Relative Strength In A Long-Term Point & Figure Chart Format
Discover The Amazing Power Of Point & Figure Charting
Performance tests on the Market Dynamics buy list
Market Dynamics Performance Test Updates
Full Year 2010
The performance test for the Market Dynamics buy list that was sent to subscribers on December 31, 2009 showed a positive spread of 18.73% versus the S&P 500. This was the best annual relative performance by the Market Dynamics buy list since 2001. The gross return generated by the buy list was 31.51% based on a buy and hold calculation. The performance results calculated for this buy list were extremely skewed toward positive returns. The buy list is usually made up of one hundred stocks.
I have periodically tested the performance of the buylists data that is supplied to Market Dynamics users. This is to verify that the P&F relative strength charting system is still producing satisfactory results. I conducted performance tests for data from the years 2000 and 2001 and similar results were obtained. The large declines recorded during calendar 2008 indicated that the Market Dynamics system continued to outperform the market but a ”buy and hold” investment system still produced large negative returns.
The performance results of these buy lists are tested on a regular basis and communicated to subscribers. The positive spread between the buy list and the S&P 500 is usually within the range of +4 to +15 percentage points. It seems that results such as these could hardly be the result of chance. It seems reasonable to conclude that the process used to select these stocks is highly effective in the identification of future stock market winners. This represents several consecutive years of excess returns for the Market Dynamics buy list with only one year that did not produce positive relative returns.
This study represents a hypothetical test, but the buy list was actually delivered to subscribers at the end of December 2009 and could have actually been purchased at that time. Commissions and dividends were not included and this test does not represent real transactions. These performance tests were based on buying equal amounts of each stock on the buylist of stocks and holding it throughout the subsequent year. Past performance does not guarantee future results. The detailed data to support this study is available upon request from firstname.lastname@example.org.
Summary of Returns
Market Dynamics buy list S&P 500 Excess Returns
2003 +38.8% +26.4% +12.4%
2004 +17.6% +9.0% +8.6%
2005 +9.9% +2.9% +7.0%
2006 +15.9% +13.6% +2.3%
2007 +8.0% +3.5% +4.5%
20007-04-11 to 2008-04-08 +2.75% -5.10% +7.85%
2008 (results approximate) -35.0% -39.0% +4.0%
2008-10-17 to 2009-10-16 +21.0% +15.6% +5.4%
2009 +22.5% +23.5% -1.0%
2010 +31.5% +12.8% +18.7%
W Clay Allen CFA
January 8, 2011
A free trial subscription for three months is available – send an e-mail to mailto:email@example.com with “request free trial” in the subject line and please include your mailing address. Please visit my web site at www.clayallen.com