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In case you haven't already seen the article here, "Out of almost 2,100 diversified retail U.S. stock mutual funds that are open to new investors, just 17 have positive returns for both the past 12 months and year-to-date, according to investment researcher Morningstar Inc.". Wonderful.

I have been considering the formulation of my own trading plan lately to apply to my ETF model portfolios.  In the little research that I have conducted thus far, the best trading plan template that I have found is on the Trade2Win web site and was posted by Tim Wilcox.  You can download Tim's template by clicking here and then scrolling down the page until you see the Trading Plan Template link.

I plan to refer to two books that will assist in my trading plan development: Come Into My Trading Room by Dr. Alexander Elder and Trading In The Zone: Master The Market With Confidence, Discipline and a Winning Attitude by Mark Douglas.

Both my Canadian and US timers remain short/cash.

This is a test post to determine the usefulness of charts created at the wikinvest site. The annotation function leaves much to be desired but I like the ability to change the time frame on a blog.

I use the Ulcer Index rather than Sharpe Ratio or Sortino Ratio as a means of measuring the risk associated with my models. Information on the Ulcer Index is available at Peter Martin's site. Mr. Martin is the creator of the Ulcer Index and on his site he briefly discusses what he considers to be shortcomings with other measures of investment risk.

Just for the fun of it, I thought I would compare the performance of my model portfolios against 5-star mutual funds.  For me, the results aren't surprising - the models beat the mutual funds hands down.  If I could only get someone to pay me a fund manager's salary to run my models!

My Canadian models started on 09/05/07 so a 1 year return isn't possible.  Also, neither GlobeInvestor.com nor Morningstar.ca provide a YTD return in the table that is generated for the performance of 5-star funds.

The recent slide in the price of gold has damaged the returns of the QLD/IAU model to the point that it is down 3.6% year-to-date.

Below is the equity curve for the HXU/XSB model.  Fortunately, the model has been out of the stock market since June 23.  Although the CAGR isn't near as high as it is for the QLD/TIP model, the HXU/XSB model is the best performing this year with a year-to-date return of 13.4%.

As time progresses, I am getting more and more comfortable with the QLD/TIP model portfolio for my US holdings and the HXU/XSB model for my Canadian holdings.  Both models require very little effort, have Ulcer Indexes (UI) that I can tolerate and provide better-than-market performance.  There are only about five signals per year so there is little trading and therefore miniscule commission costs per year.  I'll provide a weekly update on all the models tomorrow night but the CAGR for the QLD/TIP model is currently 40.2%.

As per posts on my blog, my US timer is still in cash or short.  At this point, I don't think there is a lot of downward movement left in the market in the short term so I am not prepared to buy QID or RWM.  Likewise, I suspect that gold is going to move up much in the short term so I am not going to buy IAU.  That leaves me with two options: sit on cash or buy the bond ETF (TIP).  From my postings, you will note that the QLD / TIP model has a higher return and a lower ulcer index than QLD / Cash and thus my reasoning for buying TIP's.