You wanted more Turbo, you got MORE TURBO!
Like a sailboat needs wind to move through the water, our Turbo Model needs market volatility in order to be most effective. The past few years have seen an unprecedented level of calm in the markets with stocks going over three years without a -10% correction, an event that usually occurs at least annually. Without this up and down, back and forth movement in the markets, our Turbo Model cannot beat the market. It finds no opportunity to exploit. This lack of foothold for Turbo led to decent but below-market performance in 2012-2014. Not seeing the typical market waves, Turbo began looking for smaller waves, becoming more sensitive to smaller shifts in stock prices in an effort to find any hint of the volatility that drives its performance. Unfortunately, this increased sensitivity led to a series of performance-damaging whipsaws, especially in 2015, as unusual v-shaped market recoveries had become the norm. Initially, you figure the low volatility calmness of stocks is temporary. But when it goes on year after year and after many a disgruntled subscriber note, we decided we must search for a better solution. (more…)