Model Portfolios


We created Model Portfolios to test one of the most often repeated hypothesis in the world of finance - that it is not possible to time the market, and that buy-and-hold strategy is superior to market timing. It is amazing how many people repeat this - not only without giving a proof, but also in the face of the accomplishments of many traders who routinely beat the markets. We have created 4 portfolios: buy-and-hold, long term trend following, dividend portfolio, and active trading portfolio.

The buy-and-hold portfolio will be a virtual one - since after the initial entry, there is no trading involved. We are reluctant to put real money in the buy-and-hold, since we think our other portfolios will do better. We will put real money on the line in the other portfolios - it would be silly to come up with a superior strategy and not make money with it. In addition, since human behavior differs when real money is at risk, we think it is important for the accuracy of our test to risk real money.

We will track these portfolios and compare their performance. More details about each portfolio, and the rules we use for trading them can be found under "More info" for each respective portfolio. For the record - we do believe that it is possible to time the markets, and that a well designed portfolio, traded with attention to risk management and market trends can beat a buy-and-hold strategy.

We invite you to check in now and then and see how the portfolios are doing. 2008 is shaping up to be a very interesting year - volatility, large stock market drops, weak US economy, falling dollar, high prices of oil and gold - for investors it might not be a fun year, but it sure will be interesting.

Our model portfolios are created for research and testing purposes only. They are NOT recommendations, we are not in the business of recommending stocks or any other investment instruments. We are not a broker, not a licencsed financial advisor, nor do we in any way recommend, advise or promote any of the securities that are part of the model portfolios.

 

 


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