Forum Archive Index - June 2001

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

Hi nick,

> 
>
>For a number of years i was heavily involved in
>analysing and formulating horse racing systems whilst in the
>uk. I was also part of a MENSA special interst group whose
>specific purpose was backtesting past horseracing results
>with the intention of finding profitable systems.
>    After many hundreds of hours study 
>it became obvious that
>it was relatively easy to find systems which would make paper
>profits based on past results, often over many seasons.
>    However when applied to present and future races virtually
>all the systems produced a negative return or at best a small
>profit.
>            
>

Since you spent hundreds of hours on this project, did you come up 
with any conclusions as to why this was the case?
 
>
>
>Apply this to your GPG analysis and we can see it hardly
>suprising that you are able to find a system that beats buy and
>hold. The fact the shares have consistantly risen in value should
>make it even easier.
>
>

Perhaps you might wish to rephrase that nick?   If the shares have 
consistantly risen (a straight line increase in value with no dips) 
the optimum strategy *is* buy and hold!  Any step on and off the 
financial escalator would cause you to lose money.  It would be 
*impossible* to devise a system that was better!

I would also be interested in knowing why you think it is valid to 
compare a negative sum game as in horse racing (where the money out 
is always less than the money coming in due to taxes and bookmakers 
commissions) with a positive sum game (GPG has increased 
total shareholder wealth over the period under consideration).

>
> If the best that can be managed is a 4% increase over buy and
> hold based on a best case analysys of previous results then
> it might be better to put the shares in the bottom draw and go
> and find a new hobby
> 
> 

4% may not sound a lot.  But if that is the difference between 12% 
and 16%, then over five years that makes a 20% difference to your 
returns thanks to the effect of compounding.  I wouldn't call a 20% 
increase insignificant.  But it would seem that both you and Phaedrus 
disagree?  SNOOPY 





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