Chuck Jaffe of Marketwatch included the following in a recent article:
In times like these, pros like to say “it’s a stock-picker’s market,” but that’s ridiculous, because it’s always a stock-picker’s market. While a rising tide can lift all stocks and turn even bad strategies into money-makers, savvy strategies and insights never go out of style.
Interesting. I’d love to find the “savvy strategies” that never go out of style! Unfortunately, Bernie Madoff is currently unavailable.
Back to reality. It is no secret that relative strength and value are two strategies that have shown the ability to generate outperformance over time. However, both of them do go out of favor from time to time. Fortunately, the correlation of these two strategies tends to be quite low over time. We are big advocates of combining the two winning strategies as a way to mitigate some of the underperformance when one or the other is temporarily out of favor.
