What to Expect from Niemann
Our history shows the best way to be a successful investor is to stay disciplined, stay invested and stick to the plan that you and your advisor have crafted.

Setting Expectations


All Niemann strategies are designed to perform over a complete market cycle, which we define as a market high to the next market high or a market low to the next market low (generally 4-6 years). The challenge—for advisors and investors alike—is to stay invested in the market, even when times get tough. And regardless of the Niemann strategy you choose, there will be times that your Niemann account struggles right along with the market over the short-term.

To understand why, it's important to clearly understand the steps we take, for all strategies, before making allocation changes:

• First, we employ our proprietary analytical process to identify trends in the market (i.e., which investments are gaining strength and which are becoming weaker).
• Second, we confirm the trend (i.e., we seek to ensure that the trend is real and not just a blip in the market).
• Third, once a trend is confirmed, we then begin to rotate funds into or out of that area of the market (i.e., for either an upward or downward trend).

With these three steps in mind, let's discuss a few things you can expect in your Niemann account, especially in the first year.

What to Expect from Niemann

In the Beginning (when you first invest with Niemann)

When you first open a Separately Managed Account (SMA) with Niemann, it's important to understand that your account's initial performance can be significantly influenced by the state of the market at that point in time. No one can predict how the market will perform the day after, the week after, or even months after your new account is opened. We've seen new accounts up 10% in just a month and we've seen new accounts down 10% in just a month. The market can be quite volatile over a short time period—but our history has shown that short term volatility isn't necessarily an accurate indicator of how your Niemann SMA will perform over a complete market cycle (usually 4 to 6 years). Regardless of your account's performance over the first 6 months to a year, that short-term result should not define the effectiveness of our tactical management. Only by staying invested throughout a complete market cycle of 4-6 years can the process have its full effect on your SMA.




Bear Markets

During a transition from a bull to a bear market, it is important to know what to expect from your Niemann strategy. At the beginning of a bear market:

• All of Niemann's aggressive strategies (i.e., Dynamic, Dynamic Sector and Dynamic International) share one key characteristic:   They remain fully invested in the market 100% of the time.
  • As such, when a bull is transitioning to a bear, our aggressive strategies should fall just as hard as the market in the initial stage of the downturn. As the downturn solidifies, our aggressive strategies will seek to rotate away from weakening themes into stronger areas.
  • If no strong themes exist at that time, we'll rotate into themes with less volatility to help dampen downside risk.
  • It's important to note that if the market is not showing any positive trends, our aggressive strategies have nowhere to hide, and will likely continue to struggle right along with the market.

• Our conservative/moderate strategies (i.e., Risk Managed, Risk Managed Sector and Equity Plus) may initially follow the market as it heads down.
  • However, once we confirm the downward trend, we will rotate toward strength and/or areas of the market that have demonstrated lower volatility.
  • If no themes are showing relative strength, we will rotate to cash, to help keep losses to a minimum.

The cornerstone of our philosophy is to avoid catastrophic loss of principal. While we seek to protect you to the best of our ability once we have entered a bear market, our system is not infallible.

• There may be times that we sell funds at a loss.
• Or we may move into an area of the market that is starting to show strength, only to have it weaken, forcing us to trade yet again.
• We may then buy back a fund that we previously sold at a loss, if it has risen in our rankings.

In short, bear markets are quite volatile and you may see a lot of trading activity, with no immediate reward. Rest assured, in these challenging times we still diligently execute our process every day. By doing so, by tracking and assessing the state of the market literally on a daily basis, we'll be positioned to take advantage of the next opportunity when it presents itself.




Bull Markets

As history has repeatedly demonstrated, no bear market lasts forever. Inevitably, a bear market will give way to a new bull. At the beginning of a bull market:

• Our conservative/moderate strategies (that hold defensive positions, i.e., cash or cash equivalents during a bear), will ultimately rotate out of cash and back into the market. But we will only do so after we fulfill our mandate to confirm the new trend before rotating assets into that area of the market. Following this process may result in our conservative strategies lagging the market at the beginning of a new bull trend.

• Our aggressive strategies are always fully invested and are designed to react more quickly to a rebound in the market than our conservative/moderate strategies. However, each bull market has different characteristics led by different investment themes. As a result, we still apply our three-step approach of first identifying the new theme(s) and second confirming them, before taking the third step of rotating into that area of the market. As such our aggressive strategies, although fully invested, might take some time before investing in the new emerging bull market themes. This lag may result in short term underperformance.

It is also important to understand that there are downturns (i.e., corrections) within every bull market.

• At these times, our conservative/moderate strategies will again rotate to cash to help avoid significant losses in the event that the market continues down. When the market recovers from the correction, we'll again identify and confirm the upward trend and only then rotate assets back into the market. This may result in short term underperformance. This is what we refer to as "paying the risk premium" or "erring on the side of caution". We believe it is far better to experience short-term underperformance than to remain fully invested and continue your exposure to the downturn.

• During these corrections, our aggressive strategies remain fully invested, as designed. As such, they are likely to continue to fall along with the market. On the upside, since they are always fully invested, they are positioned to participate when the market picks up again.




At Niemann

We believe the best way to achieve investment success is to take the emotion out of investing. There will be times during a downturn when your emotions tell you to get out of the market. At these times it is tantalizingly easy to make significant investment mistakes. Our history shows the best way to be a successful investor is to stay disciplined, stay invested and stick to the plan that you and your advisor have crafted. Our process is designed to help you do just that. All we ask is that you give us the time to prove our process.