Twinvest v Synchrovest
I’ve read a few comments to the effect that Lichello’s older phased investing system, Synchrovest, is superior to the Twinvest system he describes in his AIM book. Has anyone done any tests on this?
On pages 232 – 233 of the 4th ed. (2001), Lichello gives a table of data comparing Twinvest with simple DCA. The price sequence starts at $10, advances to $15, retreats to $5, then returns to $10, in $1 steps.
I’ve created a spreadsheet of the Twinvest part of this, and also created one using the same price sequence but investing by Synchrovest. My results are a gain of 17% for Twinvest (as in Lichello’s book), but only 14% for Synchrovest, and Synchrovest runs out of cash when the decline reaches $8. This price sequence is quite extreme, embodying a fall of 67%. I’ve also experimented with a rise from $10 to $15 followed by a 50% fall back to $8 then a return to $10, a fall from $10 to $5 followed by a rise back to $10, and a rise to $15 followed by a fall back to $10, plus a revised version of the original series using the ‘halfway to the wall’ technique to prevent Synchrovest running completely out of cash (i.e. never spending more than half the remaining cash). In all cases Twinvest produced better results than Synchrovest.
Perhaps I’m doing something wrong!
Intuitively I would expect Synchrovest to perform better in a bull market, and for a very long term investing programme, because it is based on a cumulating average price, which will rise gradually, rather than a fixed starting price, which will get ‘left behind’, so Synchrovest would tend to purchase more.
