Sunday, September 5, 2010

Quick Tip when back testing with EzBacktest

Finding ETF-s and mutual funds with a long history might be a challenge. It's advised to use alternatives which should generally provide same results. I found that vanguard's index mutual funds are a good replacement for ETF-s when I want to test a period beyond 10 years.

For example:

* Instead of SPY, I change the portfolio to invest in VFINX
* Instead of SHY/AGG etc, I change the portfolio to invest in VBISX

Now testing with a bull/bear strategy simulator - I get the following stunning result:
(Image above: setting up bull/bear simulation, image below: the results. Green triangle indicates bull signal and purchase of bull portfolio, pink X signals bear, star signals rebalance or other - visible through tool tip)

Could investing be this simple? Follow one simple signal and alternate between bull and bear portfolio? Try for your self - download the software and experiment with your desired allocations.


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