Post #3801 by bacon on the Mechanical Investing board

Investment Strategies / Mechanical Investing ❤

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Very well thought out screens like this and YEY which has a 24.7% CAGR from 1987 till present but a similar
-67% MDD look spectacular as a backtest but are impossible for an individual looking at those drawdowns
to actually gamble his retirement nest egg in.

In some ways, I'm preaching to the choir: that's why it's suboptimal to bet the whole nest egg on this sort of thing--or even on any proven algorithm: even those only work until they fail, or seem like they've failed for longer than we want to stay with it. Putting a percentage of one's pile into them takes advantage of the long-term performance (and gives empirical, post-discovery data on performance) while any realized big drawdowns don't matter beyond making one's heart go pitty-pat.

I have a (very) few stocks in my pile that are pure plays. They'll work out and make my wife and me rich, or they'll bust, and I'll lose some nickels and dimes, because I'm not betting my wife's retirement life on them.

Eric Hines

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