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The Amazing 1 and 2 Year Returns on DOW Stocks

The Results are in.  Stocksystem.com conducted historical simulation testing on the Dow 30 stocks over the last 1 and 2 years and compared them to the results of an identical "Buy and Hold" portfolio.

The Study shows that if two investors purchased 500 shares of every DOW 30 stock 1 year ago the PCA System user would have garnered more than 400% more profit than the investor who purchased the exact same stock, and held for the same amount of time.

The basic idea behind the PCA methodology is that market risk is mitigated by using a cash reserve to manage the holdings on a long term basis. The real benefit here is that the risk exposure is actually lower.

It is fairly difficult to compare a "system" like PCA to buy and hold because the PCA had the additional buying power of the cash reserve on it's side.

Stocksystem has taken that into consideration, the study also includes returns based on an "equal dollar amounts" invested basis.

ONE YEAR DAILY RETURNS
PCA Return
Buy/Hold Return
B/H Same $$
Invested Return
$48,545
$11,617
$23,234

As shown above, the "Same $amt." return for the buy and holder doubled and PCA stayed the same. In this case the PCA still outperforms buy and hold, but really is considered superior because the PCA system only had limited amounts of money at risk throughout the test period, and the buy and holder was 100% at risk the entire time.

While that may seem like a great improvement over buy and hold, the 2 year results were even more astounding. The PCA System over a two year period garnered a profit of $63,216 while the buy and holder managed a dismal
($39,733)

As if that was not bad enough, had the buy and holder used the equal dollar amount comparison, he lost ($79,466) for a net difference of $142,682.00

2 YEAR RETURNS USING WEEKLY CLOSING PRICES
PCA Return
Buy/Hold Return
B/H Same $$
Invested Return
$63,216
($39,733)
($79,466)

Complete Return Data for Each Stock for 1 Year Daily Test.  In this 1 year daily study the PCA system generated more than 4 times the profit of the buy and holder on the same number of shares, and if they invested the same dollar amount the PCA system generated more than 2 times the profit of the buy and holder.

 

Complete Return Data for Each Stock for 2 Year Daily Test.  In this 2 year weekly study the PCA system generated a $63,216 profit. The buy and holder on the same number of shares is down ($39,733), and if they invested the same dollar amount, the buy and holder lost ($79,466).

For a net difference of $142,682.00

The PCA software will not tell you which stocks are going up tomorrow or what to expect from the indices next week, but it will take your own carefully selected stocks and manage them in the most rational and common-sense manner.

PCA wants you to select a good stock and stick with it. Trade it through the ups and downs and let the stock work for you. Time and compounding will be on your side. After all, Investing is about making money work for you.


"These examples demonstrate the power of disciplined, systematic investing. The PCA system achieves superior returns while taking on less risk with any stocks, not just the Dow. Our thousands of users around the globe can attest to the benefit of being contrarian investors."
Bill McKinley
President, Stocksystem.com Inc.


Imagine the comfort you can have with PCA guiding your trading decisions...

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The complete details of how the study was conducted are as follows:

The Simulations were run in the PCA for Windows v2.4.19

The study assumes, in all simulations, that all trades recommended by the PCA software were executed at the closing prices daily on the one year simulations, and at the weekly closing prices for the two year simulations.

The study does not take into account the interest earned on the money not at risk in the PCA simulations, nor does it include calculations for taxes, commissions,or any other trading related expenses or interest.

The calculations are based on the trading advice generated by the software on default settings. NO optimization took place during the testing.

The Dow 30 was selected based on the conservative nature of the stocks in the index.

For additional information about the limitations of simulation testing, please see our disclaimer.

 

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