The Motley Fool Discussion Boards

Previous Page

Investing/Strategies / Mechanical Investing


Subject:  Re: RS Bullet backtesting Date:  7/17/1999  2:39 AM
Author:  Charley Number:  31934 of 267774

This is the Post that started the Bullet Concept
Subject:Poss. Slight Variation to RS-IBD monthly.
MindsEye Msg 10639

Just a little food for thought on the monthly screens.
How viable is it? Difficulty in backtest? would think so with more trades ot would probably have.

Backpost 1540 ROBBIE5550 MF AOL board:
"I then printed out your old databases and compared the weekly RS to the stock prices of the corresponding weeks. It appears that if you were to sell the stock not when it was replaced by a better RS stock; but as soon as its RS dropped, you would avoid virtually all losses and in many cases maximize your return on each individual stock.

This would obviously result in 1) a lot of tracking; 2) high trading costs ( unless you had a substantial portfolio; 3) ordinary taxable income; 4) without backtesting and calculating actual returns, who knows if it would be worth the work compared to Keystone, Formula 90, etc.

Backpost 1527 ROBBIE5550 MF AOL board:
Myplan is to replace it with the highest rs value as long as it is at least 97 and has not dropped in the previous 4 weeks. If there is no stock meeting that criteria I would wait until there is. Please note that since the rs can can change daily, waiting a month may be too late to avoid a major drop. Of course my strategy may not avoid major drops either."
Backpost 1481 Palo0303 MF AOL board:
<< I read with interest OSTB's charts regarding his approach (RS-IBD monthly). It bothered me that on the surface much of the gain was due to Dell and BBY. >>

This is the norm. See Peter Lynch's "ten-bagger" chapter in One Up on Wall Street.
Backpost 49 Vkmath MF AOL board:

I referred back to my spreadsheet to verify the exact trades & returns for a strategy that buys the #1 ranked R/S IBD stock and switches monthly only when it drops to the #3 spot. This allows for some wiggle room vs switching when it drops to the #2 spot and eliminates frequent trading & whipsaws. Use EPS rank to break ties. I have only a two year history, using the database archives. Investor beware. $1,000
invested on 1/1/97 would now be worth $9,588 for a total return of 859% in 23 months with only 6 switches. Here is the history:

Jan 97: $1,000 into APPC +2.4% 1 mth
Feb 97: $1,024 into DELL +182.0% 10 mths
Dec 97: $2,896 into ABF -15.0% 1 mth
Jan 98: $2,470 into BBY +174.0% 7 mths
Aug 98: $6,766 into AEG -19.0% 2 mths
Oct 98: $5,493 into AOL +75.0% 2 mths
Nov 98: $9,588 still in AOL

I'm strictly an RP4, BSP, Keystone5, Spark5 & EG5 investor with 1 year holding periods. The above monthly switch model however, gives me something to do in the interim with a small amount of my portfolios. No it hasn't been backtested further & it is volatile, but the potential rewards appear to be worth the risk, again with no more than 1% - 5% of my total market value.

Best Regards,


Copyright 1996-2017 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us