Cecily O'Connor
RedwoodAge.com

Stock market turbulence has many baby boomers second-guessing their investment decisions. 

Yet history may offer some guidance.

As almost all investment brochures will tell you, past performance is no indication of future returns. Still, we can learn much from history, and it's better to know something than nothing.

Stocks have been sliding recently amid concerns about credit, a weak dollar and skyrocketing oil prices. Overall, the poor health of the market has left many investors uncertain about their next move. 

To that end, so-called back-tests can compare how a strategy would have performed versus a simple buy-and-hold approach.

You can do this on your own by going back through trading records to see when you bought or sold stocks, and then check how they're doing today. Several major investment sites offer historical pricing information that will tell you how much a stock traded for in the past.

Be sure to allow for taxes in your calculations. People who lock in short-term gains often forget that they will be diminished by capital gains taxes and trading fees.

Keeping good records is always essential to a good investment strategy, so consider keeping a notebook going forward to record not only what you did trade, but what you considered trading.

Back-test Tool
Fidelity Investments is even planning to offer a free tool early next year to test those commonly employed strategies with past data to make better decisions on when to buy, hold or sell a stock.

"Back-testing methodologies have traditionally been used by highly sophisticated traders, but Fidelity believes that every investor could benefit from testing their trading ideas ...," said James Burton, senior vice president for the company's personal investment group.

The brokerage's tool reportedly will include calculations for when an equity would have been bought, sold or held, the average profit/loss, total trades, total winning trades and total losing trades.

Investors will be able to run these strategies against up to five years' worth of price information, and any trade size, whether in dollars or shares, to determine how a trading strategy would have performed had it been used in the past. Fidelity said it expects to introduce additional strategies to the online program on a regular basis and to offer a more advanced version for active traders.