Two Robots Really Beat the Market

Dec. 22, 2023

There’s one huge problem with buy-and-hold index investing.

And nobody talks about it.

It’s this: How do you go faster?

In other words, how do you increase your returns when you’re buying-and-holding?

The answer?

You can’t.

Once you’re put your hypothetical $10k in…that’s it. You just have to then sit there for three decades and hope it works out.

Granted, zealots would claim that we could add money, but that’s cheating for this discussion. We’re only talking about investing once and letting it go.

So, again, if that’s the case, how do we make our index fund do better?

Again, the answer is: we can’t.

But robot trading is different.

With robot trading, we can add in as many strategies we want–and not change the amount we’re initially investing.

So, let’s show the SPY’s return one more time on a hypothetical $10k account from January 2007 to December 2023:

We would have had to suffer a 55% drawdown but our $10k nest egg would’ve turned into $46k (if we reinvested dividends).

Now, for the exact same initial investment of $10k, let’s put our 5M RSI ES robot together with our 10M Bollinger Band™ robot.

Here’s what we hypothetically get trading 1 contract each time from ’07-’23:

And here’s the % Curve via Portfolio Architect:

Yes, there are some periods of drawdown (just like buying-and-holding the market).

Yes, there are some losing years (just like buying-and-holding the market).

But this small robot portfolio hypothetically turned our $10k into $112k, for a return of over 1,000%.

And, of course, compounding gains would make much more.

We’ve looked at a couple of systems and lot of research this week.

So, I’ll ask the question again:

Do systems beat the market?

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.