Our Philosophy
We are under no illusion that we have any predictive capabilities on the market. We prefer to deal each day with probabilities and odds. The market is dynamic in nature, and it is our business to extract money from it, regardless of whether we are in a negative or positive environment. The paragraphs below highlight the concept of our investment strategy.

Direction & Level: Direction to us means that the market is getting better or worse. And levels are related to the amount of risk we are willing to take at any point in time when we have money invested in the market.

Probabilities & Odds: We are very much focused on odds and probabilities. Rather than refer to buy and sell signals, we prefer to consider the odds and probabilities that are in our favour. These are generally related to the investment environment - extracting money out of positive and negative environments. Our system concentrates on defining these environments.

Approach: More important than all the other elements of our investment system, our approach is simple. We do not use complex algorithms, elliott waves, neural networks nor continuously re-optimize our models. Sophisticated timing systems that have a perfect back test of catching the tops and bottoms seldom work in real time. We keep it simple and therefore effective.

Advantage: As an individual you have a great advantage. In general, you will have smaller amounts of money to invest and can be more agile than most financial services and institutions. They have restrictions placed on them - they cannot overtrade, and require adhering to a number of rules. It is a little bit easier to move around thousands of dollars, than it is to move around millions of dollars.

Discipline: Why do all the research and all the hard work ... if we do not believe in it, and do not put it into practice? The objective, we believe and critical to your specific need, is discipline. One has to follow the rules... as we do in our own real-trading portfolio.

Flexibility & Risk: Besides adhering to the rules, we also need to be flexible. Things change, unforeseen events can take place. To us, flexible also means dynamic. At times, you can make easy money, and at other times you better be careful and play with lesser amounts of money.
We always consider risk. Risk to us is determined by a number of things. We believe interest rates are the causal part of the market. It is not the interest rate that is important, but the direction of it. The direction of interest rates causes the market to react the way it does. We also really like advancing and declining issues. We look at new highs, new lows, direction, divergence and lastly, we look at prices, but consider these the least important in our market timing.

Markets: We believe that one of the most important variables is relative strength. To put this into context: we feel there are two separate markets out there - small stocks and large stocks. We are very firm in our belief in this. Relative strength - OTC vs. NYSE. We want to know when small stocks are in the lead, since a lot more money can be made with them.
We take our signals off the dominant index, and have found that there are about three to four switches a year (between small stocks and large stocks), so we flip back and forth.

Environment: There are two environments out there: great environments, where one can make easy money, and poor environments, when you should better be quick and agile. If the NASDAQ is dominant, we use NASDAQ data and rules. If the NYSE is dominant, we use the NYSE data and rules.

Allocation: Last, money allocation - since not all buy signals are created equal. We have clear rules on money management and committing equity to your portfolios.

Ranking: We use ranking systems to select funds with the highest potential and acceptable risk profile. We know what is at the top of the list, so to speak.

In general we have found, that on the New York Composite, if you are in the market roughly 50 percent of the time, you can capture about 66 percent of that market. On the Nasdaq, however, in 52 percent of the time that you are in the market, you can capture 95.5 percent of it. This does not include the 50 percent of the time that you are invested in the safety of a money market fund or have chosen a more aggressive approach by taking short positions..
Would you then not agree, that timing of the market makes sense? It is entirely related to odds and probabilities. Are we in a bear market or bull market? We do not know. We just prefer the odds and probabilities to be on our side.

Buy and sell rules are important, but when the Nasdaq is dominant, there is less risk and there are more possibilities to make a profit. The Nasdaq however, is more volatile, but if you lack timing you can also lose a lot of money.



Market Timing
The benefit of Market Timing is that it offers a fundamental technique that can add enormous value to investment portfolios over long periods of time.

Most successful investors use a mechanical trading system. This is no coincidence. A good mechanical trading system automates the entire process of trading.

The system provides answers for each of the decisions an investor must make while trading. The system makes it easier for the investor to trade consistently because there are a set of rules which specifically define what should be done. The mechanics of trading is not left up to the judgment of the investor.

If you know that a system makes money over the long run it is easier to take the signals and trade according to the system during periods of losses. If you are relying on your own judgment during trading you may find that you are fearful just when you should be bold and courageous when you should be cautious.

If you use a mechanical trading system that works, and you follow it rigorously your trading will be consistent, despite the inner emotional struggles that might come from a long series of losses, or a large profit.

The confidence, consistency, and discipline that a thoroughly tested system affords is the key to many of the most profitable traders success. .

FundSpectrum uses a robust model that has been developed over the last 6 years through intense research and analysis. Our model is particularly effective in timing the Nasdaq Composite and Russell 2000 (small cap stocks) over various time frames and market conditions. It provides an excellent way for investors to buy and sell small cap and technology funds or stocks.



Investment Selection & Management
Our investments are focussed on mutual funds, ETF's and ishares, but do not exclude individual stocks. We use dynamic ranking systems and methods to help our subscribers not only make optimum selections, but also manage their portfolios in order to reduce risk and enhance returns.

The selection and management process can be summarised in the next four steps:

1. Invest only when you have an "advantage". We define advantage as a positive expectancy for profit. This advantage is initiated when our Timing Signal issues a buy signal.
2. Invest only in the best. We use dynamic ranking systems to allow investment in mutual-, index- funds and ETF's that outperform the market. We measure performance, not only by return, but also by momentum, relative strength, risk and volatility. Past achievements and sentiment have no influence on the selection decisions.
3. Trade-up to a superior fund when needed. There are no funds that go up forever. As a fund starts to weaken or move sideways, it can be replaced by a fund with increasing price momentum based on our selection system.
4. Sell when risk is excessive. Most people have a "buy" strategy, but very few have exact "sell" parameters. Our investment model warns us of imminent market risk, avoiding serious losses in your trading strategies.


Depending on your frame of reference it is expected that one or two strategies will meet your investment objectives. Historical results are listed in our performance section.