The Workshop · lesson 3
Pick a month to buy the index. See when you were whole again.
"Just buy the index and hold" is good advice with one line missing: and do not look for a while. Pick a month to buy. The chart shows your money from that day, and the counter shows how long it took to be back where you started.
Fact, from the same data the desk uses (S&P 500 total price, monthly, since 2006). The longest stretch underwater in this window is . The deepest fall is . Dividends shorten these a little; a mortgage, a job loss or a lost nerve in the middle of them lengthens them a lot.
None of this is an argument against owning the index. It is an argument for knowing what you are agreeing to when you do — and for wanting something beside it that does not go underwater at the same time. That is what a second engine with a low beta is for: not to beat the index, but to be up, or flat, in the months the index is not.
The house book's replay since 2019 lost 7% in 2022 while the index lost 19%, and on the days the index fell more than 1% it lost less than half as much. Its worst drawdown is a quarter of the index's. Those are the numbers on the engine page, next to the year the rules lost — so you can decide with the underwater time in front of you, not after.
Keep this: drawdown is measured in months, not percent. Ask how long, not just how deep.
The Workshop is education, not advice. Replayed numbers are averages over many trades, after costs unless stated, and are not forecasts; the live record is on the engine page. Open the deskManualEngineChangelog