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Performance

Chart

TTO began in 2002 with a very short-term Breakout Trading methodology. It was very successful, especially during the extremely challenging bear market in 2002. However, sensing a major change in the market's attitude, in the Spring of 2003 we shifted to a longer-term strategy focusing on holding positions for a longer period of time in an effort to achieve larger returns on a per-trade basis. The chart above shows a portfolio simulation for a $1MM account trading the Tactical Trading Stock recommendations. The portfolio was set up to put 10% of current equity into each new position with a maximum number of positions capped at 20. The portfolio reached the 20 position mark in spring 2002 and spring 2003. The total simulated portfolio return for the four and three quarter years shown is 210%. That is very impressive when compared to the S&P 500, which advanced about 24% over the same period and the NASD Composite which advanced about 40%.

Over the four and three quarter years, the average level of exposure is just under 80% meaning an average of 8 positions were held. The Simulation represents 634 trades with 325 winning trades averaging gains of 9.19% and 309 losing trades averaging a 5.6% loss.

I have always been of the opinion that the market goes through phases when it is very generous and periods when it is very stingy. When the market is being generous it is important to capitalize during those opportunities. Based on the character of the above performance record, it is clear we have done an excellent job of taking advantage of the market during its most generous phases while we have held our own during the more challenging periods.

Jim Patterson
December 2006

Risk Disclosure