TopDogTM Trading Strategies

Trend Following Market Index Stock Investment

Returns

Safety

Simplicity

Control

Examples

Why Taking Control Urgently Matters

Diversify and Rebalance? Why Be Average?
The financial industry has hypnotized us into believing diversification and rebalancing is the only worthy investment strategy. But diversification inherently means owning a little bit of everything — which is the formula for achieving precisely average performance! Rebalancing further ensures we won't stray far from average. No other industry proclaims average performance is the best you can achieve. Fortunately, it's not true here either.

Change the Game!
To achieve a different result requires a different approach. Price momentum has long been proven the best predictor of future returns. Simply by owning momentum leaders and avoiding momentum laggards one can simultaneously improve returns and reduce risk of loss. No diversification compromise! SectorSurfer further maximizes performance utilizing digital signal processing theory and automated strategy tuning.

An Extra 10% Really Matters
Before Retirement: The Nest Egg Value chart illustrates how an additional 10% annual return compounds over 15 years to produce a nest egg four times the value it would have otherwise had. The earlier you start, the greater the multiple. It really matters!

After Retirement: The Nest Egg Annual Income chart illustrates how portfolio return affects the inflation-adjusted annual income you can take, assuming a $100k nest egg, 2.5% inflation, and 30 years of retirement to fund. In the illustrated example, investing in the S&P 500 would likely allow an income of $14,000/yr. However, earning an extra 10% increases it to $36,000/year. Again, it really matters!

Additional Resources
• The Economist: Momentum in Financial Markets. A compilation of industry studies and expert opinions.

What is True Sector Rotation?
The Trend is Your Friend Trends and fads are an inherent part of human character. It takes time for information to spread, to be understood, and to be acted on. This creates momentum. Price momentum is found in all capital markets, including stocks, bonds, treasuries, and currencies. By its very definition, "trend" means that information from the recent past tells you something about the near future. SectorSurfer's trend analysis algorithms use modern digital signal processing theory to optimally extract trend signals from noisy market data.
True Sector Rotation The market cycle is tied to the economic cycle. Each market sector performs best during a portion of the economic cycle. If you think of each market sector as a piston in your investment engine, the smoothest, most powerful ride will be achieved when each of the major market sectors is represented in your portfolio ... but only while each is delivering its power stroke. By owning only the top trend leaders and avoiding trend laggards one can simultaneously improve returns and reduce risk of loss. That's True Sector Rotation! Diversify and Rebalance? Diversification inherently yields precisely average performance. Master investor Warren Buffet instructs us: "Wide diversification is only required when investors do not understand what they are doing.
Additional Resources • Short video demo on how True Sector Rotation produces higher returns. • Sector Rotation Theory Page provides theory summary and technical explanations. • The Economist: Momentum in Financial Markets. A must read for momentum doubters. • Jegadeesh & Titman Profitability of Momentum Strategies. Academic momentum paper.	Instructive Video

How StormGuard Reduces Risk
Risk is About Losing Money! The definition of risk depends on who you ask. The financial industry uses the coefficient of variation (CV) to measure risk, which tells you how wiggly the line on the chart is, but not the probability of losing real money. Treating both up and down-moves equally as risk is an unfortunate consequence. Only down-moves contribute to real loss. SectorSurfer's risk measure is the probability of a 15% loss in a year. StormGuard Measures Market Health Not only do SectorSurfer's trend-following algorithms inherently steer around and avoid poorly performing funds, but its StormGuard Indicator monitors overall market health and advises a move to the safety of a money market fund when market storms approach. The StormGuard Indicator is calculated daily from a basket of broad market indicators. Optimized for Minimum Probability of Loss The StormGuard Indicator optimally tunes itself for the minimum probability of loss according to the character of the constituent funds/stocks of each SectorSurfer Strategy by balancing the probability of whipsaw loss from reacting too quickly to market dips against the probability of loss from reacting too slowly to major downturns. Diversify and Rebalance? Warren Buffet instructs: "Risk can be greatly reduced by concentrating on only a few holdings." SectorSurfer practices serial diversification by owning many very different things, just one at a time.
Additional Resources • Short video demo about how SectorSurfer makes lower risk possible. • StormGuard Technical Details in the SectorSurfer Online User Manual. • Sector Rotation Theory Page provides theory summary and technical explanations.	Instructive Video

We Kept it Simple!
After creating your new account: Only Four Steps to Get Started 1. View the short My Strategies Tour video. 2. Click , pick a Strategy, or create your own. 3. Check charted performance by clicking . 4. Edit the name and add notes. You're done!	After clicking your email alert: Only Four Steps for Trade Alerts 1. See which ticker symbols to sell and buy. 2. Click the icon for specific trade information. 3. Click your brokerage link and go make the trade. 4. Click the button. You're done!

Additional Resources
• Short video demo showing how to select or custom build Strategies.
• SectorSurfer Online User Manual details all the features and functions.
• Subscription Plans range from Free to just a monthly pittance for Premium Strategies.
• Our will help you quickly create an account to get you SectorSurfing.

Click to play a short video about StormGuard.

Instructive Video

SectorSurfer's Algorithm Validation

Overview
SectorSurfer's validation is confirmed by the validation of each principle detailed in the paragraphs below.

Trend Signals Exist in Market Data
In his 1996 book Chaos and Order in the Capital Markets, Edgar Peters applied the Hurst Range/Scale analysis method to data from all capital markets, including stocks, bonds, commodities, and treasuries. He found that they all have a significant short-term trend component that dissipates after numerous months.
• See Hurst Exponent Reveals Trends on the Sector Rotation Theory Page for further technical information.

Momentum Strategies Really Work
When you can get the media, industry, and academia to agree that something is real and works, then you know you really have something. These three momentum trading articles do just that:
• The Economist: Momentum in Financial Markets. A survey of strategy results and expert commentary.
• Columbine Capital Price Momentum - a Twenty Year Research Effort. Industry momentum white paper.
• Jegadeesh & Titman Profitability of Momentum Strategies. A fundamental academic momentum paper.

SectorSurfer's Performance is Trend Based
How can we tell that the trend signal we extract from the noisy market data really does drive SectorSurfer's performance? The Hurst exponent measures the quality of the trend signal and has a month-end bump in its character. This bump is a fingerprint likewise found in the character of SectorSurfer Strategy performance.
• See SectorSurfer's Trend Fingerprint on the Sector Rotation Theory Page for further technical information.

Trend Signals Exhibit Stationarity
Stationarity refers to the character of a random process remaining the same, such as the distribution in heights of men, shoe sizes for women, or trend lengths in market data. Stationarity enables one to confidently manufacture shoes of various sizes even though the shoe size of the next customer is unknown. Backtesting provides assessment of market character. Stationarity in market character enables strategy design to learn from the past in order to improve one's batting average for future investment choices.
• See Trend Signal Stationarity on the Sector Rotation Theory Page for further technical information.

SectorSurfer's Improved Technology

Background
"Diversify and Rebalance" was born with MPT (Modern Portfolio Theory) in 1950 when we had rotary dial telephones. Today the telecom industry has wireless digital cell phones with touch screens, video cameras, voice dialing, and GPS maps. But, the financial industry is still selling us 1950s diversify and rebalance?

Extracting the Trend Signal is Everything
If the EMH (efficient market hypothesis) were true, the future would be random and the Hurst exponent of market data would be exactly 0.5, but it's not, because market data contains significant trends. A trend means that information from the recent past tells you something about the near future. There is nothing more important than to apply the best signal processing technology available to extract the trend signal from noisy market data to improve one's investment batting average. (Here's why, MPT is blind to trends.)

Differential Signal Processing
One of the most fundamental methods for improving the signal-to-noise ratio in data communications is to eliminate common mode noise via differential signal processing. That's why it's built into Ethernet and USB. Most charting and analysis software evaluates ticker symbols independently, which taints the analysis with common mode market noise resulting in excess whipsaw losses reacting to noise unrelated to its own relative performance. SectorSurfer's simultaneous differential analysis eliminates common mode noise.

Matched Filter Theory
Matched filter theory provides the basis by which trend signals can be optimally extracted from noisy market data. The well-known academic paper Profitability of Momentum Strategies, by Jegadeesh & Titman used a simple equally weighted SMA (Simple Moving Average) of length 6 months as its trend measure. However, neither the SMA nor 6 months are near optimum compared to the Matched Filter Theory solution. Simply put: better trend analysis produce better results. See this summary comparison and the Strategy Hall of Fame.

Automated Strategy Optimization
Investors familiar with technical chart indicators know how tedious it is to determine which indicators and what parameters to use. SectorSurfer completely automates this process for you. Better results, less time!

Welcome!
Market momentum has long been proven to be the best predictor of future price movements. SectorSurfer automates the process of selecting the best stock to own — no emotional bias! Its high performance trend following sector rotation algorithms keep you in the best stocks during bull markets and its StormGuard ^TM algorithms move you to the safety of cash during prolonged bear markets. Only by owning the top trend leader and steering clear of the trend laggards can you simultaneously improve returns and reduce the probability of loss. SectorSurfer evaluates your Strategies daily and sends an email Trade Alert when you have trades to make. We also have many high performance mutual fund and ETF Strategies to choose from, or you can create your own Custom Strategy (see how here). If you prefer having personal professional advice, please contact one of our listed SectorSurfing Professional Financial Advisors.

TopDog Strategy Performance
SectorSurfer is a trend following trading strategy for stock investment. Each TopDog Strategy is based on a well known Stock Market Index and consists of a selection of up to 12 stocks from that market index. It is SectorSurfer's job to determine which one stock, and only one stock, from the set of 12 to own at any given time. Simply by determining which of the stocks is the top trend leader and owning only that stock for the next month SectorSurfer achieves the performance depicted by the yellow line on the charts below. Click the tabs below to see the TopDog Strategies for the stock market index of interest.

To better understand how SectorSurfer Strategies achieve such high performance, please click each of the title-slides above (or the text below each thumbnail image) to review the topic's information in more detail. The charts below have numerous mouse-over hot spots that provide a brief popup text description of the chart object, and many chart objects can be clicked to link to a more complete description. For a more theoretical discussion, please review the Sector Rotation Theory page.

DJ-65

For the DJ-65 Dow Jones Composite Index Composed of US Companies.

To add this to your My Strategies list, click the icon to open the Select-a-Strategy popup window and select TopDog DJ-65 Composite from the list.

Comparison To "Dogs of the Dow"
The chart to the right compares the TopDog DJ-65 Composite market index Strategy to the well-known "Dogs of the Dow" strategy performance as reported by TheStreet.com. The Dogs of the Dow strategy buys the Dow Jones Industrial stocks that are relatively low in price compared to their 52 week high, but which still pay relatively high dividends. Dogs of the Dow theory says these stocks will more likely perform better in the near future than their peers.

Our TopDog Strategies send the Dogs of the Dow back to the doghouse! A stock with TopDog leadership status is a much better predictor of future performance than is a stock suffering with underdog status. Dogs of the Dow theory presumes that stocks are often cyclically punished without cause and will recover. However, stocks are also punished for poor execution unrelated to market cycles. In the end, there is no justifiable reason to own a poor performing stock until it actually is trending higher at a stronger rate than its peers. Only the trend is your friend!

DJ-30

For the DJ-30 Dow Jones Industrial Average DJIA Index Composed of US Companies.

To add this to your My Strategies list, click the icon to open the Select-a-Strategy popup window and select TopDog DJ-30 Industrials from the list.

SP-100

For the S&P-100 Index of the 100 Largest US Companies.

To add this to your My Strategies list, click the icon to open the Select-a-Strategy popup window and select TopDog of the S&P-100-b from the list.

To add this to your My Strategies list, click the icon to open the Select-a-Strategy popup window and select TopDog of the S&P-100-d from the list.

NASDAQ-100

For the NASDAQ-100 Index of the NASDAQ Stock Exchange.

To add this to your My Strategies list, click the icon to open the Select-a-Strategy popup window and select TopDog of the NASDAQ-100-c from the list.

To add this to your My Strategies list, click the icon to open the Select-a-Strategy popup window and select TopDog of the NASDAQ-100-d from the list.

Note: Some TopDog Strategies are for stocks traded on exchanges in other countries and may not be available through your brokerage.

Note: Individual stocks are more volatile than mutual funds or ETFs as they are not diversified and carry more risk of sharp loss from news about quarterly earnings misses, management scandals, and other adverse events. We strongly recommend use of the Prudent Investor Rule with stock Strategies: To reduce portfolio risk and volatility, invest no more than 20% of your funds in any one stock. That translates into the concept of "Post-Surfing Diversification" — five or more Strategies each selecting one excellent stock.

S&P-100 Stocks:

NASDAQ-100 Stocks:

DJ-65 Composite Stocks:

Retired? Employed Elsewhere? Over 591/2?
Upgrade your 401(k) to an IRA to Unleash SectorSurfer's True Sector Rotation Potential!

You can escape from the paltry performance of your 401(k)'s over-diversified funds by rolling them over into an IRA account where you'll have access to a wide variety of country and sector funds that will unleash the full performance potential of SectorSurfer's True Sector Rotation algorithms. Good returns are required to reduce "retirement risk," which is the risk at age 65 that your savings aren't sufficient and you may have to work longer or reduce your standard of living. While traditional diversification addresses the relatively short term investment risk, its paltry returns can lead to longer term retirement risk problems. Don't win a battle but lose the war.

Learn Here how to convert your 401(k) to an IRA. Then check out the many excellent Safety Strategies on our Hall of Fame page.

We Believe:

• High performance investment software should be for everyone — not just big Wall Street firms.
• Diversification is not a justifiable reason to own poorly performing funds — they hurt your portfolio.
• Great investment advice isn't a fund sorting tool — it's automatically selecting this month's best fund.

How to Become a SectorSurfer

How We Work

• Analyze each of your
   strategies every day.
• Send a trade alert if
   action is required.
• Keep you invested in
   only the best funds.
• Reduce your risk of
   loss in the market.

• Our complex signal
   processing algorithms
   identify real trends in
   noisy market data.
• Steering around the
   potholes and sitting
   out market storms
   improves both risk
   and return measures.
• Dedicated computers
   automate everything.

• We don't touch your
   investment accounts.
   You make the trades.
• We don't touch your
   credit card. Amazon
   Payments processes all
   subscriptions.
• We don't provide
   financial advice that
   is specific for your
   personal situation.

We'll do the Hard Work ...
... While You go Have a Life!

Resources

• Validation

• Technology

• AAII Seminar

•

Getting Started

• Study: Returns, Safety,
Simplicity, Control, Examples

• Review: Subscriptions,
Free vs Premium Strategies

• Ready? It Costs Nothing to Start - Let's Get Surfing!

Specific Quick-Start Instructions
Follow these steps to quickly set up your SectorSurfer account to use this Strategy ... (click to read more)

1. Click the Signup Wizard button on the right to create your account. It costs nothing to open an account and experiment with custom strategies or make use our totally Free Strategies. See Member Plans Page for details about Free and Premium Memberships.

    a) On the Create an Account screen specify your username, password, full name, and email address.
         Then click

    b) Next is the Account Information Screen. Complete the below steps and then click
      - Section A: Optionally add a backup email address or cell text number for your Trade Alerts. Click the button.
      - Section A: Optionally enter your Referrer's name to give them credit. Review the Referral-Name you'll give others.
      - Section B: Review the subscription options and click checkbox to acknowledge having read it.
      - Section C: Optionally order a subscription (required to receive Trade Alerts for this Strategy). Acknowledge the checkbox.

    c) Next is the Application Settings Screen to determine how you would like your Trade Alerts handled and then click

   You're Now Are a SectorSurfer!

2. The My Strategies Page will automatically be your next destination. This is your definition list of personal Strategies.

    a) Please watch the short video demo. It will save you time and frustration. Click its icon in the upper left of the page.

    b) Note the other help resources in the upper left and bottom of the page.

   c) Experiment with the Example Strategies provided. Mouse-over the icons and ticker symbols. Click things to see what they do.

    d) To import the above Strategy into your My Strategies execute the following steps:
       - Click the icon in the 2nd row to get the Select a Strategy popup screen.
       - Scroll down until you see the Strategy name matching the above Strategy, then click its line to highlight it.
       - Then click the button near the bottom to import this Strategy into your personal list.

Now You're Really SectorSurfing!

Stocks & Commodities Review of SectorSurfer

Product Review
by: Joe Gruender

Contest Paper
by: Scott Juds

Product Review
by: Jaclyn McClellan

Media Interview
by: John Cook

Professional Article
Dale Van Metre, Ph.D.

Note: SumGrowth Strategies, LLC and its SectorSurfer product are not associated with or sponsored by any stock exchange, or stock index sponsor. SumGrowth Strategies is a
privately held company with a mission to help individuals improve their retirement prospects by providing state-of-the-art automated investment portfolio analysis and advice.

Notice: Your registered use of this site is considered equivalent to your signature as evidence of your acceptance of our Terms of Use, and Privacy Policy. Merlyn.AI, SectorSurfer, True Sector Rotation, StormGuard, StormGuard-Armor, Own-the-Bubble, Polymorphic Momentum, Tactical Diversification, Temporal Portfolio Theory, SwanGuard, and SumGrowth Strategies, are all trademarks of SumGrowth Strategies, LLC. Seattle WA 98125. Copyright 2010-2016 SumGrowth Strategies, LLC. All Rights Reserved.

SumGrowth Strategies, LLC is not a registered investment advisor and does not provide professional financial investment advice specific to your life situation. SectorSurfer is solely an algorithmic strategy analysis tool that produces trade signals according to the set of funds you provide to it for analysis. Strategy performance is hypothetical, based on trading at the market close of trade dates, and does not include associated trading fees or subscription fees. Past performance is no guarantee of future performance. Losses can and will occur over time as the market's character reacts to world events. SectorSurfer may only be used for your personal analysis and education purposes. Please Read More Here.

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