New System Starting in 2012

We began using a new timing system in 2012. Our old system outperformed all of the TSP Funds except the F Fund from 2006-2011. However, it didn't perform as well as we expected in recent years.

Our old system relied heavily on intermarket relationships among stocks, interest rates, bonds, oil and commercial trading activity. These relationships had been good forecasting tools for several decades--good enough to soundly beat buy-and-hold investing. They continued to work very well as we started our service in 2006. However, the world changed during the financial crisis of 2008-2009. Many intermarket analysis tools and timing strategies haven't behaved consistently since then. This hasn't been unique to us. Other analysts, hedge funds and money managers have noted the same thing.

As we researched other methods, only two strategies appeared robust enough to stand the test of time and ever-changing financial conditions. The first was a momentum-based approach using longer-term data to avoid frequent “whipsaws” in volatile markets. The other was a unique seasonal approach. We combined these two strategies into a system that works better than a pure momentum or pure seasonal method.

While our new system's performance fluctuates year by year, it has held up well since the financial crisis. You can see its backtested returns from 2004 to 2011 below.