401k Maximizer & ETF Maximizer

The 401k Maximizer by 401k Maximizer, Inc. was developed specifically for all three of Southwest Airlines retirement plans.

The 401k Maximizer was developed so that every employee at Southwest Airlines can have a powerful, easy tool to manage their retirement dollars. The 401k Maximizer solves 401k and profit sharing fund selection decisions immediately. Every employee should be taking advantage of the tax deferred power of these great retirement plans, but most employees just don't know how to maximize returns and limit risk when the market turns down. The 401k Maximizer will show you how to grow your retirement account and avoid losses that threaten your retirement. 401k Maximizer gives busy employees the bottom line on what to do with their retirement plans, so they can build a secure retirement and not worry about their money.

How many times have we all witnessed colleagues of ours working weekends, holidays or all night shifts just to pick up a few extra dollars in after tax money. And yet those same folks won't take 5 minutes a month to manage their retirement accounts which will have a far greater impact on their financial future than those few extra hours every month on the job. Remember, that retirement dollars are all tax deferred while salaries are taxable. So do yourself, and your family, a favor and make it a habit to spend the 5 minutes every month it takes to keep these dollars in the best performing funds.

During the last week of every month we will show you which funds to own, and how much exposure Conservative, Moderate and Aggressive investors should have in the market, the following month. Then daily we analyze the risk/reward potential of the overall market and communicate if any significant changes occur which would warrant you to reduce or increase your market exposure and how. Stay safely on track toward reaching a secure retirement. This service will show you when to avoid high-risk times in the markets and times when the odds for solid growth are in your favor. Then it’s just a matter of following the fund recommendations.

The power of this approach is so effective that you will soon be telling other employees you work with about the difference it has made in your retirement plan since you signed up. Because every Southwest employee deserves the peace of mind of a secure retirement we want each of you to maximize your investment returns. A secure retirement is one of the greatest gifts you can give yourself. Don't hesitate, subscribe now and start turning your tax deferred retirement dollars into the retirement security it was meant to be.

Top Down Investing

At 401k Maximizer,Inc. we approach the market from a top down perspective. First we evaluate overall market conditions to evaluate the risks in the market which will determine the level of market exposure Conservative, Moderate and Aggressive risk investors want their portfolios to have in the next month.

To demonstrate the power of analyzing overall market conditions before investing our hard earned retirement dollars let's compare the returns you would have realized using a simple 50 day moving average of the NASDAQ and S&P 500 indexes to evaluate whether it's safer in the market our out of the market, in the safety of cash (or in our case the credit union), during the period from 1972 to 1993.
 
For the S&P 500, buy and hold from 1972 to 1993 would have returned 349.96%, compared to 533.21% using a 50 day moving average to get in and out of the market. With the NASDAQ, buy and hold would have returned 760.74%, compared to 6,016% with timing.

If you had started out with $10,000, buy and hold would have increased that amount to $44,996 on the NYSE and $86,074 on the NASDAQ. Using a simple 50day moving average would have increased those numbers to $63,321 on the NYSE and $611,686 on the NASDAQ.

If you had bought and held the Dow Industrials from 1970 to 1994, you would have gained 472.62%. If you missed the 75 best days, you would have lost 51.56% of your money. But if you had missed the 75 worst days, you would have made 5,187%!!

We were so fascinated by this at 401k Maximizer, Inc. that we took it all the way back to 1928 and found that if you had purchased the Dow Jones industrial average index with $10,000 in 1928 and held it until the end of 2002, that $10,000 would have to grow to $330,807. If you had missed the 10 best months in the market since 1928, we're only talking about 10 months here in close to a 900 month period, then that $10,000 would have only grown to $47,387. But if you had missed the 10 worst months in the market since 1928 that initial $10,000 value would have grown to $3,713,036!! So it definitely pays to be in the safety of cash during the worst periods in the market, as most of you know who rode the market down during 2000 through the fall of 2002. The easy conclusion of all of this testing is that the key to making big profits over the long term is to avoid the market altogether during big sell offs.

Market Analysis

So how do we determine whether it's safe or not to dip our toes into the market at any given time? Well after many years of testing; back testing, forward testing, and just all around crazy testing we have found that relying upon any one indicator, like a moving average, or even two moving averages, is a very dangerous way to approach the market. Why? Because even the best indicators breakdown at times and don't work!!

So when you have your hard earned dollars on the line it's wiser to take a consensus of some of the best market barometers available to determine whether the wind is at your back or pushing you back. Consequently, our market analysis of both the large cap stocks as represented by the S&P 500 stocks or small cap stocks as represented by the Nasdaq Composite is a product of 7 different measurements of price direction, accumulation vs. distribution, and several measures of underlying market breadth.  Each of these major signals represents a consensus vote of all of the underlying indicators which drive them. The consensus of the vote shows us the positive or negative bias of the market. Consequently, if any indicator, like a moving average, breaks down and stops performing for a period of time, its failure is masked by the consensus of the other indicators, which are still performing. We look at these indicators using weekly bars of market change to dampen out short term market noise and gain a clear picture of actual market bias.

When the consensus of all 7 underlying indicators of both the S&P 500 and the Nasdaq Composite turn negative we recommend that Conservative and Moderate risk investors reduce their market exposure. Because as the losses everyone took during the bear market show, there are times when it's just better to have money invested in the safety of cash than watch it dwindle away in any investment.

Fund Selections

So how do we select our monthly fund recommendations? First of all, it’s important to remember that the 401k and Profit Sharing fund selections producing the greatest returns will slowly change during the course of a year. This is why we want to upgrade our portfolios monthly to stay invested in the funds which have the greatest potential for gains in the following month. To select those funds, we evaluate multiple measures of each of the funds returns. This is a proprietary ranking process which considers each funds recent and historical returns. This approach is considered one of the most robust mutual fund selection techniques available.

Summary - The Advantages of using 401k Maximizer, Inc. as your guide to 401k and Profit Sharing plan fund selection

• We start with a top down analysis of the overall market and use advanced multiple measures of underlying market breadth and strength driven by 7 different proprietary indicators all voting against each other to determine the markets bias.
• This market bias determines the level of market risk which in turn drives the level of market exposure that Aggressive, Moderate, and Conservative risk investors want to have on a month to month basis.
  * We rank all of the 401k and Profit Sharing plan funds using a thoroughly tested methodology that weighs each fund’s recent and longer term returns.
• To summarize, our goal is to always position ourselves for the greatest returns based upon the current market conditions with the understanding that once in a great while the greatest returns may be the safety of cash in a money market fund.

Notes:

The information and data contained herein are compiled from the Southwest Airlines web sites and other sources and are believed to be reliable, but accuracy cannot be guaranteed. 401k Maximizer, Inc. disclaims any and all liability for losses that may be sustained as a result of using the data presented herein. Past performance is no assurance of future results. All investments involve risk. You should invest only after careful examination of fund prospectuses.

401k Maximizer, Inc. monitors fund performance and publishes a monthly newsletter. The goal of 401k Maximizer is to take the guess work out of the fund choices and to help every employee manage his or her own retirement plan. 401k Maximizer is a newsletter monitoring the retirement fund alternatives available to employees of Southwest Airlines.

There are other services available to manage my Southwest Airlines retirement plans with, what makes your system better?

That's a great question. There are two main issues you want to consider when managing your retirement portfolios. The first is a method to show you when it's safe to be fully invested, partially invested or out of the market entirely in the safety of cash and the second is a thoroughly tested fund selection system. 

We say managing because each of us should be actively upgrading our retirement holdings monthly to the best performing funds if you want to outperform the market over the long term. Buy and hold asset allocation is a recipe for under performance whether it's with your retirement portfolio or with other dollars. Look at it this way. Money is constantly rotating on Wall Street from sector to sector and industry to industry. Normally, when the market favors a certain area like oil stocks, or biotech, or international stocks those areas will start to trend, and trend, and trend, for months on end. If the funds you bought to hold 2 years ago don't hold the kind of stocks that are being favored by the market at the time then they will languish month after month under performing the major indexes and occasionally even lose money when the rest of the market is going up. This is why it's critically important to constantly upgrade your holdings to the funds which are out performing the others over the recent past in order to focus your investments in those funds which are holding the stocks that the major institutions are accumulating at the time.

Before jumping into the market though you want to analyze overall market conditions to determine whether the market currently has a positive or negative bias. The 401k Maximizer Major Market Analysis tells conservative and moderate risk investors whether it's safe to be fully invested or partially invested in the safety of the credit union as we walk forward in time.

This whole issue is so important it forms the backbone of the 401k Maximizer. At 401k Maximizer we look at 7 different measures of underlying market internals, sometimes referred to as market breadth, of both the NASDAQ and the NYSE to determine how aggressive our fund recommendations should be. These market internals gauge the strength of both the NASDAQ's and NYSE's up volume, down volume, advancing issues, declining issues, accumulation, distribution, and trend strength on a weekly basis. All of this information forms a consensus of either positive or negative market bias displayed by two simple indicators for each index. We show both of these indicators to our subscribers in every month end newsletter. The indicators then drive our recommendations about whether it's safe to be fully invested or partially invested in the safety of the Credit Union fund at the time.

The second key component of any successful method to manage our 401k funds with is a fund selection system. 401k Maximizer uses an enhanced ranking method based upon each fund’s multi-period weighted returns. This approach is considered one of the most robust mutual fund selection techniques available and has been used very successfully for years by professional money management firms specializing in mutual fund up-grading.

Which investment method is best for me? Risk vs. Reward

The Aggressive method stays 100% invested in the best ranked funds on a rolling month to month basis.  This allows investors who don't like adjusting their market exposure to account for current market conditions, to stay invested in the highest ranked funds.  In most market conditions, short of a bear market, the Aggressive method will probably out perform the Moderate and the Conservative risk approaches, but not by a lot, and clearly not enough so that subscribers approaching retirement, or in retirement, or subscribers who just don’t want to see their account values decrease a lot from their peak values should follow the Aggressive approach. 

Conservative and Moderate risk portfolios reduce their market exposure by holding fewer funds to lower portfolio volatility when the bias of the market becomes negative. 

There are several other value added features of the 401k Maximizer system that you'll want to carefully consider, including:

* Ease of Use

* Clear, user friendly, presentation

* Specific Recommendations for Conservative, Moderate and Aggressive investors

* Different market exposure level recommendations for Conservative, Moderate and Aggressive investors when the major market conditions and bias change.

* 401k Maximizer uses the actual price data for each available fund. The market index data is from FastTrack.

* Recommendations are made before the end of the month. Additionally we monitor the markets daily and if it is necessary we will send you an urgent mid-month set of recommendations.

Why spend all the time upgrading my 401k holdings every month? I feel more comfortable just buying and holding 2 or 3 good funds.

One of the golden nuggets of the retirement plan is the ability to upgrade to the best performing funds monthly without worrying about short term capital gains taxes and the commissions you would incur trying to do this through a normal low cost broker. Consider this, the commission to buy and sell a fund from a low cost broker outside of the retirement plan might run $50 to $100 per month every time you made a change. Then multiply this times holding 5-6 funds at a time and you can see how the expenses alone would kill your performance very quickly.

To see the real power of constantly upgrading to the best performing funds on a rolling month to month basis let's compare similar gains in the market with a buy and hold system versus an upgrade system. Hypothetically, we're going to make 2 investments. In our first investment we buy fund ABC at the beginning of the year and hold it for the entire year. This buy and hold strategy gives us a return of 20% for the year, a great return! With our second investment we buy fund ABC at the beginning of the year and then sell it several months later with an 8% gain. Our model now says to buy fund DEF which we purchase and hold for a 7% gain. Next, the model says to buy fund GHI which we hold for a -2% loss. Finally, our model says to buy fund JKL which we hold to the end of the year for a 7% gain. Now by the end of the year our upgrading has produced what appears to be a similar 20% gain = +8%, +7%,-2%, +7% but in reality we made more money than buy and hold. Our buy and hold approach gained 20% but our upgrading produced a yearly gain of 21.18%!! 

How did this happen? It's because when we continually upgrade to the best performing funds throughout the course of a year we are constantly leveraging our gains from the previous investment into our new investment. To make this clearer from the example above after our first gain of 8% a $100 starting value is now worth $108. So when we make the next purchase with a gain of 7% we are realizing a gain of 7% on our original $100 investment plus a gain of 7% on the $8 gain from the first investment. Remember that our account had grown to $108 before we made the second investment. And when you do that over and over and over again throughout the year you leverage your gains with the power of compounding again and again. It's that power of compounding gains over and over again that is the magic golden nugget of our Super Saver 401k. Albert Einstein referred to the power of compounding as the 8'th wonder of the world and when you see it in practice you have to agree that not only does E = M*C*C but that compounded gains are magical!

How do I use your system?

It's easy. Just subscribe and you will receive an email message during the last week of each month announcing that new recommendations are available. This message will prompt you as a subscriber to log into the 401k Maximizer web site and Sign In to view the new Recommendations and Market Analysis. 401k Maximizer is published several days before the end of every month in order to give subscribers time to re-allocate to the new recommendations before the beginning of the new month. 401k Maximizer is also published during the course of the month if any significant market changes have occurred which would warrant a re-allocation or reduction in market exposure. If you do not receive an email message towards the end of each month, you can always visit the web site and SignIn and see if they new recommendations have already been posted.

The key is to stay with the trend constantly up-grading to the best performing funds.    

For the Pilot Plan -- How do I implement the 401k Maximizer recommendations?

• New Subscribers: 

Use the “Rebalance Exchange” option to implement the model portfolio that best meets your needs if you have held your current positions for more than 30 days.  Here are the steps for Rebalancing:
1. Log into the 401k Account Access website.  The URL is: https://www.401kaccess.com
2. On the top of the page click on “Transactions”
3. Then in the drop-down, click on “Investment/Portfolio Changes/Current Balance Transfer”
4. To do a Rebalance:  Scroll to the bottom of the page and on the left hand side in the “Rebalance Exchange” box select “Rebalance your entire account to a Wealth Allocation or build your own model”.  And click on “Continue”.
5. In the next screen, click on “Build your own model” and “Continue”.
6. Click “OK” when a message appears.
7. On the next web page, enter the percents that you want to invest in each of the listed funds. The percents should add to 100% at the bottom. Then click “Continue”.

• Current Subscribers: 

Use the Fund Transfer approach by following the steps below:
1. Log into the 401k Account Access website.  The URL is: https://www.401kaccess.com
2. On the top of the page click on “Transactions”
3. Then in the drop-down, click on “Investment/Portfolio Changes/Current Balance Transfer”
4. To do a fund to fund transfer:  Scroll to the bottom of the page and on the right hand side in the “Individual Fund Transfer” box select “Percent Exchange”.
5. Select “Continue” and then fill in the box with 100% of the fund which you want to transfer out of, then select the continue button again.
6. On the next web page, enter the percents that you want to invest in each of the listed funds. The percents should add to 100% at the bottom
7. Then click “Continue”
8. If necessary go thru steps 9 thru 11 again for other funds to sell.

• For Future Fund Elections:

1. Highlight “Transactions – Investment/Portfolio changes/Future Fund Election.”
2. Select the radio button at the bottom next to “Build your own model.”
3. Modify the percentages you want in your 401k.
4. Click on the radio button at bottom where it says “No, I do not wish to have my entire account automatically rebalanced once a year.”
5. Select “Continue” and then select the “Process” button.

If you still have questions about your account or whether you are doing this correctly call Account Access at 1-800-777-401k and tell them what percentages you want in each fund.  

 For the Company and Profit Sharing Plans -- How do I implement the 401k Maximizer recommendations?

• New Subscribers: 

If it has been less than 30 days since you last made changes in your account then skip to the section below labeled “Current Subscribers”.  If you are a new subscriber who has held your current positions for more than 30 days then use the “Rebalance Exchange” option, shown below, to implement the model portfolio that best meets your needs. 

• Rebalance Exchange option - here are the steps for Rebalancing:
1. Log into the JP Morgan website. The web address of the Profit Sharing Plan is https://www.retireonline.com
2. The next page you see is labeled “My Accounts”.
3. Click on the link labeled “Southwest Airlines Co. Profit Sharing Plan.
4. This brings up the "Account Balance Page". On the left side of this screen is a section with two major categories, "Account Detail" and "Account Management". Under the "Account Management" heading is a link that says "Manage Investments". Click on it.
5. On this page there are four links in the middle of the page labeled View Your Investment Summary, Fund to Fund Transfer, Rebalance Your Account, and Change Future Investments. Select the link labeled “Rebalance Your Account”.
6. On the next page, fill in the percentages next to each fund so they total 100%
7. Click on the “Continue” button on the bottom of the page and then the “Accept” button.

• Current Subscribers:

Use the Fund to Fund Transfer approach by following the steps below:
1. Log into the JP Morgan website. For the Company (Non-Pilot) Plan the URL is www.freedomtoretire.com  and the URL for the Profit Sharing Plan is https://www.retireonline.com
2. The next page you see is labeled “My Accounts”.
3. Click on the link labeled “Southwest Airlines Co. Profit Sharing Plan”.
4. This brings up the "Account Balance Page". On the left side of this screen is a section with two major categories, "Account Detail" and "Account Management". Under the "Account Management" heading is a link that says "Manage Investments". Click on it.
5. On this page there are four links in the middle of the page labeled View Your Investment Summary, Fund to Fund Transfer, Rebalance your account, and Change Future Investments. Select the link labeled “Fund to Fund Transfer”.
6. Scroll down the page and select the fund you want to sell, and then at the bottom of the page under Transfer Type select “Percentage Amount”, and in the box labeled “Amount to Transfer” fill in 100%.
7. Select the “Continue” button.
8. Now select the fund you are going to transfer the money from the fund you selected on the previous page into, and put 100% in the box in the column labeled “New %”.
9. Select the “Continue” button.
10. Then Accept.  Repeat this process for each fund you are making changes to. 

• For Future fund elections:

1. Return to the "Account Balance Page". On the left side of this screen is a section with two major categories, "Account Detail" and "Account Management".
2. Under the "Account Management" heading is a link that says "Manage Investments". Click on it.
3. On this page you will be given four major choices: View Your Investment Summary, Fund to Fund Transfer, Rebalance your account, and Change Future Investments. Select the link labeled Change Future Investments.
4. This next screen will allow you to select where you want the money coming out of your paycheck to go. Scroll down to the Investment choice section and fill in the percentages you desire.
5. Then choose the Continue button at the bottom of the screen.
6. Finally, click on the Accept button. 

The fund to fund transfer allows us to change one fund at a time and move the money from that one fund into a new fund.  According to J.P. Morgan you can make as many fund-to-fund transfers you want each month, but only in two sessions.  What this means is that we can use the fund-to-fund transfer feature to manage our accounts but only twice a month. 

Please note that if a transfer request is made on a business day by 2:59 PM Central Time, the transfer is processed that day and is based on the fund closing prices that day. Transfer requests received on or after 3 PM Central time are processed the following day based on the closing price of the funds on that day.

If you still have questions about your account or whether you are doing this correctly call J.P. Morgan at (1-866-588-2728). 

We provide three investing methods for you to choose from depending on your risk tolerance and objectives. Each is described below.

The 401kMaximizer Conservative Method

This approach is 100% invested in the market whenever the bias of either the NASDAQ Composite or the S&P 500 are neutral or positive.  Our historical testing and real time results show that this approach will produce smaller gains than the Aggressive method when the overall market is trending sideways or up.  Subscribers approaching retirement, or in retirement, or subscribers who just don’t want to see their account values decrease a lot from their peak value should carefully consider following this approach as it’s the easiest approach to live with as the market goes through different cycles. 

The Conservative risk Method reduces your market exposure by 2/3 to a single fund whenever the bias of both the NASDAQ and S&P 500 market indexes turns negative.
 
The Conservative risk investment method will vary your exposure to the market as the risk in the market changes over time. We measure market risk with the buy and sell counts. The buy and sell counts measure the bias and therefore the risk of both the NASDAQ and S&P 500 markets. These are described in further detail in both the Introduction and FAQ's section of the web site.

The 401kMaximizer Moderate Method

This approach is 100% invested in the market whenever the bias of either the NASDAQ Composite or the S&P 500 are neutral or positive.  Our historical testing and real time results show that this approach will produce smaller gains than the Aggressive method when the overall market is trending sideways or up, but not by a lot.
 
The Moderate risk Method reduces your market exposure by 1/3 to two funds whenever the bias of both the NASDAQ and S&P 500 market indexes turns negative.
 
The Moderate risk investment method will vary your exposure to the market as the risk in the market changes over time. We measure market risk with the buy and sell counts. The buy and sell counts measure the bias and therefore the risk of both the NASDAQ and S&P 500 markets. These are described in further detail in both the Introduction and FAQ's section of the web site.

The 401kMaximizer Aggressive Method

This method is always 100% invested in the top ranked funds each month. This approach has the most risk of all of the three approaches but will in all likelihood outperform the other two approaches over time although with much more volatility.

This approach has the greatest amount of risk because it is invested in the market 100% of the time.

The Aggressive risk investment method is for folks who want to have 100% exposure to the markets at all times. It will have the highest draw downs of the three methods but historical testing and real time results show that it will prospectively have the highest returns as long as the overall major market indexes trend sideways or up.