No. of Recommendations: 9
In the longest backtest, the OP_screen has 90% of the CAGR while holding 40% cash on average (compared to no_step2_step3). This is a surprising result, but does not hold in the most recent 10 years, when the OP_screen CAGR is much lower than no_step2_step3.
The idea of using technical indicators as short-term market timing signals reminds me of some of Zeelotes' posts:
Author: zeelotes
Subject: Managing Risk with Saul Picks
Date: 12/30/22
"Back on 11/23/2021 I posted on the Saul Investing board, and here on the Mechanical Investing board a relatively simple way to manage risk by using overbought / oversold indicators built off of the Software as a Service sector. The method finds times when these four groups of stocks become way overbought to produce a sell and way oversold to produce a buy. ... What you need is to find technical analysis indicators that identify points of extreme on the overbought and oversold sides. You do this for every stock in the universe and then average their readings to arrive at a consensus. Once you've done that you simply determine thresholds for buy and sell. ... "
https://www.shrewdm.com/MB?pid=95445777Author: Zeelotes
Subject: Saul Investing - Managing Risk!
Date: 1/14/2022
"... The point of that post was to say there is a way to use overbought/oversold indicators applied to the individual stocks identified to pinpoint times of risk and times of opportunity. ... "
https://yorickm.com/Message.php?pid=35025423Author: Zeelotes
Subject: Managing Risk in Volatile Picks
Date: 11/23/2021
"... Years ago I discovered that it was relatively easy to take a basket of stocks and determine points when they were excessively overbought and when they were excessively oversold. ... Using cash during the dangerous periods results in being invested in the more volatile investments just 69.71% of the time. In other words, you sit in cash about 30% of the time. ..."
https://yorickm.com/Message.php?pid=34986288 