Tbills and Gold
Surprise and Disaster
TBILLS SYSTEM vs 3 Indexes, DJIA, NDX, and SP500
37.7 years August 30,1971-May 11, 2009
Cumulative % Change--Hypothetical--Weekly
See Comments below
You may guess that this is another in the famous Foolproof Failsafe Prudent-Trustee series on Systems Tips. You would be right.
They all deal with the three big indexes using different methods of timing.
So what? Who cares about trustees, and so forth, at this stage of the game?
Everything starts with cash. You get paid in cash--from sales, emoluments, or income from investments. Until spent, cash accumlates as savings. With savings, prudence arrives--or should. Prudence is the intelligent balanced decision to allocate savings in excess of current spending to investing. Investing demands further prudence; hence its importance to the site.
For many, index investing is too boring to speak of. But for some, it is the perfect solution now for long-term investing of serious assets. For others, it will be a future solution when aggregate speculative investments arrive at a level that requires allocation to more permananet disposition.
In the chart above, the curves compare the results of buying and holding two of the most prudent, most widely traded equities assets in the world vs the 'Tbills system' shown here. All three start with 100 and wind up as shown, with system results more than four times as profitable as the indexes.
TIMING
Ths method is internal, intrinsic, self-contained. It is utterly simple. All four components (including NDX--the Nasdaq-100 stock index, shown later) are ranked by their relative strength in market performance. The ranking and timing method is identical to those used currently in the selection and timing processes of the ETFs portfolios.
The top-ranked component gets purchased. When its rank falls to second place, it is replaced by the new top-ranking component. And so on, continuously.
You can do this. All you need is access to the closing prices of the three indexes and Treasury Bills. Build them into a cumulative record of value growth and compare the current cumulative values with their own values several months ago. Buy the top-ranked value. Change when it changes. That's it.
I will get to gold in a minute. First I want to point out an inflaction hedge on this page. Please go to next.
This is page 1.
Previous Foolproof Failsafe articles
here,
here,
here, and
here.
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