More SectorSurfer Portfolios

Gary (“YODA”) Noreen

Aerial Videographer

April 26, 2014

Los Angeles AAII SumGrowth SIG

Disclosures

Gary Noreen has had or currently holds positions in the securities discussed herein.

The information provided herein is for general information only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

Gary Noreen cannot guarantee the accuracy, timeliness, or completeness of the information herein. The views, opinions and estimates herein are subject to change without notice at any time in reaction to shifting market conditions. Past performance is no guarantee of future results and the opinions presented cannot be viewed as an indicator of future performance.

Gary Noreen has received compensation (under $100) for referring people to SectorSurfer

Examples provided are for illustrative purposes only and not intended to be reflective of results you should expect to attain.

Agenda

•  Performance Review

•  Targeting the 1%

•  Momentum

•  Yale U Portfolio

•  The Celeste Portfolio

•  Portfolio Comparison

My Performance as of February 18

SigFig.com

Wikinvest.com YTD

February: SectorSurfer Changed my Life

•  Assumed 5% return when calculating retirement income. Now expect at least twice that, possibly several times.

•  Increased investing confidence

•  Consciously spending much more

•  My relatives are hitting me up for money

12/31/2013 to March 4

Symbol   Name  12/31  to  

3/4  FOCPX   Fidelity  OTC  Por:olio   8.9%  VIPS   Vipshop  Holdings  Limited   102.2%  RENT   Rentrak  CorporaLon   72.6%  PES   Pioneer  Energy  Services  Corp.   46.1%  IBB   iShares  Nasdaq  Biotechnology   18.6%  BIB   ProShares  Ultra  Nasdaq  Biotechnology   39.3%  JAZZ   Jazz  PharmaceuLcals  Public  Limited  Company   27.0%  QQQ   PowerShares  QQQ   3.7%  EWK   iShares  MSCI  Belgium  Capped   4.5%  TAN   Guggenheim  Solar   38.5%  TNA   Direxion  Daily  Small  Cap  Bull  3X  Shares   9.9%  VTI   Vanguard  Total  Stock  Market  ETF   2.4%  SPY   SPDR  S&P  500   1.6%  

Rich-O-Meter

•  Household rank in net worth & income (2011)

•  http://blogs.wsj.com/wealth/2011/07/28/how-rich-are-you/

•  10 years to grow $1M to $6M @ 20% Cumulative Annual Growth Rate

Net Worth Income

1% $8,400,000 $510,000

2% $4,700,000 $370,000

3% $3,200,000 $300,000

4% $2,400,000 $240,000

5% $1,900,000 $210,000

MitT Romney IRA

• $100 M

• Rate of return to grow from $1 M to $100 M in 10 years?

• 67% CAGR

March 4 to April 11

Symbol   Name  12/31  to  

3/4  3/4  to  4/11  

FOCPX   Fidelity  OTC  Por:olio   8.9%   -­‐11.2%  VIPS   Vipshop  Holdings  Limited   102.2%   -­‐20.3%  RENT   Rentrak  CorporaLon   72.6%   -­‐21.1%  PES   Pioneer  Energy  Services  Corp.   46.1%   10.0%  IBB   iShares  Nasdaq  Biotechnology   18.6%   -­‐20.0%  BIB   ProShares  Ultra  Nasdaq  Biotechnology   39.3%   -­‐37.2%  JAZZ   Jazz  PharmaceuLcals  Public  Limited  Company   27.0%   -­‐20.0%  QQQ   PowerShares  QQQ   3.7%   -­‐7.2%  EWK   iShares  MSCI  Belgium  Capped   4.5%   -­‐0.4%  TAN   Guggenheim  Solar   38.5%   -­‐17.8%  TNA   Direxion  Daily  Small  Cap  Bull  3X  Shares   9.9%   -­‐22.2%  VTI   Vanguard  Total  Stock  Market  ETF   2.4%   -­‐3.6%  SPY   SPDR  S&P  500   1.6%   -­‐2.8%  

March 4 to April 11 Changed my Life Again

•  Decreased investing confidence

•  Consciously spending much less

•  My relatives are no longer hitting me up for money

My Performance Now

Sigfig.com

Thoughts On Momentum

•  Momentum equities can be highly correlated

•  A potential way to mitigate this problem: •  Choose a strategy using widely traded funds based on broad

market indexes

•  Faber 5 (Faber 4 in SectorSurfer) still looks very good •  Richard Young’s February 2, 2013 presentation

•  Use Faber 4 as baseline strategy

•  Add other strategies and the specific equities they select only if confident they have significantly better potential than the baseline, and only as supplements

Faber 4

Swenson Portfolio

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Yale U Portfolio in SectorSurfer

Quarterly Rebalance

Yale U Portfolio

YODA Strategies

635338024914542500-4582-1-70542

635338024914542500-4582-2-69983

635338024914542500-4582-3-70692

635338024914542500-4582-4-50027

635338035845948750-4582-5-45975

635338035845948750-4582-6-50028

635338035845948750-4582-7-45902

635338035845948750-4582-8-50490

635338035846105000-4582-9-50493

635338035846105000-4582-10-45602

635338035846105000-4582-11-78130

635338035846105000-4582-12-80973

My Equities

UVU

•  ProShares Ultra Russell MidCap Value

•  SectorSurfer strategy: ETFs 3: FLsurfer A /d

•  3.31% gross expense ratio; 0.95% net expense ratio

YODA Portfolio

Celeste Portfolio

Celeste Excluding Mutual

Sector Surfer Metrics

•  Sector Surfer Score: overall performance in a single number •  Includes average return for all years & most recent three years,

and the probability of loss over a one year period Score = (AllYearReturn + 3YearReturn/2) / (40% + RiskOfLoss)

•  Sector Surfer Safety •  Referenced to 100 for Fidelity Income-Bond Strategy

•  Higher is better Safety = 25*(AvgReturn - 2*AvgNegReturnDeviation) / (1 + (MaxDrawDown/15%)^4 + (ProbOfLoss/2%)^4)

•  Sortino Ratio Sortino Ratio = (Fund Average Return - Money Market Return) / (Downside Deviation)

Model Portfolio Performance

72.8,  208,  17.1%  

Sector  Surfer  Score,  Safety,  3-­‐Year  Return  (as  of  Feb.  21,  2014)  

94.5,  219,  21.9%  

53.9,  230,  17.0%  

124,  88.1,  31.5  

156,  78.4,  48.9%  

60.2,  136,  13.7%  

71.3,  226,  17.6%  

85.7,  198,  28.6%  

102,  152,  25.6%  

102,  48.0,  22.9%  

178,  93.6,  64.1%  

137,  117,  40.8%  

56.3,  121,  11.7%  

122,  159,  31.1%  

188,  95.6,  56.1%  

220,  22.3,  58.2  

128,  100,  34.8%  

141,  161,  48.9%  

YODA  Por:olio:  257,  225,  80%  

Portfolio Comparison

Portfolio Sortino Ratio

SS Score Safety

3 Year Return

10 Year Return

Chance of 15% loss in

1 year

Maximum Drawdown

Yale U 3.46 32.0 0.2 10.1% 8.7% 7.53% 42%

S&P 500 1.86 24.7 0.0 14.4% 7.3% 25.6% 55%

Faber 4 9.71 75.2 108 16.4% 20.9% 0.15% 17%

YODA 22.19 320 241 84.8% 70.3% 0.03% 38%

Celeste w/Mutual 24.79 416 504 119.6% 88.4% 0.17% 51%

Celeste w/o Mutual 23.99 419 459 90.8% 71.4% 0.07% 53%

SumGrowth calculations on April 22, 24 & 26 2014

Telecom COMMENTARY

•  FCC Chairman Wheeler’s proposal to do away with net neutrality will harm consumers & California’s content industry

•  Proposed Comcast-Time Warner merger is anti-competitive; continues trend towards monopoly power & abusive behavior in telecom industry

•  FCC should regulate broadband as common carrier

•  Write your Senators, congressman & the FCC •  Ask for congressional inquiries

FEDEX Nightmare

•  Google glass arrived soon after I flew to Thailand

•  I had it shipped to Thailand via Fedex for $196.60 using Fedex “easy custom form”

•  Thai customs didn’t accept Fedex form

•  Fedex charged me another $175.57 shipping plus $172.84 customs to return it to me, which took nearly a month

•  Total cost: $545.01

How to Tell when the Party is Over

Small Investors Make Billions Off Strategies on Quirky Web Site

YODA’s Toolbox

•  To be provided at AAII Los Angeles web site

•  Presentations from SumGrowth SIG

•  Initial bonus: Beaver Investment presentation “How I was able to retire on 16 years of investments made through JPL/Cal Tech retirement programs” •  Bottom-up calculations of retirement costs & income

•  $583,295 in Cal Tech retirement funds needed to retire

•  Month end reports

Stock Screener

TOP 12 SCREENER STOCKS

ETF Screener Example