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I recently posted on the forum (thank you for the responses) about getting out of the market, but that wasn’t the full story….
We’ve been invested 100% in stocks for a number of years and have reaped the rewards, however, general anxiety and market fluctuations don’t mix. I hated giving up the gains by migrating to a 60/40 (I am a victim to recency bias) and after reading Gary Antonacci’s Dual Momentum, I thought I had found the solution to my quandary.
DM strategy told me to sell the stocks in March or perhaps April, but I didn’t get back in since the strategy calls for reviewing annual returns monthly and the market had climbed dramatically. In that time, I’ve realized that DM has not cooled my emotions one bit.
My question to all you erudite investors who have read Antonacci’s Dual Momentum strategy, “What are your thoughts?” I’ll sheepishly admit that I was unable to backtest the strategy and there is minimal research.
Sounds suspiciously like market timing to me…but to each their own.
As Jack Bogle famously said, “I can’t time the market. I don’t know anyone who can time the market. I don’t know anyone who knows anyone who can time the market.”
IF you are not using your invested portfolio for income and you have more than adequate income from guaranteed sources, and you have 12-18 months of cash to cover 100% of your retirement expenses, 100% equities are the way to go, IMHO.
Ah yes, billionaire Gary Antonacci….
Momentum investment strategies have been studied extensively and proved to yield highest risk adjusted return but also highest risk of momentum crashes, making this strategy unsuitable for investors with strong loss aversion. The risk of loss could be reduced when this strategy is balanced with value investing strategy.
Factor investing, like momentum investing, is the alternative to passive index investing. Passive index investing is accepting the market for what it is: the market giveth and the market taketh, investors have no say. Factor investing is maximizing investment return using a few factors that proved to deliver the premium.
Interested in learning which market factors drive the investment return? check out the summary of finance publications on this subject in the book “Your Complete Guide to Factor-Based Investing”, an easy read filled with explanations and historical market data.
Amazon.com: Your Complete Guide to Factor-Based Investing: The Way Smart Money Invests Today: 9780692783658: Berkin, Andrew L, Swedroe, Larry E: Books
Coincidentally, I am actually rereading this book at this moment. In fact, I’m on their chapter about momentum.
Examples of real-life application of factor-based investing (Dimensional Fund Advisors) beating market cap weight