Is there any reason you shouldn't combine investment strategies? If you consider Value, GARP, Mean Reversion, or Momentum... how about pairing them up?
For example, Value or Mean Reversion strategies alone probably will
eventually pay off, but for how many years or decades can you afford
to wait (witness 1970s)? How about pairing GARP with Mean Reversion so
that the (growth at a reasonable price) will filter your M.R.
candidates down to those already showing earnings improvement? Less
dead time. Or you could pair Value candidates with Momentum under the
What I like pairing Momentum with "skeptical sectors". Not sure how to
name the latter - not the dogs or the disdained since they may be
appreciated, but they are knee-jerk under-appreciated. So they don't
get overbought by momentum players and crash, but ascend in a medium
speed that just keeps going and going.
This seemed true for years in emerging stock markets, which many
investors just stereotyped as banana republics with poor accounting.
Now that sounds more a description of the developed world, but anyway
roaring E.M. stock markets finally priced in their great economies and
have hit a pause.
Lately I have applied that principle to GLNG which profits from the US
pushing away logical energy choices in favor of subsidizing looney
popular alternatives. GLNG ships clean energy from under-appreciators
to countries where logic still rules. Caveat: not a current
recommendation. You could have bought it cheaper when I mentioned it 3
months ago (up 30% since then, 150% in last 6 mo, or 300% in 12) but
now better to find something cheaper on your own.
So to ape the GARP acronym... how about MOSS for Momentum Of Skeptical
Sectors? I would rather hit an etf sector rather than a volatile stock
- maybe someone has special knowledge of one being held back by a
popular false assumption?
Another crazy idea is MVOV Mean Reversion of Volatility. Isn't
volatility (such as measured by VIX or VIXY) more cyclical in a
pronounced way vs stock prices? Not upward biased:
- posted 8 years ago