FundSense Mutual-Fund Survival Program

From 2002 Jan 1 to 2011 Jul 31 (9.6 years):

20-week Friday MA, S&P 500 DE or money market.. +52.4%

Berkshire Hathaway.................................................... +50.1%

FundSense mutual-fund survival program.......... +41.0%

Long treasurys............................................................ +38.5%

S&P 500 DE (plus div. but minus exp.) (buy & hold).. +33.8%

One-year CDs.............................................................. +31.0%

Fund managers, average actively managed............... +24.2%

Consumer Price Index (CPI)....................................... +22.9%

Money market............................................................. +16.2%

House prices, Case-Shiller US 20-city average........... +15.9%

Fund investors, average.............................................. +13.6%

S&P 500 price return.................................................. +12.6%

Financial advisors....................................................... unknown

FundSense is suitable for individual investors, financial advisors, software packagers, financial web sites, hedge funds, funds of funds, and financial software (Quicken/Mint).

FundSense offers a trading-station interface and generates IRS Form 1040 Schedule D. The program pays no commissions or early-exit fees, did not profit from leverage or insider knowledge, and required no trading on 48% of market days.

Notes: The 20-week moving average (MA) calculates and trades on Fridays only; the investor is always either 100% invested in the S&P 500 DE (dividends minus expenses) or 100% in money market. The S&P 500 DE uses the Bloomberg (SPTR:IND) and Yahoo (^PXTY) S&P 500 total return but adds annual expenses of 0.17% for buy and hold or 0.7% for a moving average. The S&P 500 price return is the readily available index; Bloomberg says the index includes "special cash dividends." Berkshire Hathaway management had insider access; at inception, shares were not available to small investors. FundSense and moving-average returns include the yield on principal that is temporarily in money market. CD and treasury yields are from hypothetical benchmarks that assume direct purchases that are held to maturity yet roll over every Friday. The long-treasury benchmark tracks the yield to maturity on the 30-year bond before 2001 Oct., and on the 10-year note thereafter. The CPI underreports inflation (shadowstats.com). The Case-Shiller US 20-city composite has a two- or three-month delay. The average fund manager underperforms the S&P 500 TR at a rate equal to fund expenses (John R. Talbott The 86 Biggest Lies on Wall Street 2009 p. 81); fund expenses in my survey are 1.20% per year. Average mutual-fund investors underperform their funds by 1.1% per year (Kevin Laughlin via Jeff Sommer NYT 2011 Jan 2).

Hunter Greer, Ashland, OR

huntergreersw@gmail.com

Mutual-Fund Trading Algorithms Report

My mutual-fund trading algorithms in an 9.0-year trial beat the S&P 500 by 28.8%.

Total return from 2002 Jan 1 to 2010 Dec 31:

Berkshire Hathaway...................................................+62.9%

My mutual-fund trading algorithms................+40.0%

Long treasurys...........................................................+36.7%

One-year CDs.............................................................+30.3%

CPI.............................................................................+20.6%

US house prices, Case-Shiller 20-city.......................+20.5%

Money market...........................................................+16.2%

S&P 500 Index...........................................................+11.2%

Average fund manager..............................................+0.4%

Average fund investor................................................-9.5%

Financial advisors...................................................unknown

The algorithms are suitable for individual investors, financial advisors, software packagers, financial web sites, hedge funds, funds of funds, and financial software (Quicken).

The algorithms did not profit from leverage and required no trading on 37% of market days.

Notes: Berkshire Hathaway management had insider access; at inception shares were not available to small investors. The algorithms' return includes principal temporarily in money market. CD and treasury yields are from proprietary benchmarks that assume all instruments are held to maturity yet roll over every Friday. The long-treasury benchmark uses the yield on the 30-year bond before 2001 Oct., and on the 10-year note thereafter. The CPI underreports inflation (shadowstats.com). The Case-Shiller US 20-city composite has a two- or three-month delay. Fund managers underperform the market at a rate equal to fund expenses (John R. Talbott The 86 Biggest Lies on Wall Street 2009 p. 81); fund expenses in my survey are 1.20% per year. Mutual-fund investors underperform their funds by 1.1% per year (Kevin Laughlin via Jeff Sommer NYT 2011 Jan 2).

Hunter Greer
800 Harmony Lane
Ashland, OR 97520
fundsense at aol.com