SystemTrader's Fidelity Select Timing Portfolio

[SystemTrader]

This folder will track a timing system for the Fidelity Select funds. These funds represent many different sectors. As stated on Fidelity's website, "Sector funds let you target growth opportunities in specific industries—without choosing individual stocks."

For years, the Fidelity Selects have been afavorite for market timers. As the economy goes through its business cycle, certain sectorstend tooutperform others. These funds give investors a chance to capitalize on this phenomenon. The sectors include energy, utilities, technology and health care. Because these have been traded frequently by market timers, Fidelity begancharging a 0.75%fee for "early" redemptions (i.e., less than 30 days). To avoid this, my timing systemwaits 30 days before switching once it's in a fund.

Thesystem ispurely quantitative (i.e., there's no judgement or discretion on my part) and has strongly outperformed the S&P 500 since 1990. Of course, I should mention the obligatory "past performance doesn't guarantee future returns" statement. In addition, even though it has outperformed over the long run, this doesn't mean it will beat the S&P 500 every quarter or even every year. But it's designed for IRAs and other long-term portfolios, and I expect to do well if it's followed long enough.

The system is always invested in 2 different funds. I'll list those funds here and try to update the performance weekly. I'll also post whenever there's a switch. So without further adieu, the current funds are

Energy Services (FSESX)

Automotive (FSAVX)

For tracking purposes, I'll assume these funds were purchased at the close of business on Monday, 22 Aug.

Oh, and a list with all the Fidelity Select funds is here:

http://personal.fidelity.com/products/funds/selectindex.shtml

[mlk_man]

ST, I'm not understanding.......is this now part of your future pay site that you mentioned earlier this year? Seems as though your previous system is doing about as well as mine and everybody elses. Which ain't too good.

That being said, are you saying you will be switching between the energy fund and the automotive fund so you are always invested in one or the other or that you'll always be invested in both or none at all?

Also, on the web address you posted, I notice the first part of the address says "personal". I'm curious, do you get something for every "hit" on this link or is this just the way you copied the link?

THere are ETF's to just about every fund Fidelity offers and you have the luxury of being able to buy and sell them at anytime during the trading day, as opposed to having to wait until the closing price. Have you looked into this? Why pay an extra fee if you don't have to.

One last thing, you mention "not representitive of past performance". What is this performance?

Thanks,
M_M

[SystemTrader]

Milk:

ST, I'm not understanding.......is this now part of your future pay site that you mentioned earlier this year? Seems as though your previous system is doing about as well as mine and everybody elses. Which ain't too good.


ST:

Yes, I'll probably include it along with a gold fund timing system at no extra charge. And yes, I'm not really happy with my TSP system's performace so far, but

1) It's only been 8 months, and timing is everything. We started this year with a huge drawdown for stocks, and most of us were fully loaded on C/S/I. If we started trackinglast November, it would be a different story for many of us.

2) It's been good for me to see what's unfolded this year. I've seen a couple ofweak areasthatthat I didn't catch previously, and I'm in the process of changing a few things. I'm not going to charge anything until I'm really comfortable with the system.

For what it's worth, I've made a few gold mutualfund timing recommendations in a folder you started ("Buying Gold Companies").My lastrecommendation from 10 May (which I'm still holding)is up14% right now, knock on wood....I'm going to start a separate folder here for gold fundtiming as well.

Milk:
That being said, are you saying you will be switching between the energy fund and the automotive fund so you are always invested in one or the other or that you'll always be invested in both or none at all?

ST:

For the Fidelity Selects, I'll always be invested in two funds. The current two are Energy and Automotive.Later it could be (1) Energy and (2) Health Careor (1) Retailingand (2) Technology, etc. But no, I won't be switching betweenEnergy and Automotive. I'll holdboth until further notice and will always hold two funds.

Milk:

Also, on the web address you posted, I notice the first part of the address says "personal". I'm curious, do you get something for every "hit" on this link or is this just the way you copied the link?

ST:

Absoluletely not. I don't do any affiliate programs. Go to Fidelity.com then select "Mutual Funds" and you'll see that the "Personal" part is automatically added to the URL.

Milk:
THere are ETF's to just about every fund Fidelity offers and you have the luxury of being able to buy and sell them at anytime during the trading day, as opposed to having to wait until the closing price. Have you looked into this? Why pay an extra fee if you don't have to.

ST:

I'd rather trade ETFs. I've tried todesign a system for them,but nonehave been asprofitable or stable as the one I've made for Fidelity.Also, Fidelity Selects have been around much longer so there's a lot more data to backtest. I haven't given up on ETFs, but for now I'll stick with Fidelity.

Milk:

One last thing, you mention "not representitive of past performance". What is this performance?

ST:
The backtested performance for the Fidelity system, which has beenin the20-25% annualized rangesince 1990. Whether you're talking about backtested or real-time performance, there's no way you can guarantee the same results in the future.

[mlk_man]

THanks for replying ST, I hope things work out for ya. Have you come across any funds other than short funds that happen to go the opposite of each other? I've been looking but haven't really come across any. I know that gold typically goes the opposite of the dollar, but is than a way to play the dollar other than with Forex?

I agree about not being with my system also. I had to go back through my old data and actually discovered a couple things I was doing wrong so hopefully it'll get better. I've been so wrapped up helping others with their retirement plans and playing individual stocks that I might have spread myself a little thin there for awhile. Guess I might have to sacrifice some of my social life so I can focus more on making money........:(

One thing I won't do anymore with individual stocks is gamble on quarterly reports. You can take a real hit even when the report is good, which you can figure it will be by researching, but just one little word or negative comment by some CEO and you can lose 10-20% real quick! :shock: Of course those big drops do make good buying opportunities sometimes.

Good luck,

M_M

[SystemTrader]

(mlk_man wrote: [/b]


THanks for replying ST, I hope things work out for ya. Have you come across any funds other than short funds that happen to go the opposite of each other? I've been looking but haven't really come across any. I know that gold typically goes the opposite of the dollar, but is than a way to play the dollar other than with Forex?

I agree about not being with my system also. I had to go back through my old data and actually discovered a couple things I was doing wrong so hopefully it'll get better. I've been so wrapped up helping others with their retirement plans and playing individual stocks that I might have spread myself a little thin there for awhile. Guess I might have to sacrifice some of my social life so I can focus more on making money........:(

One thing I won't do anymore with individual stocks is gamble on quarterly reports. You can take a real hit even when the report is good, which you can figure it will be by researching, but just one little word or negative comment by some CEO and you can lose 10-20% real quick! :shock: Of course those big drops do make good buying opportunities sometimes.

Good luck,

M_M


Thanks, MM.

As for other inverse funds, there are acouple that go up with rising interest rates--they're sort of "anti-bond" funds. One is the Rydex Juno Fund (RYJAX) and the other is the ProFunds Rising Rates Opportunity fund (RRPSX). The only other way to play the USD (besides gold or direct Forex trading) that I'm aware of are CDs or savings accountsdenominated in other currencies. Everbank (http://www.Everbank.com (http://www.everbank.com/)) specializes in these.

Oh, one other possibility is the Prudent Bear Global Income fund (PBRCX). It's a foreign bond + gold mutual fund that moves inversely with the USD.

I agree about trading stocks around quarterly reports--it's a minefield!

Take care,

ST

[SystemTrader]

Quick update. For tracking purposes, I'll assume the two Fidelity Select funds were purchased at Monday's closing price since I gave the "buy signal" over the weekend.

Initial Purchase, 22 Aug:

Fidelity Select Energy Service (FSESX) at 57.51

Fidelity Select Automotive (FSAVX) at 36.07

[SystemTrader]

Weekend Update

Still holding the same two Fidelity funds. We'll hold them at least 30 days to avoid Fidelity's early redemption penalty.

Current Fidelity Select Funds

Energy Service (FSESX)

Automotive (FSAVX)

Returns Since Inception (8/22/05):

Fidelity Select Portfolio: -0.67%

S&P 500: -1.36%

[SystemTrader]

Weekend Update 9/2/2005

Still holding the same two Fidelity Selectfunds. We'll hold them at least 30 days to avoid Fidelity's early redemption penalty.

Current Fidelity Select Funds

Energy Service (FSESX)

Automotive (FSAVX)

Returns Since Inception (8/22/05):

Fidelity Select Portfolio: +1.81%

S&P 500: -0.30%

[SystemTrader]

Weekend Update (As of 9/9/2005)

Sorry, I'm a day late. To stay consistent, I'll update with Friday'sclosing prices (9/9/05)as I normally do. The Energy Service Fund--and entire energy sector--took a pretty big hit today, so we'll have to see how things shape up at the end of this week.

As of Friday, though, thingswere going well. We're still holding the same two Fidelity Selectfunds. We'll hold them at least 30 days to avoid Fidelity's early redemption penalty.

Current Fidelity Select Funds

Energy Service (FSESX)

Automotive (FSAVX)

Returns Since Inception (8/22/05):

Fidelity Select Portfolio: +3.86%

S&P 500: +1.62%

[SystemTrader]

Weekend Update 9/16/2005

Still holding the same two Fidelity Selectfunds. We'll hold them at least 30 days to avoid Fidelity's early redemption penalty.

Current Fidelity Select Funds

Energy Service (FSESX)

Automotive (FSAVX)

Returns Since Inception (8/22/05):

Fidelity Select Portfolio: +2.74%

S&P 500: +1.32%

[SystemTrader]

Weekend Update (As of 9/23/2005)

We're stillholding theEnergy Service Fund, butwill replace Automotive with Fidelity Select Gold (FSAGX) at the market's close on Monday, 26 Sep 05. A reminder: each fundis held at least 30 days to avoid Fidelity's early redemption penalty.

Note: it wasn't a good week for the system, but it wasn't a good weekmost other sectors, either.Stocks, bonds, gold, crude oil and other energy-related sectors each took a hit.

Current Fidelity Select Funds

Energy Service (FSESX)

Gold (FSAGX) (As of 9/26/05 close)

Returns Since Inception (8/22/05):

Fidelity Select Portfolio: +1.82%

S&P 500: -0.51%

[SystemTrader]

Weekend Update (As of 9/30/2005)

Wereplaced Automotive (FSAVX)withGold (FSAGX) at the market's close on26 Sep 05.

We have another change for this week. We'llreplace Energy Services (FSESX) with Software (FSCSX) as of this Monday's close on3 Oct 05. Note:each fundis held at least 30 days to avoid Fidelity's early redemption penalty.


Current Fidelity Select Funds

Software(FSCSX) (As of 10/3/05 close)

Gold (FSAGX) (As of 9/26/05 close)

Returns SinceInception vs. S&P 500 (Tracking began on 8/22/05):

Fidelity Select Portfolio: +4.26%

S&P 500: +0.58%

[SystemTrader]

Weekend Update (As of 10/7/2005)

Wereplaced Energy Services (FSESX) with Software (FSCSX) as oflast Monday's close(7 Oct 05).

No changes for this week. The current funds are Fidelity Select's Gold and Software. Note:each fundis held at least 30 days to avoid Fidelity's early redemption penalty.


Current Fidelity Select Funds

Software (FSCSX) (As of 10/3/05 close)

Gold (FSAGX) (As of 9/26/05 close)

Returns SinceInception vs. S&P 500 (From8/22/05 to 10/7/05):

Fidelity Select Portfolio: +2.33%

S&P 500: -2.11%

[SystemTrader]

Weekend Update (As of 10/21/2005)

Sorry, I missed last week's update, but there were no changes. For this week, we'll replace Gold(FSAGX) withMedical (FSHCX) as of todayclose (24 Oct 05).

For the first time, the portfolio has entered negative territory, but it isstill outperforming its benchmark (the S&P 500) by over 2%. This drop has mostly been due to a large dip in the Gold fund during the last few weeks.

Note: I'm going to take Fidelity's Gold fund out ofthis database/system for future portfolioallocations.The reason:gold funds are already traded inmygold fund timing system.That system has abetter track record for gold funds,and is tailored to handlegold's unusualcharacteristics. For example, it exitedgold funds near their peak at the beginning of Octoberlargely dueseasonal factors.In addition, gold funds arequite volatile, and owning too much of them (i.e., through both systems/portfolios) isprobably too much exposure for most investors.


Current Fidelity Select Funds

Software (FSCSX) (As of 10/3/05 close)

Medical(FSHCX) (As of 10/24/05 close)

Returns SinceInception vs. S&P 500 (From8/22/05 to 10/21/05):

Fidelity Select Portfolio: -1.12%

S&P 500: -3.45%

[SystemTrader]

Sorry for the lack of updates. I'm havingtrouble with software I'm using for this system. I'll update theperformance as of the close thisFriday, and will put the allocations/performance on hold until I get the problem resolved. For now, we're still holding Software (FSCSX) and Medical (FSHCX).

ST



SystemTrader wrote:

Weekend Update (As of 10/21/2005)

Sorry, I missed last week's update, but there were no changes. For this week, we'll replace Gold (FSAGX) withMedical (FSHCX) as of todayclose (24 Oct 05).

For the first time, the portfolio has entered negative territory, but it isstill outperforming its benchmark (the S&P 500) by over 2%. This drop has mostly been due to a large dip in the Gold fund during the last few weeks.

Note: I'm going to take Fidelity's Gold fund out ofthis database/system for future portfolioallocations.The reason:gold funds are already traded inmygold fund timing system.That system has abetter track record for gold funds,and is tailored to handlegold's unusualcharacteristics. For example, it exitedgold funds near their peak at the beginning of Octoberlargely dueseasonal factors.In addition, gold funds arequite volatile, and owning too much of them (i.e., through both systems/portfolios) isprobably too much exposure for most investors.


Current Fidelity Select Funds

Software (FSCSX) (As of 10/3/05 close)

Medical (FSHCX) (As of 10/24/05 close)

Returns SinceInception vs. S&P 500 (From8/22/05 to 10/21/05):

Fidelity Select Portfolio: -1.12%

S&P 500: -3.45%

[SystemTrader]

I was going to update this, but I'm really not 100% sure that the system should be in the current funds (Software and Medical Delivery) right now. As such, I'm going to leave 10/21 as the last official update until I get things straightened out with the software.

ST



SystemTrader wrote:

Sorry for the lack of updates. I'm havingtrouble with software I'm using for this system. I'll update theperformance as of the close thisFriday, and will put the allocations/performance on hold until I get the problem resolved. For now, we're still holding Software (FSCSX) and Medical (FSHCX).

ST



SystemTrader wrote:

Weekend Update (As of 10/21/2005)

Sorry, I missed last week's update, but there were no changes. For this week, we'll replace Gold (FSAGX) withMedical (FSHCX) as of todayclose (24 Oct 05).

For the first time, the portfolio has entered negative territory, but it isstill outperforming its benchmark (the S&P 500) by over 2%. This drop has mostly been due to a large dip in the Gold fund during the last few weeks.

Note: I'm going to take Fidelity's Gold fund out ofthis database/system for future portfolioallocations.The reason:gold funds are already traded inmygold fund timing system.That system has abetter track record for gold funds,and is tailored to handlegold's unusualcharacteristics. For example, it exitedgold funds near their peak at the beginning of Octoberlargely dueseasonal factors.In addition, gold funds arequite volatile, and owning too much of them (i.e., through both systems/portfolios) isprobably too much exposure for most investors.


Current Fidelity Select Funds

Software (FSCSX) (As of 10/3/05 close)

Medical (FSHCX) (As of 10/24/05 close)

Returns SinceInception vs. S&P 500 (From8/22/05 to 10/21/05):

Fidelity Select Portfolio: -1.12%

S&P 500: -3.45%

[SystemTrader]

I'm going to start posting these allocationsagain. Long story short on the system: I've decided to leave it as-is, which means it occasionally exits positions early and incurs Fidelity's 0.75% penalty.Overall, it'sbetter to occasionally take the0.75% hit than to stay in a losing fund. The system factors in a sort of "penalty vs. max loss" tradeoff before taking the penalty. That happened a couple of times in November but I thought something wasn't working right.

The current funds are

Paper & Forest (11/21 buy date)

Electronics (12/5 buy date...at the closing price today)

1/3/05-12/2/05results(backtested through July '05 andrun in real time since):

Fidelity Select Portfolio: 16.39%

S&P 500: 5.24%







SystemTrader wrote:

I was going to update this, but I'm really not 100% sure that the system should be in the current funds (Software and Medical Delivery) right now. As such, I'm going to leave 10/21 as the last official update until I get things straightened out with the software.

ST



SystemTrader wrote:

Sorry for the lack of updates. I'm havingtrouble with software I'm using for this system. I'll update theperformance as of the close thisFriday, and will put the allocations/performance on hold until I get the problem resolved. For now, we're still holding Software (FSCSX) and Medical (FSHCX).

ST



SystemTrader wrote:

Weekend Update (As of 10/21/2005)

Sorry, I missed last week's update, but there were no changes. For this week, we'll replace Gold (FSAGX) withMedical (FSHCX) as of todayclose (24 Oct 05).

For the first time, the portfolio has entered negative territory, but it isstill outperforming its benchmark (the S&P 500) by over 2%. This drop has mostly been due to a large dip in the Gold fund during the last few weeks.

Note: I'm going to take Fidelity's Gold fund out ofthis database/system for future portfolioallocations.The reason:gold funds are already traded inmygold fund timing system.That system has abetter track record for gold funds,and is tailored to handlegold's unusualcharacteristics. For example, it exitedgold funds near their peak at the beginning of Octoberlargely dueseasonal factors.In addition, gold funds arequite volatile, and owning too much of them (i.e., through both systems/portfolios) isprobably too much exposure for most investors.


Current Fidelity Select Funds

Software (FSCSX) (As of 10/3/05 close)

Medical (FSHCX) (As of 10/24/05 close)

Returns SinceInception vs. S&P 500 (From8/22/05 to 10/21/05):

Fidelity Select Portfolio: -1.12%

S&P 500: -3.45%

[SystemTrader]

I forgot to mention the symbols for these Fidelity Select funds:

Paper & Forest (FSPFX)

Electronics (FSELX)



SystemTrader wrote:

I'm going to start posting these allocationsagain. Long story short on the system: I've decided to leave it as-is, which means it occasionally exits positions early and incurs Fidelity's 0.75% penalty.Overall, it'sbetter to occasionally take the0.75% hit than to stay in a losing fund. The system factors in a sort of "penalty vs. max loss" tradeoff before taking the penalty. That happened a couple of times in November but I thought something wasn't working right.

The current funds are

Paper & Forest (11/21 buy date)

Electronics (12/5 buy date...at the closing price today)

1/3/05-12/2/05results (backtested through July '05 andrun in real time since):

Fidelity Select Portfolio: 16.39%

S&P 500: 5.24%

[mlk_man]

ST, did you see this new fund that I posted?

http://www.thestreet.com/_yahoo/etf/rogernusbaum/10255828.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA



I know it's not a Fidelity fund, but thought it might be of interest to you since you play the different sectors.

M_M

[SystemTrader]

Thanks, MM. I didn't see that. Interesting. For what it's worth,some peoplethink the next world war may be fought over drinking water instead of oil.

Another angle on this: Canada has more drinking water than any other country. They also have a lot of oil, natural gas and gold. There are quite a few potential plays on natural resouces there. In fact, there have been some very nice performing Candadian natural gas stocks/trusts (PGH, PTF) that pay about a 10% dividend on top of your capital gains. Now ifthey could just get a stable government!



mlk_man wrote:

ST, did you see this new fund that I posted?

http://www.thestreet.com/_yahoo/etf/rogernusbaum/10255828.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA



I know it's not a Fidelity fund, but thought it might be of interest to you since you play the different sectors.

M_M

[mlk_man]

I agree with your assessment of Cananda.

This is my long term play on the water factor:

http://biz.yahoo.com/bw/051115/20051115005355.html?.v=1

[SystemTrader]

No changes. Still holding the same funds.

Current Fidelity Selectfunds

Paper & Forest (FSPFX) 11/21 purchase date

Electronics (FSELX) 12/5/purchase date

1/3/05-12/2/05results (backtested through July '05 andrun in real time since):

Fidelity Select Portfolio: 15.87%

S&P 500: 4.77%

[SystemTrader]

Sorry, a little late on the weekend update. However, there were no changes. Still holding the same funds.

Current Fidelity Selectfunds

Paper & Forest (FSPFX) 11/21 purchase date

Electronics (FSELX) 12/5/purchase date

1/3/05-12/16/05results (backtested through July '05 andrun in real time since):

Fidelity Select Portfolio: 15.65%

S&P 500: 5.43%

[SystemTrader]

One change for this week: we'll replace the Paper & Forest fund for Air Transports (FSAIX) at the market's close on Monday, 12/26..

Current Fidelity Selectfunds

Paper & Forest (FSAIX) 12/26 purchase date

Electronics (FSELX) 12/5/purchase date

1/3/05-12/23/05results (backtested through July '05 andrun in real time since):

Fidelity Select Portfolio: 17.26%

S&P 500: 5.54%

[SystemTrader]

Oops, the transaction to replace the Paper & Forest fund with Air Transports should be 12/27 since the market is closed today.

ST



SystemTrader wrote:

One change for this week: we'll replace the Paper & Forest fund for Air Transports (FSAIX) at the market's close on Monday, 12/26..

Current Fidelity Selectfunds

Paper & Forest (FSAIX) 12/26 purchase date

Electronics (FSELX) 12/5/purchase date

1/3/05-12/23/05results (backtested through July '05 andrun in real time since):

Fidelity Select Portfolio: 17.26%

S&P 500: 5.54%

[Sr]

SystemTrader wrote:
Oops, the transaction to replace the Paper & Forest fund with Air Transports should be 12/27 since the market is closed today.

ST
perhaps the fund you are going in also has the wrong symbol or name

[SystemTrader]

Yep, I labeled it correctly the first time butmixed up the name and symbol thesecond time. Thanks.Thefund I'm going inshould be:

Fidelity Select Air Transportation (FSAIX)

and I'll be exiting Paper and Forest (FSPFX).

Thanks,

ST



Sr wrote:

SystemTrader wrote:
Oops, the transaction to replace the Paper & Forest fund with Air Transports should be 12/27 since the market is closed today.

ST
perhaps the fund you are going in also has the wrong symbol or name

[SystemTrader]

No changes this week.

Current Fidelity Selectfunds

Air Transports(FSAIX) 12/26 purchase date

Electronics (FSELX) 12/5/purchase date

2005 Final Results (1/3/05-12/30/05, backtested through July '05 andrun in real time since):

Fidelity Select Portfolio: 15.28%

S&P 500: 3.84%

[SystemTrader]

I just updated my Gold Fund Timing Model. It received its first signal of 2006.

I haven't been updating the Fidelity Select Portfolio this year, as it's more labor-intensive than the Gold Model. And I guess I've just been a little lazy. But I can update the Fidelity Select weekly if there's any interest. So far it's having a decent year, up around 4.5%. It isn't setting any world-records, but is beating the S&P 500 benchmark.

ST