your trades on line, your hourly rate would more than double.

Also keep in mind that this hourly rate is based on using our most conservative Stock Market Timing Model that simply goes to a cash position (we use a zero interest rate for our calculations, your actual return will be higher) when our Timing Model says to get out of the Stock Market.  Had you used either one of our leveraged 2X or 3X Timing Systems, your hourly rate is in the five figures, easily.

Was All Your Hard Work Worth It?

I certainly hope you can see that you can easily make a huge difference in your investment accounts by using a proven system like the one here at MoveTheDecimal.com to get you in and out of the stock market at the right times.

I don’t know about you, but I don’t have time to just accept whatever the stock market gives me.  I need a structured, proven system to keep me on track with my investment goals.

How about you?

To your success,

John Ross

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When I’m out in public, and I meet someone new, the subject eventually comes up that I created the Stock Market Timing System here at MoveTheDecimal.com.  Invariably, they will tell me what stocks or mutual funds they bought.  My question to them is “What’s your exit strategy”?

Most of the time the answer is either “I don’t really have one”, or “What do you mean by exit strategy?”

Unless you plan to hold your stock forever – through bull markets and bear markets – you should always think about what might cause you to sell it.  Perhaps it’s a sudden need for cash, or you want to cash out your investment for retirement purposes.

But more often than not, most people will sell when they see their investment go down in price much further than they thought possible.  This type of panic selling is exactly the opposite of what we’re all about here at MoveTheDecimal.com.

The Selling Decision is More Difficult Than Buying Decision

It seems that people are much more willing to talk about the purchase of their stocks, than the sale of their stocks.  Sure, it’s easy to say you bought XYZ stock last year when it was $50, and now it’s gone up to $100, but so what?  What’s going to happen to your investment when the stock market crushes it, and it falls to $15?  Will you sell?  Or will you hold on, hoping for it to evenutally get back to where you bought it?

The Psychological Investment Factor In All of Us

There are a lot of people where I work that hold shares of the company stock.  Some of them bought their shares decades ago when the share price was $20 or more.  Now the stock price fluctuates between $2 and $9, and none of them want to sell.  They just want to hold on and wait for it to come back up to their buy price.

My advice to them: Sell your shares.  Take the proceeds from the sale and do something positive with it.  If they don’t, they could wait another 10 years and still not see their share price get back to where they bought it.

These people didn’t have a sell strategy with their stock purchase.  They just hoped the stock price would go up.  When that didn’t happen, they just sat on their money for years, earning nothing.  Doesn’t that seem foolish?

Whether you use a “Stop Loss”, a particular price target, or some other method, I highly advise you to think about your particular sell strategy.  If you don’t, you could end up losing many years, and a lot of wealth.

To Your Success,

John Ross

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As we put the month of April in the history books, let’s take a look back and see how we did:

Monthly Returns:

DJIA   +4.0%

S&P 500:    +2.8%

NASDAQ:    +3.3%

MoveTheDecimal Timing System:    +2.8%

MoveTheDecimal 2X System:    +5.7%

MoveTheDecimal 3X System:    +7.5%

MoveTheDecimal Quattro X System:    +59.5%

Technical Review

Taking a look at the S&P 500, we can see from the chart below that the market seems to be ignoring the massive financial problems that the U.S., Japan, Europe, and even China are now having with their budget disasters.

Most sane investors who understand the scope of this disaster are simply finding hard to believe that the Stock Market can continue to move higher despite the insane monetary policies at the Federal Reserve.

It’s my opinion that the Obama administration and the Fed are working in concert to keep pumping billions of dollars into the economy to try to get the economy charging forward, but with very little to show for it.  They’ve painted themselves into a corner, and soon we will begin to see a hyper- inflation scenario that will make paupers of the vast majority of middle class citizens.

Basic commodities, precious metals, food and fuel are beginning to skyrocket in price.  Your dollar is becoming more and more worthless every day, which is exactly what the Fed has specifically hoped for.  They want you to go out and spend your money, otherwise tomorrow it’s going to cost you a whole lot more for the same goods and services.

Again, it’s my opinion, but one of the main reasons the Stock Market keeps heading higher is that it’s taking more and more worthless dollars to buy shares of stock.  The Dow closed the month at 12,810.54, but inflation adjusted, it’s not even close to being at a record high.

The only way I know how to keep up with this insane financial world is to make as much money as I possibly can NOW in order to not get left in the dust.  I hope you’ll join me.

To your success,

John Ross

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