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There have been pockets of decline that are probably worthy of focus. 2002 was not the best year and there was a very rapid spike down in 2001. 2000 was also very volatile.

I started system testing at the end of 2001 and didn't really have a system that I was comfortable with until the beginning of 2003 - right at the start of an incredible bull market! So I was happy to take what the market gave.

If I made the system longer term and used monthly charts I got great returns but was uneasy because the number of trades taken dropped in the system test and the sample size reduced. Data quality is also an issue - data gremlins are nearly impossible to avoid.

I am more comfortable testing over a large number of stocks 500 to 1000 ideally over a 10 year period. Testing just 20 or 30 stocks, or even 100 makes me quite uncomfortable. I like to think that I am not testing on 500 stocks rather just one stock (500 stocks joined end to end) over a very long time.

System testing will only give us a rough approximation of a possible future. If we are in a bull market then why not take advantage of it, fully aware that market conditions change. It is possible to go to cash if the markets change - something that has happened to me a couple of times over the last 5 years.

Trying to buck the long term trend by shorting stocks is like trying to swim against the rip at North Avalon beach - I stop swimming and wait.

stevo