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Investment Strategy

Accelerating Dual Momentum Investing

Warren Buffett has said that trying to time the market is the number one mistake to avoid.

Market timing is hard, if not impossible to do, as it often results in the investor buying or selling too late or too early rather than right on time.  To even consider a market timing strategy is generally frowned upon by professional investors.

But we’re not professional investors, we’re just engineers who were convinced that there must be a simple yet effective way to pick up on and follow trends in uncorrelated asset classes.  We don’t hope or expect to be right every time, but we do hope and expect this strategy to do a decent job at minimizing losses to improve the effect of compounding gains.

In this post, I will lay out the framework of a simple, intuitive and profitable strategy that has worked well over the last 150 years.  I will provide all the data used so that you can perform your own analysis.  I’ll also provide tools you can use to implement this, or a similar strategy, on your own for free.  No proprietary software necessary, no expensive financial advisor required – just you, some logic, and systematic rules-based investing (no emotion!).

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Engineering a Balanced Index Fund

Did our engineered indexes peak your investment interest; but did they still seem a little too risky for what you are comfortable with?

In those indexes we pick US stocks on a monthly basis; and we’ve made an effort to pick stocks across uncorrelated sectors.  But at the end of the day, they all still carry US stock market risk. Portfolio management seeks to reduce risk by spreading your investments across many uncorrelated asset classes like international equities, bonds, and gold. So let’s do that with our engineered indexes to engineer a balanced index fund!

In this post we’ll add an allocation to international equities, bonds, and gold to our diversified US equity engineered indexes.  What we’ll be left with are two very well diversified funds that have exhibited about half the risk of the S&P 500 while matching, and even beating its returns.

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Engineering an Index Fund

Buying an S&P 500 index fund is boring yet simple. In the world of investing, boring and simple generally means inexpensive yet high returns. But if its too boring, excitement seeking humans (like myself) may opt for “sexier” investment opportunities.

The trouble is that sexy stocks and “strategies” are both expensive and their returns are underwhelming. But can we apply some lessons learned from previous analysis to make a boring and simple investment strategy… fun and exciting!?

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6 Reasons The Mid-Cap Value Index is Constructed to Outperform

Everyone has heard of the investment adage to “buy low, and sell high.” But it’s very difficult to execute in practice.  But the mid-cap value index buys low and sells high automatically for its investor.

In this blog I’ll explain why this area of the equity market is so proficient.  But I won’t stop at some simple conjecture, I’ll prove this functionality in other areas of the market. Not only that, we’ll go over a way to capitalize on the mid-cap value’s inherent genius.

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