Own-the-Bubble - AAII. LOS ANGELES

How to “Own-the-Bubble”
Presented by: Scott Juds
President, & Chief SectorSurfer
SumGrowth Strategies, LLC Seattle, WA
What Is a Bubble?
It’s a Long Lasting Overbought
Trend Anywhere in the Market.
Well Known Bubbles
1992 – Biotech - FBIOX
2000 – Technology - FSELX
2007 – Real Estate - FRESX
1998 & 2008 – Oil & Gas - FSESX
2004 – Consumer Finance - FSVLX
2012 – Gold - GLD
1992 – Biotech - FBIOX
2004 – Cons. Finance - FSVLX
How About a
Strategy of Bubbles?
98 & 08 - Oil-Gas - FSESX
2007 – Real Estate - FRESX
2012 – Gold - GLD
2000 – Technology - FSELX
What Accounts For This?
SectorSurfer Strategies
Inherently “Own the Bubble”
Why? - #1
Although Bubbles can be Anywhere, Sector Rotation
Strategies Inherently Look For Bubbles Everywhere.
SectorSurfer Strategies
Inherently “Own the Bubble”
Why? - #2
Bubbles ARE the Power Strokes - Embodied as Long
Lasting Overbought Trends, which SectorSurfer Rides.
SectorSurfer Strategies
Inherently “Own the Bubble”
Why? - #3
Oscillators, Such as RSI and MACD Exit Too Early and
Too Often. Trends Must be Used to Own the Bubble.
Oscillator Indicators
SectorSurfer Strategies
Inherently “Own the Bubble”
Why? - #4
Exiting Promptly When Leadership is Lost is Built-In.
Leadership Can Be Lost to Another Sector, or to $Cash.
SectorSurfer Strategies
Inherently “Own the Bubble”
Why? - #5
Optimal Trend Signal Extraction is Our Expertise:
Its the Whole Game!
Reduce the Noise
To See the Signal.
Bubble Philosophy
-- Behavioral Finance -Bubbles are Created by Irrational Exuberance
Former Fed Chairman Alan Greenspan
Without Bubbles, Markets Would be a Flat 8%
A Few Percent Better than Inflation – Driven by Productivity Improvements.
Bubbles are the Engine for Sector Rotation
Embrace and Own the Bubble – The Alternative is “Diversify & Rebalance”
Bubble Therapy
• We Can’t Change the Bubbles
• Bubbles Don’t Want to Change
• Portfolios Must Adapt to Bubbles
Ahhh ... Portfolios ...
Portfolios Own Multiple Strategies
What Can We Do With That?
Do Layers Add Value?
How about Layered Diversification?
Diversification Layers
 Funds: Company Diversification: Reduce the risk of pops and drops in individual stocks.
 Strategy: Serial Diversification: Owning multiple funds, one at a time — the trend leader.
 Portfolio: Asset Class Diversification: Multiple Strategies smooth shorter term bumps.
“Own the Bubble” Portfolio
Holds Only Four Funds
Fidelity Global
ETF Power Mix
ETF Regions
ETF Ultra (2x)
Strategy-of-Strategies
Strategy-of-Strategies
Strategy-of-Strategies
Strategy-of-Strategies
True Sector Rotation Strategies
Each Selecting the Best One of Twelve Funds
Many Many Thousands of ETFs and Mutual Funds
Many Thousands of Companies
“Own the Bubble” Portfolio
Holds Only Four Funds
Fidelity Global
ETF Power Mix
ETF Regions
ETF Ultra (2x)
Strategy-of-Strategies
Strategy-of-Strategies
Strategy-of-Strategies
Strategy-of-Strategies
True Sector Rotation Strategies
Each Selecting the Best One of Twelve Funds
Portfolio Layers:
 Portfolio Holds:
A Diversified Set of Strategies
 Each Selecting:
The Best Strategy in its Class
 Each Selecting :
The Best Fund in its Class
 Each Holding :
A Diversified Set of Companies
Master S.O.S. Strategy Definition (example)
Master S.O.S. Strategy Definition (example)
“Own the Bubble” Portfolio (example)
“Own the Bubble” Portfolio (example)
Additional Online Information
That’s How to
“Own-the-Bubble”
SumGrowth Strategies, LLC Seattle, WA