Friday, August 20, 2010

More on the 16/18/20

The 16/18/20 method was detailed previously (go here) at EconomPic. At the time, we showed the performance of those periods that were to be avoided (they underperformed historically).

Below, we show the performance in terms of real change of the S&P 500 index during periods deemed "attractive" based on the 16/18/20 method.

How'd they do?

Quite well.

Source: Irrational Exuberance


  1. Why did you use only every other year of the ones where the diagram suggests buying?

    And ... is this diagram genuinely old, or is this whole thing a hoax?

  2. Scratch the second question. I've read the comments on TBP now.

  3. i only used the periods in which the market "spiked" which is 16, 18, 20 years. if i have some time, i'll take a look at the other "buy" years in between...

  4. This study, like many other of the sort are lovely. The problem is we only have 30 years of adult-risk-taking life, so you better get it right, there won't be a second chance....