FastTrack - A Mutual Fund Traders/Investors Friend - Part II - Jim Hill
You can expand FastTrack's analysis (referred to last month) by developing a combination fund of the two and then develop counter relationships using a new index. This is a very powerful feature.
You create a new mutual fund that represents the counter relationship of the two select mutual funds. Then you develop a counter relationship with another index. If this second counter relationship is positive, then you choose the strongest mutual fund; if it is negative you can be in another mutual fund or a money market fund. This type of pairing is easy to establish, and you can determine its effectiveness, historically.
What type of historical information is provided? Besides the usual mutual fund pricing and dividend data, you will obtain the composite return of the fund and index, paired, a total return of the fund and a money market fund in case you want to invest in a money market fund when your selected fund is weak, the fraction of time the chosen indicator was up or down, the number of sell/buy signals, the standard deviation of volatility, the return unadjusted, correlation coefficients, and the expected return given the standard deviation.
Assistance with FT is readily available from the company. Or, you can communicate with users on the investment bulletin board in Prodigy. The bulletin board participants are helpful, and discuss more advanced selection strategies.
What are some of the disadvantages of FT and its data service? First, the data only goes back to September of 1988. And second, you can not analyze a group of different funds for net profit/loss (in other words, you can not easily do asset allocation beyond two funds).
What is the cost? There is an initiation charge of $69 and a monthly data cost of $30 if paid monthly or $240 per year, if paid yearly. They have a one month trial package. If you are interested, you can call them at 1-800-749-1348 and obtain the most recent cost for a one month trial. This is the best method of determining FT would be of use in your selection of mutual funds.
I will close this article with a comment about timing. I use FT for both timing and mutual fund selection. I time the market as a whole, and when my indicator is positive, I invest in Fidelity Selects. I will leave for another article how this is easily done, but I will give you the sell/buy dates using this methodology: S,9/1/88 - B,9/23/88 - S,6/8/89 - B,6/20/89 - S,10/19/89 - B,04/30/90 - S,04/09/90 - B,01/04/91 - S,08/28/91 - B,10/04/91 - S,04/03/92 - B,10/06/92 - S,10/12/92 - B,10/14/92 - S,05/27/93 - B,07/30/93 - S,02/14/94
As of the date I am writing this article, April 14, 1994, my indicator for the general market is still negative and it will not be positive in the near future. It is an easy indicator to set up in FT and easy to follow each day.
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