Just in case you were wondering, these are the types of companies that a high relative strength strategy won’t own on a trip to the basement. Fortune has a nice slideshow on the biggest disasters. Yes, these are blue chip companies, but they’ve been lousy performers for much of the decade. Maybe they will come back; maybe they won’t. A disciplined relative strength strategy might own these companies at some point during their ascent, but as they weaken in price and their relative strength ranking drops, they will get kicked out of the portfolio. A trend-following strategy will not identify the top or the bottom and will miss the turns, but will try to own assets for part of the ride up and to avoid them during most of the ride down.
Be the first to like this post.
