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
This is the full panoply of choices we have looked at.
Note that NDX (Nasdaq-100) is vastly more volatile than anything else on the chart (including gold, not shown). For example, NDX's big run from 1974 to 2000 soared +21,400% compared with Gold's biggest run during the same period, +614%. But you do not want to own it during its 2.5-year decline of -83% from 2000 to 2002.
The system negatives are several protracted periods of underperformance relatave to the indexes and a maximum drawdown of -31.6%.
A note on numbers. Big numbers are foolers. These big total gains break down into compound average %/year returns as follows.
TABLE OF RETURNS
|
|
tot |
% |
%max |
|
|
|
%gain |
/yr |
ddwn |
CF |
|
system |
|
3920 |
10.3 |
-31.6 |
124 |
|
NDX |
|
3027 |
9.6 |
-82.6 |
37 |
|
DJIA |
|
806 |
6.0 |
-53.0 |
15 |
|
SP500 |
|
777 |
5.9 |
-56.2 |
14 |
|
Tbills |
|
528 |
5.0 |
-- |
|
|
CPI |
|
423 |
4.5 |
-- |
|
Dividends and transaction costs excluded
Conclusions. This is a very simple, very easy method of 'prudent-trustee' investing. Timing is of paramount importance in this system, as it is in all investing. It is the perfect lazy man's way of getting above-average market returns while doing very little work. It avoids terrible, crises bear markets. The use of options can raise returns three to six times the system returns reported in the table above.
If enough people show interest, I may complete research validation for general system release and weekly publication. Let me know if you are interested. Send an email here:
Major Indexes Timing with Tbills System
This is page 4. End.
CF in the Table is a measure of reward vs risk.
It equals tot%gain
divided by %max drawdown
Notes. NDX consists of the Nasdaq Composite Index (COMPQX) until 10/7/1985 when it is linked to NDX, the date of first publication of NDX.
System maximum drawdown reported above corrects the -23% originally posted.
Previous Foolproof Failsafe articles
here,
here,
here, and
here.
Posted
5/25/2009 12:30 a.m. EDT
Amended
5/26/2009 4:55 p.m. EDT
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