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Thread: Last Month's Second Best Fund Method

  1. #13

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    Default Re: Last Month's Second Best Fund Method

    Quote Originally Posted by Intrepid_Timer View Post
    Looking at the whipsaw action it incurred those few months, I can understand why.
    Yea I'm not a fan of these type systems, from my own perspective it's like saying "I want to come in second place." Some of these systems may appear to do well, until they don't...
    Retired, 55G/15C/15S/15I (Paper Trading)_ BLOG: Stats for March, Stats for Q1, 2024 Stats

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  3. #14

    Default Re: Last Month's Second Best Fund Method

    Quote Originally Posted by Intrepid_Timer View Post
    Looking at the whipsaw action it incurred those few months, I can understand why.
    Quote Originally Posted by JTH View Post
    Yea I'm not a fan of these type systems, from my own perspective it's like saying "I want to come in second place." Some of these systems may appear to do well, until they don't...
    Actually Beafet's 2nd Best Fund method doesn't appear to whipsaw any more than the LMBF. I worked out the monthly & yearly returns for both methods from 2004 - 2012 and have posted the results in the tables below. The LMBF method averaged 9.56 IFTs/year vs. the 2nd Best Fund average of 10.22 IFTs/year. That's about equal in my book.

    What isn't equal are the returns. The 2nd Best Fund method outperformed the LMBF method in 2009 which I presume is why beafet developed this method. In 2010, on the other hand, it incurred a nasty loss while the LMBF had a rather nice gain. I have to assume this is why beafet lost interest in it.

    Looking at the tables we can see how the equities often take turns being the best fund for a month. I think beafet saw this and thought if he took the 2nd best from last month it could become the best this month. Unfortunately it didn't appear to work. The LMBF method returned 102.72% over the period from 2004 - 2012. That outperformed all 5 TSP Funds over the same period. The 2nd Best Fund method only returned 83.69% over the same time span. It also has 3 negative years out of 9 compared to the LMBF single negative year. That would be quite an emotional roller-coaster in anybody's book and may be what IT was referring to with the whipsaw action.

    Of course, as has been mentioned already, this type of method is not for everybody. I'm merely comparing 2 Set-It-And-Forget-It-Type Monthly methods to see how they compare. If that's what you want, you'd be better off served by the original.

    LMBF 2004 2005 2006 2007 2008 2009 2010 2011 2012
    Annual 13.00% 2.38% 7.07% 10.97% (10.96%) 9.66% 12.85% 12.22% 19.27%
    IFTs/pos 11 3rd 9 Last 11 4th 11 2nd 10 3rd 10 4th 7 3rd 8 1st 9 1st
    2ndBest 2004 2005 2006 2007 2008 2009 2010 2011 2012
    Annual 17.10% (4.03%) 17.79% 1.94% (9.28%) 31.82% (8.45%) 7.42% 15.75%
    IFTs/pos 9 3rd 12 Last 11 2nd 10 Last 10 3rd 10 2nd 11 Last 9 2nd 10 4th

    Note: I had to cut out the monthlies because it wouldn't fit. Maybe I should try it as a graphic.
    Allocations as of COB Dec 28 : 100% S. | Retirement Date:Dec 2025
    Past Returns:
    2020 31.85%,2019 27.97%,2018 -3.36%,2017 13.10%, 2016 -1.79%, 5Yr Avg 12.61%

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