The MUTUALdecision Blog

MUTUALdecision Rating System Coming in July

Bill Byrnes — Wed, 01 Jul 2009 08:30:00 -0500

MUTUALdecision is dedicated to helping mutual fund investors earn superior returns. To achieve this goal, by July 15, we'll launch our proprietary rating system, mutual fund screener and top ten funds lists. These tools are based on four leading academic models, each of which used a minimum of 20 years data to determine unique variables which predict mutual fund performance. By comparison, Morningstar's rating system is based on one model, uses 10 years data and is a historical, look back, model. Check out MUTUALdecision's new predictive mutual fund investment tools.

George Comer on Fox Business News Predicts Top Performing Mutual Funds

Bill Byrnes — Tue, 30 Jun 2009 16:24:00 -0500

Professor George Comer will appear on the Fox Business New channel on July 1 at 11:30 a.m. Professor Comer will discuss the predictive power of academic models and their top ranked mutual funds.

Ten Top Mutual Funds

Bill Byrnes — Tue, 30 Jun 2009 10:28:00 -0500

The latest rankings are in for two of our models. Top mutual funds according to Forecasting Alphas include: Fidelity Select Materials (FSDPX), New Alternatives Fund (JAVLX), Janus Twenty Fund (JAVLX), Alger Capital Appreciation Fund (ACAAX) and Fairholme Fund (FAIRX). Top funds according to the Judging Fund Managers model include: Bruce Fund (BRUFX), Appleseed Fund (APPLX), Van Kampen Asset Allocation Growth (VKAIX) and Yacktman Focused Fund (YAFFX).

Upate: Academic Models Predict Mutual Fund Performance and Outperform S&P

Bill Byrnes — Tue, 23 Jun 2009 01:07:00 -0500

We have four models on MUTUALdecision. Each model was tested with at least 20 years data, covering recessions and events such as the 1987 market crash, 1997 financial crisis and 9/11. The academic community will vigorously argue that these models have proved themselves and their findings are valid beyond the end of the study. We offer additional evidence of these models predictive abilities. What follows is the return for the top twenty five funds as predicted by each of our models and compared to the return on the S&P 500 for the same period. We chose the first month for which we had data from our web site for each model (and a second for the Return Gap, our first model). Returns are through June 15.

Return Gap, from Oct. '08, return -4.3%, beat S&P by .03%
Return Gap, from Dec. '08, return 6.3%, beat S&P by 4.1%
Active Share, from Nov. '08, return 7.9%, beat S&P by 4.8%
Judging Fund Managers, from Dec. '08, return 6.9%, beat S&P by 4.6%
Forecasting Alphas, from Jan. '09, return 17.2%, beat S&P by 5.4%

Does this evidence prove our models post-study predictive ability? Of course not, it's only five data points and the S&P might not be your benchmark. But these results should give you increased confidence in the predictive value of academic research.

Which mutual funds do our models currently predict will be the best performing? Here's out top five: Fidelity Select Materials (FSDPX), Fidelity Select Retialing (FSRPX), Eagle Capital Appreciation (HRCPX), Yacktman Fund (YACKX), and API Efficient Frontier (APIGX).

The Correction Has Begun: Buy

Bill Byrnes — Tue, 16 Jun 2009 06:22:00 -0500

The Dow advanced over 30% from it's 2009 low. A correction was to be expected. I first wrote about this on May 13. I appear to have a month early but yesterday's 2% decline in the Dow, and market sentiment, suggests that the correction is now upon us. A 10% correction, a modest correction, would put the Dow in the mid-7,000s. A great entry point to the market will be when the Dow goes below 8,000. I urge anyone who's underweighted in equities to buy more at that time. I continue to believe that the Dow will go to 10,000 by year end and 12,000 by the end of 2010.

Here's why. The recession is running its course and the recovery will begin late this year. It'll be a slow recovery because of continuning weakness in housing and commercial real estate (the one sector weakness the market hasn't yet fully discounted). Unemployment will go higher over the near term due to auto industry layoffs, particularly, from the closed GM and Chrysler dealerships. As painful as all this will be, it'll also be create a base for a prolonged, albeit gradual, recovery. The stock market will be driven by surprisingly strong earnings growth because corporations are running lean (look at how quickly the banks recovered) and inflation will be modest. Inflation is the key. We're running a massive deficit as a result of a massive stimulus program. A slow recovery will limit the inflationary pressure of this spending (and, hopefully, give us time to restore fiscal balance).

Fidelity Sector Funds Continue to be Top Ranked in Forecasting Alphas Model. Yacktman Funds are Top Ranked in Judging Fund Managers Model.

Bill Byrnes — Mon, 08 Jun 2009 01:57:00 -0500

Top ranked Forecasting Alphas funds include: Berkshire Focus (BFOCX), Fidelity Select Material Portfolio ( FSDPX), Fidelity Select Chemical portfolio (FSCHX), Janus Twenty Fund (JAVLX) and New Alternatives Fund (NALFX). Berkshire is a small growth fund, the others are mid-cap growth funds. Forecasting Alphas uses a statistical procedure and backtesting to generate a better alpha and identify the mutual funds which are most likely to generate superior future returns.

Top ranked Judging Fund Managers funds include: Yacktman Focused Fund (YAFFX), Yacktman Fund (YACKX), Rydex Series Ess Port fuunds (RYMLX), Hotchkis and Wiley All Cap Value (HWAAX), and Undiscovered Managers Behavior Value fund (UBVLX). These funds styles include mid-cap value, large value, large growth, mid-cap value, and small value, respectively. The Judging Fund managers model uses two performance measures to judge a fund manager's skill and provides information about future returns that is not fund in traditional measures such as alpha.

GM: Eliminate GMC and Change the Name

Bill Byrnes — Sat, 06 Jun 2009 01:15:00 -0500

GMs approach to making cars was to flood the market with identical models sold under different brands. The strategy was to avoid putting too much emphasis on any one model to reduce the risk of failure. The result was not enough money could be spent on creating one good car or marketing it. Mediocrity guarantees failure. Only bankruptcy and the federal government forced General Motors to sell or shut down Hummer, Saab, Pontiac and Saturn. But, as long as GMC exists, General Motors will continue with its failed strategy of producing too many identical, and less desirable, models. Every model made by GMC has an identical -- meaning engine, frame, transmission, body, etc. -- Chevrolet counterpart. Cadillac also markets some of the same models. Even Buick, and GMC is sold by Buick dealers, has the Enclave which is identical to the GMC Yukon. GM argues that GMC has a better reputation than Chevrolet and "professionals" prefer the GMC Sierra pickup over the Chevy Silverado. But that's the point. Why not build a great Chevy? The best selling vechile in the U.S. for many years has been the Ford F-150 truck. Ford doesn't market its truck under two names. Neither does Toyota, and it knows something about selling cars. GMC siphons precious model development and marketing dollars away from other identical GM models. GMC enables the General Motors multiple model mindset to live on and will be the ultimate downfall of the company.

A few years ago GM came up with the bright idea of putting a small chrome square, with the letters GM, on each side of every car it makes. Did management really believe that the GM name was such a positive that it would help sell cars? This is just another example of the delusion that gripped GMs management for so many years. Every car company, except General Motors, has a major product line with the same name as the company. GM should change its name to Cadillac Corporation. It would be symbolic of change. It's GM best product and employees might feel some pride working for a car company whose name is on its top line of cars.

Video of Professor George Comer's Interview on the PBS Nightly Business Report

Bill Byrnes — Tue, 02 Jun 2009 06:11:00 -0500

George Comer Interview on PBS Nightly Business Report from William Byrnes on Vimeo.

Professor George Comer recently appeared on the PBS Nightly Business News segment "Of Mutual Interest," and discussed using academic research models to predict the best performing mutual funds. Click on the link to see the entire interview. Professor Comer explains why the MUTUALdecision system is unique in its predictive nature and discusses four leading academic models. To find the top ranked mutual funds according to academic research, go to MUTUALdecision.com.

May's Top Ranked Mutual Funds By the Return Gap and Active Share Models are on MUTUALdecision

Bill Byrnes — Wed, 20 May 2009 14:42:00 -0500

The May runs have been completed and the new ranking of almost 4,000 actively managed equity mutual funds for the Return Gap and Active Share models, based on research by professors at leading universities, are available on MUTUALdecision.

Top performing Return Gap mutual funds include: Catalyst America First Quant (AFIAX), Touchstone Large Value (CIJLX), and ProFunds Basic Mat (BMPIX). The Return Gap measures a fund manager's ability to add value by outperforming a buy and hold strategy.

Top performing Active Share mutual funds include: Cookson Peirce Core Equity (CPEQX), AdvisorOne Berolina Fund (CLBLX), and New Century Capital (NCCPX). The Active Share model measures how a fund's holdings differ from its benchmark and if it outperforms its benchmark.

The Matthew 25 Fund (MXXVX) is one of only a few small value funds ranking in the top decile of either model and Matthew 25 is in the top decile of both models.

It's a Small World Afterall

Bill Byrnes — Tue, 19 May 2009 07:51:00 -0500

The Dow rose 235 points on Monday, attributed to a better then expected earnings report by Lowes and positive signs from the housing market. Overlooked, was the impact of India's 17% stock market increase. This was in response to the ruling Congress party's gains in the national election and the belief it will be positive for India's economic growth. (Anyone who's watched Slumdog Millionaire knows India has its share of problems.)

I want to draw three points from the above. First, we shouldn't overlook the impact events in other countries, and changes in their stock markets, have on the U.S. market. Values are relative and money quickly moves around the world out of high priced assets (risk adjusted), into lower valued assets. Second, India's and China's GDP are expected to grow at 5% and 6%, respectively, in 2009. They grew at higher rates in 2008 and their growth is in stark contrast to the contraction in GDP in the United States and Europe. India and China are major economies and their impact on creating worldwide demand and helping to pull the U.S. and Europe out of our recession should not be underestimated. Third, the strength of these two economies and smaller emerging nations, demonstrates the importance of investing internationally. It's a challenging undertaking but a good regional or world mutual fund is the right way to invest for most of us. International stock markets are volatile. India's market could fall by 17% in one day, but over the long run economies growing by 5% + annually will richly reward investors.