Chapter 8: Conclusion
In conclusion, the simulation was successful as two of the three strategies produced a significant amount of profit and outperformed the three major indices with the exception of the trend-following strategy. Cumulatively, the three strategies more than doubled the performance of that of all three indices as seen above in table 7.1. During the simulation the main obstacle was the six-week timeframe on which the simulation was conduct. The Growth strategy was the most successful due to positive news in the marketplace but this seems to be more of good timing for growth stocks on a short positive upswing rather than long term rapid growth. Had the timeframe of the simulation been longer it would have been interesting to see if the Growth stocks would continue on their rapid pace or would if they would tail off. Also the longer time frame would allow one to see if the value or trend following strategies were able to catch up to the return of the growth stocks performance if they were to slow in growth. The performance of the three strategies would have been likely been significantly better if the time frame were longer as the short time frame forced the simulation to start at a time where the current positions of the stocks chosen were not ideal. This however taught me the importance of current position when deciding on a time to invest in the market. I also learned how crucial current position was to the value and trend-following technique as the poor initial market position had me “paddling upstream” to make up for early losses.