SCOTT WELSH TRADING BLOG

Stupid Is As Stupid Does

Stupid Is As Stupid Does

Sept. 30, 2020

Most regular people have no idea what to do with their money.

I read a survey recently that claimed 80% of people don’t know how much to save for retirement or how to invest for retirement.

That’s shocking. And sad.

There’s a vast number of normal people out there with no information and no idea what to do.

Some Experts tell us to invest in mutual funds and hold them forever.

Of course, that’s idiotic and borderline criminal. Most mutual funds don’t even outperform the market.

And then there’s the looking-out-for-us, on-our-side Experts.

These Experts have dug in and gotten to the truth. These Experts have started FIRE (Financial Independence Retire Early) movements that many lost, regular people have flocked to.

These Experts have seen the data and have the solution.

Just buy-and-hold an Index Fund.

Trust them, they say. They’ve looked into it. No one can time the market.

The best and only solution is to passive, long-term investing.

I have one thing to ask these benevolent Experts:

Why don’t you care that you’re giving advice to the innocent masses that is so clearly full of garbage? Is it ignorance or apathy?

To which the Experts could only reply:

We don’t know and we don’t care.

It is possible to time the market. The market can be negative for a decade at a time. A basic trading system can beat passive investing by a million miles.

How do I know?

As I’ve mentioned, I entered a real-money World Trading Contest this year. All entrants have to trade an account with real money and all results are verified. And here are the real-life results so far in 2020.

The Experts’ FIRE-certified, best-option-out there, academically-certified S&P 500 Index Fund is up 2.1% for the year.

My real-money Contest account is up 80.7%.

Yeah, but what about drawdown? Surely I had to risk an arm and two legs to get that return.

Let’s compare.

The max drawdown so far this year for the S&P 500 is -35%.

The max drawdown for my Contest account is -16.3%.

The Contest account has gotten 40 times the return for half the drawdown.

It would take 10-12 more years of maximum index fund performance to match one year’s results from a simple trading system.

If I stopped trading tomorrow, the experts MIGHT have the same amount of return by 2032.

What “research” are the Experts reading? Why have they purposefully chosen to put their heads in the sand?

Why are they grossly misleading regular people?

In our next email, we’ll go into detail on a simple system that annihilates the “best solution out there.”

Talk to you soon.

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Disclaimer:
It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented on these sites are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The authors, the publisher, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading.

HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.