Buy and hold is a pattern of behavior, but not a strategy.
I want to be kind to you, and encourage your interest into the markets....but buy and hold is the only guaranteed way to lose money.
It's just a back-tested data-mined trading strategy. These are a dime a dozen and I can make them at the rate of one per 3 minutes. All that happened here is that:
a) You start with the knowledge that the Dow was very successful over that entire period.
b) You know things like the maximum drawdowns of the Dow over that period.
c) You know things like the Dow didn't go to 0 in 2009.
d) You know that companies that are in the Dow now survived so you likely have survivorship bias.
Then you try out different parameters on a non-linear system until you get something that performed well. I have seen thousands of these systems in my life and can almost always destroy them in seconds.
There is something amiss with your Math...
If it were actually possible to reliably make a 600% return over sixteen years doing ANYTHING investment-based (that's an average annualized return of 37.5% per annum), why on Earth would anybody EVER start a business?....a FAR riskier, harder work proposition that ultimately will likely only annualize a 20-25% return?
That's FOUR TIMES the return one can reasonably expect from a Wall Street professional...
You are either a savant, or you suck at Math!
My career was in quantitative investing. I've seen dozens of cases where amateurs (and some academics) think they've found the holy grail of investing. None have worked, so I am skeptical of your claims.
The most common problems are commissions and spreads, either underestimating costs or assuming the execution of trades that would not actually be possible in the market.
You don't provide enough info for detailed analysis, but I'd wager a substantial amount that it won't stand up to quantitative scrutiny.
So I have been working hard on developing a long term investment strategy that just uses stocks in the Dow Jones Industrial Average to beat the overall index. I didn't use market timing or margin, just simple buy and hold until the stops are hit. I tested it from January 1997 to March 31 this year and it returned 615% not including dividends. I was just wondering if that was good. It surpassed the overall index, but I want to give this strategy to people I know for long term use and I don't want it to be worse than something else out there. I'm only 18 so I haven't really had any industry experience to know if this is good enough for the everyday investor. So can anyone give me feedback?
Thank you for your time.
