Stock Market TIming Services Offered
MIPS is a stock market timing model that signals its members at the end of the day when the market (as measured by the S&P500) has changed direction from up-to-down or down-to-up (Signal Date). The individual investor trades on this signal (long or short or out) on the opening of the market on the following day (Trade Date). Members then simply keep the position that they acquired on the trade date until the next Signal email from MIPS. It really is that simple.
To get the full benefit from our MIPS stock market timing system, we recommend using our flagship model MIPS3/MF with a buy/short/cash strategy, trading a mix of your choice from the SPY, IWR, IWM, QQQ ETFs. This gives the member an ETF Trading System to time the stock market. But, for investors that want to trade less frequently, or do not want to go short, etc., we offer the following market timing services options (or "Trading Profiles").
MIPS Trading Profiles
When trading with MIPS (or trading any way else for that matter), investors need to have defined:
(1) which stock market trading model use,
(2) which stock market trading strategy to use (buy/hold, buy/short, etc), and
(3) which equities (or ETFs) to trade.
Once an investor has decided on ALL of the above, we call it the investor's "Trading Profile". This section is to help you decide upon the MIPS Trading Profile that is right for you.
FROM THE ABOVE MEMBERS DECIDE:
A.) Which Stock Market Timing Model to Follow (all included in one low price) *
1. Very Low Frequency - MIPS1/VLF - 1 trade every 1-3 years (beats buy/hold long-term)
2. Low Frequency - MIPS2/LF - 5 trades/year (trades a little more, but beats buy/hold by a lot)
3. Medium Frequency - MIPS3/MF - 15 trades/year (trumps buy/hold, but trades more)
* Note: All of the above MIPS models are included in one subscription fee. Read on and follow
the one that is right for you.
B.) Which Strategy to Follow
1. Buy/Sell - Long/Cash only, or
2. Buy/Short - Long/Short/Cash
C.) What to Trade (buy and/or short)
1. Buy just one of SPY, MDY, IWM, QQQ ETFs on Long Signals, or
2. Buy a mix of SPY, MDY, IWM, QQQ ETFs (like 1/3 of 3, or 1/4 of each), and
3. Short the ETFs you bought in #1 or #2 above (or buy the corresponding "inverse ETFs")
* Inverse funds not recommended with MIPS1/VLF.
4. Short just SPY ETF (or buy just SH)
5. Short another ETF (or a mix from those on this page)
6. Don't short at all (stay 100% in cash)
TRADING FREQUENCIES FOR INDIVIDUAL INVESTORS
As mentioned under the "MIPS Basics" tab, MIPS caters to low-frequency and mid-frequency investors. This is described in the following table:
MIPS STOCK MARKET TRADING MODELS
After about 6 months of development and testing, we are releasing our newest model (which is a slightly faster trading model).
- we are most pleased to officially introduce our new "MIPS4/MF+" model
- the name comes from: (a) MIPS4 to identify a new model, and (b) MF+ meaning medium-frequency "plus"
- MIPS4 is an offshoot of MIPS3, but uses algorithms from all MIPS models
As with all of the MIPS models, with MIPS4 you can trade any ETF that "correlates" well with the SPY
- and, MIPS4 is a little smoother ride than MIPS3 (i.e., with less "volatility")
- as a result, the MIPS4 model produces very "smooth" results
For this reason, we feel comfortable approving the use of MIPS4/MF+ signals to trade leveraged ETFs
But, of course, you do NOT have to trade with leverage...
- if you do use leverage, however, we recommend double leverage long, but single leverage short for more
conservative use of leverage.
(MIPS3.org in the graph below is MIPS3/MF without the improvements in 2011-2012)
MIPS was designed and developed to be a medium frequency stock market trading model with a buy/short/cash strategy, trading ETFs. Our original and now "flagship" model is MIPS3/MF (new name). We usually use MIPS3/MF with a buy/short/cash strategy, trading a "mix" of 1/4 each of SPY, MDY, IWM, QQQ ETFs. This profile trades an "average" of 15 trades/year over long periods (but with a range of 10-25 trades/year in any one year, or even maybe 2-3 times in any one month). We recommend this profile for active investors and it will produce the best results in the long term.
We realize that there are many investors who do not want to trade as often as a medium frequency-model requires. So, we decided to offer models that would be more appealing to these investors. Our two other models are (a) the low-frequency trading model (MIPS2/LF) whick trades about 5-6 times/year, and (b) the very-low-frequency trading model (MIPS1/VLF) which trades an averge of about only once a year.
Our low-frequency stock market trading model was developed for the average investor who does not want to make 10-20 trades/year. MIPS2/LF trades an average of 5 trades/year (but occasionally can trade as many as 2-3 times in any one month). When coupling MIPS2/LF with a buy/short strategy, it will produce really good results, but not quite as good as MIPS3/MF (but with fewer trades). Over time, the MIPS2/LF low frequency trading service should produce results that are at least 80% as good as the MIPS3/LF model, with only 1/3 as many trades.
Our very-low-frequency stock market trading model was developed for the long-term investor who wants to trade only the long-term cycles in the stock market, and hence trade an average of 1 time per year! Obviously, this model cannot produce results as good as the other MIPS models, but it can still trump the buy/hold strategy over long periods of time (see the "Studies I and II" under the Performance tab). For example, in the 5-year period of 2006-10, the MIPS1/VLF performance with a buy/short strategy was +90% versus +1% for buy/hold SPY (with only 6 trades). *Using Inverse ETFs not recommended with the MIPS1/VLF model.
Even without "shorting", MIPS1/VLF with buy/sell beat SPY buy/hold in the 8 year period of 2003-10 to the tune of +102 vs +43, respectiely (see "Study IV"). This model is good for 401k accounts (without shorting) and this is why we call it "The 401K Saver".
AVERAGE TRADING FREQUENCIES
YOU DON'T HAVE TO GO "SHORT"
Most average investors use the buy/hold strategy and watch their stock market gains seriously erode every 4-5 years. In other words, they watch their 401K accounts become 201K accounts!!! And then they "start over", again-and-again. MIPS was designed to correct this trading "habit" that the average investor has been taught (erroneously) to follow. How do we know that it is erroneous? Mainly because the "teachers" do NOT follow that strategy themselves. They themselves follow the buy/short/cash strategy, and so can you (with MIPS).
We certainly understand that some risk-averse investors to not want to (and possibly should not) be "short' in their portfolios. No problem, these investors should simply use their chosen MIPS model with a buy/sell strategy. That is, they simply sell and hold a 100% cash position on Cash and Short Signals from MIPS. An intermediate option for investors who are buying say 1/4 each of SPY, MDY, IWM, QQQ ETFs would be to short just the SPY on Short Signals from MIPS. The bottom line is that you decide on your strategy and there is no right or wrong.
WHAT TO TRADE
A short list of ETFs that are well-correlated to the SPY include (but are certainly not limited to) the ETFs in the chart below. Click here for more on what to trade and what NOT to trade.
* These funds are Inverse Funds (not recommended with MIPS1/VLF)
** Click here for "Alternate ETFs" to those above
By definition, large-cap stocks are companies with annual revenues over $20 billion; mid-caps have annual revenues between $10-20 billion; and small-caps have revenues between $2-10 billion. Companies with revenues under $2 billion are called ultra small-cap or micro-cap. So, none of the ETFs above contain really small companies (like revenues of say $50-100 million)
Investors can use the MIPS models to trade any one of the above ETFs or they may buy a small "basket" containing 3-4 in a mix of their choice (like investing 1/4 of their money in each of the above, or 50% in one and 25% each in two others, etc.).
You can basically trade any equity whose price behavior correlates well with the SPY. Usually these would be certain Index ETFs. A short list of these are presented in the Services section, and a more comprehensive list is provide under the "Alternate ETFs?" button in the Services section. Again, MIPS is not a stock picking system and we do not recommend any individual stocks or ETFs that our members should trade, but we do offer some "guidelines".
Viable trading profiles include:
- Conservative investors trading SPY long and short.
- Average investors trading IWM long and short.
- Average investors buying 1/3 each of SPY, IWM, QQQ on long signals, and buying their inverse* ETFs on short signals.
- Aggressive investors buying 1/3 each of SPY, IWM, SSO on long signals and buying their inverse* ETFs on short
signals (except buy SH instead of the double leverage inverse fund for SSO).
- Definition of "Inverse Funds" http://www.investopedia.com/terms/i/inverse-etf.asp
* Using Inverse ETFs not recommended with the MIPS1/VLF model.