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- In replicating published backtesting results, why do I get slightly different results even though the parameters and portfolio are identical?
- The software relies on adjusted closing price data from Yahoo! Finance website to capture historic splits and dividend distributions. Unfortunately, the adjusted closing prices are limited to 2 decimal places, so we get a rounding error. The further back in time, the greater the relative rounding error. So as time goes by, the rounding error would give slightly different results. The whole series of adjusted closing prices also changes whenever a dividend or split occurs, so due to rounding error, portfolio performance results can be different upon a new dividend distribution from any of the tickers in the portfolio.
- I get scores of “-100.”
- Scores of -100 imply that there is insufficient historical data (at least a year) available for that ticker symbol. Either the ticker is new or Yahoo Finance is undergoing an update.
- Can you tell me how the scoring algorithm works?
- The scoring algorithm is proprietary. It does require 12 months of daily pricing data for each fund in the portfolio (and yes it uses each and every daily price in its calculation.)
- Can you add XX feature to the application?
- Write me a note, and I’ll consider it. The backtester module focuses on the recommended strategy (the one I personally use). I prefer not to turn it into a generalized backtesting application. There are superior software packages for that.
- Can you add commissions and slippage cost features to the backtest module?
- On average there are 4-6 trades a year. The cost of slippage is fairly negligible, and zero for mutual funds. A one day trade delay in the backtest settings replicates a transfer between two funds the day after the scoring date. No load funds and institutional funds have no commission costs. Funds with redemption fees for <30 days can be managed; more often than not the fees do not apply, or you have to delay a trading day to avoid the fee. With so few trades a year, the cost of ETF commissions in a brokerage account should be <1% for equity greater than $10K.
- Can you add taxes, leverage and/or margin interest rate features to the backtest module?
- The short answer is that I have no plans to add taxes, leverage, and margin in the backtest module. Using leverage and/or margin can be dangerous. Be sure to study the use of such instruments carefully and understand all the risks. Example of how one can estimate effect of taxes, leverage and margin interest rate: Say a backtest result has a CAGR of 20%, GSD of 25%, and Max Drawdown of 30%. We want to apply leverage of 1.5X using margin that has an annual interest rate of 8%, and our effective income tax rate (fed and state combined) is 25%. We can roughly estimate the resulting CAGR as: exp[ln(1.20)*(1.5 * (1-8%) * (1-25%)] = 20.7% after taxes. The GSD will be 25% * 1.5 = 37.5%, and the max drawdown would be 30% * 1.5 = 45%. Note that with margin and leverage we can get back to even after taxes. Without leverage, in our example income taxes would reduce the CAGR by roughly 25%, from 20% to 15%.
- I found a bug or error on the website.
- Report it to me here, and I’ll have a look. Describe precisely what you see and what you were doing so I can replicate the bug. When I fix the bug, I’ll update the web app.
- Can I switch to another plan at a later date?
- Yes, you can switch to any plan, any time. Your new plan will start immediately and will include any prorated credit from unused portion of your previous plan.
- What is the cancellation policy?
- You can cancel your subscription anytime. You'll have the option to automatically cancel at the end of the current subsciption period (no future charges). You can also cancel immediately, but there will be no refunds for unused portions of the subscription.
- When do the charges occur?
- All charges are recurring at the plan's designated period, starting on the day of activiation. For the Monthly plan, all future charges will be occur each month on the same day as the original activation day. For the Annual plan, the first charge will occur at the end of the 60 day trial, and all future charges will occur each year on the same day as the first charge date.
- Who is providing your credit card service?
- Our third-party card payment service provider is Stripe (stripe.com) who also provides card services for Kickstarter, Facebook, Twitter, and Apple Pay. Within 401kbooster.com, we do not store any card information or
personal information beyond your provided email address as login. However, we can access from Stripe: last 4 digits of the card number, card brand, and card