27 Oct The Best of Both Worlds?
The Best of Both Worlds?
Oct. 27, 2023
Subscribe to my YouTube Channel HERE.
As much as index fund influencers make me angry, it’s easy to let doubt creep in.
Can 50 million Elvis fans really be wrong?
Millions of people use index funds. Trillions of dollars are wrapped up in them.
Maybe we’re wrong. Maybe we should just follow the crowd.
Or, even better, maybe we can get the best of both worlds.
How about this?
I’ll use a robot to take a trade on the SPY back in 1998 and then put a time exit on it so it doesn’t get out until October 2023. We’ll put $10k into that account.
Then, at the same time, we’ll use our other $10k and put the 5-Minute RSI ES Robot on that.
That way, we have all the wisdom and greatness of an index fund and we have an automated strategy.
It’s perfect!
Let’s see how good that makes it.
Here’s the Equity Curve of just our RSI Robot on a $10,000 account. If we ONLY use that, here’s that Equity Curve again:
The strategy alone hypothetically makes 669%.
Now let’s add in the buy-and-held SPY. Now we have $20,000 at work and we get…
Only 478%.
The best of both worlds is worse. The index fund’s underperformance is too much to overcome.
How sad.
But there’s one more thing we could try.
We could add all our “everyday” stock picks from earlier this week to SPY.
For sure, it would return less. But we could have the psychological peace of mind that comes with following the crowd and owning the whole market.
What would that look like?
Putting equal weights into SPY, MSFT, AAPL, GOOG, SBUX, and AMZN from 2010 to 2023, we’d get an average return of 1,200%.
That would mean a $6,000 account would have turned into $81,000.
Not the best we could have done but still pretty great.
And we could have the peace of mind that we’d have the influencers’ partial approval.
Talk to you soon.
Join the free Newsletter list here .
Get Robot information HERE.
Visit my Performance Page HERE.
Buy my new book HERE.
The Inevitability of Becoming Rich is HERE.
My latest YouTube video is HERE.
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.