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Long-term Validation of Methods

For many people, including me, two and a half years is too short a period to put much trust in.

I needed to validate the 'prescribed conditions,' the methods I was developing, over as many bull and bear markets as I could get reasonable access to. I obtained good data going back to 1986 for the stocks I had been, and still am, using in the Classic Portfolio on the 'Copernicus' website.

Those results proved for me what I was looking for. The method worked well over an 18-year period covering 945 weeks of observations. I used the S&P500 Composite Stock Index as a benchmark. It gained 350%. Applying the selection component of my potential method over the same period produced a total gain of 890%. See the chart and the next section for more details. The timing component behaved well intermittently, holding back performance during some periods, boosting it noticeably during others. See this chart.

The selection component ranked 36 stocks from the strongest to the weakest. The timing component measured the probable changes in market direction. I'll talk more about these components in the next section.

 
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