Frequently Asked Questions
What sets you apart from other market timing services?
Our model portfolios use absolute return
strategies, investing wherever the greatest short term profit potential exists.
Our goal is to make profits,
regardless of market direction. We invest in long and short mutual funds that track the major market indexes, such as the
DOW 30 and S&P 500; various foreign market indexes; and industry sector indexes.
In addition, all of our model portfolios
uses asset allocation, an investment strategy
that helps reduce volatility and
risk. Using absolute return, in combination with asset allocation, is a
strategy developed by AccuFundTrader. Others may have had the same idea, but we have
not yet seen another market timing web site or advisory firm using this unique combination of
strategies. Please contact us if you find one. Another thing that makes us different is, we publish the
historical results of trading our models in our own real accounts. This way you know we have a very vested
interest in the performance. We have an excellent track record that spans
more than four years, and we are proud of it. We hope we can continue to do as
well in future; however, we
don't make extraordinary claims or promises. If you are looking for the
"Holy Grail", you have come to the wrong place. Market
conditions change daily. We have been looking for many years and have yet
to find a strategy which works all of the time. The only comfort we can
offer is; if our members are feeling pain, so are we. Some of you that are as old as I, may remember hearing the name Al Frank.
I met Al at the Chicago Money Show in 1998. Al is gone now, but he used to publish
"The Prudent Speculator" newsletter.
I am sure there are others, but "The Prudent Speculator" was the only one I know of,
that also published the results achieved in real accounts. Many market timing services publish results of hypothetical models or backtested
results. It is not possible for anyone (including the publisher) to match
the results achieved in backtesting. Backtesting occurs in a perfect
world, like in a glass bubble. It does not take into consideration data
problems, computer glitches, human error, etc., all of which, have an effect on
performance. If you have ever followed the advice of any publication or advisor, you
know there are many things that can happen, which will cause your account
performance to differ from the performance of the publication.
For more on this, make sure you read the next FAQ. It is extremely important to look for a market timing service with performance statistics that are independently verified. Normally I
would not bash our competition; however, in April of 2009, I stumbled across a market timing service I felt would make a good (or bad) example.
They publish spectacular results. This market timing "leader" shows an equity curve on their web site
with the growth of $10,000 trending upward to almost $300,000 in 5 years (click here
to see it). My first thought was, I should give up what I am doing and sign up for a membership on their
site. With the exception of some sideways squiggles in the last half of 2006,
the performance is stellar. If
you display the verified results, you quickly discover that this market timers'
web site has not been updated to reflect a recent drawdown of -81.97%. Click
here to see the verified
results. It does not appear that they have misrepresented anything;
however, you don't see the entire picture because the data is incomplete.
We update our ProFunds and Rydex
performance pages every month, whether our performance is good or bad. We
also show you where to find independently verified results. We urge you to
be very careful in your selection process, and thoroughly check out any timing services you
are considering.
The performance of the models in our managed
account program is monitored and
independently verified by Theta Investment Research, LLC. Please visit our
Theta Investment Research page for more
details. Another thing that sets us apart from most is, my home phone number is published on our
contact us page. AccuFundTrader is a small company and,
as long as it is feasible, I
will continue to provide personalized customer service during reasonable daytime
hours. If you call
at 3:00 AM, I will begrudgingly talk to you. If you wake up my wife, you
are in very deep "do-do". Thank you for taking the time to look at AccuFundTrader. Gary Bozlinski, Founder Why doesn't my account get exactly the same performance as the model I am
trading?
The performance of your account should be substantially similar to ours, with two minor caveats. Your allocation to
each fund will not exactly match ours. When you started trading, our account had already been trading for
some period of time. For example: If a model holds three funds, we start with equal amounts in each fund. For a
$15,000 account that would be $5,000 / $5,000 / $5,000 or 33 1/3% / 33 1/3% / 33 1/3%. By the time you started, we had been
trading for a while, and our allocations will have moved somewhat, say 29% / 33%
/ 38%. Your account started with equal
allocations, but over time the allocations change, so on any given day, your profit or loss percent could be slightly higher
or lower than ours. We rebalance all accounts monthly, but it is not possible to get your allocations exactly equal to ours
unless all positions are moved to cash for at least one day. Depending on when you start, your performance during your
first month may be significantly different from ours. However, if you follow our rebalancing recommendations, your account
performance should be substantially similar during your second month and thereafter. The second caveat is that our performance results reflect our mistakes.
Some of the things that have happened in the
past, and may happen again, are:
-
I forgot to confirm a trade.
-
I bought or sold a short fund instead of a long fund
(or vice versa) because the names are
very similar.
-
I bought or sold an indexed fund with the wrong leverage because the
names are very similar.
-
I entered a trade in the wrong account.
-
I
did not have enough time to recover from a technical problem such as a glitch
in the data or a computer problem.
-
I missed the cutoff because I waited until later in the day to enter trades, but the broadband went
down before I finished.
-
I missed the bond fund cutoff because I was going to do the trades later in
the day, but forgot the bond funds have an earlier close.
-
With the Rydex models, I entered a trade for the
morning cutoff instead of the evening. On one occasion, I was in Puerto Vallarta,
Mexico and I had a trade, which involved one of the 2x strategy funds that trade twice per
day. It was too early in the day
to place an afternoon trade over the Internet. I could not get through to Rydex on
my cell phone, so I placed the trade
online to execute at the morning NAV instead of the afternoon price. I
had to place the trade early because buy the
time I could have placed the afternoon trade, I was already hanging from a zip line in the rain forest. Now I have
Skype. It is very cheap and, as long as I have Internet service, I have very inexpensive phone service that works anywhere.
Unless you can walk on water, you will probably make an occasional mistake. Most
will not happen more than once or twice,
and about half will work out in your favor. We have learned from earlier mistakes and implemented new procedures to minimize
them. Our pledge to you is that we will make 99% of the trades exactly as published in the
member area. We never deviate intentionally from what we publish. However, if there
is an error, we usually catch it and correct it on the next trading day. How does it work?
You open an account at ProFunds ($15,000 minimum) or Rydex Funds ($25,000 minimum). You select which model you wish to
trade depending on your individual circumstances. For example, you may have a substantial investment account or 401K
elsewhere, but you want to open a small account to enhance your average return. In that case, it may be appropriate to
follow an aggressive model in order to maximize your return. On the other hand, if you only have $15,000 to invest, start
with a more conservative model. The drawdowns will be lower and you will find it much easier to sleep at night. You
can always get more aggressive later, once you have built up a cushion in profits. Each day the U.S. markets are open you will receive an "AFT Update" email that lists the names of the models that
have changes for that day. If you do not see the name of your model listed, you have nothing else to do unless
it is the first
trading day of the month, when we do our rebalancing. If the model you are following has new trades indicated, log on to
the member area of this site; get the current trades; and place your orders with ProFunds
or Rydex. Your trades can be placed on the Internet or over the phone, anytime throughout the trading day, up until the
ProFunds or Rydex trading cutoff times. We post the trade signals to the web site before
entering them in our own accounts so we all receive the same execution price. What are the trading cutoff times?
Generally speaking, the cutoff is approximately 30 minutes before market close. We
do not publish the exact times on our site
because they vary around certain holidays and are subject to change, particularly in the event of a catastrophic or unusual
event. In addition, they vary depending on your method of input (Internet, phone, etc.). To
complicate the issue,
the bond market closing times and holidays are different, so if you have a trade into or out of a bond fund, you
will be
affected. See the ProFunds or
Rydex web site for details. We attempt to keep members informed of
any variations in cutoff times, however since we update the member area page before we place our
trades, it is possible that we could miss something. We recommend you
enter your trades early in the day, just in case there is
an early cutoff. If you are trading at Rydex, read the next "Q & A" also. On the ProFunds web site click
on this icon in the upper right portion of the screen to see the times for the current day:  . Rydex has two trading times per day for some of the "2x Strategy" funds? Does it
matter which trading time I use?
It certainly will make a difference in the execution price. We do not know if it will help or hurt the performance over
the long run. Our software is designed to handle only one net asset value (NAV) per fund per day. We enter the orders
after 8:30AM Mountain Time (10:30AM Eastern) so we receive the end of day NAV. We recommend that you do the same. See
the Rydex web site for specific cutoff times, as times may vary. Why do you trade mutual funds rather than exchange traded funds (ETFs)?
Let me answer your question with another question. Have you ever subscribed to a stock or ETF newsletter, or
a web site
that has a great track record, only to find out that it is impossible for you to
achieve same results? Over the
years, I have subscribed to many newsletters and online trading services,
generally with good results. However, by the time I received
the publication, the prices have moved so I receive a different execution price
than publication. In most cases, the publisher has already placed his trades, as well as any other insiders that have access to the
information sooner than you, such as office personnel, printers and distributors, web developers, stock brokers and many of their
friends. The best performing publications are watched the closest, and the price movement can be significant before you even
see the information. If it is an Internet publication, that information
can be disseminated to many people with lightning
speed. With the exception of a few Rydex mutual funds, the funds we use trade only once per day. The computer models we use
can not determine the next days' trade signals until the closing net asset values (NAVs) from the current trading day are
published. As long as you place the trades prior to the cutoff time, you get the same
execution price as everyone else. If you
are trading one of the Rydex models that occasionally trades the "2x Strategy" funds, you can trade at the morning closing price
but we do not recommend it, unless you will not be available to place the afternoon trade.
We developed the models using
historical data with the end of day closing NAVs. In addition, there are no transaction costs on mutual fund trades placed at
ProFunds or Rydex.
ETF trades generally do incur brokerage transaction fees, which can be significant with frequent
trading. Are there fees associated with these trades?
No. ProFunds and Rydex funds were designed specifically for frequent traders, so there are no associated fees when the
trades are placed directly through ProFunds or Rydex. Can I do the trades through my brokerage firm?
Yes, but you are likely incur significant short term redemption fees. Schwab is the only brokerage firm we know of that
does not charge short term redemption fees for ProFunds and Rydex mutual fund exchanges.
In addition, there may be a one day lag
between the execution of the sell order and the buy order. If this is the case, do not attempt to trade in the brokerage
account, because your buy orders will always be one day late. At Schwab, if you have sufficient margin available from other
holdings, it is possible to execute a buy order and a sell order on the same day, but not an exchange. This creates a
problem if your intent was to reinvest all the profits because you can only guess at what the proceeds from your sell order will
be, when placing your buy order. The easiest way to trade in a Schwab account would be to always buy the same dollar
amount. In addition, your brokerage firm may have different cutoff times. When do you update the member area?
Our goal is to have the member area updated, and an email sent to
members, by 8:00AM Mountain Time (10:00AM Eastern), on every trading day. As
with anything, sometimes there are glitches. We have to run the computer
models to generate the trade signals. Since the models are based on price
movement, every morning we download the prior day closing net asset values (NAVs)
for all ProFunds and Rydex mutual funds. On rare occasions we have
broadband problems or get bad data
downloads, and have to enter the closing NAVs manually. It is very time
consuming, and can cause a delay of an hour or longer. If we expect to
have a delay, and Internet service is available, we notify members as soon as
possible. What generally occurs is, the web site gets updated and the daily email is
queued for delivery prior to 8:00AM MT. Due to the manner in which our
email list server (www.AWeber.com) processes
messages, the delivery can be delayed. Generally there is a 10-20 minute
delay; however, on rare occasions we have seen delays of up to 2 hours. We
urge members to check the web site if they don't receive the scheduled daily
message. The trade signals are almost always posted on the web site by
8:00AM MT (10:00AM ET).
Do you manage accounts for others?
We do offer a managed
account program, however we are not in the business of managing money, so
the program is administered by a licensed Financial Advisor.
How frequent are the trades?
It varies by model, but our holding period can last anywhere from one day to
about three weeks. The trades may occur on different
days, and the frequency may change with market conditions. Generally
speaking, you should expect to have trades two or three times per week.
What happened to the models when the market turned around?
You probably are well aware that the markets started to falter around July of
2007, then made a brief recovery before resuming the downward spiral in October
of 2007. Our models held up very well for the next twelve months, and were hitting new
all time highs at
the end of July, 2008. Then, the market started to drop so precipitously
that everything went haywire. Computer trading models that had been
working for many years just stopped working. Unfortunately, we did not escape the mayhem. We did, however react quickly to get the models back on
track, which resulted in our giving back much less than the overall
markets. We ended the year with very nice gains in two of the accounts,
and overall had to pay capital gains taxes for tax year 2008, while the market
indexes were set back to levels they were trading at around 1997. For the
complete details, click on the following link and read the news
update that was sent on January 1, 2009: http://www.aweber.com/z/rss/?accufundtrader.
How do I enter the trades?
The easiest way is to logon to the
ProFunds or
Rydex web sites and
enter your
trades there. The trades are very simple and can be entered in just a few
minutes at any time before the trading cutoff time. If you are not near a
computer, you can call ProFunds or Rydex to place the trades, however the cutoff
times are earlier than they would be if you placed the trades over the Internet.
It is best
to get in the habit of trading earlier in the day because the trading cutoff
times are moved up the day before a holiday if the market is closing early.
The bond market closing times are different than the stock market, so if you
are making a trade in or out of a bond fund, you may have an earlier cutoff.
Can I trade these models in an IRA?
Yes. We are not accountants, but we believe it is better to trade the models
in a tax-deferred account. I trade two of the models in my Roth IRA
accounts. Consult your tax advisor for details.
What are the tax consequences of trading in a regular account?
You may receive periodic distributions from the funds (usually during the
month of December) that can be characterized as dividends or long term gains,
but virtually all of the gains or losses from trading will be taxed as short
term, incurring a higher tax rate. Looking at the performance table, you need
to decide if the rewards justify the tax expense. Keep in
mind, depending on your individual tax situation, you may want to make estimated
tax payments to Uncle Sam. Give your tax preparer a copy of
your year end statement and the average cost basis report. If you prepare
your own taxes, transactions can be downloaded into various money management
software programs, such as Quicken, Microsoft Money, and Microsoft Excel.
From there they can be exported to TurboTax, TaxCut, and other tax preparation
programs.
Do you trade these models with your own money?
Yes. The results displayed in the performance spreadsheets and graphs are
all from real accounts owned by AccuFundTrader, LLC. We have a very vested
interest in keeping the models running smooth.
Is my subscription fee tax deductible?
Our accountant has advised us that for individuals, under Section 212 of
Internal Revenue Code, investment subscription fees are tax deductible as a miscellaneous expense on
schedule A. However, you may only deduct the portion of miscellaneous expenses
that exceeds 2% of your adjusted gross income. So, it really depends on the size
of your income and other miscellaneous expenses. If you are trading through a business entity,
the expense is probably deductible. We recommend you consult your tax advisor for
more specific information regarding your tax situation.
What should I do if I miss a trade?
If you miss a trade, enter it
on the next trading day. About 40% of the
time your mistakes will actually work out in your favor.
Should I rebalance my account periodically?
We have adopted a procedure of rebalancing the model portfolio accounts on
the first trading day of each month. More information on rebalancing can be found
this page: rebalancing your account.
Do you anticipate an increase in the cost of subscriptions?
Yes, but current members are automatically grandfathered in at their original
subscription rate, as long as there is no lapse in your service.
Do I need to worry about the "wash sale" rule?
Yes. This is a very complex issue. However, we do not give it much consideration, because we believe most of our trades are going to be
profitable. The likelihood
that we will have many trades affected is small. It can be very complex and have serious tax consequences, if we were to
have a series of losing trades in the same index which, we believe is unlikely.
In addition, trades placed in your other accounts,
or your spouse's accounts can have "wash sale" implications, if you are trading
other securities that are
substantially similar to what our models are trading. The only way we know
of for an investor or casual trader to avoid
"wash sale" implications, is to stop trading for 31 days at or near the end of the
year. Professional traders
can elect the "mark-to-market" accounting method
to eliminate the problem. We recommend you consult your tax advisor, or click on
the following link for more information:
www.traderstatus.com/washsale.htm.
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