iEF and sETF rankings update, 12/22/2009

Rankings of Average Momentum Index(AMI) for iETF and sETF have been posted at :http://yechen.pan.googlepages.com/

Trading signal occurs in sETF model portfolio: Sell IEZ, Buy ICF.

Starting from Jan. 1, 2010, I will not update iETF and sETF ranking tables on Tuesday. I will update them over the weekends, together with the other ranking tables.

Readers are interested in knowing the performance of my portfolio for the past 2 years using the ranking system. I have posted my fund rankings for more than 5 years. During this period, we have experienced bull market as well as bear (extremely bear) market, especially for the past 2 years with economy gradually recovered from the the collapse of financial sector. In October 2007, the S&P 500 index reached the high of 1567 after years of steady advance from the 1211 at the end of 2004. However, all good things eventually will come to an end. The market subsequently headed downward and the S&P 500 index closed 2007 with 7 points below where it started that year. The stock markets struggled to hang on their gains for most of the 2008 but the finalcial tsunami finally hit the street. In September 2008, financial institutes were in shamble, and the investment capital were frozen. The economy were in the brink of collapse and the stock market went down 25% in a week. Panics set in and the S&P 500 index lost 34% in 2008 and continued the slide in 2009. The market finally hit the bottom in March 2009 as economy started its fragile recovery. From the high of 1567 to the bottom of 683, the S&P 500 index lost 56% during this bear market. Since March 2009, the market has recovered quite strongly, even stronger than the economy recovery. The &P 500 index has gained 63% from its low in March and 20% from the the beginning of the year.

The chart below, shows the performance of my portfolio for the past 5 years. I have normalized the value such that it starts at 1 in Dec. 2004. In 3 years, by the end of 2007, my portfolio had doubled in value, averaging 26% a year and outperformed the market. For the first nine months in 2008, the value of my portfolio was flat compared to the downward trend in S&P 500 index. As no one can escape from the financial tsunami, my portfolio went down as well at the end of 2008, losing 18 % for the year. I stayed on the side line for 6 months from October 2008 to March 2009 following the ranking system. In March and April, the buying signals started to show up and I started to take positions. By December, my portfolio has recovered from the loss and has made all time high.

The ranking system will not prevent us from the loss totally but will reduce our exposure to the risk when the time is bad and lessen our loss. When the up trend come back, the ranking system will take advantage of the trend and deliver performance better than the market average.

Merry Christmas and Happy New Year!!