The Performance Tables compare the monthly performance of a $10,000 investment in the S&P 500 ETF SPY held since 2007 in a buy-and-hold strategy and the performance of our Model which invests in the same SPY but switches to the safety of government bonds in the TLT ETF when the models predicts stress ahead for equities. No leverage whatsoever is employed.
All the outperformance is generated by following the timing of purchases in SPY according to a 20%-60%-20% key for the Daily, Weekly and Monthly models. This means that 20% of the account assets are invested in SPY when the Daily Model triggers to Risk On, an additional 60% when the Weekly Model triggers to Risk On and a further 20% when the Monthly Model triggers to Risk On. The same key of 20%-60%-20% is used in reverse when Risk Off is triggered in the relevant Model. This is explained in detail in the following video.
What is statistically significant is that the consistent application of the Models not only avoids equity exposure and losses during bear markets but also outperforms a buy-and-hold strategy during the long bull market which followed it, thereby lowering volatility of returns and maximizing long term compounded portfolio returns.
I have included a comparison performance to a 60%-40% Equity-Bond allocation, which is the standard allocation followed by most investors. While this allocation is very similar in performance to a simple Equity buy-and-hold, it is vastly surpassed by the Model performance. This proves beyond doubt that the timings generated by the Model are responsible for the out-performance.