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"Buy and hold" vs your strategy
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"Buy and hold" vs your strategy

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"Buy and hold" vs your strategy

In the last three years, major indices have gained about 60%.

Have you outperformed a "buy and hold" strategy with your own trading in this time frame?

If you have been trading a shorter period of time, you can use this to determine if you've outperformed the indices or not:

3-year perf: 60%
2-year perf: 30%
1-year perf: 15%

Vote in the poll, and discuss.

Are you outperforming the major indices?

Total votes: 118
 


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  #3 (permalink)
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"Buy and hold" vs your strategy


Although the broad market "buy and hold" return is a good starting point for evaluating a strategy, I think the volatility of returns and correlation to other asset classes are equally important. I consider my strategies as complimenting rather than replacing traditional investment vehicles. Therefore, the critical decision becomes one of capital allocation between the different alternatives.

Regardless of how promising back-tested and actual returns look, one should never "trust" themselves with all their capital. I'm reminded of a line from "When Genius Failed" about how the fantastically wealthy partners at LTCM survived despite having 90%+ of their net worth tied up in the fund . . . the money they saved was the money they had spent on mega yachts and mansions.

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drywater0 View Post
Although the broad market "buy and hold" return is a good starting point for evaluating a strategy, I think the volatility of returns and correlation to other asset classes are equally important. I consider my strategies as complimenting rather than replacing traditional investment vehicles. Therefore, the critical decision becomes one of capital allocation between the different alternatives.

Regardless of how promising back-tested and actual returns look, one should never "trust" themselves with all their capital. I'm reminded of a line from "When Genius Failed" about how the fantastically wealthy partners at LTCM survived despite having 90%+ of their net worth tied up in the fund . . . the money they saved was the money they had spent on mega yachts and mansions.

Good post.

I think the poll was motivated by the classic question if there is any purpose in active management rather than holding the market portfolio, so correlation would be irrelevant. Lowenstein's account is somewhat deceiving, and the guys were modest and inconspicuous with their spending.

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