[TSP_Strategy] Re: Newb

 

Newb, you asked some good questions. 

Sarah is correct about picking your dates for comparison.  The standard 3/5/10-year lookback is not much help.  You need to see how a strategy/service handles the full market cycle (bull and bear markets) … unless you do not think there is going to be another bear market! 

Bear markets wipe out 50% of bull market gains in a secular bull market and 80% on average during a secular bear market.  The last bear market wiped out over 100% of the previous bull market for example.

Since the market spends 80% of the time in a long bull market and a very short period losing all the bull market gains, you will find some analyst are geniuses 80% of the time.  You will also find the Buy & Hold wins no more than 80% of the time.  It is the other 20% you really need to worry about.

For example, buy-the-dip strategies are great in bull markets but deadly in bear markets.  Just remember you also have to sell (time) each peak.  Then one day there is not a peak to sell into. 

If you want to see how the various timing services did during a full market cycle, look at how they did from the last market peak to the current one.  I put together TSP-Timing-Services Returns Tables (http://tspsmart.com/TSP-Timing-Services) for this group awhile back.   Scroll down to the 9 year sorted table to see the results from peak-to-peak.

Annual self-reporting from the services makes getting the Sharpe ratios on trades impossible unless each service provides the data.  

Still hoping to get my service added to Sarah's list someday (sigh),

Michael (TSPsmart.com)

PS.  You will not find daily TSP prices prior to 2003, but you can obtain their tracked indexes data.  They have different prices, but the same daily gain/losses so you could do the conversion with excel. Make sure to use the returns with dividends added in and not price only.

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Posted by: michaelhbond@yahoo.com

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