Thread: Last Month's Second Best Fund Method

[QUOTE: Beafet : imported from LMBFMS #164] No, I was talking about Last Month's Best Fund YTD numbers...I started a new thread for the second best one. I didn't want to hijack this one anymore!
[/QUOTE]

Since everyone seems to be working on Last Month's Best Fund method,
is that to say this one - 2nd best - has lost its attraction/validity?
Or just hasn't had the back-tracking the other one has?
Thank you, Beafet, for your posting of this different type of strategy -

I can't speak for anyone else, but it would probably help if I were to be able to back track this theory more accurately. I realized I'm not sure what I'm doing. If anyone wants to help guide me through it, I am game!

There is a problem with both the Best month and second best month and that's the lack of back-testing data. There is a hugh difference between backtesting a year's worth of daily charts vs 12 months. IMHO A decent backtest should have at least 10 years worth of data during multiple periods of time. We can't get that much data with the TSP funds, so I'd advise caution.

JMHO

Originally Posted by beafet

I decided to put this in it's own thread instead of hijacking the LMBFM thread.

My theory is that if you choose to invest in the second best performing fund of the prior month, you will catch a lot of trends before they peak.
I think my math must be off somewhat, but here are the returns I've calculated so far.

2009: 42.84% as of COB December 29
2008: -8.49%
2007: 1.18%
2006: 22.46%
2005: -3.03%



End of month for December 2009:

G= +0.25%
F= -1.51%
C= +1.98%
S= + 6.66%
I = + 0.81%

Anyone using the last month's best fund method would invest for January in the S fund. Using my theory, you would invest 100% into the C fund.

My goals for this theory (should it continue the way it has been) is to a) beat the LMBFM, yet b) be just as easy to implement. If anyone has any thoughts or ways to refine it, let me know!

beafet, I like the idea. I decided to check it out further back...

2001: +13%
2002: -5.58%
2003: +48.8%
2004: +17.3%
2005: -3.03%
2006: +19.06%
2007: +4.39%
2008: -8.49%
2009: +43.08%


2001-2009: 194.03%

Looks good to me!

Some of my yearly totals are off from yours, but I would be glad to compare numbers.

I get a 14.8% average annual return...does that sound right? And how does that compare to the markets in that time? 14.8 a year sounds good to me! I wish we could take it all the way back to 1988, but I can be happy with what we got!

Alright, if you are following the recommendations made by the Last Month's Second Best Fund Method, for February we are putting 100% into the G fund.

100% into C for March!

100% into I for April. Until the end of the month it looked like it would be C again.