3Sig ‘Just Might’ Continue Outperforming

Thank you to Brenda Jubin of “Reading The Markets” for her pre-publication review of my new book, The 3% Signal. It ran on Investing, ValueWalk, and other sites. She concluded: “We often hear, and have come to believe, that models beat experts. Kelly offers the individual investor a simple, mechanical model that instills discipline, removes a lot of self-sabotaging emotion, and has a good track record. Will it continue to outperform? Actually, it just might.”

I appreciate her final sentence because it would have been easy to demur with something like “We’ll see” or “Only time will tell.” Jubin was evidently swayed by the book’s research and wanted to convey that, in fact, unpopular as it may be to admit this to cynical investing types, she does believe in the underpinnings of 3Sig and thinks it probably will continue outperforming. Thank you, Brenda. I hope others are as open-minded as you are when it comes to embracing a new approach.

I would also like to thank Nancy Zambell at Dick Davis Dividend Digest, who invited me to submit my top pick for 2015 and allowed mine to be 3Sig rather than another stock or fund. The Digest ran the following in Issue 268 sent last Wednesday:

The 3% Signal in Dick Davis Dividend Digest

In case it’s hard for you to read it in the screen capture, here’s the full text:

“My pick is not a stock, but a technique: The 3% Signal. This is the title of my new book and the name of the method it explains. Rather than trying to time the market, this approach is indifferent to future market direction and focuses its effort instead on rational reaction to prices already recorded.

“By dividing an account along an 80/20 split, putting the 80 in a small-cap stock index fund and the 20 in a bond index fund, then rebalancing the stock fund to a rate of 3% growth every quarter, the technique beats buying and holding the market and even beats the formidable dollar-cost averaging method into a market index fund. Because most professional money managers lose to indexes, the plan beats the vast majority of them as well — with low-cost index funds, no less.

“This is the stock market’s new best practice, and I encourage everybody to use it with at least part of their assets, if not all. It works especially well in a retirement account, such as a 401(k).

DD editor’s note: You may pre-order the book via Jason’s website, and are invited to join him in a live Twitter Q&A session on Tuesday, March 3 at 7pm EST.

The book is available for publication day delivery on February 24 from Amazon for $12, a good discount off the $16 cover price. Here’s the link:

http://www.amazon.com/exec/obidos/ASIN/0142180955/jasonkelly/

If you’re not already following me on Twitter, please head over to @TheKellyLetter at https://twitter.com/TheKellyLetter and follow me so you’ll be ready for the Q&A and whatever else I post there, like my recent interaction with Doug Kass of Seabreeze Partners. Kass wrote on Jan 6: “Perhaps, rather than ridicule outside of the box thinking – variant views should be sought out. And I do tweet this respectfully.” I replied: “Or no views since opinions about the stock market are proven to be wrong about 50% of the time. Reactive rebalancing rules.”

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    Thank you for the work you do. You're a household name here and my wife and I often discuss your letters on Sundays. My ten- and seven-year-old children recognize your name and will eventually be taught to invest using 3Sig and 6Sig. You've had an enormously positive impact on our investing and inspired me to look at the world in more rational and clear terms than I did years ago. I'm sure that thousands of others would say the same. Kelly Letter subscriber Matt Barnes
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