Trading
Fidelity Select Funds in 2000-2004
Using PEERLESS Stock Market Timing Software
Major BUY and SELL Signals
Special Report: February 4, 2005,
Augmenting Report of January 25, 1998
by William Schmidt, Ph.D.
Table Showing Data for 2000-2004 Study.
Important Findings
1. For the period,
2000-2004, Peerless reversing major Buy
and Sell Signals significantly improved the average annual
performance of trading the Fidelity Select Funds. An improvement over buying
and holding was seen for the 25 of the 31 mutual funds that data was collected
for. This study also allowed for a $40 commission charge on each purchase or sale of
the fund, with an initial purchaseof $10000 assumed for each fund.. The average
improvement was nearly 22% per year if short selling was used along
with going long when a reversing major Buy signal was used.
2. For the period, 2000-2004, Peerless major Buy signals would have showed an
average yearly performance of the 26.91% in trading the Fidelity Select funds, if short selling was used along with going long when a reversing
major Buy signal was used.
3. For the period, 2000-2004, Peerless major Buy signals would have showed an
average yearly performance of the 16.73% in trading the Fidelity Select funds, if only long positons were taken with revering major Buy and Sell
signals and there was no short selling. Below is a ranking, showing which
Select Funds were most profitably traded by Peerless from 2000-2004.
Average Annual Gain for 31 Fidelity Select Funds
Traded with Reversing Peerless Major Signals, 2000-2004. No short sales:
FSPTX - Technology +26.06%
FSAVX - Automotive +25.58%
FSHOX - Construction & Housing +24.34%
FSENX - Energy +23.23%
FSELX - Electronics +21.55%
FDCPX - Computers +21.0%%
FSDPX - Industrial Materials +20.66%
FBMPX - Multimedia +19.89%
FSCBX - Small Caps. +19.78%
FSRFX - Transportation +18.73%
FSAIX - Air Transport +18.45%
FDLSX - Leisure/Entertainment +18.32%
FSDCX - Dev.Comm. +18.11%
FSAGX - Amer.Gold +17.82%
FSDAX - Defense/Aerospace +17.56%
FSCHX - Chemicals +17.53%
FSLEX - Environmental Services +17.13%
FSRPX - Retailing +16.81%
All Funds Averaged +16.73%
FSPCX - Insurance +16.31%
FSTCX - Tele-communications +16.00%
FDVLX - Savings & Loan +15.2%
FSESX - Energy Services +14.23%
FSCPX - Consumer +13.77%
FIDSX - Financial Servics +13.23%
FBIOX - Biotech +12.57%
FSHCX - Medical Delivery +12.03%
FSRBX - Regional Banks +10.66%
FSNGX - Natural Gas +8.9%
FSUTX - Utility Growth +8.63%
FDFAX - Agriculture +7.78%
FSPHX - Health Care +6.83%
4. For the period, 2000-2004, Peerless major Buy signals would have improved the average
performance of the 26 of the 31 funds studied. The average annual improvement was by
11.59% % per year if long positions were taken on a reversing major Buy signal from
Peerless and then sold when a reversing major Sell signal was given and no short selling was done.
5. While Peerless Buys and Sells would have helped an investor with 82% of the funds
studied, there was considerable variation in how well Peerless helped the market timing of
these funds. Below is the ranking of the
difference between the these the annual performance using Peerless to buy and sell
each Select Fund (with short selling) and simply buying these funds each year and holding
them for that period. For example, $10,000 invested in the Fidelity Technology
fund each year would have averaged a yearly gain of $2606.
Fidelity Fund Annual Percent Gain Difference
between Using Peerless
Reversing Major Buys and Sells
and Just Buying and Holding
Specified Fund for period 2000-2004
========== ============================
Technology
+42.18%
Electronics
+37.53%
Computers
+36.14%
Dev. Comm.
+35.94%
Tele-Communications
+32.97%
Leisure/Entertainment
+21.99%
Retailing
+19.01%
Utility Growth
+17.34%
Construction & Housing
+15.54%
Air Transport
+15.52%
Consumer
+15.05%
Automotive
+15.02%
Multimedia
+14.59%
Small Caps.
+14.0%
All Funds
+11.59%
Biotech
+10.47%
Industrial Materials
+8.18%
Financial Servics
+8.13%
Energy Services
+6.20%
Regional Banks
+5.73%
Transportation
+4.97%
Defense/Aerospace
4.73%
Savings & Loan
+4.6%
Environmental Services
+3.62%
Chemicals
+3.52%
Amer.Gold
+3.43%
Health Care
+1.28%
................................
Insurance
-0.42%
Energy
-0.77%
Agriculture
-1.53%
Medical Delivery
-17.17%
Natural Gas
-23.3%
6. Buying and holding these mutual funds for the period 2000-2004 would generally not have
resulted in stellar gains.
18 funds produced gains, but 13 showed net losses over this 4 year period. The
average yearly gain was only 5.14%, hardly enough to compensate for the risks of equite
ownership to many investors.
Avg. Yearly Gain Buying and Holding These 31 Fidelity Select Funds,
for the period 2000-2004 :
FSNGX Natural Gas 32.2%
FSHCX Medical Delivery 29.20%
FSENX Energy 24.00%
FSPCX Insurance 16.73%
FSLEX Environmental Services 13.15%
FSDAX Defense/ Aerospace 12.83%
FDVLX Savings & Loan 10.6%
FSCHX Chemicals 14.01%
FSRFX Transportation 13.76%
FSDPX Industrial Materials 12.48%
FDFAX Agriculture 10.56%
FSHOX Construction & Housing 8.8%
FSESX Energy Services 8.03%
FSCBX Small Caps. 5.78%
FSPHX Health Care 5.55%
FBMPX Multimedia 5.3%
All Funds Averaged 5.14%
FIDSX Financial Servics 5.1%
FSAIX Air Transport 2.93%
----------------------------------------------------
FSCPX Consumer -1.28%
FSRPX Retailing -2.2%
FBIOX Biotech -2.30%
FDLSX Leisure/Entertainment -3.67%
FSRBX Regional Banks -4.93%
FSUTX Utility Growth -8.71%
FDCPX Computers -15.14%
FSELX Electronics --15.98%
FSPTX Technology -16.12%
FSTCX Tele-communications --16.9%
FSDCX Dev.Comm. -17.83%
7. Similar improvements were reported 7 years ago, in an earlier study of Peerless
signals's effectiveness in trading Fidelity Select Funds back in 1997. In that
study, the PEERLESS Major Buy and Sell Signals Would Have Improved the Fidelity Gains in
33 of 34 Cases.
8. In 1997-8, the
Average Gain Using PEERLESS signals was 26.7% while a "Buy and Hold" Strategy
Would Have Gained Just 1.9%.
9. In 1997-8 one could
have doubled these gains by selling short, as well as selling on a major PEERLESS Sell
Signal.
Methodology
Using the TIGER Power-Stock-Ranker
software I downloaded 34 Fidelity Select funds' data for the past year from Dial
Data. I then displayed their data and super-imposed our PEERLESS Stock Market Timing
Software's major signals on the DJI for the last year.
Using TIGER's Trade Evaluator
feature, I then asked the computer to show me the trading results using these
signals, assuming $40 a trade and $10,000 was originally invested. The results were
then displayed in two ways. First, on Peerless Sell Signals, short sales were made
as well as the sale on long positions made on reversing major Buys. Secondly,
Reversing Peerless Buys were used to take long positions and the next majpr Sell signal
was used to sell out the long position.
Results
First, in Table 2000-2004, you will see how
Peerless major Buys and Sells improved trading in the Fidelity Select funds.
Second, in Table 1, you can see how well each Fidelity Select Fund
was traded back in 1997 where a reversing SELL signal would have simply caused a long
position to be closed out.
Second, in Table
2, you can see how each Fidelity Select Fund was traded back in 1997 where a reversing
SELL signal would have caused not only a long position to have been closed out, but it
would also have caused a short position in the fund to have been initiated, which would
then have been closed out at the time of the next major BUY signal.
In both tables, the last column at
the end shows the percent gain accruing to the investor using a "buy and hold"
strategy.
1998 Conclusions
"The most important lesson I draw from this study is that it may be a big
mistake, especially with the DJI having risen so far (seven years) without a 15% decline,
to blindly trust in a "buy and hold strategy"."
The study unequivocally shows that the major PEERLESS BUY and SELL signals would have
greatly aided an investor in his quest for mutual fund profits in 1997.
The net gain and loss statistics,
you will note, were gathered from the point of the first major signal of last year,
2/14/97, to the end of the available data, 1/21/98.
A "buy and hold" strategy
for these 34 Fidelity Select Funds would have brought a mere 1.9% profit. The worst
performing funds were American Gold (-45%), Precious Metals (-47%), Computers (-41%) and
Technology (-24%). Only 11 of the 34 produced a 15% profit or more. 15 of the
34 produced a loss.
Had one applied last year's PEERLESS
BUY and SELL signals to the trading of all these 34 funds using just long positions the
average gain then would have been +26.7%. Only 3 of the 34 Fidelity Select Funds did
better: retailing (+40%), Air Transport (+32%) and Brokerage (+28%).
The investor who started with
$10,000 would have ended the period on average with $2000 more had he used the PEERLESS
BUY and SELL signals, instead of just buying and holding these funds for the period.
Only one of 34 Fidelity Select Funds would have been unprofitably traded for the period
using PEERLESS. That was Precious Metals. The loss would have been just $372
on an original $10,000 investment.
The best mutual funds to take a long
position in on a reversing major PEERLESS BUY signal and sell on the next major SELL
signal were Energy Services (+65.2%), Defense/Aerospace (+43.4%), Dev.Comm. (+42.0%),
Telecomm (40.1%) and Computers (37.0%), Brokerage (35.9%) and Technology (35.1%).
You can see the actual PEERLESS signals on these charts by clicking on their links
here.
Using PEERLESS Stock
Market Timing Software
to Trade the Short Side As Well as the Long Side
Would Have Doubled the Trading Profits in the
Fidelity Select Funds in 1997
The key point here is that using the
PEERLESS major signals to buy, sell and to sell short - and emphatically not abiding by a
casual, carefree buy and hold approach - would have made an enormous difference to the
trader's success with these funds last year.
Look at the fifth column in Table 2. It shows the net difference between the two approaches
when $10,000 is traded both ways. An investor in the the Fidelity Select Computer
Fund would have been $14,994 better off using. Instead of losing 30.9% with a
"buy and hold" strategy, our PEERLESS user would have gained an amazing 117%, by
buying, selling and selling short when PEERLESS gave a reversing major BUY or SELL signal
on the DJI.
With Energy Services the modest
26.5% gain using a "buy and hold" strategy would have become a massive +107.7%
gain using PEERLESS to the fullest.
The volatile Technology Select Fund
would have brought the flexible PEERLESS trader who bought, sold and sold short a double,
a +106.% profit, The "buy and sell" investor would have lost 23.7%.
The same huge difference can be seen
in other popular, but volatile funds. If you had invested in the Fidelity
Electronics Select Fund using the "buy and hold" you would have lost
23.7%. An active PEERLESS user would have gained 97.9%.
Or consider the Select Biotech
Fund. It would have lost the inert "buy and hold" investor 5.4%. The
investor using PEERLESS to the fullest would have gained 76.2%.
Of course, past results do not
guarantee future results. But PEERLESS has been tested back to 1965.
For just $495 plus shipping you can get these PEERLESS-DJI signals yourself.
If you would like to get the same charts that we are using here, you may purchase the
necessary software for $995.
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