Replies to post #179 on The "Stock Trading Riches" Investment Sy

[PraveenP]

Hi 1step,

A reader of my book used my spreadsheet to test my system on the SPDR (SPY) S&P 500 ETF from 2001-2008, and said it beat the index (2.0% vs. 1.7%).

They posted it on Amazon.com, in a list mania:

http://www.amazon.com/Contrarian-Stock-Investing-Systems/lm/RKU02DVM0IS13/ref=cm_srch_res_rpli_alt_2

With systems such as AIM or "Stock Trading Riches", a general index fund such as SPY isn't ideal because the individual movements of the components cancel each other out, thus dampening the volatility.

Instead of investing directly in SPY, you would get better results by replicating the index with multiple funds, such as by sector, or market cap (i.e. small, midcap, etc.) That way, you would be rebalancing each fund. They would be more volatile because the stocks in each fund would be more inclined to move up or down together.