Investment decisions are made by fund selection  (which fund to buy) and market timing  (when to be in or out of the market).  HCM's market timing models are computerized program that generates "BUY" and "SELL" signals to help make investment decisions. These signals are based on  Harloff Inc.'s proprietary mathematical models.  Early application of one of the models to the SP500 index is documented here.  The system was developed in 1998 and examples of hypothetical trading the SP500 without and with leverage, or beta,  is provided here.  Beta is explained below.  High and low beta funds were pioneered by the Rydex mutual fund family.  The Rydex Nova  fund has a beta of about 1.5 which means that the Nova fund goes up or down 150% compared to the SP500 index.  A money market fund has a beta of about zero.   Nova started trading about 7/9/1993. The Rydex Ursa  fund has a beta of -1.0 which means that the Ursa fund goes up or down 100% when the SP500 index goes down or up 100%.  Ursa started trading about 1/7/1994; this contrary fund performs inverse to the SP500 and can be purchased in retirement accounts so the account can go up in a down market.  High beta funds up to 2.0 now exist. Examples provided below use NOVA, SP500, URSA, and Money Market as investment vehicles which have beta of 1.5, 1.0, -1.0, and 0.0 respectively.
 
 

The following table presents hypothetical results of one of Harloff Inc.'s proprietary timing models used to time the market with index funds based on SP500, Rydex Nova, money market (MM), and Rydex Ursa.  The computer model can use other index funds (and even commodities) which might have different beta values like Rydex OTC, or the Potmac or ProFund funds.  For the first example using the SP500 index and a money market fund from 8/1/1985 to 7/13/1998  (13 years) the Harloff system return was 36.6% per year with a maximum drawdown or loss of -9.4 % (on 1/20/1988) compared to a buy-and-hold the SP500 index return of 17.7% per year and a maximum drawdown of -33.5% (on 12/4/1987).  The second entry examines the Harloff timing system performance over a much longer period of over 56 years and finds the results to be quite similar to the 13 year results. The fact that similar results are obtained for the much longer time period  adds confidence to the advanced technology developed.  The remaining cases examined all use the longer 56 year data base.  The third entry illustrates that changing the beta from 1.0 to 1.5, and still employing money market when the system is short (out of the market) increases the yearly average return from 36.5% to 56%.  The fourth example in the table below shows that by employing a negative 1.0 beta (to simulate Rydex Ursa)  when the system is short, and using a beta of 1.0 when the system is long,  the average yearly return increases to 61.6%. Finally, by employing both a long beta of 1.5 and a short beta of -1.0 the average yearly return is 84.7%. To see the historical buy / sell signals of HCM's  timing model for SP500 long and Ursa when short,  from 1942 to 1998, just click on this: HCM's timing research .
 

Table. Harloff Capital Management hypothetical^* SP500 based timing system results with different investment vehicles. Beta =1 for SP500, = 1.5 for Rydex Nova, = 0.0 for Money Market, = -1. 
for Rydex Ursa. Rydex Nova and Ursa available starting 7/9/1993 and 1/7/1994 respectively. 

long beta	short beta	dates	Harloff % return/year	Harloff max drawdown,%	buy-hold % return/year	buy-hold max drawdown,%
1.0 SP500	0.0 MM	1985-1998	36.6	-9.40	17.7	-33.5
1.0 SP500	0.0 MM	1942-1998	36.5	-7.87	8.8	-48.2
1.5 Nova	0.0 MM	1942-1998	56.0	-11.3	8.8	-48.2
1.0 SP500	-1.0 Ursa	1942-1998	61.6	-10.0	9.0	-48.2
1.5 Nova	-1.0 Ursa	1942-1998	84.7	-13.2	9.0	-48.2

^* The above data are hypothetical and do not represent actual trading, they may not reflect the impact that material economic and market factors might have had on actual trading performance.  The information used in this report is generally available to the public from sources believed to be reliable. No representation is made that it is accurate or complete. Certain assumptions may have been made in this analysis.  No representation is made that the returns indicated will be achieved. Changes in the assumptions may materially impact the returns presented. Past performance does not guarantee future performance. The SP500 index is an unmanaged index consisting of 500 common stocks traded by the public.  Effect of material market and economic conditions is given somewhat by market indexes such as SP500.  Further investments will be made under different economic conditions and may be in different mutual funds.   Potential for higher-than-average returns is ordinarily accomplished by higher-than-average volatility and risk.  There are inherent differences in nature/volatility of most mutual funds compared to any market-average indexes.  Harloff Capital Management, Harloff Inc. and/or their affiliates and/or key employees may have positions in, and may effect transactions in mutual funds and indexes mentioned herein. The investments discussed  in this report may be unsuitable for investors depending on their specific investment objectives and financial position. The price or value of the investments to which these reports relates, either directly or indirectly, may fall or rise against the interest of investors. Harloff Capital Management, Harloff  Inc. has no affiliation with any mutual fund family or individual mutual fund.