The ETF Timing investing strategies are a combination of “seasonal”, technical, and other market timing strategies, which, over time, have proven to significantly outperform a “buy and hold” investing approach. The strategies were originally developed as part of my effort to improve my returns in my Federal Thrift Savings Plan (TSP) account. I was so impressed with the results that I decided to share them, and I made the strategies available starting in July 2016 at http://www.tsptiming.com. I soon realized that the strategies would also work just as well (and potentially even better since the TSP does not include the ability to short stocks during bear markets) in investment accounts external to the TSP, thus this sister website was born in December 2016 to offer the strategies to all investors.
You’ve probably heard of the “Sell in May and go away” axiom. ETF Timing takes that strategy and adds numerous enhancements. Over the period of 2004-2017, these strategies have resulted in an astounding compound annual return of well over 20% per year! As with any system, past performance does not guarantee future returns, but for 14 years and counting, these strategies continue to do well year after year. See the Performance tab for details.
In fact, from 2004-17, the ETF Timing “Enhanced” strategy using Vanguard ETFs:
- Had an incredible compound annual return (CAR) of 20.77%;
- Beat the S&P 500 13 straight years from 2004-16; and,
- Never had a negative return, even during the 2008-09 bear market!
How does this compare to your own results? And how was this possible?
This is not a “hocus pocus” or “black box” investment strategy; it is very real. I’ve compiled numerous sources of information, and spent several thousand hours analyzing and implementing it. Through trial and error and endless hours of experimenting and back-testing I’ve developed these strategies that are both simple and very sensible. Over time, these strategies not only consistently beat the investing returns you and I would get through simple buy-and-hold strategies, but they also consistently blow away the returns of most money managers and even the best Wall Street pros. The performance data speaks for itself, take a look, it works. Perhaps you may choose to just try out one of the strategies with a portion of your portfolio, or maybe you will just track it on the spreadsheet. If you do, I’m confident that within a few years you’ll be convinced that it works better than any method you’ve tried before, and you’ll use these strategies with a significant portion of your investment portfolios. By following these strategies you will no longer be led astray by listening to friends, family, or online gurus that keep their subscription revenues flowing with warnings of an imminent market collapse, or just your own gut which more often than not is wrong and just reacting to fear.
The ETF Timing system consists of three strategies:
Basic Strategy – The Basic strategy simply uses the past monthly performance data of the TSP funds which it mimics using ETFs, and selects the fund which has historically performed the best in each calendar month. So the Basic strategy could also be called the “Monthly” seasonal strategy. These seasonal tendencies tend to repeat year after year; not every year, but the key is more than half the time. A total of only ten trades (selling one ETF and purchasing another, so there are twenty transactions) are made each calendar year with this strategy, and always on the last trading day of a month. From 2004-17 this strategy returned a whopping 14.34% per year using four Vanguard ETFs, as compared to 8.63% for the S&P 500 ETF IVV. Many purchasers of ETF Timing will choose this strategy, and if you had used it in recent years you would smiling and planning an earlier retirement.
Enhanced Strategy – The Enhanced strategy improves on the basic strategy in a number of ways.
First, instead of blindly making trades on the last day of the month it uses historical daily data to determine more precisely when to make each move. Second, and this is the hard part to comprehend, the strategy utilizes phases of the moon for timing trades during portions of the year (primarily during the slower trading summer months when the lunar forces seem to have an impact on the mass psychology of the markets). The end result is astounding. You may not believe that there could be a correlation between the moon and the markets (see the reading material page if you want to explore this and other topics), it’s certainly hard for my engineering mind to comprehend, but these enhancements improved the CAR from 14.34% for the Basic strategy, to a whopping 20.77% for the Enhanced strategy from 2004-17 using Vanguard ETFs.
Bull/Bear Strategy – Wouldn’t it be nice to avoid the huge downdrafts in your account during bear markets? That’s the holy grail that many investment pro’s seek. It’s the reason so many investors shell out huge amounts of money for subscriptions to investment gurus, or simply give up adn hand over their accounts to “professionals”, all in an attempt to avoid or at least cushion painful losses during bear markets. The Bull/Bear strategy seeks to do just that, avoid significant losses, and using a combination of a simple set of publicly available data (the monthly unemployment rate) to exit the “Enhanced” strategy, and then using a simple monthly charting method of the S&P 500 index to re-enter the “Enhanced Strategy”, this strategy was able to avoid most (over 38% in 2001-02 and over 43% in 2008) of the losses of both the 2000-03 and 2007-09 bear markets. The next recession and bear market will be an important test to see if this system continues to perform well, and as of now the system is still on a “stay invested” signal despite the markets gyrations and constant stream of gloomy news.
What the ETF version of the timing strategies can do that the TSP version can’t do is that you are free to “short” the stock market during bear markets. Using this strategy, and using a conservative approach of using the inverse S&P 500 ETF “SH” while the system was on a bear market signal during 2008, the Bull/Bear system has produced the best returns of any of the systems since 2004. This strategy may not be for everyone, “shorting” the market introduces significant risk to your portfolio, but over the period of 2004-17 the Bull/Bear strategy produced a ridiculous CAR of 26.79% (using commission-free ETFs available from Charles Schwab as an example), and the gap between this strategy and the Enhanced strategy will likely grow if it is successful in timing the next bear market.
Here’s a link to third-party tracking of the performance and IFTs of the TSP Bull/Bear Strategy at TimerTrac.com (since 7/25/16):
So how do you use the ETF Timing products? Easy, just review the materials you will receive with your purchase (see “Products” page), then decide which of the strategies you’d like to follow (or you can even modify them to your own liking such as by removing the lunar component), then use the provided future trade dates to make your moves for the next 5+ years (the current files contain IFTs all the way through the year 2023). All you have to do is remember to enter the trades on the dates shown by the strategy you use. These strategies were designed to work around the TSP limitations that only allow two trades per month, and having to decide whether or not to make a transfer by the TSPs silly noon Eastern time deadline. That’s not an issue with the ETF strategies since there are no limits on frequency of trading, however my back-testing of adding more trades into the strategies proved to diminish returns. The range of about 16 trades/year seems to be the sweet spot to maximize returns, and minimize stress.
If you have a non-retirement brokerage account portfolio, or either an IRA or 401K retirement account that allows trading of ETFs including those available from TD Ameritrade such iShares and Vanguard, or through Charles Schwab if that is your broker, then ETF Timing is for you. You can be at any stage of your career, just starting out, mid-career, or retired, (if you are civilian or military please go to TSPTiming.com, and note that the TSP Timing materials along with the ETF Timing materials will answer your question of whether or not you should roll over your TSP to an IRA when you retire), it doesn’t matter….you may be a minimum wage employee just starting out with minimal retirement savings, or a company executive looking to diversify your investments, it doesn’t matter. These strategies are for anyone who wants to improve their returns and reduce stress.