The Simple System Strikes Again

Jan. 12, 2024

It’s a strange thing.

We say we want answers, but when the answers knock on our door we say, “Go away. I’m looking for the answers.”

In our last Newsletter, we talked about a simple system based on timeless principles that asks for almost no work. And that simple solution outperforms the market return by a nice margin.

So what do we say?

Do we say, “Excellent! I want more money, so I’m immediately looking into that!”

Or do we say, “Yeah, but TQQQ is risky and looking at the charts every other year is too much and that system is probably optimized and making less money isn’t all that bad…”?

Strange.

Nonetheless, let’s try to mangle the market again.

This time we’ll just use a random stock. As everyone knows, random stocks are r-i-s-k-y. Any stock can suffer bad news and go to zero. While an index fund is safe forever and ever.

So I’ll pick the stock everyone picks, AAPL. Is that fair?

Yes. We discussed that in the last Newsletter.

Furthermore, we should only pick lifestyle stocks if we want to do a thing like this. What does that mean?

Only pick a stock that we use every day in our normal life. If we do that, the chances of success go way up. And we also will know if our stock needs to be switched out. If, for example, a new coffee chain is introduced and we find ourselves going there instead of Starbucks, then we stop trading our stock and move into something else.

Despite the fact I despise smartphones, I do like my iPad and use it every day. Thus, AAPL is a viable lifestyle pick.

Using our system from last Newsletter on a monthly chart, here’s AAPL from 2007-2024 trading $10k of stock each time with no compounding:

The system turns a hypothetical $10k into $67k. Here’s the Equity Curve via Portfolio Architect:

Here’s the SPY over the same period:

Our system easily beats the market with a lifestyle stock.

Does that answer change our minds?

Only time will tell.

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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.