No. of Recommendations: 13
Backtest shows it loses out to B&H with minimal improvement in Drawdown.
Can you provide a link to the back test?
This person claims to have backtested it, and that it works.
https://toughnickel.com/personal-finance/robertlic... https://toughnickel.com/personal-finance/robertlic...
I am not trying to debate this. I am trying to learn the truth, before I waste any money with it.
Any criticisms of the method are welcome.Okay, I read the link. His backtest is garbage. "From January 2000 to July 2016" That's not a backtest period. That is a joke. I have looked at many many timing schemes that look good in a certain small(ish) time period but fail when at longer time periods.
You can easily download the S&P500 stock history from 1950 to the present date. I have an Excel file with the monthly S&P500 from Jan 1950 to Jan 2011 if anybody wants the data but can't find it. Also weekly from Jan 1950 to Jan 2016--with yields so you could include dividends. Although just the price-only results would give you a good idea of how well this strategy works.
Given a few hours (and the incentive), I could probably whack up a spreadsheet with the buy/sell rules and do a more rigorous backtest.
Here's a thing that stood out for me:
"1. Initial amount to invest in the stock is $10,000
2. Cash reserve of $10,000 for future purchases."
I think that this will run into the same problem that "value average investing" does. You are holding a very large un-invested cash reserve with the assumption that you will (always) be able to invest that cash at lower values *and* that you will always have enough cash to invest when called for.
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Poking around, I found my spreadsheet that does GTT (growth trend timing) of S&P500, Jan'1950 to Nov'2021. That's where I would start if I wanted to do a decent backtest of AIM.
