Good Timing Peter Mauthe Spectrum Financial Inc. May 15, 2004.

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Presentation transcript:

Good Timing Peter Mauthe Spectrum Financial Inc. May 15, 2004

OBJECTIVE IS to Make Money!

OBJECTIVE is NOT to be right

APPROACH: Find or make price streams that are smooth and offer superior performance.

Baskets Pros: enhanced betas, enhanced performance, trade all day, unique price stream, smooth price stream, can easily target market hot spots Cons: trade all day, transaction costs need to be managed, slippage needs to be managed, trading and tracking of baskets

Biotech Holders vs. Equal Weighted Basket Basket equals or betters the performance of the Holders

Industrials vs. Equal Weighted Dow Basket Basket equals or betters the performance of the Holders

IBD 100 Basket vs. NASDAQ Composite Basket far outperforms the NASDAQ Composite

Lowry's Power Bank basket vs. NASDAQ Composite. (vs. BKX which was %)

Lowry's Power Oil basket vs. NASDAQ Composite. (vs. OIH which was %)

Lowry's Power REIT basket vs. NASDAQ Composite. (vs. IYR Real Estate ETF which was %)

Top small cap growth fund picks vs. Rydex Mekros (1.5x enhanced beta) Mekros outperforms the average of our favorite small cap growth funds FOCUS ON STYLE SECTOR RATHER THAN SPECIFIC FUNDS

CRUSH basket 1/14/03 – 3/11/03 vs. NASDAQ Composite Those that go down the most in a correction tend to go up the most in the following rally.

CRUSH Basket 7/14/03 – 8/8/03 vs. NASDAQ Composite Those that go down the most in a correction tend to go up the most in the following rally.

Lowry's “Power” REIT basket vs. NASDAQ Composite. (vs. IYR Real Estate ETF which was %)

Position Sizing Dollar loss stops Percent loss stops % of Capital stops – dependent on where trade stop is. Dynamic stops to keep positions from getting too large.

Trading by Exposure

Profile Forecasting

Behavioral Finance More errors are made when a trader has a forecast. Objectivity is compromised since subconsciously the trader tends to interpret indicators to fit the forecast.

Good News / Bad News Discount Model

Trend line anchoring

Discretionary vs. Systematic Discretionary: + Performance - Repeatability Systematic: + Repeatability - Performance

Moving average / New High Strategy

PIMCO High Yield Institutional