Bichon Frise wrote:
Our resident expert will certainly guarantee that if you invest the money, you will do better than 3.625% (+tax benefit if you itemize). If you pay him, I'm sure it comes with some fancy guarantee. I wish my magic 8 ball was that good. It is always just says, "call me maybe."
Granted that results in the short-term are not guarranteed, but in "What Works on Wall Street" (Fourth Edition), it shows that over 10-year periods of time, the return on investing merely in the top 10% of stocks in regards to having a low P/E ratio would return a minimum of 6.07% over 10 years (Years covered 1964-2009). And considering that this was tested month-by-month, this means that 433 results were collected and this was the absolute worst 10-year period out of 433 results.
And considering that multi-factor models are more profitable, indeed my system should create better returns than this. Even with buying and selling expenses, 6.07% will still beat the mortgage interest rate so long as the investment sizes aren't ridiculously small.
And my standards are much higher than merely looking at the top decile like it has in the book. Less than 2% (and sometimes less than 1%) of stocks make it through my screening process at any given time. Please recall that VTI is getting creamed by my stock portfolio in the "Stock Portfolio" thread. Considering that the gap is a mere 2.74% as of the last post and that the back-tested strategies on my forum that are older than 6 months are beating their comparisons by 7% or more, I expect the gap to widen even more in the future.