Historical stock and fund prices change over time due to splits and dividends. This book shows values adjusted through autumn 2013. If you check historical prices of the investments you see in this book, many will have changed. Rest assured that this does not affect historical performance. Something that grew 20 percent back in 2005 still did so whether calculated using prices in 2005, 2013, or a future year. In the performance calculations not shown in the text, I used unadjusted prices with dividend payments to better reflect the change in balances that investors experienced at the time. For this reason, some of the prices discussed in Chapter 7, “The Life of the Plan,” are different from those shown in adjusted price tables elsewhere in the book.
This book’s primary time period is the fifty calendar quarters from the beginning of 2001 to the middle of 2013. To begin the period, the closing prices from December 2000 are used for the initial buys, and I usually refer to the period as the fifty quarters from December 2000 to June 2013. This sometimes confuses people, as they wonder if the time period includes 2000. No, it just uses December 2000 closing prices as the starting point for a clean look at the period from the first quarter of 2001 through the end of the second quarter of 2013, a fifty-quarter, or 12.5-year, time frame. Except for the Medifast tables in Chapter 4 (where the December 2000 closing price plays a critical role in the example), price tables begin with the first quarter of 2001 to display exactly fifty prices for the time period.
Finally, the 3 percent signal plan produces trading guidance for buying and selling two funds at the same time. In real life, the trades won’t happen at exactly the same time, but they can get pretty close these days due to fast order execution. I calculated past performance with all trades using the closing prices of the period in question. While real-world performance will vary based on slightly different order execution prices, it shouldn’t vary by much. Follow the plan, and it will basically do for you what it’s shown doing here.