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That level of outperformance — thanks to the magic of compounding — turns a substantial profit over time.
Yet, it’s modest enough to keep the amount of new money required to a low level.
Some techniques have high accuracy but are extremely hard to interpret or monitor for anybody not working the market full time. The sweet spot occurs when a measure is fairly accurate and fairly simple to use.
Once I found a subset of measures in that sweet spot, I ran regression tests on them in combination to validate what my own experience had already shown to work pretty well.
This new edition helps readers find those right moments.
I realized that the book was missing a set of tools I use every day to keep tabs on market health and the risk level of investments I hold: technical analysis tools.
Those three measures are the simple moving average, MACD, and RSI, and they’re introduced and explained in this book’s hallmark style in a new section in Chapter 4 called “Limiting the Downside with Charts” on page 131.The star of them, Maximum Midcap, had performed splendidly from 2002 to 2007 in the Fed-liquidity-driven market run, turning ,000 into ,495.The same strategy left untouched, however, plunged 68% in 2008.That wreaked havoc on even the best-planned portfolios, as every investor will recall.Did the market crash invalidate the book’s permanent portfolios?