The Money Mustache Community
General Discussion => Share Your Badassity => Topic started by: ChaseJuggler on January 28, 2015, 08:22:50 AM
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http://www.evernote.com/l/ACAmH5JD3hpE375faH11MzqyRQpt91LmUEg/ (http://www.evernote.com/l/ACAmH5JD3hpE375faH11MzqyRQpt91LmUEg/)
Instead of a buy & hold strategy, I started trying a data-driven sell high buy low strategy starting in October. It's worked incredibly well so far.
I have 100% of my investments in the SCHB etf (0.04 expenses), and all in cash when I wait for the 3% drop from the monthly high.
Just found the site about a month ago, and I'm super excited about pushing my net worth into hyperdrive =D
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That's very impressive - nice work! Any replicable tips for the rest of us? :)
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Couldn't you have done the same if you bought/held cracker barrel or apple or any other "hot" companies if you had known they would have done well?
But yes, what's a "safer" way of selling high/buying low?
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Good luck with that... lol
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Your chart is a bit deceiving. Since you (apparently) sold your holdings in September and missed the negative returns between September and late October, your portfolio ended much higher than the S&P simply as a fluke of when you decided to exit the market and when you decided to return with this strategy. You should begin the comparison when you bought back into the market in October. That would give a more genuine comparison.
Also be weary of extrapolating three months of positive performance to the conclusion that this strategy will continue outperforming. Three months is a very small sample size.
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Congrats, but remember:
"Everyone's a genius in a bull market"
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Of course, no strategy is guaranteed to work long term, even after past/short-term success (including buy & hold). But I did backtest the strategy on 70 years of monthly S&P 500 data, and the strategy outperformed a simple buy & hold pretty soundly.
If the strategy continues to prove successful 6 months from now, I'll gladly share the details if any of you are interested.
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What about tax implications and transaction fees?
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I spent a few years in trading..
In general, this is a pretty terrible idea. I suspect if we looked at details, you doubled returns for 2x or more risk. So sure worked out this time. In the wrong market, could end up going 200% below the SP, and losing your shirt.
Backtesting has no meaning. The market changes every day. What worked in the past has no bearing on if it will work tomorrow.
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Instead of a buy & hold strategy, I started trying a data-driven sell high buy low strategy starting in October. It's worked incredibly well so far.
Less than 4 months ago?! See, that doesn't matter. What were you doing before that? Jumping in and out of strategies which are working (at a given time) can be done by anyone. You have to post longer term details of an entire financial picture history in order for it to be viable.
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Of course, no strategy is guaranteed to work long term, even after past/short-term success (including buy & hold). But I did backtest the strategy on 70 years of monthly S&P 500 data, and the strategy outperformed a simple buy & hold pretty soundly.
If the strategy continues to prove successful 6 months from now, I'll gladly share the details if any of you are interested.
Sure. Why not? I look forward to hearing more about it after you've tested it a bit further!
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Backtesting has no meaning. The market changes every day. What worked in the past has no bearing on if it will work tomorrow.
The real problem with backtesting is that it's easy to "overoptimize" and produce what looks on paper like an outstanding system, but then when you start trading, it totally falls apart. At the very least it's important to test the system on some "out of sample" data to see how it performs in time periods other than the one it was designed on.
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I was THIS close to doubling my money...
I put it all on Red.