3-29-15 Comments

[Mike]

Thank you, Mike. You obviously have an excellent grasp of all the rules. Can one still get the notifications of Market School through Leaderboard? Also, plain and simple, do you think it still works? Any results anywhere I can look at? (I realize it is stock-selection dependent, but perhaps someone has some numbers using simply an index, etc.)

Market School posts results of the exposure model on Leaderboard if you have attended Market School, otherwise the data is hidden from view. I presume this will continue to be the case with the upcoming home study course. The exposure model is a good guide to what you should be doing in the market and in my opinion better than I have been able to do by reading IBD or other mechanisms I have tried. As a way to measure performance I show the following chart.



The blue line represents passive buy and hold. The buy and hold strategy buys one share of the NASDAQ on 1/2/1973 at $134.63 and holds it until yesterday's close value of $4,947.44.

The red line starts with a starting portfolio of $134.63 on 1/2/1973 (same as buy and hold) and buys the NASDAQ index at the Market School recommended exposure (0% to 100%) ending up with $43,599.19 at yesterday's close.

The first conclusion is that timing the market can work but you should note that I have not modeled trading costs in this analysis which would reduce the performance of the exposure model (red line). Also note that you can't really buy NASDAQ shares, this is just a way to measure relative performance of two approaches using the underlying index that the exposure model is using. Also note that this is a cash portfolio analysis, judicious use of margin could increase the performance over this baseline case.

For me the best part of the approach is what I learned about reading the market with a totally mechanical model. It is a true unbiased read of the market as the only inputs are index price and volume.