Surviving Black Swans: The Challenge of Market Timing Systems

It is an open secret that most investment funds actually underperform the market. Yet, millions of individual investors fare even worse, barely treading water. Algorithmic trading now so common, it accounts for over 80% all trades and domain professionals. Can also help small investor? Individual are advised to buy-and-hold index fund or a balanced portfolio including stocks, bonds, cash equivalents. That would ensure market performance. However, indices occasionally have deep drawdowns (such as devastating crash 1929 other so-called Black Swan events). In contrast received wisdom, we argue with evidence from backtesting on major U.S. indices, well some select stocks simple ideas in rule-based timing can fact be useful. One not only obtain good results, but outperform while, at same time, reducing drawdowns, surviving events.