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Blair Hull: Timing the market, turning a profit

Blair Hull, Hull Tactical U.S. ETF Founder
Source: Hull Tactical Funds

U.S. stocks traded dramatically lower Wednesday as a seven percent dip in oil prices continued to pressure global equities.

The Dow Jones industrial average dropped 550 points in mid-afternoon trading, with IBM leading the declines. The Nasdaq composite traded 3.5 percent lower, while the S&P 500 fell more than 3.5 percent to reach its lowest level since February, 2014. WTI oil prices dropped six percent to $27 a barrel, the lowest level since May 2003.

The CBOE Volatility Index, a widely held gauge of fear in the market, hit 32, its highest level since September 1, 2015.

Blair Hull, founder of the Hull Tactical US ETF, told CNBC's "Power Lunch" his fund has a seven percent short position in SPDR/S&P 500 ETFs and the remaining 93 percent in cash.

"We knew as far back as last summer the odds didn't favor equities," said Hull. "So we timed the markets thanks in part to data and predictive analytics."

Hull's fund, which takes long and short positions, relies on quantitative algorithms to offer what he believes is an "all-weather fund" designed to outperform over the long-term investment horizon irrespective of market conditions.

"Just as it was "irresponsible" to time the market in the last 30 years, It will be considered irresponsible NOT to time the market in the next 30 years." Hull said of his actively managed fund..

Not every investor, though, is in favor of this type of investment strategy.

Appearing on CNBC's "Power Lunch" on Wednesday, Vanguard Group founder Jack Bogle, made his case for passive investing over active management.

"indexing always works best. up, down, or sideways, because when you look at active managers, the smart money Is trading, by definition, i suppose, with the dumb money. But the smart money and the dumb money are even. Every buy is a sale. Every time an active manager buys a stock, another active manager sells it to them. It's a losers game," Bogle said.

Market timing stigma has gone on too long: Pro