The Effectiveness Of My Signal System

SUMMARY:

In this video, you’ll see the effectiveness of my Signal system.

Starting with $10,000 in 2001 and making employee contributions to a 401(k) account, The 3% Signal system (3Sig) returned far more than dollar-cost averaging into the S&P 500 (SPY), and dollar-cost averaging into a portfolio of Morningstar medalist actively-managed funds, as follows by year-end 2016 balance:

$332,091 in 3Sig
$263,874 in DCA SPY
$209,070 in DCA Medalists

This shows 3Sig beating both the unmanaged stock market and top-quality managed funds.

Even more impressive, the example pits an imperfectly run version of 3Sig against perfectly executed dollar-cost averaging plans, but 3Sig won anyway. In real life, 3Sig does even better against the mess that is most people’s portfolios.

Get your financial future on the Signal system ASAP!

TRANSCRIPT:

Hello, I’m Jason Kelly. Thank you for joining me.

In this video, I’ll present the effectiveness of my Signal system in the stock market.

For background on how the system works, please see the video “How My Signal System Works.”

In The 3% Signal, I showed how an investor named Mark used the plan to greatly outperform two of his colleagues earning the same income and directing the same percentage of their income to 401(k) accounts.

On page 291 in the book, you’ll find this chart:

[Chart shown in the video, at 0:34.]

This chart shows in the y-axis on the left the balances of their accounts over time. The three investors are named Garrett, Selma, and Mark. Mark is the main one we care about. He’s the one running The 3% Signal.

It starts back in 2001 and ends in June of 2013. Notice there, “The 3Sig Advantage.” That stands for 3% Signal. We can see that at the end of this run Mark’s plan greatly outpaced the balances of his colleagues, Garrett and Selma.

Notice also that the comparison in the book ends in June 2013. What happened after that? Let’s have a look.

At my website, jasonkelly.com, click on Resources and then Compare Investing Strategies to see the comparison extended to the present.

To jump straight to the page, visit:

jasonkelly.com/resources/strategies/

On the Strategies page, I compare Mark’s 3Sig plan with two others: DCA SPY and DCA Medalists. I’ll explain each of the three plans:

Mark’s 3Sig
This is Mark’s plan run with IJR and VFIIX (Vanguard GNMA bond fund) as shown in the book, beginning at the end of the fourth quarter of 2000 with $10,000 and the salary history shown in the book, then his salary increasing 3% annually in the years after 2013 (where tracking ends in the book).

His quarterly contribution to VFIIX in 2013 was $1,815; in 2014, $1,871; in 2015, $1,927; and in 2016, $1,983. Mark also contributed $13,860 in new cash during the subprime mortgage crash, per the signal’s guidance. Notice the low expense ratios: IJR 0.14%, VFIIX 0.21%

DCA SPY
This plan runs the same $10,000 invested at the end of 2000 and with Mark’s same salary history shown in the book, with the same quarterly contributions after 2013.

The only difference is that all capital goes into the S&P 500 as represented by the SPY ETF. This is dollar-cost averaging into SPY with Mark’s quarterly contributions. Mark’s $13,860 in new cash is distributed evenly across the first 50 quarterly contributions (Q101-Q213). Notice the low expense ratio here, too: SPY 0.09%

DCA Medalists
This plan is the same as DCA SPY, but using a portfolio of Morningstar medalist actively-managed funds, initially allocated as follows: 30% Longleaf Partners (LLPFX) large-company stock fund, 20% Wasatch Small-Cap Growth (WAAEX) small-company stock fund, 20% Artisan International (ARTIX) international stock fund, and 30% PIMCO Total Return (PTTDX) bond fund.

All are featured in the book, and all are still highly-rated. Contributions are divided by the initial allocation percentages; holdings are not rebalanced back to target allocations. Notice the high expense ratios: LLPFX 0.92%, WAAEX 1.21%, ARTIX 1.17%, PTTDX 0.75%

So, how did the three plans fare? Have a look:

Chart at 5:20 in the video, showing that at the end of 2016 Mark’s 3Sig plan had amassed a balance of $332,091 compared with $263,874 in DCA SPY and $209,070 in DCA Medalists.

Keep in mind: Mark’s 3Sig plan was not run perfectly because he skipped one buy signal, but the DCA plans are shown here being run perfectly.

In real life, almost nobody runs a perfectly executed DCA plan or restricts their portfolio to just medal-winning mutual funds!

Yet, in this table we see an imperfectly run 3Sig plan performing much better than two perfectly run dollar-cost averaging plans.

Compared with the real-life mess that most people’s portfolios turn into over time, the Signal system does even better than it’s shown doing against these perfect DCA plans.

The numbers don’t lie, folks. The Signal system works, and this is just one version of it. In addition to 3Sig, I also run 6Sig with 2x leverage and 9Sig with 3x leverage.

This boosts profit potential even more while using the same trusted Signal framework.

There’s just no better way to go! Get your financial future on the Signal system ASAP. That’s my recommendation to you.

Thanks for watching.


To review the performance of Mark’s 3Sig plan, please visit my Strategies page.

Want more videos like this? Subscribe to The Kelly Letter YouTube channel.

Thank you for watching!

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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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    OCLC

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