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James,
IMHO, the Buy and Hold comparison in Metastock should either be eliminated
or ignored. My reason for stating this is that it is psychologically
unrealistic to implement. It is easy to look at a particular stock, once the
test is complete, and see that buy and hold would have produced superior
profits. However, what you will think in the heat of battle is something
else entirely. Let's suppose you established a long position with a stock at
$55. And lets further suppose the stock, in a few weeks time, rockets to
$70. Then, for no apparent reason, it starts to head south.
The real question is: What is your level of pain? Would you be able to
psychologically hold on to the stock when it declined to $60. How about $50.
Or let's assume your $55 stock now dropped to $40. Very few people, except
those without protective stops, would continue to cling to this stock
believing that the Buy and Hold strategy would succeed in the end. I would
be willing to bet that they would sell toot sweet.
In short and sum, the Buy and Hold strategy is one that is rarely
successfully seen to its conclusion. In the heat of battle, most traders
will sell when their pain threshold is exceeded. I would suggest that if you
develop a strategy that continually produces 100% (200% is better) returns
over your test period, keep it and use it. And don't worry about what
returns buy and hold can produce.
Jim DeWilder
-----Original Message-----
From: James Sun <jamessun@xxxxxxxxxxxxxx>
To: metastock@xxxxxxxxxxxxx <metastock@xxxxxxxxxxxxx>
Date: Wednesday, March 31, 1999 12:03 PM
Subject: Is it just me?
>All -
>
>I'm a new MetaStock user and find this list to be extremely helpful as I
try
>to digest the program. One newbie question -- In the past few days, I've
>created a handful of simple systems to test (crossing M/A and M/A
>penetration for entry condition with and w/o trending ADX as filter) with
>max loss stops. Pretty simple stuff -- but, none of the systems I've
looked
>at so far beat buy-and-hold. Now granted I haven't run the tests of lots
of
>stocks, but is the Buffet method of long-term buy and hold really the only
>game in town?
>
>Still struggling,
>James
>
>
>
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