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combining classic investment strategies

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 same principle.

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:

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Reply to
dumbstruck
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"Security Analysis" is really the Bible of investment. As with other great works, it sparked 'schools' of thought which are actually just parts of the original. SA spends all of one page to mention diversification as a means of mitigating the possibility of errors in analysis (or natural disasters or acts of God), for example, yet that one notion has been developed into a vast school of averaging expected returns with equations it takes a super-computer to run (and which are according to their own authors, impractical).

Yet SA focuses on real investment: proper deployment of capital resources to the most productive sectors, with an expectation of reasonable returns. It is based on ANALYSIS. "Value" investing and GARP, that you mentioned, fall into this category.

Some other 'styles' you mention are based on probabilities or market movements, and are thus by definition not investing, but gambling on the odds. Granted, SA refers to Mr. Market, and advises to gauge his moods, but if you like CLNG and under-appreciated sectors, please consider that you're looking at a method of finding companies that are worth analyzing, then possibly investing in (at attractive prices) if the analysis reveals a solid business.

I hope my comments offer a useful discussion. If I've misunderstood your meaning please reply to that effect.

Reply to
dapperdobbs

Garp intrigues me, sort of like combining the best of Value and Growth for a more nuanced view. It's a natural progression to assemble components you know into larger systems that would otherwise be more confusing and labor intensive to build from scratch. So I'm looking for additional workable combinations of strategies.

But analyzing individual securities takes too much work relative to the potential returns in a semi efficient market. They are examined too well by others and are subject to too much risk (esp now regulatory) so I look for something that applies to chunks/sectors/ etfs. Not something tied up in a bow like the Garp poster child Fidelity Magellan fund, because something so visible gets arbitraged or peters out.

Maybe it has got to include the realm of investor sentiment, perhaps what you call gambling the odds. With the madness of crowds effect, some investors can simply arbitrage against faulty mass psychology (which doesn't always equate to contrarian) and find at times it's like shooting fish in a barrel. I think many here feel obligated to warn against such experimentation for newbies, and I would agree. Try them as thought experiments over 5+ years, and only commit real money to such approaches if it has been killing you how many actual successes you missed by sticking to the John Bogle mainstream approach.

Reply to
dumbstruck

Craziness confirmed: that strategy appears to be impractical using ETNs due to futures rollover/contango issues, but in the discovery of that I found you can actually get on the other side of that trade and benefit from rollover/contango:

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I don't propose this as a valid strategy, but as an emerging curiosity. It gave many times the return of the SP500 in the last 6-12 months, and the article outlines how this can happen even when SP500 stays flat. It alludes to pitfalls, but I want to see it in operation in the charts as such ETNs mature:
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Reply to
dumbstruck

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