Friday, September 20, 2013

Why Relative Strength Investing Wins in Turbulent Markets

Investment techniques relative strength can be profitable in all markets, particularly when markets are turbulent in recent years. The key is to use RS correctly as I wrote above.
What results can be expected when markets swing depends on how you approach the RS and the specific formulas that you select.
In my experience and many tests, I found that certain formulas generally provide the best results:
ETF - the best formulas (in order of performance):

  • Momentum Relative Strength with SD
  • Momentum Relative Strength
  • Alpha
Stocks - best formulas (in order of performance):

  • Momentum Relative Strength
  • Momentum Relative Strength with SD
  • Return
Mutual Funds - Best formulas (in order of performance):

  • Alpha
  • Alpha with standard deviation
  • Momentum Relative Strength
What results can we expect? This is the question of the bottom line. But security investment with relative strength requires more than just RS analysis. You might say RS is just one ingredient in a safe investment package.
Optimized without buying - selling rules covering specific business factors of your potential investment group that you might as well throw a dart at the list of your stocks or funds.
The complete package in any good investment software will also ingredients such as:

  • Stops
  • Rating
  • Holding periods
  • Period
  • output market
But again what kind of results can you expect?
I know from a survey I took covering the year 2012, respondents said:
75% reported earnings of 8% or more
33% reported earnings were 13% or more
19% reported gains of 16% +
In addition, the top 10 RS strategies that I produced in 2012 earnings of 24% - 51%. Six of these strategies involved actions involved two ETFs and two were groups of mutual funds.
Over the past three years, I took about 20 groups of stocks, ETFs and mutual funds. I found:
Stocks - the vast majority of these groups walloped the S & P 500 with gains ranging from 30% to 504%
ETF - the best vast majority or walloped the S & P 500 with gains of 3 years from 25% to 103%
Mutual Funds - Almost all groups and strategy or distorted beats the S & P 00% results with their results in three years, ranging from 26% to 120%.
What does this mean?
In a word, good momentum investment ratio of the force remarkable results, excellent growth and earnings for retirement accounts and strengthening investment accounts regular heritage. However, the caveat is that RS should be used as part of an overall package. While RS is the centerpiece, like a quarterback in football or a baseball pitcher, the whole team is required to produce a winning investment strategy.


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