Is it Possible to pick Bottoms or Tops - consistently?

[Wysiwyg]

Defining consistent

- on every relevant occasion
- acting or done in the same way over time, especially so as to be fair or accurate.
- agreeing or accordant; compatible; not self-contradictory
- unchanging; steady

In percentage terms I consider above 90% accuracy to "consistently" pick top or bottom in any time frame. The exact top, i.e. the high value, is probably impossible but say within 5% does allow some practical possibility.

 

[Wysiwyg]

They have been proven through backtesting to be unprofitable.

That's right. Crosses have been proven in actual trading to be inconsistent.

 

[ceasar73]

tech...if that is you in the pic...we need to discuss this face to face. If it is your girlfriend..you lucky sob!!
As for the Thread question? for some stocks, like the big banks, it is pretty easy to pick the top. The bottom?? much harder. Sometimes i get the bottom, at times i miss it. supply and demand helps with the bottom. Anyway, as long as I buy below the top of a company that I can determine and value the top, Im usually ok.
regards, ceasar73

 

[Wysiwyg]

As far as picking trend reversals (bottom), short covering rallies are worth a look like this one "developing" (loose terminology) on the DOW now. The bears should be well fed and the bulls mighty peeved after the recent selling spree. Does this happen consistently? The market makers would not like that because everyone would know when to enter. Remembering the market exists because 90% of traders fail to profit consistently.
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Following on from that bottom prediction back in February, the DOW has gone onto new all time highs and can't be fit on the screen. Still learning to let winning trades run. So much to learn. Perceived fear the weakness.

 

[luutzu]

Historically, I could pick top and bottoms and sides without fail

 

[Ryan C]

After reading Fooled by Randomness and Black Swan by Nassim Nicholas Taleb it changed my thinking to believe it's not possible. See http://en.wikipedia.org/wiki/Black_swan_theory if you're interested. I'm no expert but it made sense to me. My two cents worth.

 

[sydboy007]

while a simple example, it does show how the use of ETFs these days, along with an asset allocation to the different classes, can help to structure sell high and buy low and produce index beating returns.

http://awealthofcommonsense.com/diversification-works-2/

A very basic three fund portfolio that includes U.S. stocks, foreign stocks and the U.S. aggregate bond market is in many ways a good benchmark portfolio because it’s so broadly diversified and can easily be put together at an extremely low cost through index funds or ETFs.

It seems to defy logic but the rebalanced portfolio actually produced a higher return than any of the individual funds. This is because this portfolio would have been selling some bonds to buy stocks in the 2000-02 bear market, selling some stocks to buy bonds in the 2003-07 bull market and once again selling some bonds to buy stocks in the 2008-09 bear market.

The diversified portfolio had higher returns than both stock funds but they came at roughly 60% of the volatility and largest annual losses. While decreased volatility is a welcomed byproduct of rebalancing, diversified portfolios aren’t meant to manage volatility. They’re meant to manage emotions.

And you’ll often be surprised where the returns come from on a year to year basis. Although the Total U.S. Fund had the best overall performance of the three, it was only the best performing fund 25% of the time. International equities actually had the best returns about 45% of the time even though they was the worst performer.

 

[Wysiwyg]

True, I have backtested it personally, it is used as part of the confirmation process, works better in some situations than others and definitely not to be used on its own. This backtest was just done with same code, although not spectacular, on its own it makes money OOS.

Back tests are a guide only and as the disclaimer states, past results are NOT indicative of future results. This isolated test with a drawdown of 27% and a two year wait to achieve new equity highs is bull dung. It reflects the Index.

Waiting for the next "backtest" misperception.