Before a strategy is offered to anyone, it is tested on ten years of real prices. This is where the tests are written up: the question, how it was tested, what happened, and what it does not prove. The ones that went badly are here too.
Hypothetical backtest, not live results. These figures come from testing rules on past prices. Nobody invested this money, and past performance does not guarantee future results. Stocks Not Stuff is research and education, not financial advice: nothing here is a recommendation to buy or sell anything.
A rule can look clever in a rising market. So we ran the same test with a company picked at random every day, three times over.
Ten good years can hide five bad ones. We cut the test in half and ran each half by itself, from a fresh start.
Its ten-year return is not the problem. The problem is how far it fell on the way, and how long it spent behind the index.
Every strategy that finished ahead of the index also spent long stretches behind it. Here is how long, strategy by strategy.
A test on past prices is easy to flatter by accident. These are the rules ours follows, and what happened when we ran it twice.
Most ideas do not survive the test. These are the ones from the first research runs that lost to the index, or added risk without adding much else.