Gyroscopic Investing

I'd like to share a momentum strategy and its variation with stock and bond portfolio.

First check out the original article,

http://seekingalpha.com/article/320009- ... m-strategy

and I tried to take some other approaches based on this data.

http://permanentpp.blogspot.com/2012/02 ... sting.html

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p.s
1. I am not a native English speaker(I am a native Korean), although my English is awkward, please let me past

2. I swear that I neither have any ill intention nor involved in money making spam with posting blog.
  (Every time I try to insert image file in this forum, with only '' mark showing up. I don't know how I could pick and upload image file from my PC, this is why
  I post in the blog and make a link in this forum. If anybody knows, please let me know)

3. In Korea, the history of investable ETF is quite short, therefore extremely few people are interested in portfolio investment strategy with different asset classes.
  10 yr bond ETF has been on market for only 3 months.

4. If you had any bad feeling or offended with my posting or writing style, forgive me. Quite a lot of time, I can't fully understand what you are trying to say. I should study English harder.

yiugn,

Thanks for your contribution to the forum.  I have read your previous posts.  I use  the standard PP with roughly 50% of my money.  For the other half, I use two momentum strategies, that aren't too different then what you're suggesting.

My thought is that depending on market conditions, some time the mean reversion strategy (the PP) will work well, and other times a momentum strategy will be advantageous.

I've found over the last 2 years, that the hardest part with momentum strategies is to stick to the plan.  There are many times where you will be buying (or staying in) assets that you feel are way overbought.  Often times they start to fall hard, shortly after you buy them because of that. 

Many people would argue that this is market timing, and over time won't work as backtested.  I tend to think that ALL trading/investing strategies are market timed whether we seek to do that or not.  The fact is that there will be at least 1 buy and at least 1 sell for every asset and TIMING will always play a big role in the performance of said asset.

B&H rarely works out as backtested either, IMO because the buy and sell will usually be arbitrary dates that don't match up with reality.  Not to mention that during the large draw downs that you get with traditional asset allocations that rely too heavily on stocks, most investors will hit the panic button at the absolute wrong times, and then get back in way too late.

That is where I feel the PP is a great investment strategy for most people because it eliminates much of the emotional effects of fear/greed.