Xyber 9 Review
Xyber 9 is a predictive stock market program developed by Robert Taylor, a nominee for the Nobel Prize in Economics. The software measures gravitational fluctuations using tide levels, and thereby predicts future stock market movements.
You may wonder what exactly gravitational forces have to do with stock market activity. It turns out quite a bit, according to the research done by Taylor. In fact, research he did showed that every major high and low in the market over the last century has corresponded inversely to highs and lows in gravitational activity. From this observation, Taylor developed a predictive model for the stock market, and hence Xyber 9 was born.
All of this is outlined in Taylor's book, Paradigm, which presents his research in a fictional tale. I didn't care much for the story, but the research behind it is nevertheless fascinating. In a nutshell, Taylor's findings can be summarized in something he calls "Taylor's Law" which states:
"The financial market’s expansion and contraction is quantitatively in direct correlation to the increases and decreases in gravitational fluctuations experienced at the human level.
Increases in market price are in direct response to decreases in gravitational forces; and, decreases in market price are in direct response to the increases in gravitational forces."
So Does It Work?
The best way to answer this question is for you to go to the Xyber 9 site and examine the past forecasts yourself. The forecasts are given in weekly, monthly, and annual time frames.
When I was a member a couple years ago, I had trouble replicating the performance of the site because the site calculates returns in a way that favors the forecast (e.g. for long forecasts, Taylor would take the LOW of the first day of the forecast, and compare it to the HIGH of the last forecast date. Vice versa for short forecasts. This is not realistic because the average investor will not be able to capture the respective lows and highs when placing the trades on a given day).
As you can see from the chart above, Taylor takes the high on 8/5, and the low on 8/12, making this short recommendation a successful trade. However, if you had taken the low on 8/5 and the high on 8/12, you probably would have broken even or even lost money after commissions and slippage.
Xyber 9 During the Market Crash in Late 2008
I took a look at how Taylor's forecasts did during the major downtrend we saw around October of 2009. The results were mixed for the weekly forecasts. Xyber 9 missed one of the major legs down in October. You probably would have broken even for the month by following the forecasts, which isn't bad considering a buy and hold strategy would have killed you in the same time frame.
Conclusion
Although I think Taylor is onto something with his unique way of looking at the markets, my feeling is that he still needs to tweak his software a bit more before it becomes accurate enough to be something an investor can consistently rely on. For the time being, I'm sticking to Valueline for my stock analysis.
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