A typical investment is what I call directional. By that I mean if prices rise its value rises and if it falls its value falls. If the price moved from $100 to $200 several times the gain would never exceed $100 if your strategy was buy and hold.

In the case of the Stars model the volatile TQQQ is rebalanced against the less volatile SPY so that the number of shares at a market high of TQQQ are reduced. TQQQ is sold at a profit as prices rise from $100 to $200. The profits buy SPY.

When the market corrects TQQQ falls 4 times as fast as SPY. At the low about 6 times as many shares of TQQQ are bought at 20 cents on the dollar. When you rebalance you have many more shares at this very low price and the cycle starts over again.

Every year to some degree this process is happening. The end result is that for that $100 upward move you get many times to make money and on many more shares.

The key to the Stars model is rebalancing the volatile TQQQ annually against the less volatile SPY.

If the returns of the last 14 years were used, Stars would outperform the S&P by a factor of 48 over 25 years. For the future 25 years Stars will most likely outperform the S&P by more than 17 times.