Clifford Asness runs AQR Capital, a very large and successful hedge fund firm. He has long been an advocate of using momentum (a similar factor to relative strength) as an investment factor. He was on CNBC this morning and gave some insightful comments about using a momentum or relative strength strategy for investing. The clip is well worth watching.
I think there are a couple of points he makes that we would totally agree with:
- Don’t put all your eggs into an RS basket
- Using a value strategy to “offset” an RS strategy is a good idea
- RS works, and it has worked for years and years. It has periods of underperformance, but it works in both bull and bear markets.
- It is difficult to time an RS strategy (just like it is difficult to time the market)
Click here for a link to the CNBC video.
