Stock Market Timing Software Results

Stock Market Timing Software vs. Buy and Hold:

The question related to using a market timing approach to growing your assets is whether or not market timing has the potential to give you a greater return over time than simply "buying the market" and holding your investment far into the future.

  • If buying and simply holding "the market"--which you can do using Indexed funds--provides greater returns, then there's no reason to look at other approaches.
  • If market timing can significantly improve returns, then market timing is something to explore very seriously.

We will compare potential returns using a buy and hold strategy with potential results from market timing approaches using several of our Price Wave Analysis programs. The parameters for the following studies are;

  • Each will start on January 1, 2003 and extend through December 31, 2012.
  • Each will start with a hypothetical initial investment of $10,000 and show growth, or lack of growth, for the entire ten years.
  • Each study uses the same S&P 500 Index price data and the same time span.
  • Taxes, brokerage fees, and interest earned when assets are not invested in the market are not taken into account since those factors are too complex to calculate and vary widely.

Buy and Hold:

During the decade 2003 through 2012 using a buy and hold strategy you would have watched your investment grow, shrink, and grow again and you would have ended with a meager 38% gain for ten years of effort, as is illustrated in the table below.

Date S&P
Price Level
Points Gain
or Loss
% Gain or
Loss
Dollar
Amount
Starting $ 10,000
1/2/2003 909
10/9/2007 1565 656 72.1% 17,217
3/9/2009 676 -889 -56.8% 7,437
12/31/2012 1257 581 85.9% 13,828

Notice that there were significant gains to be captured, and serious losses to be avoided, but an investor using a buy and hold approach would have ignored those and settled for the 38% gain shown above.

So our buy and hold bench mark is a positive 38% for ten years of investing effort. The objective of our PWA market timing program is to capture MOST of the price increases and avoid most of the price down turns. We believe that if our PWA market timing program can give profitable signals over ten years to date, it will continue to do so in the future.

Next we will see if PWA can do that and improve on the buy and hold bench mark.

PWA Market Timing

Price Wave Analysis (PWA) stock market timing software involves using our charts as tools for making buying and selling decisions. Our computer uses daily closing price data to build charts that have several unique characteristics.

  • Charts are constructed using a centered moving average that permits the program to show buy, neutral and sell price range bands.
  • Over time price oscillates in the range bands and the bands themselves oscillate according to longer term trend.
  • When the price line is in an appropriate band, a buying or selling opportunity is highlighted.
  • The charts also have a stop-loss line feature a person can use to protect against serious loss.
  • PWA chart parameters can be adjusted by users to suit their own preferences.

The first table (linked to below) shows back testing results for the 500 Timer program. The others show results using the Online Analyzer program with different chart parameter settings.

When you review the step by step tables and outcomes, you will quickly see the advantage of PWA market timing over a buy and hold strategy.

PWA Results

The results from the 500 Timer and Online Analyzer can be seen below. For more information, including a table breaking down exactly how these results were found, follow the link after each result.

  • Using the 500 timer, a $10,000 investment in 2003 could result in an ending value of $63,678 in 2012. To see our analysis, click here.
  • Using the Online Analyzer at default settings, a $10,000 investment in 2003 could result in an ending value of $63,678 in 2012. To see this analysis, click here.
  • Using the Online Analyzer at a 40 Day Moving Average, a $10,000 investment in 2003 could result in an ending value of $131,003 in 2012. To see this analysis, click here.
  • Using the Online Analyzer at a 30 Day Moving Average, a $10,000 investment in 2003 could result in an ending value of $188,979 in 2012. To see this analysis, click here.