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Trying Out a No-Brainer Investment Strategy
By DaveM | November 28, 2007
Lately I’ve been researching and learning about an interesting investment strategy called NoLoad FundX. I first heard about NoLoad FundX when I posted a question about investing & trading strategies over on Steve Pavlina’s forum.
That (somehow) led me to a neat little blog called Millionaire Mommy Next Door. The Millionaire Mommy herself uses this strategy and has blogged a few times about her experience with it.
Basically, NoLoad FundX teaches a systematic investing methodology called Upgrading. It involves buying no load mutual funds and exchange traded funds (ETF’s) that rank high in their scoring system, and holding those funds as long as they continue to outperform their peers.
When funds start to fall out of favor in the rankings, they are sold and replaced with current high-rankers.
In case you’re thinking this is some fly-by-night operation, or another one of my hair-brained investment schemes, fear not. NoLoad FundX has been rated by the Hulbert Financial Digest as the #1 performing newsletter on a risk-adjusted basis for the past 27 years!
The Hulbert Financial Digest has long been considered the watchdog of investment newsletters. They regularly rate NoLoad FundX as one of the very best performing newsletters for the 25, 20, 15 and 10 year periods. That’s enough credibility to put my mind at ease.
Why am I sharing all this with you? Well, because I’ve been a pretty boring investor for the last 18 years, and I’m itching to get a little more active.
Since the day I invested my first dollar, I’ve been socking money away into mutual funds, mostly index funds, and then forgetting about it. Don’t get me wrong, that has done considerably well for us, but it’s about as exciting as watching paint dry.
In an attempt to combat the boredom, over the past 3-5 years, I’ve tried my hand a picking individual stocks using a variety of different systems, strategies, and methodologies from various authors and other gurus.
Bottom line… I suck at it — bad.
No matter which system I attempt to follow, I seem to always lose money.
For starters, I don’t have the time to be constantly watching the markets with my finger on the trigger ready to sell (or buy) when I get “a signal”. I also don’t have the stomach for that kind of ride.
Even if I did have the stomach, I have to be honest with myself… I just don’t want to be a trader.
Long term investing is where I’m comfortable. OK…so I really AM boring! 
Having said that, I’m also very analytical and systematic. I need to have an actual strategy to follow that is well defined and has rules to eliminate emotions from the equation. Give me a step-by-step recipe that works and I’m good to go!
From everything I’ve read and learned so far, NoLoad FundX looks like it could be just the thing I’ve been searching for.
Before posting this blog entry, I went over to NoLoad FundX’s website and signed up for the free trial. Now, I have about 30 pages of printed material sitting here on my desk that I plan on reading tonight.
Once we get into the new year, I’m going to start revamping my portfolio to follow the NoLoad FundX strategy. I will most likely ease into it with just my Rollover IRA to see how things go.
Once I’m sufficiently convinced it is going to work as advertised, I’ll work on incorporating it into my entire portfolio.
Watch for some additional posts about NoLoad FundX over the coming months as I continue to learn even more and actually follow their advice.
By the way, Millionaire Mommy Next Door blogged today about how a beginning investor with a small portfolio should start out. I found it to be an interesting read, and of course she mentions NoLoad FundX along with some other very sound advice. I definitely recommend the read!
November 29th, 2007 at 12:55 am
I’ll be curious to see how you like using the Upgrading system. I, too, tried it out for awhile using just a couple of my accounts first. Good idea. Get familiar with the system, then allocate more funds as you see fit in the future.
Thanks for the nice mention of my blog and relevant post, and for adding my link to your blog roll!
November 29th, 2007 at 3:12 am
Hey, I read about this at Millionaire Mommy Next Door, too. I’m wondering if it’s possible to find the best funds just by morningstar instead of paying for it. I guess research takes time.
November 29th, 2007 at 8:45 am
TheBagLady: Thanks for the comment! I’m sure it’s possible to find good funds on your own, but how much is your own time worth? The online (non-printed) version of NoLoad FundX works out to about $12.42 per month. I’m guessing it would take more than 1 hour per month to do all the research, and I make WAY more than $12/hour right now!
After signing up for the free trial, I printed off the November newsletter, the users guide, and a couple other misc articles about Upgrading. I read everything last night before going to bed, and I gotta say… I’m pretty impressed.
This really is a “no brainer” investing strategy. I’m excited about getting started with my Rollover IRA. I already have about $6K cash sitting in that account, and I think I’m going to just dump the other mutual funds I’m holding (in the Rollover IRA) and start from scratch with NoLoad FundX.
I’ll keep everyone posted on my progress!
November 29th, 2007 at 3:20 pm
Hi Dave:
I have been using the fundX strategy in my portfolio for almost 2 years. I love fund X because:
1. As a mechanical engineer I like recipe investing (like you mentioned above). I like it because it removes my emotions from it. Never fall in love with a stock or mutual fund, this was something I have made a mistake doing. NoLoad fundX removes this emotion if you follow the strategy.
2. The time required does not become a job unto itself. Researching individual stocks and to some extent mutual funds, if done right, takes a good deal of follow up and paying attention to your companies performance and management. No-Load FundX does not require this at all. Follow their BUY-HOLD-SELL signals and don’t get too smart for yourself…..work the plan, it works.
3. You would want to check the newsletters performance once a year via Hulbert to make sure NoLoad FundX stays a solid performer. If it does, keep using the strategy. Ride that money train!
Some personal comments:
1. Go foreign
Going foreign is an easy choice with the absolute predictible fall of the dollar. It is a sure thing. (think at least 50% foreign in your portfolio - I am 90%)
2. Go Commodities
Commodities, or commodity mutual funds will continue to do well. China is gobbling up resources in its growth. This is also a sure thing, in the long-term.
3. Save 10% of your income to invest
Ok, it all begins here doesn’t it? To get money to invest a forced savings of 10% off the top is a really good proven strategy. This assumes you have paid off your credit cards and ripped them up for good. Credit cards are the devil! :p
I wish you all the best.
November 29th, 2007 at 3:44 pm
Barry:
Thanks a million for posting your experience with NoLoad FundX. You’ve inspired me even further to dig into my Rollover IRA and start making some changes!
I also love your advice about foreign investments and commodities. My wife and I were just at a financial seminar last night (put on my Wachovia & ING) and the entire thing was about foreign investment opportunities. Mostly commercial real-estate, but foreign nonetheless.
As far as saving 10% of your income — AMEN BROTHER!
In fact, 10% should be a starting point. I hope to be investing 50% of our income very soon!
That reminds me… There’s a special report I wrote a long time ago that talks specifically about the whole 10% “pay yourself first” thing. I need to resurrect that and get it posted in the articles section.
Thanks for the much needed kick!
November 29th, 2007 at 3:54 pm
Oh, I almost forgot…
I agree with you that credit cards are evil — IF you don’t understand the proper use of them.
My wife and I use a Citi rewards card for all of our monthly expenses. We run that sucker up to around $3200 every month, but we also pay it off IN FULL every single month.
Whenever a charge is made, it gets entered into our budgeting system
just as if we spent cash or wrote a check.
It all gets accounted for in our budget and the money is sitting in our checking account when the bill arrives.
So, since April of ‘06 when we got the card, we haven’t paid a dime of interest. I’m sure Citi Bank hates us!
The upside is that we get 5% back at gas stations, grocery stores, and drug stores. 1% on everything else.
In 2006, our reward points bought around $400 worth of gift cards for our kids at Christmas time.
This year, so far, reward points have bought me a new ladder, gutter guards for the house, and we still have around $300 to use for Christmas.
We’ve since switched to the Citi Drivers Edge Rewards card (since I travel a lot more with my new job), but it basically works the same way. I just get even more points now for miles I drive.
Credit can be a powerful financial “tool”, but you have to be smart and VERY disciplined about it.
November 29th, 2007 at 4:00 pm
If many of the poor or working poor never used a Credit card and spent all they earned they would be better off. Credit cards suck the life out of many many people. Isn’t it funny kids on college campuses get credit cards with the kids having zero income?
My wife and I use Discover for the same purposes. I will have to look at the Citi card you mentioned, thank you.
November 29th, 2007 at 4:06 pm
I agree with you 1000% my friend!
In fact, we already had to bail my daughter out of $1400 worth of credit card debt because she fell victim to the pressure.
“Oh, would you like to save 10% today with your purchase? Just apply for our handy-dandy credit card.”
I literally walk out of stores, and leave my stuff laying there, when they pull that sh*t on me. It makes steam come out of my ears!
My daughter said they even offered her a credit card at the college bookstore when she went to get her books!
Good Lord, what is this world coming to?!?!?