401kBooster.com is still undergoing development and testing. Links may be broken and all user data may be reset without notice. Use the Contact page to be notified when 401kBooster.com is ready for subscriptions. Until then, enjoy the demo apps.

Investment Strategy Tips


Portfolio Construction

  • For strategies that use scoring periods of a month or longer, choose asset classes with sufficient diversification and stability. Avoid “niche” asset classes. For example, single commodities such as gold, oil, and timber are often too volatile. A commodity fund representing multiple commodities is better suited for ACRIS. Similarly single small countries (i.e. relatively small economies) are also too volatile for intermediate momentum.
  • Sector fund rotation (e.g. energy, financials, healthcare, transportation, etc.) is popular. ACRIS would deliver superior returns relative to the S&P 500 of which these sectors are a part of. However, larger asset classes such as geographic regions would deliver better results.
  • Real estate is a popular asset class. In reality, it performs much like an industry sector, and does not fit well within a broader portfolio of world geographic regions.
  • Junk bonds are often too volatile for use in ACRIS. Add to your portfolio with caution.

Discipline

  • 401kBooster.com deploys ACRIS, which is fundamentally a mechanical trading system. As such, it usually performs best if the trader follows the trading rules exactly and without variation every time.
  • Backtest your portfolio to gain confidence in the system and to understand its volatility.
  • If daily volatility causes great anxiety, do not follow your equity or the fund that represents your position. Or if necessary, do not pay attention to the market at all until it is time to score and rotate your fund.
  • If a trading system is causing great anxiety frequently, then the system may not be for you. The risk of losing discipline is great–emotional trading can lead to a death spiral. Find another system that fits your temperament better.

Trading

  • The website currently relies only on historical adjusted closing prices from a paid service. The day’s closing prices are usually not transferred to historical record until the evening (i.e. not at closing bell). Thus the day’s score would be the previous day’s score until the data transfer occurs.
  • One routine may be: before the morning bell of the potential trading day (e.g. last trading of the month), score your portfolio (it would use previous day’s close). Based on the score results, enter your trades to swap funds before or at the morning bell.
  • The backtester app makes trades using the closing price. While this mimics how mutual fund transfers operate, with Exchange Traded Funds, this requires a sell/buy order near the closing bell (e.g. 4 pm Eastern Time) which can be an inconvenient time. Many brokerages offer trading apps that offer conditional trading based on time, such as Schwab's StreetSmart Edge.
  • If you’re experienced with chart reading and technical trading, you may be able to enhance returns by waiting during the designated trading day (or longer) for a good time to sell your fund, and then wait for a good time to buy the next fund. Note that this is diverging from strict mechanical trading, so tread carefully.
  • Often there is a slight performance advantage if one could rotate the top scoring fund at the close of the same trading day as the scoring of the portfolio. This can be accomplished when (1) the top scoring fund is known prior to close based on its relative score from the previous day, and (2) execute the fund rotation just prior to close or use a broker that can execute the trade orders at close.