1. What is SKI and what is JEFF?
The usefulness of my Updates will depend upon my ability to communicate clearly and effectively with you. One communication issue involves the difference between SKI and JEFF (me). SKI is the mechanical system that only uses the index signals. It yields consistent, profitable, and fairly conservative buys and sells. It does NOT take into account money management, personal life issues, or run patterns. JEFF takes those factors into account when making his own personal investment decisions and therefore, JEFF will perform more transactions than SKI. JEFF, for example, might decide to take a large profit based upon run patterns when SKI is doing nothing. How you use these Updates will depend upon your investment style. I am trying to communicate to readers with widely varying styles and needs. The easiest, simplest approach is to act infrequently using the mechanical SKI. BUT THERE IS NO SINGLE “CORRECT” STYLE or investment strategy. Over years, JEFF doesn’t consistently beat SKI or vice versa. JEFF has sold at major highs when SKI then gave back profits. And JEFF has avoided profitable SKI trades and has missed rises by selling before SKI. The only CORRECT style/strategy is to try to do whatever you do in a CONSISTENT manner. I decided to have two subscription levels to match readers’ styles: Basic service = Lower-frequency transactions, Expanded service = Higher-frequency transactions.
If you’re a long-term investor, you should be executing on major SKI signals when I write that “everyone” should be buying or selling or perhaps executing with part of your monies/holdings when JEFF adamantly states that a run pattern is identifying a MAJOR high.
2. I am interested in the Alert subscription. What is the difference between a mid-week Alert vs. a mid-week Message?
Based upon your feedback, I have decided to send two types of midweek emails. The first type, an “Alert” message is what I really intended when I developed the website idea: These are supposed to be very high probability and rather definitive recommendations for immediate buy/sell action, designed to save you from a one-day or more delay in acting. I will label those as ALERTS. The ease with which I can send messages now allows for the second type of midweek email, the MESSAGE, reflecting more frequent observations on the market patterns/movements and being much less definitive. Alerts happen perhaps 6 times a year. Message frequency has not been established because the website is new!
3. I am a non-U.S. investor. What should I invest in?
The website has many readers from Canada, Australia, New Zealand, Europe, and South Africa. Non-U.S. readers cannot invest in U.S. mutual funds such as USERX. While the SKI Website does not recommend or analyze individual stocks, Forum members can obtain assistance from fellow investors. I recommend always investing in as broad a basket of individual stocks as possible:
Canadians have it relatively easy with many individual gold stocks listed on the Toronto exchange (e.g., GG, NEM, NNO) as well as XGD.
Europeans appear to have a more difficult time, with the most common investment vehicle being Merrill Lynch Gold and General Unit Trust. If one accesses it through a broker the spread is 1.5% without any other costs (no stamp duty, no broker fees).
Australians do not appear to have access to a simple gold mutual fund or index, and their Unit Trusts charge meaningful fees. However, they do have access to many individual companies such as NCM, BSG, BDG, KCN,OXR, and LHG.
4. I am new to SKI and I have decided to try out the auto trading futures program.I understand how futures work but I have a couple of questions if you won't mind answering:
Sorry for all the questions and I really appreciate your time.
1. I’ll send you the hypothetical record but it is only hypothetical and uses Mechanical SKI. The managed futures account uses “run pattern” Jeff as well and therefore executes a few more trades than pure mechanical SKI. Mechanical SKI, as of 4/21/06, simply continues on its buy from 8/09/05 at around $430 (current price $630).
2. It’s only been done since the website opened on Friday the 13th, 2006.
3. I always use the most active contract because I sometimes like to execute in the overseas (non-U.S.) market.
4. I am the ultra-conservative and manage the risk, although you CAN specify to the broker an even more conservative stance (but not riskier than Jeff allows). Minimum is 10-15K. I initiate 1 contract per 15K BUT if I really see a nice set-up I immediately do 2 contracts per 15K and then increase it to 3 contracts per 15K. Then I maintain that ratio as the account grows, even within a multi-month trade.
5. I determine the probability and risk/reward and then I trade different percentages, as per answer #4 above in the same percentages as my own account. Actually, SKI Futures was initiated due to requests from long-time SKIers and they recommended the broker based upon their 15-20 year experience with that one excellent broker (a pleasure for me!). After SKI Futures initiated, I decided that if I was going to make other people money via my hard work, I may as well make extra myself, so I have the largest account.
6. I love going short and it’s easier to make money because over months we capture the interest rate differential (futures starts higher than spot gold and loses value each day by a dime while we make interest on our equity; if gold is flat over a year, and we are short, we make about $2500 per contract). However, I try to refrain from shorting during great bull markets!
7. I know when I will exit before I enter a trade but NEVER put a stop order into the market. And the mental stop is NOT a price because the system works on the unique Price X Time interaction as per the SKI Indices. If the trade is bad, the duration of the trade is very short (a few days to two weeks). That is rare because I won’t initiate until the probabilities are at least 90%+ in SKI’s favor. I am patient for days, weeks, or months and then execute instantly on the signal, just as I do with the gold stocks (the signals are identical for me).
As you can see, SKI Futures is weird and unique because the SKI indices are incredibly accurate and unique. Jeff breaks traditional rules because SKI “KNOWS” and has been trading for 21 years (although he only does futures at the most opportune, strong legs up OR legs down when leverage is desirable). People are not used to any of this and think of futures as “gambling” and “frequent trading with stops”. Nope! The advantage over gold stocks and mutual funds is that I can execute 24 hrs per day and can increase leverage to a larger degree than with stocks at any moment that is appropriate. The downside is that futures have increased intra-day volatility (causing me nausea; that IS the extra cost in futures, the frequent intra-day emotional stress), but I don’t care because I don’t day-trade and usually execute on the open or on the close because I can’t predict intra-day movements (just closing prices).
5. USERX is a gold mutual fund and does not have intra-day prices. It just has one price provided several hours after the close. However, you sometimes talk about buying/selling the precious metals IF USERX is falling/rising above a certain point into the close. How do you know hat price USERX will close at?
I never know for sure, but we can estimate USERX’s price at any time during the day if you care about that one day’s closing price and can’t wait until the next day to execute a buy or sell. One does that by using USERX’s top 25 holdings, available for free at http://quicktake.morningstar.com/Fund/Holdings.asp?Country=USA&Symbol=USERX
&fdtab=portfolio. You can see USERX's top 25 holdings at that link, but note that it will change a little every 3 months thereafter. This is the information that is publicly available and won't change until the next quarter while USERX could be changing its holdings during the three month period before it publicly provides the information on its top holdings (as per legal requirements for mutual funds). I use a brokerage account with a hypothetical model portfolio that mimics the weights of USERX’s top 25 stock and warrant holdings. It automatically shows me the estimated percentage daily gain at any moment of the day that I look at it. But remember it’s just an estimate and I usually wait until I get the actual USERX closing price (posted of-course on the charts on this website) and execute the next day.