March 24, 2021
Henry was keeping quiet in his hiding place. It was cramped quarters, yet it was his own choice to get in there.
In the few hours that he found refuge in this confined space, he was jostled, moved about, and even held upside down for some time. His hand was burning with acid injury. Yet he kept silent through all these agonizing moments with a purpose.
Most of it he endured by his own choice. It was in the plan.
The plan
Henry ‘Box’ Brown was a Virginia slave who mailed himself out of slavery! On March 29, 1849, he climbed into a crate which was then sealed by a sympathizer and mailed from Richmond, VA to Philadelphia.
The journey involved an assortment of travel modes: wagon, railroad, steamboat, as well as a ferry. The crate was handled roughly at times and even kept upside down despite clear markings outside indicating which side should be up,
After 27 hours of enduring such accommodation, Brown stepped out of the box, on March 30, as a free man in Philadelphia.
The man
With meticulous planning which included burning his own hands with sulfuric acid to get the day off from work and drilling a single hole in the box for air, Henry Brown orchestrated one of the daring, yet successful, escapes of the time by thinking of the unthinkable.
That’s entrepreneurship.
Many slaves endured what Henry did, sometimes even worse. But his story stands out because of his resourcefulness in making the most of what was available to him and thinking of previously unheard of ways to press his advantage.
The dream
I have had my own thoughts of the unthinkable. This is in the area of Personal Finance. While this is a broad topic, my special interest lies in a specific focus area: swing trading (laid back short term trading) of U.S. stocks. Even this is too broad in some sense: there are thousands of stocks that are candidates. My focus is on the S&P 500 stocks.
This index consists of stocks that are well understood all over the world, and are under constant scrutiny by investors and traders alike. So, the prospects of coming up with a profitable trading strategy in that niche is daunting.
But I love it for just that challenge. Moreover, I am only trying things out on “paper”, not in the real market, so there is no downside to it!
The hope
I have been tinkering with some approaches in this quest and one of the many variations I have tried shows some promise.
So much promise that I am beginning to worry about the “too good to be true” syndrome. I want to share a glimpse of what I have discovered. What you see is the outcome from back testing, i.e. simulating what would have happened in the past if we had applied this trading strategy in the market.
Below is a comparison of how my portfolio of paper trades would have performed as opposed to the S&P 500 index. You cannot invest in the index directly, but can invest in an index mutual fund that tracks the S&P 500. The performance would be close enough for our needs here.
I wanted to take on the worst decade in recent times for stock market performance: 2000-2009. This period includes the dot-com bust of 2000, the 9/11 attack and its aftermath, plus the subprime mortgage crisis that brought down financial institutions to their knees.
I was hoping to do better than S&P, but never expected this type of a blow out. This brings me right to my disclaimers.
The caveats
This experiment is done on hypotheticals. No actual trading. This means that slippages due to trading volume and other reasons are not reflected in the analysis. Some error in coding of the algorithm may be present, invalidating the results. Performance in other time frames need not be similar to this one.
In essence, nothing is guaranteed, except for the possible thrill of the no-risk ride!
If you find the topic of swing trading and what it may have in store for you interesting, you should subscribe to my free emails targeted to just that topic. If you choose to opt in, you will get occasional emails on the topic, with lessons learned and more.
Click on the button below to express your interest. You can always cancel your subscription. As a token of my thanks for subscribing, I will make available to you a comparative report of how this strategy would have worked pitted against the S&P 500 in the following decade, from 2010 up to 2019.
In search of better unthinkable thoughts,
P. Venkat Raman
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