Break The Habit of Thinking That High Returns
Come Only From Taking
High Risk STOCK Gambles.
With this Government Long Bond Trading Strategy you will join an
exclusive group of investors who are:
From the desk of: Thaddeus J. "Ted" McDonald R.I.A.
February 18, 2008
Re: Using Rydex Government Long and Inverse Long Bond Funds in a Managed Strategy
designed for Capital Appreciation
Dear Fellow Mutual Fund Investor,
When someone says "U.S. Treasury Bond", don't the words "safety" and "fixed income" immediately
come to mind? You like the idea "safety of principal" and "guaranteed fixed income", but do you
pass up the safety of the highest quality security because you need more investment return?
If so, do you put most, maybe all, of your investment in common stocks instead?
Maybe you simply pass on using bonds because you don't know which ones to buy.
Have you thought you could invest more in bonds if you had access to a bond manager - the
kind institutions and high net worth individuals use? You know, the professionals who know how
to mix different maturities into a single portfolio, when to move up and down the maturity ladder,
and who discern interest rate changes from economic data ... managers who invest for total return
and
get paid big bucks if they can match the Lehman Brothers Treasury Bond Index, the accepted
benchmark for total return bond performance.
Or, maybe you settled for a bond mutual fund because its manager was a highly touted "top gun"
manager. (see Pimco Total Return Bond Fund in the table that follows)
These have been pretty much the choices you've had.
Well, the outstanding news now is the playing field for bond investing has been wonderfully enlarged.
Rydex Funds offer the bond mutual funds and the trading freedom
to put a managed strategy like
ours to work for you, and you can get in on it today.
With the trading program I am about to tell you about using the Rydex Fund
Long Term Bond and Inverse Long Term Government Bond Funds ...
YOU
COULD HAVE Done Better than any of the bond
investing alternatives
listed above, A WHOLE LOT BETTER!
Did you know?
This strategy using these funds could be your ticket to profit by, rather than be trampled
by markets
getting hit by credit failures, dollar troubles, inflation and/or deflation worries.
All You Need to Know is When To Make Your Trades
This is where the strategy I'm about to introduce to you comes in. This is the strategy that
by using just these two new Bond Fund products according to a signal I have developed
from many years of experience and testing has beaten all the bond managers, the bond
benchmark, AND the SP 500 index, the benchmark for equity managers.
You heard this right. Beat the S&P 500 Index using dull, overlooked, forgotten, old
conservative bond funds.
Check out the performance of my Rydex Government Long Bond Trading Strategy From 12-31-97 to 12-31-2007 versus the buy and hold performance of the same Rydex Bond Funds, the Lehman Treasury Bond Index, Pimco Total Return Bond Fund, and the SP 500 Stock Index. |
||
|---|---|---|
Fund/Index Name |
Cumulative Return |
The Number of Times the Strategy Outperformed |
| McDonald Trading Strategy | 278.77% |
|
| Rydex Government Long Bond | 69.98% |
8 out of 10 Periods |
| Rydex Inverse Gvt Long Bond | -26.19% |
9 out of 10 Periods |
| Lehman Treasury Bond Index | 99.17% |
8 out of 10 Periods |
| Pimco Total Ret Bond Fund | 91.79% |
10 out of 10 Periods |
| S & P 500 Stock Index | 51.31% |
7 out of 10 Periods |
**Disclosure** This is a quantitative strategy derived from proven technical indicators set into algorithms that determine strategy trading rules. Because these are fixed mathematical statements, real time results would be the same as the results shown providing the trades were made on the trade dates determined by the signal. Signals have been published for subscribers daily on the website since March, 2005. PAST RESULTS ARE NO GUARANTEE OF FUTURE RETURNS. Investments in all securities are subject to risk of loss. ©Thaddeus J. McDonald RIA - All Rights Reserved |
||
Before we go further, let me give you some necessary background on myself and answer just what it is
that gives me the confidence to put this investment opportunity in front of you.
You saw the performance results above, but what IS
the story behind developing such a strategy?
Who is Thaddeus (Ted) J. McDonald II?
My short name is "Ted". I am a Registered Investment Advisor who has been in the investing
business
for at least 35 years. I do business as McDonald Capital Management in St. Louis, Missouri
where I manage private accounts of mutual funds for individual investors.
At the same time I am the owner of an on-line financial web business which I started in March 2005.
It is called Mutual Fund Investing, Trading and Market Timing at www.tradingmutualfunds.com
This is a subscription website where I publish daily buy/sell signals on carefully selected mutual
funds
for people wishing to be active in trading their mutual funds and ETF's.
The signals derive from my proprietary quantitative trading strategy developed over many years of wide
ranging experience in investment management.
On the site, I also publish and update daily a series of single fund and tactical asset allocation models made up of my selections from Rydex, ProFunds and ETF index and sector funds.
Subscribers see running performance numbers and are privy to my exclusive trading rules. We also
publish a free newsletter for the active mutual fund investor.
My purpose through the website is to give the ordinary mutual fund investor the ability (by referencing my signals) to engage in managed active long term investing without having a minimum account size and paying the usual management fee. My deepest purpose is to rescue the average mutual fund investor from the unreasonable premise of the buy and hold promise called: "You put your money down, and you take your chances." EXPERIENCE HAS SHOWN ME THAT WITH CONSISTENT APPLICATION OF STRATEGY RULES OVER TIME, THE PERFORMANCE OF MOST MUTUAL FUNDS CAN BE ENHANCED, AND THE INVESTOR CAN PROTECT HIM/HERSELF FROM STEEP AND CRIPPLING LOSSES. |
The market decline of 2000-2002 and this one in 2008 caused real suffering among friends who were ready for retirement, needing to draw invested money for income, and instead saw their mutual fund holdings reduced in value, some by half.
They were literally paralyzed as the market drifted down week after week.
We both know this can happen again.
My career path started with stock broker training, then portfolio management in a bank trust department when
mutual funds were hardly known, then gravitating to working with early market timers presenting this then new
concept for enhanced mutual fund performance to the brokers of major national brokerage firms.
I have had my own financial management firm specializing in managing portfolios of mutual funds for clients for
the last 20 years. In the process I have worked with two very successful independent fixed income managers.
My life of immersion in the financial markets always presented the same question, "Is this the best
time to be invested where I am now?"
Answering this question has taken analysis, experience, testing and the formulation of quantitative
strategies.
We live in very good times for the individual investor who wants to manage his or her own portfolio. Thanks
to modern data processing and high speed communication systems, the fruits of my many
years of work on
mutual
fund trading are available to you now.
With the new innovative funds available from Rydex and ProFunds, the way was made clear to apply
sophisticated trading concepts to mutual funds in transaction free accounts with no trading restrictions or
penalties.
There is no better example of doing this than the
Long Term Government Bond Fund Strategy
I have introduced to you here.
How I discovered The Bond Strategy Work on formulating trading strategies started with back-testing results using Rydex stock index and sector funds. Through over a year and untold number of hours, I selected certain proven technical indicators, gave them values and set them in algorithms that now make up my strategy trading rules for common stock mutual fund investing. As time came to back test the strategy on the Rydex Government Long Bond Fund and Inverse Government Long Bond Fund, the words of an exceptional institutional bond manager I knew kept running through my head: "Successfully timing the U.S. 30 year You see what he was on to was I felt challenged, and as the search narrowed to one of the indicators in the common stock fund strategy, back tested results were very encouraging and drove me further. This was a breakthrough!! It meant the strategy worked in both a rising rate I have the mental image of myself as an old gold miner panning for gold when I think of the hours spent refining my stratagies. This Government Bond Fund Trading strategy is one of the brightest "gold nuggets", one that unexpectedly turned up and shone forth. All you had to do was pick it up and put it in your pocket! It was the "Eureka!" moment
|
The Method
The method is simple.
There it is in a nutshell. A two bond fund combination operating like a toggle switch
responsive to the technical signals generated by my quantitative bond
fund trading
strategy.
Can You Believe It?
This Strategy Turns the Customary Risk and Return
Expectation Upside Down Getting Market Beating Returns Using
the Price Moves of the World's Safest Security
You have seen the cumulative returns of 278.77% using these signals applied to the Rydex fund selections from
December 31, 1997 through December 31, 2007.
Now, 10 years may not be a long time to prove out a buy and hold strategy. But, it is long enough for a trading
strategy; and if you are a bond trader, you know that in the last 10 years you have seen almost everything.
It has been a wild and woolly ride for interest rates, thrashed about by big financial scandals, equity bubbles, terrorism, unprecedented moves by the Federal Reserve, and currently by a big crash in credit financing.
Long bond returns and stock market returns over the period have been both positive and negative in the extreme.
Yet, these strategy rules, derived from pure mathematical statements, have dealt with these price swings trade by
trade throughout the period. What I want you to look at, in addition to the returns generated, is the year by year
consistency of the returns. By the way, there was not one losing year in the 10 yearly periods.
| Government Long Bond Trading Strategy - Rydex | |
|---|---|
| Average of Annual Rates of Return | % Return |
| 10 Years ending December 31, 2007 | 14.27% |
| 5 Years ending December 31, 2007 | 14.55% |
| 3 Years ending December 31, 2007 | 14.25% |
| Year to Date December 15, 2008 | 7.58% |
"Looks Good, Ted, but tell me more…"
Like, why does this strategy work? What’s going on here?
Why hasn’t some one else already done this if it’s so good?
Will it work in the future?
Is this day trading?
Why should I care about this now?
Well, here it is…one at a time...
Why does this strategy work?
The market for U.S. Treasury bonds and notes is very liquid, meaning it is huge. As interest rates
move up and down, prices of long term bonds move up and down affording trading opportunities.
The key to big profits is to be positioned for significant trend changes in interest rates.
Significant trend changes occur when bond managers move large positions up or down the yield curve
as they respond to inflationary pressures, deflationary threats, and changes in the economy.
My strategy detects these moves and positions accounts with price trends as they develop.
With Rydex which allow us to trade unrestricted and cost free,
we can respond
quickly and
efficiently,
and profit from these trend changes and consequent price moves.
Based on my experience, I see no reason why these price patterns will change in the future.
Why aren’t others doing this if it’s so good?
I think there are several elements at play here.
First of all, the really big bond managers who most influence U.S. Treasury long term bond prices,
make portfolios of BONDS, not BOND
FUNDS. These
managers aren’t even looking at bond funds.
Then, the big traders play the BOND FUTURES MARKET, not BOND FUNDS.
These two groups aren’t even looking at mutual funds.
We are ... and we operate under their radar
And remember it has only been a little over 10 years ago that Rydex Funds offered these bond funds
on their no restrictions, no transaction cost platforms.
Of course, there are people using the US Government Bond Fund and it’s Inverse, as they see fit,
for any number of reasons. You have probably experienced that on any given news item,
prices
can go in
unexpected directions, often in ways that defy conventional wisdom.
But the difference between them and what I am introducing here is a quantitative and systematic
trading strategy using these two bond funds, where the moves are consistently made with the discipline
of a
strategy built on purely objective technical indicators.
The results have been and are continuously published on our website and have proven to produce the
performance
I have shown you.
As far as I know, this quantitative, systematic bond fund trading system is totally unique.
Also consider that, as I said at the beginning, not many people look to bond funds to make capital
gains. Most people only look at the coupon rate and compute the current yield.
This is the beauty of what we do.
Is this a bond day-trading program?
No, no, no......
Bond mutual fund prices, like all mutual fund prices, are computed and published only once at the
end of the day. Price data is run through our strategy computations and the trading signal is determined.
If a switch is signaled, the trade occurs at the end of the following trading day. When a trend is in place, trades
are infrequent. In transition periods, trades can be more frequent. You can probably vouch for that.
You can see in the complete trading analysis report offered below exactly how many trades were made in
every month of every year back to 1997. As I said before, you will be amazed at the consistency.
The complete Bond Trading History Analysis offered here contains a full study which answers any further in-depth questions you may have about verification. You can have this report FREE with no obligation on your part.
Your email address will be kept private. We will not sell, share or offer any information about you to any other party.
This 17 page Analysis in PDF format, gives you data on every trade
going back to December 31, 1997, including:
Simply fill in the box above, check your e-mail for reconfirmation we can send you the information, and then look for the link to the complete Bond Trading History Analysis.
Is this program for you?
Is it for you now?
I say, if not now, when?
In good times and bad, here is a way to put your bond fund investment into a total return generating vehicle.
But in uncertain times like the present, with the market reacting in big swings to credit losses, dollar problems, inflation and deflation fears, war and politics, and
Because the bond is looked to as the "go to" security in times of trouble, certainly the time for a strategy like this has never been better.
If you are a financial professional, you will recognize the value in a “total return” approach to supplement portfolio
return and beat the benchmarks your clients expect from you.
What to Do
If You Would Like to Access the
Government Bond Fund Trading Strategy
The positions and trade signals for the Government Long Bond Trading
Strategy are offered as part of a monthly
subscription to www.tradingmutualfunds.com
. The subscription is $22.50 per month or $225.00 per year.
In addition to having the benefits of this signal, you will also receive:
This information is directed to individual investors who have or can place funds at Rydex Funds or ProFunds.
For further information, just click on the following link
Call us during business hours,
Monday through Friday, 9:30 am - 12::00 noon, 1:00 pm - 5:00 pm, Central Time
at 314-994-1201.
We will be happy to discuss the strategy and other questions you may have about using our signals and strategy
Our number again is 314-994-1201.
Best regards,
Ted McDonald
This Website Does Not Provide Investment Advice
The information contained here is not investment advice and is presented for informational purposes only. The information is not an offer or the solicitation of an offer to purchase any security, mutual fund, or other investment. The strategy and trading signals discussed may not be suitable for particular investors depending on their individual investment objectives and financial position. The purchase of any mutual fund, security, or investment, places the investor and the money invested at risk for loss. Only a registered broker or investment advisor may advise you on the suitability of a specific investment depending on your investment objectives, financial position and ability to tolerate risk of financial loss.
Disclaimer Regarding Hypothetical Performance Comparisons
The Government Long Bond Mutual Fund Trading Strategy has not been applied completely over a significant period of time in real trading. All profit performance examples are hypothetical, assuming that investors bought, sold or exchanged the mutual funds specified at the times and on the trading days called for by strategy rules. Actual results can and do vary based on the day of execution and transaction costs, if any, that can be incurred. The strategy trading rules are derived only from set mathematical expressions not subject to interpretation. The results shown are from backtesting the mathematical expressions against historical prices and in that sense would have been the same as real time results. However, there is no guarantee that information issued in the future applying the same mathematical expressions will equal or better the performance of the The Government Long Bond Mutual Fund Trading Strategy results as shown herein. Past actual or simulated performance is no guarantee of future results. Any exposure to securities markets entails a high degree of capital risk.
© Thaddeus J. McDonald R.I.A. - All Rights Reserved
P.O. Box 50386
Saint Louis, MO 63132