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Kaiser Permanente
401(k) Fund Rotation Strategy
Retirement Savings Plan
Improvement
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Returns |
Safety |
Simplicity |
Control |
Examples |
Why
Taking Control Urgently Matters
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Diversify and Rebalance? Why
Be Average?
The financial industry has hypnotized us
into believing diversification and
rebalancing is the only worthy investment
strategy. But diversification inherently
means owning a little bit of everything —
which is the formula for achieving precisely
average performance! Rebalancing further ensures
we
won't stray far from average. No other industry
proclaims average performance is the best
you can achieve. Fortunately, it's not true
here either.
Change the Game!
To achieve a different result
requires a different approach. Price momentum has long been proven
the best predictor of future returns. Simply
by owning momentum leaders and avoiding
momentum laggards one can simultaneously
improve returns and reduce risk of loss. No
diversification compromise! SectorSurfer
further maximizes performance utilizing
digital signal processing theory and
automated strategy tuning.
An Extra 10%
Really Matters
Before Retirement:
The
Nest
Egg Value chart
illustrates how an additional 10% annual
return compounds over 15 years to produce a
nest egg four times the value it would have
otherwise had. The earlier you start, the
greater the multiple. It really matters!
After
Retirement: The Nest Egg Annual Income
chart illustrates how portfolio return
affects the inflation-adjusted annual income
you can take, assuming a $100k
nest egg, 2.5% inflation, and 30 years of
retirement to fund. In the illustrated
example, investing in the S&P 500 would
likely allow an income of $14,000/yr.
However, earning an extra 10% increases it to
$36,000/year. Again, it really matters!
Additional Resources
• The Economist:
Momentum in Financial Markets.
A compilation of industry studies and
expert opinions.
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What is True Sector Rotation?
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The Trend is Your Friend
Trends and fads are an inherent part of
human character. It takes time for
information to spread, to be understood, and
to be acted on. This creates momentum.
Price
momentum is found in all capital
markets, including stocks, bonds,
treasuries, and currencies. By its very definition,
"trend" means that information from the recent
past tells you something about the near future.
SectorSurfer's trend analysis algorithms use modern digital
signal processing theory to optimally
extract trend signals from noisy market
data.
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True Sector Rotation
The
market cycle is tied to the economic cycle.
Each market sector performs best during a
portion of the economic cycle. If you think
of each market sector as a piston in your
investment engine, the smoothest, most
powerful ride will be achieved when each of
the major market sectors is represented in
your portfolio ... but only while each is
delivering its power stroke.
By owning only the top trend
leaders and avoiding trend laggards one can
simultaneously improve returns and reduce
risk of loss.
That's True Sector Rotation!
Diversify and Rebalance?
Diversification inherently yields
precisely average performance. Master investor Warren Buffet
instructs us:
"Wide diversification is only
required when investors do not understand
what they are doing.
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Additional Resources
• Short video demo on
how True Sector Rotation
produces higher returns.
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Sector Rotation Theory Page
provides theory summary and technical
explanations.
• The Economist:
Momentum in Financial Markets.
A
must read for momentum doubters.
• Jegadeesh & Titman
Profitability of Momentum Strategies.
Academic momentum paper.
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Instructive Video |
How
StormGuard Reduces Risk
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Risk is About Losing Money!
The definition of risk depends on who you ask. The financial industry
uses
the coefficient
of variation (CV) to measure risk, which tells you how
wiggly the line on the chart is, but not the
probability of losing real money. Treating
both up and down-moves equally as risk is an
unfortunate consequence. Only down-moves
contribute to real loss. SectorSurfer's risk
measure is the
probability of
a 15% loss
in a year.
StormGuard
Measures Market Health
Not only do SectorSurfer's trend-following
algorithms inherently steer around and avoid
poorly performing funds, but its StormGuard
Indicator monitors overall market health
and advises a move to the safety of a money
market fund when market storms approach. The StormGuard Indicator is
calculated daily from a basket of broad
market indicators.
Optimized for Minimum Probability of Loss
The StormGuard Indicator optimally tunes
itself for the minimum probability of loss
according to the character of the
constituent funds/stocks of each
SectorSurfer Strategy by balancing the
probability of whipsaw loss from reacting
too quickly
to market dips against the
probability of loss from reacting too slowly
to major downturns.
Diversify and Rebalance?
Warren Buffet instructs:
"Risk can be
greatly reduced by concentrating on only a
few holdings."
SectorSurfer practices
serial diversification
by owning many very different things,
just one at a time.
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Additional Resources
• Short video demo about how SectorSurfer
makes lower risk possible.
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StormGuard Technical Details in the
SectorSurfer Online User Manual.
•
Sector Rotation Theory Page
provides theory summary and technical
explanations.
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Instructive Video |
Additional
Resources
• Short video demo showing how to select or custom build
Strategies.
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SectorSurfer Online User Manual details all
the features and functions.
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Subscription Plans range from Free to just a monthly
pittance for Premium Strategies.
• Our will help you
quickly create an account to get you SectorSurfing.
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Instructive Video |
SectorSurfer's Algorithm
Validation
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Overview
SectorSurfer's validation is confirmed
by the
validation of each principle detailed in the
paragraphs below.
Trend Signals Exist in Market Data
In his 1996 book
Chaos and Order in the Capital Markets,
Edgar Peters applied the Hurst Range/Scale
analysis method to data from all capital
markets, including stocks, bonds,
commodities, and treasuries. He found that they
all have a significant short-term trend component that
dissipates after numerous months.
• See Hurst Exponent Reveals Trends on
the Sector Rotation Theory Page for further
technical information.
Momentum Strategies Really Work
When you can get the media, industry, and
academia to agree that something is real and
works, then you know you really have
something. These three momentum trading
articles do just that:
• The Economist:
Momentum in Financial Markets. A survey
of strategy results and expert commentary.
• Columbine Capital
Price Momentum - a Twenty Year Research Effort. Industry momentum white paper.
• Jegadeesh & Titman
Profitability of Momentum Strategies.
A fundamental academic momentum paper.
SectorSurfer's Performance is
Trend Based
How can we tell that the trend signal we
extract from the noisy market data really
does drive SectorSurfer's performance? The
Hurst exponent measures the quality of the
trend signal and has a month-end bump in its
character. This bump is a fingerprint
likewise found in the character of
SectorSurfer Strategy performance.
• See SectorSurfer's
Trend Fingerprint on the Sector Rotation Theory Page for
further technical information.
Trend Signals Exhibit
Stationarity
Stationarity refers to the character of a
random process remaining the same, such as
the distribution in heights of men, shoe
sizes for women, or trend lengths in market
data. Stationarity enables one to
confidently manufacture shoes of various
sizes even though the shoe size of the next
customer is unknown. Backtesting provides
assessment of market character. Stationarity
in market character enables strategy design
to learn from the past in order to improve
one's batting average for future investment
choices.
• See Trend
Signal Stationarity on the Sector Rotation Theory Page for
further technical information.
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SectorSurfer's
Improved
Technology
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Background
"Diversify and Rebalance" was born with MPT (Modern
Portfolio Theory) in 1950 when we had
rotary dial telephones. Today the telecom
industry has wireless digital cell phones
with touch screens, video cameras, voice
dialing, and GPS maps.
But,
the financial industry is still selling us 1950s
diversify and rebalance?
Extracting the Trend Signal is Everything
If the EMH (efficient
market hypothesis) were true, the future
would be random and the
Hurst exponent of market data would be
exactly 0.5, but it's not, because market data
contains significant trends. A trend
means that information from the recent past
tells you something about the near future.
There is nothing more important than to
apply the best signal processing
technology available to extract the trend
signal from noisy market data to improve one's
investment batting average. (Here's why, MPT is blind to trends.)
Differential Signal Processing
One of the most fundamental methods for improving the
signal-to-noise
ratio in data communications is
to eliminate common mode noise via
differential signal processing. That's why it's built into
Ethernet and USB.
Most charting and analysis software
evaluates ticker symbols independently,
which taints the analysis with common mode
market noise resulting in excess whipsaw
losses reacting to noise unrelated to its
own relative performance. SectorSurfer's
simultaneous
differential analysis eliminates common mode noise.
Matched Filter Theory
Matched filter theory provides the basis by which
trend signals can be optimally extracted
from noisy market data. The well-known academic paper
Profitability of Momentum Strategies, by Jegadeesh & Titman
used a simple equally weighted SMA (Simple
Moving Average) of length 6 months as its
trend measure. However, neither the SMA nor 6 months are near optimum
compared to the Matched Filter Theory solution. Simply put:
better trend analysis produce better results. See this
summary comparison and the Strategy Hall of Fame.
Automated Strategy Optimization
Investors familiar with technical chart
indicators know how tedious it is to
determine which indicators and what
parameters to use. SectorSurfer completely
automates this process for you. Better
results, less time!
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Welcome!
Market momentum has
long been proven to be the best predictor of future
price movements. SectorSurfer is an automated investment
advice tool for self-directed retirement plan accounts. Its high performance sector rotation
algorithms keep you in the best funds during bull
markets and its StormGuard algorithms move you to the
safety of a money market fund during bear markets.
SectorSurfer evaluates each
Strategy daily and sends 2 to 5 Trade Alert emails
per year when a trade is required. If you prefer having
personal professional advice, please contact one of our
listed
SectorSurfing Professional Financial Advisors.
SectorSurfer Strategy Performance
The performance of SectorSurfer's trend-following asset
class rotation algorithms, as applied to
Kaiser Permanente 401(k) funds,
is depicted in the chart below. Simply by determining which of
the funds has leadership and owning only that fund for
the next month SectorSurfer achieves the performance
depicted by the yellow line on the chart. To better
understand how SectorSurfer works, be sure to click each
slide above (or its
text title below each
thumbnail) to review the topic's summary information.
The chart below has numerous mouse-over hot spots that
provide a brief popup text description of the chart
object, and many chart objects can be clicked to link to
a more complete description. For a
more theoretical discussion, please review the
Sector Rotation Theory page.
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To add this to your My Strategies list,
click the icon to open the Select-a-Strategy popup window
and select
401k - Kaiser Permanente from
the list.
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Kaiser Permanente 401(k) Plan
Funds
The funds included in the chart above are investment options
available for use
within the Kaiser Permanente 401(k) Plan according to the most recent information
we have. However, from time-to-time it is not uncommon
for a plan's custodian to change one or more of the plan
investment options available to participants. Pease diligently check the plan's fund list
currently provided to you by your plan custodian against the funds
included in any version of this Strategy that you may use.
SectorSurfer Strategies are fully customizable. You are not limited
to using only the combination of funds included in the above
Strategy, but may add or subtract funds to customize
it as you please. If you find that the selection of funds in this
Strategy is outdated and you have an update to share, or if you have a measurably
better Kaiser Permanente 401k Strategy you would like to share, please contact us
via our
Plan Update page.
Retired? Employed Elsewhere? Over 591/2?
Upgrade
your 401(k) to an IRA to Unleash SectorSurfer's
True Sector Rotation
Potential!
You can escape from the paltry performance of your 401(k)'s over-diversified funds by rolling them over into an IRA account
where you'll have access to a wide variety of country and
sector
funds
that will unleash the full performance potential of SectorSurfer's True Sector Rotation algorithms.
Good returns are required to reduce "retirement risk," which is
the risk at age 65 that your savings aren't sufficient and you
may have to work longer or reduce your standard of living. While
traditional diversification addresses the relatively short
term investment risk, its paltry returns can lead to longer term
retirement risk problems. Don't win a battle
but lose the war.
Learn Here
how to convert your 401(k) to an IRA. Then check out the
many excellent Safety
Strategies on our Hall of Fame page.
We Believe:
• High performance investment
software should be for everyone — not just big Wall Street
firms.
• Diversification is not a justifiable reason to own poorly
performing funds — they hurt your portfolio.
• Great investment advice isn't a fund sorting tool — it's
automatically selecting this month's best fund.
How to Become a SectorSurfer
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How We Work
• Analyze each of your
strategies every day.
• Send a trade alert if
action is required.
• Keep you invested in
only the best funds.
• Reduce your risk of
loss in the market.
• Our complex signal
processing algorithms
identify real trends in
noisy market data.
• Steering around the
potholes and sitting
out market storms
improves both risk
and return measures.
• Dedicated computers
automate everything.
• We don't touch your
investment accounts.
You make the trades.
• We don't touch your
credit card. Amazon
Payments processes all
subscriptions.
• We don't provide
financial advice that
is specific for your
personal situation.
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We'll do the Hard Work ...
... While You go Have a Life!
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Resources
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Validation
•
Technology
•
AAII Seminar
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Specific
Quick-Start Instructions
Follow these steps to quickly set up your SectorSurfer account to use this
Strategy ...
(click to read more)
1.
Click the Signup Wizard
button on the right to create your account. It costs
nothing to open an account and experiment with custom strategies or
make use our totally Free Strategies. See
Member Plans Page for
details about Free and Premium Memberships.
a) On the
Create an Account
screen specify your username, password, full name, and email address.
Then click
b)
Next is the
Account Information
Screen. Complete the below steps and then click
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Section A: Optionally add a backup email address or
cell text number for your Trade Alerts. Click the
button.
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Section A: Optionally enter your Referrer's name to
give them credit. Review the Referral-Name you'll give others.
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Section B: Review the subscription options and click checkbox
to acknowledge having read it. -
Section C: Optionally order a subscription
(required to receive Trade Alerts for this Strategy). Acknowledge
the checkbox.
c) Next is the Application
Settings Screen to determine how you would like your
Trade Alerts handled and then click
You're
Now Are a SectorSurfer!
2.
The My
Strategies Page
will automatically be your next destination. This is your definition list of
personal Strategies.
a)
Please watch the short video demo.
It
will save you time and frustration. Click its icon in the
upper left of the page.
b)
Note the other
help resources in the
upper left and bottom of the page.
c)
Experiment with
the Example Strategies
provided. Mouse-over the icons and ticker symbols. Click things to see what they do.
d) To import the above
Strategy into your My Strategies execute the following steps:
- Click the
icon
in the 2nd row to get the
Select a Strategy popup screen.
- Scroll down until you see the Strategy
name matching the above Strategy, then click its line to highlight it.
- Then click the
button near the bottom to import this Strategy into your personal
list.
Now You're Really SectorSurfing!
Note: SumGrowth
Strategies, LLC and its SectorSurfer product are not associated with
or sponsored by Kaiser Permanente or the Kaiser Permanente 401(k) Plan. SumGrowth Strategies
is a privately
held company with a mission to help individuals improve their retirement
plan prospects by providing state-of-the-art automated investment
portfolio analysis and advice.
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