Performance Signal  
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PerformanceSignal Core Principles

Principle #1: Don't Lose Money!
Sounds easy doesn't it?, but if you've had money invested in the stock market for any length of time, you know how difficult it can be NOT to lose money. The problem when you lose money is the recovery effort: if you lose 50% of your capital you must make 100% to break even.

For example, if you have $10,000 and you lose 50%, that leaves you with $5,000. You now have to make 100% return on your money just to break even. What was your annual rate of return last year? 5%? 10%? Are you getting the picture on how LONG it will take to recover that 50% loss?

Here is a simple chart to illustrate how the percentage of loss on your capital effects the percentage that must be gained back to break even.

% Loss of Capital % of Gain Required to Recover
10% 11.11%
20% 25.00%
30% 42.85%
40% 66.66%
50% 100%
60% 150%
70% 233%
80% 400%
90% 900%
100% broke

Declines make a difference.
PerformanceSignal alerts you to move into safe investments when a decline is imminent and alerts you to move back when rising prices return.

Let’s take a look at stock market returns vs. PerformanceSignal during the worst declines between March 2000 and October 2002. This graph illustrates the market decline and at which point members would have received an alert to either move proceeds to cash or move proceeds into stock funds that replicate the Nasdaq.

Stock Market Returns

While the S&P 500 lost 50%, PerformanceSignal would have generated positive returns.

Principle #2: Enhance your returns without incurring excessive risk!
Risk is measured by the fluctuation that you must endure with a particular investment. PerformanceSignals proprietary indicators capture ideal moments when risk is at its lowest. However, as positive as we are about our indicators, nothing can be 100% accurate. Therefore, our program limits any loss to no more than a 7%, protecting your investments from excessive down-turns in the market.

Knowing when to increase your allocation of safe haven investments (such as cash and money markets) or increase you allocation of riskier investments (such as stocks) can be very counterintuitive at times; PerformanceSignal pinpoints those times for you.

An example of the market psycholgy
In the year 2000 the general market (S&P 500) was making new highs. Individuals were joyful and exuberant as their investments grew to their largest amounts. However, at the height of this euphoria, our signal was detecting the subtle selling by professionals and our analysis provided a “sell/move into cash” signal near the peak of the buying frenzy.

Over the next three years the markets plunged downward. Had you been participating in PerformanceSignal, you would have been alerted to move your money to the shelter of safe haven investments (such as money market and bond funds) during the worst downturns and invested in stocks during those rare months when the markets were actually moving up.

Back tested against common stock indexes since 1989, PerformanceSignal has dramatically outperformed “buy and hold strategies” with no losing years. When used with a diversified portfolio, one can expect enhanced returns with less risk. See PerformanceSignal results.