SystemTrader
03-28-2006, 09:11 AM
(Note to Milk/FundSurfer: if possible, please add this for tracking purposes. You can call it "SystemTrader 2" or "SystemTrader All Stocks" or whatever. Thanks in advance!)
I'm starting a folder for a secondary timing system for tracking purposes. This system will always have a 100% stock fund allocation. Basically, it uses just one part of my overall system: the part that chooses the top two perforrming stock funds.
As such, it will always have a 50/50 allocation among the C, S and I funds. The current allocation is...
50% S Fund and 50% I Fund
I've tested this strategy on Vanguard's equivalent of the C, S and I funds from 1997-2005. The average annual returns were twice as high simply holding the C Fund (S&P 500). Of course, it did take a big hit in 2000-2002, just like any portfolio that remained heavily invested in stocks. But I see this as competing strategy to buy and hold for those who like to be permanently invested in stocks. Personally, I'm not comfortable holding a 100% stock allocation of the time, so I prefer my original/primary system.
However, I must admit that it may make sense to be 100% invested in stocks at certain times, such as pre-Presidential election years (almost always a positive return for stocks: 1991, 1995, 1999, 2003, etc.), the months of November-December each year, etc. This is ideally suited for those situations.
ST
I'm starting a folder for a secondary timing system for tracking purposes. This system will always have a 100% stock fund allocation. Basically, it uses just one part of my overall system: the part that chooses the top two perforrming stock funds.
As such, it will always have a 50/50 allocation among the C, S and I funds. The current allocation is...
50% S Fund and 50% I Fund
I've tested this strategy on Vanguard's equivalent of the C, S and I funds from 1997-2005. The average annual returns were twice as high simply holding the C Fund (S&P 500). Of course, it did take a big hit in 2000-2002, just like any portfolio that remained heavily invested in stocks. But I see this as competing strategy to buy and hold for those who like to be permanently invested in stocks. Personally, I'm not comfortable holding a 100% stock allocation of the time, so I prefer my original/primary system.
However, I must admit that it may make sense to be 100% invested in stocks at certain times, such as pre-Presidential election years (almost always a positive return for stocks: 1991, 1995, 1999, 2003, etc.), the months of November-December each year, etc. This is ideally suited for those situations.
ST