Jeff Miller

Are You Missing the ETF Rally?

Uncle Bill -
Thanks for your question. I can see that you did some research with genuine interest, so let me try to clarify a few things.

While I have been trading market sectors through model-based rotation systems for nearly ten years, the application to the ETF's, and particularly to iShares, is a new approach for us. I have tried to explain why this universe is especially good for our model, and I'll write more on this in the future. Meanwhile, the record you see here is what we actually did. The articles include a rapid trade in and out of a sector in August, and how we were out of the market for a month.

I am trying to illustrate what it is really like to trade a system. Most people do not understand at all. I do not expect to call bottoms and tops with this method. In fact, I know that I will get whipped around at transitional points. How? From studying the careful, out-of-sample back tests, so I am prepared for what I get. I also know there will be some negative patches and drawdowns.

We use this model for our intermediate outlook even when I personally disagree. (Over the years, the model and I have been pretty close overall, both with excellent records.) Because we make our position public on the Ticker Sense blogger sentiment poll, you can check us out for a longer period. When the model is negative, we include short ETF's to hedge the position. We might still be net long, but the percentage has been reduced.

I am still trying to figure out what to include in these articles, and what the timing should be. Your comment is helpful in that regard.

Thanks,

Jeff