Sorry, couldn't help myself. Miles and I had this discussion several pages back in this thread, when he made the trade out of stocks, and we discussed where the market would have to go in the future to make that a good vs a bad idea. I clearly thought it seemed very unlikely that the market would crash, and he mostly seemed to agree but was sticking by the strategy based on his analysis of the historical record. Maybe this time is different?
is built on a logical framework that seems like it should work in the future years.
This is the part I've never really understood. Ultimately, the performance of this strategy is entirely dependent on the duration of market downturns following a predictable pattern, and then the pace of early declines at the start of a bear (within the lookback period) being smaller than the pace of early climbs a the start of a bull. That pattern may hold in the future, but I wouldn't exactly call it "logical framework" when it's just based on empirical observations. The entire grounding of the DM strategy as presented in this thread is agnostic of mechanics, because it times the market based solely on a price signal. That's not logic, that's data mining.
However, yes, I concede that momentum will not beat the S&P over every rolling 60 day period.
This is really the crux of my gloating. This particular episode turned out really bad for market timers following a DM strategy. I only highlight that because this thread was started in the optimistic hopes that this strategy would handily beat the index, and after all arguing it about violently for a few weeks we sort of begrudgingly agreed "fine, we'll just wait and see what happens then." Then we waited, then this happened. You can't really expect me to pass up an opportunity to point that out when the entire argument was basically "you just wait, you'll see that we're right and DM is awesome." In this moment, not so awesome. Maybe next month?
I'll remember to gloat when other forum members lose money and I profit that particular month. Jeez.
Hey, if you spend 50 long posts trying to defend your investment philosophy, and people call you an idiot and then do something stupid that your philosophy would have saved them from, then you too can gloat, but only in the thread where you tried to dissuade them. It won't be nice when you do it either, but I'll be more understanding. I'm not gloating because I'm happy anyone lost money, and in fact I've repeated several times in this thread that I hope miles gets rich with his scheme. But in this particular case, he would have been better off listening to me.
Not that I'm going to claim I'm a market genius for sticking with passive investing. You don't get to start up a hedge fund just because you DIDN'T trade away a big chunk of your portfolio with poorly timed trades based on chartist voodoo. (I'm sure that will get miles' blood to boiling. Hi miles!)