WINNING INVESTMENTS with EXCHANGE-TRADED FUNDS

EXPECTATIONS vs REALITY

These pages will tell you the best way to look at stock investing. They will never be out of date.

Tens of millions of other investors, including most professionals, do not use it or even know about this. It will give you the setting in which you can gauge any investment or trading method you ever use, your own, or some one else's, or the one on this site.
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Range of Returns 3.25 years

Note. The purpose of these charts and data (from actual systems tests) is to illustrate
a unique, useful approach to viewing results. No updates are necessary.
Other charts and data cover those voluminously.


 

WEALTH

The purpose of investing is the creation of wealth. Speed and magnitude of creation are the measures of success. They are the basis for comparing and judging different methods of investing or trading.

The chart above compares two methods: the Winning Investments with ETFs system and simply buying and holding a broad index of stocks, like the S&P 500.

The chart is both a fact and an expectation. The expectation is subliminal and carries over into the infinite future. It is the embedded impression you have of +129% vs +35%. That advantage looks very attractive and worthwhile pursuing.

Each point along the curves tells you how much wealth exists on each date. The lines look continuous, but actually they are not. Each point is one week. There are 179 of them on each curve. The graph is a portrait--a snapshot--of the entire period from start to finish, the first date to the last date. This is standard practice. It's what you see all the time on the big, financial websites like Yahoo, SmartMoney, Morningstar, MSN, Fidelity, Vanguard, etc., and on all the charting services.

But wait. Why these two particular dates? I chose them here because they contain all the historic data that was available when I produced the chart.

When you think about it, you realize the dates are, in fact, arbitrary. They could be any other pair of dates within this time span. Or, if I produced the same chart for study next month, the end date would be different and random, dependent on the date I arbitrarily chose. Or you could pick any two random dates yourself.

The conclusion here is that all starting dates and ending dates in any performance study are random,* and therefore the results are random. Random means you don't know what's coming next. It's a coin toss.

The corollary is that a pair of dates may give very good results or bad results. And good or bad is the expectation that you will unconsciously carry forward into the future. Thus, the same trading system may give a favorable or unfavorable impression depending on what two dates were selected to start with and end with.


Something needs to be done. Wealth comparisons were the topic of this page. Go next to the topic, CONTEXT, within which all Wealth occurs. Click in the column to the right.
WEALTH
>>CONTEXT
RANDOMNESS
EXPECT THE BEST
ENCORE (Optional)

 


  * Yes, that includes the 1, 3, 5, and 10-year studies you see everywhere. Year-end dates and quarter-end dates are an arbitrary convention for uniform convenience. To that extent, they are also random. All arbitrary events are random, but not all random events are arbitrary. Random rules the roost.

                                                               



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