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Buy and hold investors will tell you it's impossible to beat the market, so just buy a cheap index fund and sit back and watch.
The problem with that is while you'll likely increase your portfolio value, the odds are slim that you'll reach a comfortable retirement without investing significant additional capital. The following chart shows that $10,000 invested in 1995 in a well known S&P 500 index fund (VFINX) resulted in $85,011 (If compounded in a tax deferred account). That's a nice sum, but if you're really frugal it might get you through a year of retirement in 22 years.
On the other hand, using a simple relative strength timing model in conjunction with the T. Rowe Price International Discovery Fund (PRIDX) and the Rydex 1.2x Government Bond Fund (RYGBX) turned $10,000 into $1,003,698.
Will the next 22 years produce the same results? Probably not! The returns could be higher or lower. But, wouldn't you rather work with a plan that has a 22 year history of significant out performance? I'll post how it was done right before Christmas.
William "David" Wedeking - President of Jade Reserves, Inc. and publisher of Sensible Speculation