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Strategies & Market Trends : Technical Analysis - Beginners
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To: Bob Jagow who wrote (10261)5/13/1999 3:19:00 PM
From: Richard Estes  Read Replies (2) of 12039
 
I use the Dollars compounding as in WOW and MSWIN, it is all relative. I disagreed with article and its thoughts about the myth of buy and hold. I do not consider buy and hold worthy of review. There is a bias to buy and hold in testing, yet it is meaningless in our decisions to buy or sell.

We are looking to buy today. I know of no measurable funnymental method of buying or selling. While most TA systems provide the method and that is what we have today. We are not buying AOL, 9 years ago, but looking at it today. Our testing does not provide the millions of variables surrounding AOL years ago, we simply buy it the first day of the test. I can't for the life of me imagine why anyone would use AOL, why would I buy and hold it then or now?

System tests are to give us a view of how our systems performed using historical data. When we see a constant performance that meets our mindset, we begin to trust it for future decisions. It isn't a test of the stock but of the system. It allows us to compare between systems to determine how each handled the price movement of any stock. I hate to see the programs even putting buy and hold results into the test. Our systems give precise entry/exit points. Buy and hold only reflects the static start date. It is of little use in today's decisions. I think I am right that GM's high was in 1963, Think how long that money would have stayed dead in the water.
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