Featured Strategies 2021
I want everyone to be successful in investing. To that end, I am inclined to point people in what I believe is the right direction.
But investing involves risk. None of these strategies are guaranteed to perform well. You might even lose money if you follow them. This is more than a disclaimer; I genuinely want people to understand- AND accept- the risks when they are using my website. There’s no shame in simple buy and hold, it does well in the long term.
That said, here are some strategies that I believe deserve your attention for 2021. Some of these explanations require you to understand “The Hindsight Problem” and how “Blind Testing” addresses it.
Well-performing strategies made before 1/1/2018
I don’t have exact strategy creation dates for the old strategies. I didn’t start logging creation date until mid-2020. But I can approximate creation date. A strategy number below roughly 30,000 was made at the end of 2017 or earlier.
Among strategies made before 2018 began, here is a snapshot of the best performers:
Note that these values are “times 100”. And the years are abbreviated YY-YY. For example, strategy # 27967 has an 2018-2020 average of 39.26%.
Here’s the link comparing the top 20 of these strategies:
That’s a lot of strategies! But, I started eliminating strategies that hadn’t beat either C or S 3 years in a row. That nets a much shorter list:
https://tspcalc.com/seasonal.php?ID=25196&years=18-20&benchmarks=C-S-I-13742-13743-18042
Shorter yet, only two of those have beat all 3 buy-and-hold funds for 3 years straight:
https://tspcalc.com/seasonal.php?ID=25196&years=18-20&benchmarks=C-S-I-18042
And now that that’s been settled, let the games begin-
Beer Bet ’21: Matt
NOTE: Due to a problem with the Seasonal Builder, the dataset was incomplete when I first wrote this article. Originally, the blind test lead to strategy # 131229. After fixing the Seasonal Builder, that same tests leads to strategy # 138665. My beer bet # will remain 131229 to be fair to the others.
For the 2021 beer bet, I’m choosing strategy # 131229.
Why? This strategy came from the Seasonal Builder. It was informed by the Blind Test case 27.
What does the “Blind Test” here mean? Basically, the Seasonal Calculator and the Seasonal Strategies tables are subject to Hindsight. Blind Testing is one method of solving the hindsight problem.
Blind Testing works by splitting our available data (2004 – present) into two pieces. For example, 2004-2010, then 2011-present. When we split these into two pieces, we use the first range of years to create a strategy. Then we test it on the second range of years to see how it would have performed. The key to this working is that the strategy cannot be made with any knowledge of the 2nd range. You have to be “blind” to it, the same way we are all blind to the future.
Here’s Case 27:
If you’ve never seen this table before, it’s intimidating.
So let’s break it down, and only focus on these parts:
The left-column is self-explanatory. The right column is a bit more involved. First of all, the “11” here means that any strategy shown in this column was built using 11 years worth of data. Our data starts in 2004. So For 2005-2014, it was impossible to build a strategy because we didn’t have 11 years worth of data yet.
The first number in the column, 5.71%, says that if we had built a strategy using 11 years of data on December 31st 2014, and then used that strategy throughout 2015, we would have finished 2015 with a return of +5.71%.
One year later, on December 31st 2015, we built a new strategy using the same method. 11 years of data now means 2005-2015. And then we implemented it for 2016. And our return was +11.23% in 2016.
This is blind testing! See, it’s not that hard after all.
The green rows at the bottom show us the average return over the years that we blind tested (2015-2019). Our method averaged +16.93% over that 5-year timeframe. During the same 5-year timeframe, the C fund averaged 12.47%, the S fund averaged 10.07%, and the I fund averaged 7.21%. Plus, it’s 2020 return so far was +27.94%. Not bad!
This is all basically a proof-of-concept for Case 27. So, if we want to implement this “method” or “Case 27” for 2021, then we go to the Seasonal builder. And we set it up with an 11-year range that ends in 2020 (2010-2020). Then we sort by “Beats S Rate (descending)”, and check the boxes at the bottom labeled “0 G” and “0 F”. Then, click “Sort & Filter”, wait for the builder to do it’s magic. Then click “Best Fit”, and finally, scroll down and click “Submit to Calc”.
The result for 2021 is Strategy# 138665. And I’ll bet a beer on it beating my comrades’ strategies.
Beer Bet ’21: Deena
Busy single-handedly saving the South from Coronavirus (and from people without accents), Deena has not yet added commentary. Check back again soon.
Deena, pandemic hero
Beer Bet ’21: Travis
As the often opined opinion this year, I too, could never have been convinced of the chaos that 2020 would bring to not only the stock market, but our individual lives. I got my first opportunity to see how “real world Travis” would react during a tumultuous time in the market. Overall, I was pretty unsatisfied with my decision making, but I certainly didn’t fall apart at the seams.
I’ll take every positive I can!
My actual real world TSP account will end up finishing somewhere around -7%, with the most devastating of my decisions being to miss the +19% week we had in April. That one week cost me substantial money and caused many sleepless nights.
It’s an experience that was certainly stressful, but also a fantastic lesson I can carry forward into my later years. This was the first major collapse where I had substantial money invested, but it won’t be my last. Education and mistakes often go hand in hand, and I tend to try and turn negatives into a positive, and if I can’t, at least attempt to prevent that mistake from happening again in the future.
So here we are, on the cusp of 2021.
Any bets on what we can expect? I didn’t think so.
But 2021 is going to be my attempt to return to my roots. The whole reason I started following seasonal investing to begin with.
Beat buy and hold.
If you go all the way back to my Travis’ Musings at the start of the year, I told everyone that I thought Matt’s strategy (86104) was being overlooked because it wasn’t flashy.
And look at that, he won the TSP beer bet going away without drama!
As such, I too think that the most consistent way to beat buy and hold is to try and play the equities. It’s boring, but it’s reliable. My 2021 strategy (130851) returned 41.44% (as of December 21st), handily beating the S (32.65%) and C (16.34%) Fund. It also lets me sleep at night, and I think gives me my best chance at meeting my goals.
Good luck to all of you! May we all be rich and sipping Mai Tai’s on a beach soon!
Travis, literary scholar
Beer Bet ’21: Ryan
Ryan doesn’t drink beer and technically isn’t participating in either the beer or the bet portion of the beer bet. But he’s still one of us and his strategy choice for the game is:
I started with 113021. I switched to that strategy in the last quarter of this year after it was introduced in our admin chat group discussion. I had intended to stay with that strategy going into next year. However, after Anthony questioned in our discussion how recent the move to G for half of March was in terms of strategies, I started reviewing “older” strategies. I modified 113021 to more closely match 84383, which spent most of its time in March in S fund. These modifications resulted in 130682. Although 130682 has had a lower mean than 113021 the last few years, I like the idea of having more time in equities.
Ryan Hetsler, legal genius
Beer Bet ’21: Larry
Let me begin by stating that I am betting beers on this strategy, not my TSP balance. It is one of 10 on my watch list, and it is the foundation of a few of the others on the list. It is my beer bet selection because Matt gave me a deadline, and I simply chose the most aggressive, big dreamer strategy on my watch list.
I don’t have a grand explanation of how #129128 ended up on my list, but here is some of the thought process:
– I typically start out looking for the highest total return with a standard deviation the 10% range
– Limit the I-Fund to 10%
– Limit the F-Fund time to 20%This strategy does have some “split time” with most of April being 75C/25S. This was important to me as far as the beer bet goes.
My personal strategy will end up looking a lot like this, but with zero time in the F-Fund and Christmas week only for the I-Fund. I’ll also be split most/all of the time I am in, and that split will likely be 25C/75S. But what do I know? I’m just a hobbyist.
Let’s leave 2020 in the dust!
Larry, the most interesting man in the world
Beer Bet ’21: Jerin
Cause… it takes mostly from my 84373… and from the 64822.
Jerin, man of many words
Beer Bet ’21: Anthony
The intent is to explore a phenomenon that Matt found and use it to exploit adult beverages from him and his friends.
This is the best 2020 (120.9%) and we’re applying it to 2021.
Anthony, nobody’s really sure what he does
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