Frequently Asked Questions
- Question: How does Jim's model work?
Answer: Data is received from various
governmental and independent agencies that are indications of changing conditions in the
economy. The data is updated weekly and will give him short, medium and long-term
indications on market direction.
- Question: Can every investor use this signal?
Answer: Yes. The model gives an indication
of overall direction. Those who trade occasionally may do so knowing the general
direction. Traders who are in and out daily may do so knowing that when a 'buy' is in
place, the market is in a general up bias and a market collapse is not imminent.
- Question: What will I be told when a "buy" or "sell" is given?
Answer: A "Buy" is an indication
that it is okay in general to buy equities and that the market will continue in an upward
bias. A "Sell" is an indication that equities should not be purchased and that
present stocks should be sold because the market is nearing a phase where a collapse is
possible. Individual stocks may still move up or down at any time but the Model will
signal in advance the general direction of the majority of stocks.
- Question: What does the reference to "Critical Mass" mean?
Answer: This term is used after the receipt
of a "sell" signal to indicate the point at which the model becomes so negative
as to indicate a large drop in the indexes is about to occur. Critical mass readings are
not always reached after a sell signal. Here's two examples: Example
1: A sell signal was received from the Model in August of 1990. Even though the
market dropped 20%, critical mass levels were never reached. A "buy" signal was
received in January 1991. Example 2: The Model started to
indicate trouble in the markets in the spring of 1987 and issued a sell signal on
September 8th. Late in September the model reached critical mass readings and the market
crashed on October 19th.
- Question: Can I get questions answered about my investments?
Answer: No. The service at this level is not
designed to provide advice on individual investments. However Jim will advise, in general
terms, what asset classes to be in when equities are too dangerous to remain in.
Individual advice is offered only to clients at the next two higher levels.
- Question: Does Jim ever comment on other than the US stock market?
Answer: Yes, but only when he sees a special
opportunity. This may range from commodities such as gold, bonds, treasury bills and real
- Question: If options are to be utilized, will I get specifics?
Answer: You will be told in general terms
what Jim is doing for his managed accounts and himself. Example:
Managed accounts have approximately 15% of their speculative funds so designated for
options in the June 1000 to 1300 level, with most in the area of the 1000 level. They also
have 25% of their capital in the Ursa bear fund
- Question: What should I do when I hear that a "caution" has been issued?
Answer: This is an indication that the
market is about to enter a period where a correction is imminent. Long-term investors who
may face tax implications may choose to stay invested in equities. Short-term investors
and those at or nearing retirement age may wish to take their profits.
- Question: After a "sell "signal is received should I purchase Put Options
"just in case"?
Answer: Definitely not. At times if the
market looks very dangerous before reaching critical mass readings, Jim will purchase
insurance positions using no more than 10% of the funds set aside to purchase options.
When critical mass readings are received the balance of the funds to be used to purchase
options are then utilized.
- Question: When will I know if Jim has liquidated his option positions during a crash?
Answer: At the end of the trading day Jim
will do a voice update informing you about the actions he has taken. This does not
necessarily mean that the market has reached its low since it is impossible for
anyone to trade the exact high or low in any market. It simply means that the probable low
point has been reached. Your profits may be slightly higher or lower than those that he
achieved on his trade for his managed accounts. Managed accounts are available at the two
higher levels of service.
- Question: Can I expect advice on asset allocation in the immediate aftermath of a
Answer: Yes. Depending on information
available, Jim should be able to give a good indication of the best deployment of
Our subscribers are never surprised in any market
This page last edited
December 10, 2001