I ran a back-test on 6 stocks that I've been studying for the last 4 months, and I got a less than desirable outcome. By removing just 2 of the most volatile stocks, the outcome is simply incredible. It makes me want to invest in these stocks right now. Please see the details of this back-test, and give me your opinion on the results of my back-test. Any and all responses will be very valuable to me: A New Investor.
Putting all your portfolio into 4 stocks has the potential of a lot of volatility. Your algorithm shows 25% volatility and drawdown. Not for the faint of heart. Also, extending the backtest back 3 years to 2012 shows a 17% total loss. No guarantee those conditions won't repeat themselves in the future?
Not sure how you arrived at these particular stock? Maybe take that logic and incorporate it into your algo and have it find the stocks so you aren't introducing any personal bias?
Yeah, the portfolio is volatile times, and has a large ending drawdown, but my monthly returns, by my data shows that: in any given month, my mean average return outperforms the benchmark, drastically. So, I'll wait to see how it does in the contest before I consider scrapping it. Thanks for the feedback though. I would love a link to one of your algorithms. Maybe it'll help me a great deal.
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