What do I mean by repeatable performance? I mean that you can outperform the market in any kind of market. In the case of market corrections you take the average of the correction year and the two following years.

What characteristics help produce repeatable performance?

1. Your strategy type is buy and hold. This means you are always in the market. You are not trying to call market direction.
2. You don’t hold a diversified portfolio just to be diversified. You only hold investments that outperform the market.
3. You hold the best equities. Equities outperform other investments over time. The best equities are held by cap weighted ETFs because they automatically hold the stocks that are consistently rising the most.
4. You rebalance once a year at year end so that one ETF doesn’t become too large. You are doing the same thing over and over.
5. You backtest your strategy over 25 years to make sure it works in different markets.

The Stars model has all 5 of these characteristics. The result is that Stars outperforms the market by 8 to 27 percentage points per year over the past 25 years. On average the outperformance is two times the S&P or more.

One thing you don’t do is try to pick bottoms in mid year. Doing so reduces the 8 year holding period. A long holding period and high returns produces 100% accuracy. You never have a loss because the purchase price is from 8 years ago. 100% accuracy implies in theory zero risk.

Repeatable performance allows you to plan for retirement. I estimate that the Stars performance over the next 25 years will be 20 – 25 % per year. When you have a correction you should be at new portfolio highs in 2 years.