Balanced stock/cash with full-stock on drop


Maintain constant stock/cash balance (e.g., 75% stock/25% cash).

Take the profit by selling extra stock every time the ratio is out of balance (e.g., by 5%).

Additionally, go full-stock in the case of a major drop (e.g., 40%) and sell back once the stock recovers.

Example   Test it!


Invest 75% of the available cash into S&P 500 index ETF (SPY).
Sell extra stock each time the stock-to-cash swings above 80%/20%.
On a 40% drop invest all cash into stocks. Sell the stocks once SPY recovers to -10% from the all-time-high.
Invest for the period of 7 years.

Simulation on a single period

Note: We quote the results for just the most recent 7-year period from 2004-10-09 to 2011-10-08. Review the simulation for other periods.

Key indicator Value Description
Annualized return 2.41% Compound annual return (CAGR) over the period
Max drawdown -34.32%% Maximum loss relative to the initial value experienced over the period

Statistical simulation

Note: We simulate over all 7-year periods since 1995.

Key indicator Value Description
Percentile 20% of annual return 3.79% 80% of the periods produced this annualized return (CAGR) or better
Percentile 20% of max drawdown -40.6% 80% of the periods experienced this max draw-down (relative to the initial investment) or better