What happens if you invest $1,000 in the top performing stock from the last month rather than the S&P 500? ๐ค
Apparently you'd be up over $6 million compared to the S&P 500.
I had an agent backtest a strategy of looking at the past month's top performing stock and dumbly investing $1,000 into it. That strategy, since 1998, generated $8.8 million while the S&P 500 generated $2.2 million.
Some caveats:
- there's some stocks the agent couldn't pull/find data for
- we assume that if we can't find the data (e.g. a buyout) that the stock went to $0 to be conservative
- the gains are mainly from a few outliers, like Apple and NVIDIA (if you remove the top outliers, performance gets worse but still beats S&P500)
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