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Computerized Investing > July 15, 2017

Selecting Asset Classes for Retirement Investments

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by John Zhong


The founder of SumGrowth Strategies explains how to use his SectorSurfer service to build a sector rotation strategy that is optimized for both bull and bear markets.

Sector rotation, as an investment strategy, is rooted in the economic cycle data produced by the National Bureau of Economic Research (NBER) dating back to 1854. However, achieving satisfactory sector rotation investment performance has long been difficult or elusive. For example, Figure 1 illustrates how a sector rotation strategy employing the original nine Select Sector SPDR ETFs (exchange-traded funds) and a popular momentum algorithm (purple line, detailed later) barely outperforms a simple equal-weight portfolio of the same ETFs (red line). This article shows how performance similar to that of the “Desired Sector Rotation Strategy” (light blue line in Figure 1) can be achieved by utilizing advanced signal processing methods and employing problem segmentation to treat bull and bear markets as separate problems.

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H Mercer from TX posted 2 months ago:

Unusual that REIT's are mentioned but health care, biotech, and pharmaceuticals are not. Just how have they done as a group over the past 1,3,5,10, 20yrs? I have a good bit of these in my portfolio.

John Zhong@MyPlanIQ from CA posted about 1 month ago:

Even though REITs are sometimes classified as a sector, like health care, technology, etc., they have some distinct features that make them more suitable as a major asset class. We will have a future newsletter to discuss this issue in more details. In the meantime, you can find more info on

John Zhong@MyPlanIQ from CA posted about 1 month ago:

A user recently told us that the statement “Fidelity offers half-baked commission-free ETF trades that are only buy commission-free, but not sell commission-free.” in the article is misleading. He believes that Fidelity offers ETFs that are commission free in both purchase and sell trades.

Here is our answer:

We have monitored Fidelity commission free ETFs since the days they were introduced. Fidelity went through commission free (both purchase and sell) and then commission free purchase but sell with a commission till last year sometime. Apparently, recently, they changed the policy to

commission free purchase and sell with some activity fees (0.01 - 0.03 per $1000, so $100,000 would be charged $1-$3).

This is true even after you have held shares for more than 30 days. So it's still not entirely commission free but now it's close.

See foot print on page :

Free commission offer applies to online purchases of Fidelity ETFs and select iShares ETFs in a Fidelity brokerage account. Fidelity accounts may require minimum balances. The sale of ETFs is subject to an activity assessment fee (from $0.01 to $0.03 per $1,000 of principal). iShares ETFs and Fidelity ETFs are subject to a short-term trading fee by Fidelity if held less than 30 days.

We wrote the piece late last year and the information was correct at that time.

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