Don’t forget that you have a much better chance of beating the market using ETF. That is your edge. P123 is great for managing it. I posted this in Feb 2016. 3.5 years later my Hypothesis is right and I am still invested in the Nasdaq. In fact if you had a designer model with this simple formula you would be in the top 10. I have evolved my investing to be Long QQQ and hedging with TLT and GLD. I alternate the percentage invested in each by the month. Here’s another even more simple Book. What are the odds that this simple book over the next 10 years outperforms the Nasdaq? It’s 20 year simulation would place it in the top 1% of all mutual funds. I think there is a culture that you have to use stocks to beat the market and that is simply not true. The evidence I think favors ETF and uncorrelated assets. Especially if you thinking 10 or 20 years and only want to beat the market by a little.
https://www.portfolio123.com/port_summary.jsp?portid=1510587
My post from Feb 2016:
There is another way to look at beating the market it’s boring and not fun but it works and it is rarely talked about which surprises me a lot since we are all here to make money. Well that is why I am here.
You don’t need a ranking system to beat the market. My best performing investment since 2009 is QLD. There is no ranking system it was just me betting that Nasdaq will outperform the S&P for many years to come. If the technology does not outperform other sectors than I don’t think the US economy will grow. Here are the reasons I choose it and how I continue to use it.
- 80% of fund managers cannot beat an index during a ten year period. If you don’t think you can then you should pick an ETF. Based on what I have seen over the last 2 years of Smart Alpha not many models are beating QLD. Since 2009 QLD returned almost 40% annually. Yes it had a 34% drawdown which makes it hard to hold.
- Very little effort and time is required to invest in ETF. I’v tried the day trading and I still do it but I have a niche that very few people play in. I prefer my ETF I sleep better at night.
- I have not been pure QLD I use it with Market timing and have lost money versus buy and hold.
- 8 years into a bull market I have reduced my exposure to QLD to no more than 25% of my investments and 0% right now.
- I use TLT and EUM along with QLD in a book to reduce my drawdowns. Again I will not make as much as just pure QLD but 8 years into a bull market means there will be a crash. After the next crash I will increase my expose to QLD.
- I know in 2008 If you buy and hold QLD you lose 83% and this is why you have to use market timing.
I will leave you with one thought:
What are the odds that this simple little formula performs well over the next ten years? If it was a Smart Alpha model would it be in the top 20%? I am going to bet it will outperform the S&P and it will beat 80% of mutual fund managers.
Eval(close(0,#spepscy)>ema(20,0,#spepscy) or (close(0,#bench)>ema(75,0,#bench)),Ticker(“QLD,TLT”),Ticker(“TLT,IEF”))
Cheers,
Mark V.