cjam
In looking through my previous posts it seems that all I have done is ask questions, which might perhaps be taken to imply that I am questioning the validity of your methods. In fact, what I am trying to define for myself is a simple system that has a reasonable probability of giving at least average returns, that suits my investment temperament and has rules that I know I have the discipline to follow.
For many years I previously used market timing systems that became increasingly complex and tried to catch every upswing of individual stocks however, with more good luck than good judgement, I got out of the market in mid 2000 and haven't been back in since. Having reviewed my past performance it has become very clear to me that the amount of time and effort spent on managing my complex timing systems has been of no benefit in producing substantially increased returns. Hence my decision to implement a simple, logical, long term system which will produce returns reasonably close to the average.
Philosophically, I like the idea of Modern Portfolio Theory and holding a very diversified, balanced portfolio for the long term and re-balancing annually. However I doubt that I have the temperament to hold during a bear market or a very long sideways market. Also, over the years, I have kept looking at Lichello's AIM strategy and recently almost got up the courage to start, however I think probably I would not be able to bring myself to carry out the substantial averaging down that is necessary during bear markets.
Which, in a long-winded way, brings me to my interest in your Never-Lose strategy. (I think I have come across similar systems in the past but have not kept details.) I like it as a concept and it suits my temperament because it allows profits to run but cuts losses quickly. However reducing risks in this way usually results in reduced returns and what I am now trying to decide in my own mind (and why I am asking so many questions) is whether operating such a system might have the potential to result in substantial reductions. I know I could do my own back-testing but I am basically lazy and hope to take as much advantage as possible of the hard work that you have already put in to your project!
Regards
Ken
