Down goes the Dow

Faber includes a chart showing how the strategy would have worked in 2013 -

If you had bought the 10 cheapest countries by CAPE, you would have made 21%.

If you had bought the 10 most expensive by CAPE, you would have lost 17.8%

just one year obviously, and a very strong upyear - in a downyear I suspect Greece, italy and argentina would have done very poorly. But this sure worked last year.

K55 wrote:

agip wrote:

I'll use the 200 day strategy for stocks and hope I am brave enough to sell when the sell signal triggers.

Ah yes. The magical 200 day strategy.

Just curious. Can you provide the mathematical proof as to why this strategy works?

How do you prove mathematically that something has worked?

Pointing Out the Obvious wrote:

K55 wrote:

The usual fact free response from a dupe

Hmmm...his response wasn't all that subtle. I'm surprised you didn't catch his drift.

An imposter!

K55 wrote:

agip wrote:

I'll use the 200 day strategy for stocks and hope I am brave enough to sell when the sell signal triggers.

Ah yes. The magical 200 day strategy.

Just curious. Can you provide the mathematical proof as to why this strategy works?

Here's a discussion of a published paper that tests various trigger-based sell strategies throughout the history of the S&P.

dumb wrote:

Here's a discussion of a published paper that tests various trigger-based sell strategies throughout the history of the S&P.

I'd be curious to see how the contrarian strategies fare.

R2D3 wrote:

K55 wrote:

Ah yes. The magical 200 day strategy.

Just curious. Can you provide the mathematical proof as to why this strategy works?

How do you prove mathematically that something has worked?

You may be able to find a period of time for which this so called strategy worked.

However, mathematically is it bullsh*t. It is more investment advisor's mumbo jumbo

K55 wrote:

R2D3 wrote:

How do you prove mathematically that something has worked?

You may be able to find a period of time for which this so called strategy worked.

However, mathematically is it bullsh*t. It is more investment advisor's mumbo jumbo

Bullshit like bailing out of equities because one thinks the US might send their military into Syria? At least the 200 day average strategy is not panicking.

(Cue K5 to tell us the invasion of Syria is coming. He's so predictable.)

Pointing Out the Obvious wrote:

Just curious. Can you provide the mathematical proof as to why this strategy works?

How do you prove mathematically that something has worked?[/quote]

You may be able to find a period of time for which this so called strategy worked.

However, mathematically is it bullsh*t. It is more investment advisor's mumbo jumbo[/quote]

Bullshit like bailing out of equities because one thinks the US might send their military into Syria? At least the 200 day average strategy is not panicking.

More non mathematical mumbo jumbo

Not surprisingly, that went right over your head.

Pointing Out the Obvious wrote:

Not surprisingly, that went right over your head.

Pretty much everything you say is really weird and seems to have no relationship to the post you are responding to.

Perhaps you can explain to me why the magic 200 day whatever it is would work mathematically.

K55 wrote:

Pointing Out the Obvious wrote:

Not surprisingly, that went right over your head.

Pretty much everything you say is really weird and seems to have no relationship to the post you are responding to.

Perhaps you can explain to me why the magic 200 day whatever it is would work mathematically.

I don't use the 200 day average.

Pointing Out the Obvious wrote:

Perhaps you can explain to me why the magic 200 day whatever it is would work mathematically.

I don't use the 200 day average.[/quote]

Yet you have defended it as a strategy.

Can you not explain why?

Care to show me where I have defended it? Can you read?

Pointing Out the Obvious wrote:

Care to show me where I have defended it? Can you read?

Short term memory issues too?

Back up 4 posts

By saying something went over your head, I'm supposedly defending an investment strategy? You're an idiot.

Pointing Out the Obvious wrote:

By saying something went over your head, I'm supposedly defending an investment strategy? You're an idiot.

Not only can you not remember what you posted a few minutes ago, you also can't even read it? Really?

K55 wrote:

Pointing Out the Obvious wrote:

Not surprisingly, that went right over your head.

Pretty much everything you say is really weird and seems to have no relationship to the post you are responding to.

Perhaps you can explain to me why the magic 200 day whatever it is would work mathematically.

You said to back up four posts and this is what we see. What we don't see us me defending an investment strategy.

ok I will stop being petulant.

The 'mathematical' proof that the 200 day moving average strategy is is a book called The Ivy Portfolio by Mebane Faber. Following the 200 day strategy over the last 40 or so years would have increased returns by around 6/10ths of a percentage point over buy and hold.

Which is not spectacular, but it exists.

But the better fact is this - the 200 day strategy would reduce maximum drawdowns by a massive amount. So it is very helpful to people in their 50s, 60s, 70s etc who can't afford to wait out a long bear market. Buy and hold's max drawdown since 1972 is around 48%, while for the 200 day strategy the max drawdown is only around 9%.

This website has some of the data:

http://www.investingdaily.com/18094/avoid-market-crashes-using-the-ivy-portfolio-market-timing-system/

But it is all worked out better in the Faber book.

Another way you can look at this is to pull up yahoo finance and chart the dow or sp500 with the 200 day. You will see clearly that it would have gotten you out in 2000 and in 2008 after small losses. Then it would have gotten you back in in 2002 and 2009 very near the bottom.

the downside is false alarms - several times you will sell everything...only to have to buy it back the next month at a small loss.

But the key is avoiding the big drawdown, esp for older folks.

[quote]agip wrote:

ok I will stop being petulant.

The 'mathematical' proof that the 200 day moving average strategy is is a book called The Ivy Portfolio by Mebane Faber. Following the 200 day strategy over the last 40 or so years would have increased returns by around 6/10ths of a percentage point over buy and hold.

That is not mathematical proof. That is looking back at results over a random time period. What were the results over a different period of time? What were the results for a 250 day moving average over the same time period?

This is just more investment advisor BS, a belief in some magical system that works for a reason that cannot be mathematically explained. Real low brow thinking

Except for those with inside info and those big enuff to influence the market, nobody can know or impact the market. The only possible thing an investor can proactively do if willing to risk being in the market is to try to find stocks that seem to be in the process of traded on inside info (a marked increase in the volume of trades and a rise in price) and try to jump onto this before the gravy trade ends