This is an 11 am intraday update of Turov on Timing for August 18, 2011.
In response to my 10:35 update, I received an email from a subscriber, asking, “Why don’t I simply use the futures prices instead of the cash index price?”
That was the exact same question I answered in the August 10, 2006 Turov on Timing, and I wrote the following at that time:
The obvious question comes to mind, “So why don’t I simply use the futures prices instead of the cash index price?” Many reasons:
1. ALL my research has been done with the cash index, and continuity of research is very important.
2. The regulators are very strict about reporting performance. If I were to switch to reporting performance based on the futures, I would not be allowed to also report on the cash results. I’m not going to throw away 13+ years of performance records.
3. My service is priced very reasonably at $279 a year. One reason is that my regulatory compliance costs are low (about $10,000 a year in legal review fees). Were I to make recommendations based on futures, because I am a Registered Investment Adviser (unlike many newsletter writers who are not) my attorney feels I would have to do due diligence on each and every subscriber to make sure that futures recommendations were suitable for their investment needs. It would raise the cost to me astronomically, and most subscribers would not be willing to pay for it.
4. Judging from emails, I have more subscribers who use the recommendations to trade the Spyders and options than use them to trade futures. For them, switching to futures recommendations would actually make following recommendations more difficult.
5. There’s nothing to prevent readers (or their brokers) from acting on a recommendation as soon as they receive it, in the night session. Had someone traded yesterday’s recommendation in the night session, he indeed would have made the 10 points times 4 units (or at least 8½ points times 4 units). Of course, sleep might be impaired.