In 1991 Billy and Akaisha Kaderli retired at the age
of 38. Now, into their 3rd decade of this
financially independent lifestyle, they invite you
to take advantage of their wisdom and experience.
Billy and Akaisha Kaderli
With the financial markets in turmoil and the
investing future being uncertain, we contacted Sy Harding from
Street Smart Report for some insight into what investors
should be doing with their money today. He was very generous in
answering our questions.
Retire Early Lifestyle: Sy, tell
us about your background and experience before you started
The Street Smart Report.
Sy Harding: My original career was
in engineering, where I had considerable success in working quite quickly up the
management ladder at a small high-tech company, becoming vice-president and a
minority partner in my 20’s. I sold my stock in that company to found my own
small high-tech company, built it substantially over a five-year period and sold
it. After a two-year sabbatical I founded another high-tech company, built that
significantly over another five-year period, and sold it to a NYSE listed
company. I then turned my attention to investing and markets, founded Asset
Management Research Corp., and began publishing my research and market
recommendations via a newsletter, and currently via an online website.
You have been advising serious investors for 24 years. How have the markets and
investors expectations changed in those two decades?
Sy: The biggest changes have been
the huge increase of economic and market information available to investors, the
arrival of discount brokerage firms making trading inexpensive, and more
recently the arrival of exchange-traded funds, making portfolio changes easy. As
far as changes in investor expectations, they have been dramatic. The unusual
ten-year bull market of the 1990’s resulted in investors believing that making
big profits was easy and didn’t require much work, while the two serious bear
markets of the last ten years has scared many away from the market altogether.
What can you tell us about your investment style and strategy? Does being in a
secular bull or bear market affect your models?
Sy: We have two investment
strategies. We have a ‘Seasonal Timing Strategy’ based on the clear history of
the market making most of its gains in the winter months, and experiencing most
of its serious corrections in the summer months, not every year but so often
that it has significantly out-performed the market since we introduced it 12
years ago. And we have a non-seasonal Market-Timing Strategy that uses
traditional technical and fundamental analysis. Experiencing cyclical bull
markets of several years duration within a secular bear market usually of 17 to
20 years duration makes a significant difference, since 110 years of history
clearly shows that buy & hold investing does not work in long-term secular bear
You have sidestepped the recent double-digit downturn in the markets. What was
your reasoning for getting out? Did you profit from the downside?
Sy: Our Seasonal Timing Strategy
provided a typical exit signal on April 20, which allowed us to keep our profits
from the bull market of the winter months, while the market topped out April 29,
and the S&P 500 lost 18% of its value in the subsequent correction. Our Market
Timing Strategy, because it is basically a trend-following strategy, gave its
exit signal a bit later on May 9. We moved it into ‘inverse’ exchange-traded
funds that are designed to move opposite to the market, and made significant
double-digit profits from those in the correction. We also had the portfolio 20%
invested in bonds which rallied strongly as the stock market declined. That
position also produced a double-digit profit as the stock market declined.
Gold is rising at a rapid pace and has had quite a run over the last couple of
years. What is your opinion for its future gains or losses? What about other
commodities like silver and oil? Do you advise subscribers on these investments?
Sy: Gold has been one of our
frequent investments over the years, and we have often been ranked in Timer
Digest’s Top-Ten Gold Timers. But we took our profits from our last buy signal
for gold in May, too early, and missed out on its last spike-up. We stayed away
from it as we thought it was dangerously overbought, and potentially in a
bubble. Given the problems of global debt crises, political uprisings in various
parts of the world, and uncertainties of inflation/deflation, all of which we
expect will be with us for several years, I am long-term bullish on gold. But
I’m currently still standing aside from it, believing it is short to
intermediate-term overbought, with too much investor excitement over it. We do
not advise subscribers on commodities except for gold. Individual commodities
require a different expertise and knowledge, for instance of rapid supply/demand
changes, growing conditions for soft commodities, etc. And commodity markets are
dominated by the trading departments of the commodity producers themselves,
which have much more information than an outsider can hope to have.
How much of your work is based on technical or fundamental analysis and could
you give a brief explanation of how you incorporate these into your
Sy: We are deeply involved in
technical and fundamental analysis. Our Seasonal Timing Strategy is pretty much
a simple mechanical timing mechanism, its one entry, and one exit signal per
year being based on the calendar and just one technical indicator. But our
non-seasonal Market-Timing Strategy is based entirely on technical chart
analysis as well as analysis of the fundamental economic conditions in which the
technical indicators are functioning at any given time. It’s difficult to
provide a description in a few sentences. But our technical analysis utilizes
charts and data showing for example, overbought/oversold conditions,
support/resistance levels, money flows in or out of various sectors, trend
reversal indications, investor sentiment, insider buying or selling, and so on.
It is designed to go after gains from intermediate-term rallies and corrections
usually of three-to six months duration.
understand you have a couple of different portfolios that investors can work
with depending on their risk tolerance. Briefly describe them and their ten year
Sy: We have a Seasonal Timing
Strategy (STS) portfolio. I introduced the strategy in my 1999 book ‘Riding the
Bear – How To Prosper in The Coming Bear Market’, in which I predicted a serious
bear market was right around the corner. Its performance since has been
remarkable. The market topped out in early 2000 into a serious bear market in
which the S&P 500 lost 50% of its value. It then rallied back to its 2000 peak
in the 2003-2007 bull market, only to experience the equally severe 2007-2009
bear market in which it again lost 50% of its value. And currently, in spite of
the new bull market that began in 2009, the S&P remain s 20% below its peak in
2000. It’s become known as ‘the lost decade’ for investors. But our Seasonal
Timing Strategy is up 12% over the last year, 31.3% over the last five years,
81.9% over the last 10-years, and 151.0% over the last 12 years. We don’t have a
specific performance record for our non-seasonal Market-Timing Strategy
portfolio as in the past we provided numerous alternative investments at each
signal. But it has performed well enough to have us often in Timer Digest’s
Top-Ten Market Timers rankings. (We are currently the #1 Bond-Timer of the last
Your newsletter is published every few weeks. In these fast moving markets many
changes happen daily. Does the subscriber receive notifications if changes
to their investments
need to be made?
Sy: Our newsletter is published
(online) every three weeks. But as far as communications with subscribers are
concerned it has been surpassed by an in-depth ‘Mid-Week Markets Update’ every
Wednesday, an in-depth Gold, Bonds, Dollar, Inflation’ Update, and an in-depth
‘Global Markets Update’ every two weeks, as well as a hotline whenever we have a
change in signals or recommended holdings.
What about markets outside of the US? Do you follow and recommend them from time
Sy: We follow about 20 global
markets outside the U.S., and have recommended some of them at times through the
years, although our main focus is on the U.S. markets.
These are certainly challenging times for investors worldwide. Do you have any
closing advice to help them with their investment choices to produce better
Sy: My major concern is the history
of individual investors (as opposed to professional and institutional
investors), becoming overly confident when the market is rising and thus
unwilling to heed warning signs of a coming correction. They then typically give
back so much of their previous profits in each serious correction that they
become angry, distressed, and ‘swear off the damned market for good’, not
becoming interested again until the next rally or bull market has made most of
its easy money gains. And yet the stock market remains the best investment area
going for those who pay attention, better than real estate, art, collectibles,
or what have you.
would like to thank Sy for taking the time to answer these questions for our