A SPY Backtest
Here is a 12 year (part one) backtest on SPY. I started from Jan 1, 2000 to 2012.
Using these parameters, 75/25 allocation, 10% buy/sell, 2%interest, 10.95 commission and a 20,000 starting capital, I was able to acquire a 114.6% gain using my uptrend buy method.
Using a more aggressive allocation I could have made more.
Example: 80/20 or 100 to zero. Also, I could use a more conservative allocation.
Will now explain my procedure. My first rule is that I will buy only if the stock or ETF has been discounted. It has to have moved down from a top. Buys made on an AIM uptrend.
I used yahoo monthly closing prices. Placed in a spreadsheet, here are the prices that generated a BTB AIM buy at a 75/25 distribution.
Start. 152.34 -123.95 -116.69 -( 126.66).(Uptrend.)
So, I began to AIM SPY at the $152.34 high. My first uptrend aim buy was at $126.66.
AT the 75/25 allocation, BTB Aim has released $3,095. So, at this point I buy 24.44 shares at $126.66.
Now, I didn't pretend to buy, I simply AIM the monthly action and delayed my buys until an AIM uptrend occured.
Delayed buying on an AIM uptrend basis is a better description of my Aim method.
From the $126.66 level, Spy reversed its uptrend and started another donward move.
114.04- 104.41 - 105.80 - (114.05).(Uptrend.)
My next delayed Aim uptrend buy occured at 114.05. AIM has released $3,250.
I bought 28.50 shares at $3,250. My average share at this point is $119.85.
At the 114.05 SPY again reversed its uptrend move and started another downward move.
113.18- 96.98- 91.16- 91.78- 81.79- ( 88.52).(Uptrend).
My next delayed Aim uptrend buy occured at $88.52. AIM has released $7,168.
I bought 80.98 shares at 7,168. My average share is $100.90.
This average share figure becomes important on the sale side of my AIM method.
Spy from the $88.52 proceeded up to the 153.00 level and then started a second downtrend move.
Now, starting at my average price of 100.90, I sold BTB my 133.91 shares up to the 153.32 price where I liquidated completely on 5/1/2007.
My complete liquidation at this point can best be described by these words from Grabbers L D AIM observation about AIM.
"If one were to study the share turnover in Lichello's original
10-8-5-4-5-8-10 example; one would note that that on a LIFO basis the original purchase of 500 shares is never sold. Therefore the question becomes if I'm likely not to ever sell them, why buy them? Would it not be better to only buy the shares that I'm likely to sell?"
I bought all the shares the shares that I'm likely to sell; and because the price is back at the $10.00 level($153.32) and shares above this level were never sold, I have to liquidate and look for other buying opportunities.
In this case SPY started another downward move in 2008,and I repeated the same process.
So, my investment world really lies in the Lichello's 10-8-5-4-5-8-10 model.
My million dollars, like the example, can only be made within this framework.
I don't hold above this level trying to capture a long term move.
ocroft
