From: Dave Dodson <dodson@convex.COM>
Subject: Re: Telephone Switch Newsletter
Originator: dodson@bach.convex.com
Reply-To: dodson@convex.COM (Dave Dodson)
Organization: Engineering, CONVEX Computer Corp., Richardson, Tx., USA
Distribution: usa
Date: Wed, 15 Apr 1992 16:46:11 GMT
X-Disclaimer: This message was written by a user at CONVEX Computer
              Corp. The opinions expressed are those of the user and
              not necessarily those of CONVEX.

In article <1992Apr13.135621.6705@cbnewsh.cb.att.com> rc@cbnewsh.cb.att.com (richard.chan) writes:
>Does anyone have any information or experiences with this newsletter?
>They claimed to have a system which predicts the market with reasonable
>accuracy.

The Telephone Switch Newsletter does not attempt to predict the market at
all.  It simply attempts to recognize the market trend and provide an
entirely mechanical set of rules for moving your investment between growth
mutual funds and money market funds.  The object of the rules is to remove
emotion from investment decisions.  Removing emotions means that you don't
have to worry about whether you have positioned your investments correctly.
You don't have the goal of buying at the bottom or selling at the top, nor
do you have the risk of riding a bear market down, down, down.  But by
being invested in growth mutual funds through most of a long up-trend of
the market and being invested in a money market fund during most of a long
down-trend, you supposedly increase your rate of return while incurring
less volatility than a buy-and-hold approach would deliver.

The TSN also follows a number of no-load and low-load growth mutual funds
having the telephone exhange privilege so you can see how the fund you are
using compares to other funds.

Does it work?  The TSN was one of the few advisory newsletters that issued
a sell signal before Black Monday in October, 1987.  I believe it came at
the close of the market on the preceding Wednesday.  A buy signal was
generated a few months later with the market substantially below its level
at the sell signal.  Skipping forward, there was a sell signal near the
end of 1989 or beginning of 1990 when the Dow was at about 2620.  A buy
came on Jan 25, 1991, during the gulf war, with the Dow at about 2650.  A
follower of the TSN would have made about 7.5% during that ~year of a flat
market.  The buy is still in effect today at a Dow of 3306.  Last week, when
the market headed south, a follower of the TSN was ready to move from growth
mutual fund to money market if the Dow got down to about 3080, but otherwise
wasn't too concerned about the decline.  If the market had gone below 3080
and then headed back up, the sell signal would have been reversed and you
would not have missed a big rise.  The beauty of the system is that if you
follow it rigorously you cannot miss more than one or two day's rise after
a sell signal without getting back into the market, and conversely you cannot
suffer more than one or two day's loss after a buy signal.

----------------------------------------------------------------------

Dave Dodson		                             dodson@convex.COM
Convex Computer Corporation      Richardson, Texas      (214) 497-4234
Newsgroups: misc.invest