You are 100% correct in your analysis. I turned 70 years old this year. For 35 years, I have followed the 39 week averages of five major markets — Dow Industrials, Dow Transportations, S&P, Geometric, and QQQ or Nasdaq. When all of these indices are above their 39 week average for 2 consecutive Friday closes — that is a buy signal. When these indices are all below their 39 week averages for 2 consecutive Friday closes — that is a sell signal. Such a system is not perfect, but a system helps one avoid major loses and be on the upside when there is a bull market emerging.

Your system is easier to maintain, and works the same way.

As you conclude, it is very difficult to discipline one's self to follow a system. Seems I have followed my instincts at times, instead of a system — this seldom works, and I have had to try to make up fairly large losses when I do not follow a buy and sell static system.

You are 100% correct in your analysis. I turned 70 years old this year. For 35 years, I have followed the 39 week averages of five major markets — Dow Industrials, Dow Transportations, S&P, Geometric, and QQQ or Nasdaq. When all of these indices are above their 39 week average for 2 consecutive Friday closes — that is a buy signal. When these indices are all below their 39 week averages for 2 consecutive Friday closes — that is a sell signal. Such a system is not perfect, but a system helps one avoid major loses and be on the upside when there is a bull market emerging.

Your system is easier to maintain, and works the same way.

As you conclude, it is very difficult to discipline one's self to follow a system. Seems I have followed my instincts at times, instead of a system — this seldom works, and I have had to try to make up fairly large losses when I do not follow a buy and sell static system.

As part of my analysis I checked the data from the monthly returns table you posted on page 41 of the paper. When I enter the data I get different annual return numbers. For example, for the 1973 monthly series I get an annualized geometric mean monthly return of 5.64% versus your 7.39%.

I simply added 1 to each number in the row, and used the GEOMEAN function to find the geometric average monthly return: GEOMEAN(B2:M2). I then raised the geometric mean to the power of 12 and subtracted 1 from the result to get the annualized return.

I have posted an image of my table at:

http://99.231.140.109/~daddy/images/091020_Fabe… Return_Analysis.jpg

Also, you can download my spreadsheet at:

http://99.231.140.109/~daddy/images/091020_XLS_…

Perhaps your annual results include dividends and interest which are not captured at the monthly level?

Would you mind clarifying for me? Thanks!

http://www.hussmanfunds.com/pdf/diligence.pdf

No stop losses used, and has flesh in the game.Has not participated much in this rally, and short exposure apparently kept returns flat.

As far as the post from rsmlp, Hussman is certainly a market timer, even though he would never admit it. I have been a shareholder of his growth fund almost since its first day.

As far as the 40 week ma system trying one's perserverance, it would have done that during the '90's for sure. During a strong bull move, this system would have under-performed. Its strength is evident during the past decade, and the outperformance during the bear moves is one of the most important concepts it has going for it. The other would be the non-correlation of its asset classes.