Investment Timing Software FAQ

  1. Is the Investment Timing Software Price Wave Analysis approach to investing in stocks hard to learn and use?
  2. I'm not sure I understand the difference between what you call "PWA 500 Timer" and "PWA Online Analyzer". Please clue me in.
  3. Your system involves moving money in and out of stocks. Is it a stock trading system?
  4. What are the system requirements for the Portfolio Manager download software program?
  5. What kind of mutual fund is best to use with Investment Timing Software's "Timer" program?
  6. What is an "index fund" anyway? How is that different than any other stock fund?
  7. Are so called "indexed funds" profitable for investors?
  8. Why don't you recommend specific mutual funds or specific stocks to subscribers like investment newsletters do?
  9. What do you mean by "market timing?"
  10. I'd like to know how the first chart on the Investment Timing Software home page translates into dollars. What exactly are the percentages shown on the chart, and what does that mean in terms of money?
  11. It seems to me that paying either $180.00 or, worse yet, $360.00 a year just to look at some charts and play with them is way too much money.
  12. I once had an online subscription renew without my knowing about it. Are your subscriptions renewed automatically?
  13. Why do you show back testing as if it was your trading? Back testing is practically irrelevant.
  14. How are band widths determined?

Answers

Q1.

Is the Investment Timing Software Price Wave Analysis approach to investing in stocks hard to learn and use?

No, it is remarkably simple to use and easy to learn. PWA is a unique stock analysis and mutual fund analysis program to help stock investors implement a timing investment strategy. Our Master Program uses daily closing financial market prices to generate a "picture" of what the prices are doing and where they are compared to recent history. The picture is in the form of a chart showing price and what we call "range bands." The bands highlight buying and selling opportunities (ranges). If you become a subscriber to the basic program (PWA 500 Timer) you would log onto this website at least every couple of days when the price is in the neutral range, and every single day when the price is in or nearing either the buying or selling ranges. During the time the price is in a buying or selling range-which is often, but not always, for a number of days-you would make a judgment about exactly which day to take action in moving your money into or out of the market.

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Q2.

I'm not sure I understand the difference between what you call "PWA 500 Timer" and "PWA Online Analyzer". Please clue me in.

With the PWA 500 Timer, a subscriber can consult the price and range band chart any time he or she wants to do that and get buying and selling indicators. However, subscribers have no control over the chart otherwise, and the price data is exclusively S&P 500 Index price data. The PWA 500 Timer is an excellent tool to use if your investment vehicle is primarily stock mutual funds.

If your investment vehicles include exchange traded funds or company stocks purchased separately (outside of a mutual fund) the best stock analysis tool for you will be the PWA Online Analyzer. With Online Analyzer a subscriber will have use of the PWA Master Program online at this website. He or she can work with data from virtually any market, any individual company stock, any exchange traded fund, or index funds other than the S&P 500 Index. The subscriber will also have complete control of the chart parameters so he or she can fit the shape of the chart to the data set of interest.

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Q3.

Your system involves moving money in and out of stocks. Is it a stock trading system?

Yes, trading stocks (buying and selling) is inherent to any timing investment strategy, but there is a distinction to be made between trading and what is called "day trading." PWA is NOT suitable for day trading because it uses daily closing price data. Day traders need minute-by-minute price information since their objective is to take advantage of extremely short price movements and close out all their positions by the end of the trading day (hence the term, "day traders".)

The PWA stock analysis program will indicate to subscribers when opportunities occur to buy and sell stocks or mutual funds. With PWA, "trades" - we call them switches - may occur at frequencies anywhere from a matter of days, when the market is volatile, to weeks or months. So, trading-yes, but it isn't short term trading.

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Q4.

What are the system requirements for the Portfolio Manager download software program?

1. Windows Operating System - You must be running one of the following operating systems: Windows 2000; Windows 98; Windows 98 Second Edition; Windows ME; Windows NT; Windows Server 2003 Service Pack 1 for Itanium-based Systems; Windows Server 2003 x64 editions; Windows XP; Windows XP Professional x64 Edition.

If you are running Microsoft Windows NT 4.0, you must have Service Pack 6a installed.

2. Internet Explorer - You must be running Microsoft Internet Explorer 5.01 or later.

3. .Net Framework - You must have installed Microsoft .NET Framework Version 1.1 and you must have the Redistributable Package (dotnetfx.exe) installed.

Updates for Windows Operating System, Windows Internet Explorer, and the .Net Framework are available at no charge and can be found here.

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Q5.

What kind of mutual fund is best to use with Investment Timing Software's "Timer" program?

For the PWA 500 Timer, we recommend a stock mutual fund "indexed" to the S&P 500 Index, which you see in the newspaper every day. Our program uses closing price information for the S&P 500 specifically. Nearly all the larger mutual fund management companies will have such a fund.

The S&P 500 Index is generally considered to be a measure of the overall stock market, and the index is comprised of large, so called "blue chip" companies. So, the PWA Timer can also be a valuable tool if you are invested in a non-indexed fund that holds blue chip stocks, often called "Large Cap" funds. PWA 500 Timer will be less valuable if you are invested in sector funds that focus on a few companies in a few similar industries, such as technology industries for example.

With the PWA Online Analyzer program, you can use data from any market, stock, or mutual fund. Therefore it will be valuable in working with sector funds too since the program uses price data from whatever fund you choose.

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Q6.

What is an "index fund" anyway? How is that different than any other stock fund?

Most stock mutual funds are "actively managed" meaning that the manager and his or her staff spend a lot of time and resources selecting stocks for their fund that they think will do well in the future. One of the manager's goals is to "beat the market;" which is to say to do better than the commonly watched market averages such as the Dow Jones Industrial Average or the S&P 500 Index.

Interestingly, about 75% of actively managed stock funds DO NOT beat the averages. That being the case, why not just use funds that simply match one or another of the market averages?

Index funds are "passively managed" meaning that the manager does not try to beat the market average but simply to match it. The manager allocates money to buy the stocks that comprise the "index"-the market average-in the same proportions as the market average. Hence the name, "index funds."

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Q7.

Are so called "indexed funds" profitable for investors?

Yes. With index funds, your money will grow at the same rate the stock market does; no better, no worse. When you think about the stock market yielding an average return of 10% for over 100 years, you can see how profitable it can be even using a "buy and hold" strategy. (You must remember that the 10% figure is an average number only and that the market will up at times and down at other times.) At a 10% return rate, your money doubles every seven and one half years. We believe you can do much better than that using our market timing investment strategy as is demonstrated by the Home page charts and the Results page on this website.

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Q8.

Why don't you recommend specific mutual funds or specific stocks to subscribers like investment newsletters do?

Our intent is not to be an investment newsletter as such. Our objective is to provide a simple, easy to use program for knowing when to be-and when not to be-invested in stocks. Investments made at the wrong time can lose value even when placed with good, solid companies. Investments made at the right time can grow your money very significantly.

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Q9.

What do you mean by "market timing?"

Let's start with what might be considered to be the opposite of market timing, the "buy and hold" stock investing strategy. A buy and hold investor invests in stocks or stock mutual funds and then simply holds them for the long term. There is nothing wrong with doing that, especially if you have at least ten years before you need the money. For any ten year period, the market has historically been at a higher level at the end of the time frame than it was at the beginning. So, you're going to make money on your investment, but you might not do as well as you could since the value of your investment will rise when the market rises, but it will also fall when the market falls.

A market timing investment strategy intends to take advantage of the fact that stocks go down as well as up. When you look at graphs of the commonly watched market average, such as the Dow Jones Industrial Average, you will notice that prices move in waves and the wave crests and troughs are easy to see. A market timing investment strategy will have investors put their money at risk in stocks when it is most likely stocks prices will rise, and have them switch their money to the safety of money market funds (or other interest bearing instruments) when the market prices are most likely to fall.

Now, the crests and troughs in price movement is really easy to see when you are looking at graph of historical prices. It's a lot harder to identify them when they are actually happening. PWA stock analysis program does exactly that-identifies crests and troughs when they happen.

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Q10.

I'd like to know how the first chart on the Investment Timing Software home page translates into dollars. What exactly are the percentages shown on the chart, and what does that mean in terms of money?

All bars on the graph cover the same time span; January 2000 through December 2009. The S&P 500 Index bar is -25%, which represents the loss from the beginning to the end of the time span. The PWA Timer bar is 645%, the PWA online analyzer 744% and the PWA Online Analyzer using 20 day moving average setting represents a 4,386% gain.

In our studies, we use a starting figure of $10,000. Applying the percentages, a buy and hold strategy using and S&P 500 Index fund would have shrank to $7,500 in 10 years. During the same time span using the same index fund, the PWA Time would have grown to $74,000 and the PWA Online Analyzer using the default setting would have grown to $84,000 and the PWA Online Analyzer using the 20 day moving average settings exploded to $448,600.

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Q11.

It seems to me that paying either $180.00 or, worse yet, $360.00 a year just to look at some charts and play with them is way too much money.

Well . . . I guess it depends on your perspective. $180.00 per year is $3.46 per week and $360.00 is $6.92 per week which is less than the cost of two espresso coffees each week. I have no way of knowing your current age, but wouldn't you think it might be a good idea to trade a few cups of specialty coffee a week for a financially secure future?

If you decide to pass on a PWA subscription, I wish you well. I would only remind you that Social Security and company pensions will not provide enough income for your "golden" years, especially when you factor in an average 3.5% inflation rate.

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Q12.

I once had an online subscription renew without my knowing about it. Are your subscriptions renewed automatically?

Subscriptions to Investment Timing Software are not automatically renewed. We hope to keep you as a customer. We expect that if you you invested using our system you will have more than made up the cost of the yearly subscription. As a service to you, starting one month prior to your subscriptions lapsing, we will send you periodic email messages reminding you to renew your subscription.

Subscriptions can be renewed on the ITS system at any time. When you are logged into the system, you will have the option of renewal as part of the navigation menu. When you renew your subscription, you extend your current subscription one year beyond the current expiration date. Therefore, subscriptions can be renewed at any time and there is no advantage in waiting to the last day of your current subscription before renewing.

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Q13.

Why do you show back testing as it were your own trading? Back testing is practically irrelevant.

Your inquiry contains both a question and a comment, and I will respond to both.

We do not claim the back trading tests are our trading. If you check our Results page, you will see that we clearly state the results shown are from back testing.

Back testing is relevant in the same way historical information is always relevant. For example, everyone knows the best predictor of a person's future behavior is their past behavior. In this instance, if back testing shows that PWA historically gives good, profitable signals over an extended time, then it will do so in the future as well. No one expects (nor do we claim) that the future will mirror the past with any precision.

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Q14.

How are band widths determined?

Regarding your question about band widths:

The upper and lower bands are simply replications of the centered moving average. For the Online Analyzer, there are default settings for the centered moving average number of days, band widths, and band spacing; but you can change any of these settings to suit your investment style, and setting them for your own purpose will involve some experimentation.

I like to set the outer band so it includes most but not all the crests and troughs in the price line graph. That way there is room for major buy/major sell band to come into play.

The inner bands can then be set so there are reasonably wide orange and light green, but not so wide as to eliminate the neutral band. We want some elbow room in the neutral band so that buy and sell indicators are triggered by significant moves rather than by tiny moves.

You can also adjust the band curve by changing the Centered Moving Average Days PWA from 63 days to longer or short time spans. The longer moving averages will yield few trades with bigger price moves, and shorter ones will yield more trades for smaller price moves. However, very short moving averages, say under 20 days, are not as effective because there are too many market timing trades.

You can also adjust the band curve by changing the Centered Moving Average Days PWA from 63 days to longer or short time spans. The longer moving averages will yield few trades with bigger price moves, and shorter ones will yield more trades for smaller price moves. However, very short moving averages, say under 20 days, are not as effective because there are too many market timing trades. class="indent">top