Secular Holds IAU XLV
Cyclical Target 940
Condition Bear Market
Hedge XLU -1.56%

Position Date Return Days Call
SE 6/27/2011 8.43% 128 Hold
CLH 7/6/2011 9.00% 119 Hold
GCI 7/14/2011 -16.75% 111 Hold
GTAT 9/8/2011 -30.62% 55 Buy
CSGS 10/3/2011 12.25% 30 Hold
NLY 10/25/2011 -0.49% 8 Hold
DD 10/27/2011 -1.10% 6 Hold
AMGN 10/27/2011 -5.42% 6 Hold
KBR 10/27/2011 -6.75% 6 Hold
VG 10/27/2011 -22.38% 6 Hold

Mousetrap Return -0.40%
S&P Return -7.98%
Hedged Return -2.14%

Mousetrap Annualized -0.95%
S&P Annualized -18.80%
Hedged Annualized -5.05%

Long Advantage 17.84%
Hedged Advantage 13.74%

Slight tweak to the way I report the model. I’m adding secular holds on the top line to indicate the two ETFs one would hold for secular investing.

The secular holds will slowly rotate. They will always be long.

In the first half of a secular bear, when bonds and gold outperform stocks the two holds will simply be IAU and BND. Once bonds fall out of favor, IAU will be listed with the appropriate long sector on my sector rotation model.

Right now those two holds are IAU and XLV (healthcare services).

Secular investing is very slow, but should outperform a simple buy and hold of SPY.

I’ve attached a short paper explaining how to rotate a secular core with the three ETFs GLD, IWM, and BND. My own substitution of sector rotation for simple IWM investing can be ignored if someone wanted to just hold a secular core and have some peace of mind.

There WILL be drawdowns, but less than simply holding SPY over time.

I am personally holding both of these investments that are listed, but will not routinely report returns (though I'll do so perhaps once a quarter).

Tim

Intermarket Analysis.docx