Every day I receive calls from unhappy emotional investors looking for the magic investment bullet. These folks chase what’s hot, buy high and sell low and drive themselves crazy watching the markets day in and day out. They seldom follow an investment strategy and they simply make bad investment choices.
Here is the magic bullet you seek: Relative Strength is the magic bullet. It takes out Emotions that lead to bad decisions. It takes out the ifs and buts. It takes out noise from the various media sources.
Plain and simple Relative Strength works in up markets, down markets and it will protect your portfolio from major corrections.
Don’t expect to outperform the markets every year, no strategy does. This strategy is for the sane investor who just wants consistency without major 30 or 40% drawdowns of capital. Over any five year period not only did this investment strategy outperform the S&P it never had a down period. Even in the disaster of 2008 this investment strategy was positive as it earned 3% by shifting assets in the relatively stronger IEF and SHY investments.
Simple Yes, here it is.
Three asset categories:
IEF Bond Proxy
SHY Cash Proxy
SPY Stock Proxy
Buy the highest return investment from the previous month. Example, the SHY was the highest return investment out of the three for the month of August 2013 so 100% of your money is invested into the SHY for the month of September. Each month rank the performance of each investment and own 100% for the following month and continue to repeat the process. Simple, Non-Emotional and Consistent investment strategy that beats the pants off the market and the talking heads on TV that tell you to buy and sell all day long!
Risk management is the best part of this strategy as it gives great protection from major drawdowns of principal that demolish your portfolio value.
The next article in this series will provide a more in-depth study on Relative Strength utilizing multiple asset investment to improve return and consistency.
*The analysis and information in this report and on our website is for informational purposes only. No part of the material presented in this report or on our websites is intended as an investment recommendation or investment advice. Neither the information nor any opinion expressed nor any Portfolio constitutes a solicitation to purchase or sell securities or any investment program. The opinions and forecasts expressed are those of Rezny Wealth Management, Ltd, herein (RWM) may not actually come to pass. The opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security nor specific investment advice. Investors should always consult an investment professional before making any investment.
Past performance is no guarantee of future results. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.