| While aggressive timing strategies can | | | | direction) than anyone expects. During a |
| achieve large profits over time, not every | | | | strong bull run, it is common to find |
| trader is emotionally able to handle them.The | | | | individual sectors that double the gains of |
| good news is, you don't have to be an | | | | the overall market.Winning The BattleThe |
| aggressive market timer to achieve large | | | | FibTimer Sector Timer strategy covers 16 |
| profits. Trading sector funds with a solid | | | | industry specific sector funds found in the |
| timing strategy is not only profitable, but | | | | Rydex Fund Family. Several other widely used |
| drawdowns are usually very small because | | | | fund families also have sector funds, |
| sector timing strategies are very | | | | including Pro Funds and Fidelity Funds which |
| diversified.Trading the sectors deserves your | | | | can be used with our sector timing |
| consideration.Trading The SectorsLately is | | | | signals.Even in volatile market conditions |
| seems like the financial markets are being | | | | during which the overall stock market is |
| pushed in different directions almost daily. | | | | performs poorly, the FibTimer Sector Timer |
| How does a mutual fund market timer take | | | | has performed exceptionally well.Sector |
| advantage of such volatility, while | | | | timing is proactive money management at its |
| protecting himself or herself from the very | | | | best. Constantly putting your money in the |
| real risks such volatility creates, as well | | | | strongest sectors while removing it from the |
| as from the potential drawdowns that can | | | | weakest sectors.This is where the diversity |
| occur during such times?The answer is by | | | | inherent in sector timing stands out. Top |
| trading specific industry sector funds. Here | | | | performing sectors are where your timing |
| is a "quick" list of reasons why:1. | | | | funds are allocated, and no one sector can |
| Diversification: By having small positions in | | | | cause irretrievable damage to the portfolio |
| multiple industries, you reduce exposure to | | | | should that industry collapse without |
| any single industry being affected by a | | | | warning.ConclusionOver the years, sector fund |
| negative news event.2. Volatility: While | | | | timing may go down as one of the best |
| individual sectors are no less volatile than | | | | strategies ever created. Its ability to move |
| the rest of the market, they do not move | | | | funds into only those industry sectors which |
| together. So the volatility to one's | | | | are performing well keeps it profitable in |
| portfolio is considerably reduced.3. | | | | most market conditions.The low drawdowns, low |
| Drawdowns: Because sector funds go to cash | | | | volatility and diversification inherent in |
| during sell signals, and because there are | | | | sector timing, not to mention strong |
| always some funds in bull markets at the same | | | | profitability, cause this strategy to stand |
| time there are others in bear markets (during | | | | out from all the others.In volatile market |
| which those sectors are protected in money | | | | conditions sector timing can create profits |
| market funds), drawdowns are kept to extreme | | | | when other traders are lucky just to be |
| minimums.4. Good in All Markets: There are | | | | holding onto their capital, while drawdowns, |
| always single industries in their own bull | | | | if they occur at all, become almost a |
| markets. Even during a cyclical bear market, | | | | non-event.While sector timing may not make |
| such as we experienced during 2000-2002, | | | | huge gains during cyclical bear markets, |
| there were always some industries moving | | | | being mostly in cash, the strategy will |
| higher. And if not, you are still protected | | | | protect your investment capital. And it will |
| by being in money market funds.5. Active | | | | then outperform during bull markets, always |
| Timing: Though sector timing is not | | | | keeping you invested in those industries that |
| aggressive, it is certainly active. You will | | | | are in their own bull markets.Caveat.. sector |
| always be trading the bullish sectors, and | | | | timing does require active participation. Its |
| exiting the under performing ones. In some | | | | potential is excellent, there are no short |
| respects, it is the equivalent of running | | | | (bearish) trades, and it only requires a |
| your own well managed mutual fund.6. Trends: | | | | couple of minutes a day to check for and make |
| Industry sectors tend to trend. And when they | | | | changes if they are needed. |
| trend, they often move further (in either | | | | |