Clients, in general, are bad about even trying to figure out what their retirement number is—that is, the pool of assets they will need to maintain their standard of living in retirement. Even more difficult is figuring out if they are on track. One simple method is mentioned in The Millionaire Next Door, by Thomas Stanley and William Danko. From Yahoo! Finance:
Thomas Stanley and William Danko, authors of the bestselling book “The Millionaire Next Door,” suggest that you simply take your age and multiply it by your current annual income before taxes from all sources (except for inheritances, which are only paid once). Divide the total by 10, and the quotient is what your net worth should be at that point in your life.
So, for example, if you are making $80,000 per year and you are now 45 years old, this simple formula suggests that to stay on track your net worth should be about $360,000. There are a lot of assumptions that go into this, obviously, and there are better and more accurate ways to figure out if you are on track (for example, we use a % funded spreadsheet), but it’s a start. Given current return expectations, this simple formula might understate what you will require, but anything that will motivate clients to get moving in the right direction is a help.
Mutual fund flow estimates are derived from data collected by The Investment Company Institute covering more than 95 percent of industry assets and are adjusted to represent industry totals.
The chart below measures the percentage of high relative strength stocks that are trading above their 50-day moving average (universe of mid and large cap stocks.) As of 1/29/13.
The 10-day moving average of this indicator is 96% and the one-day reading is 94%.
Our latest sentiment survey was open from 1/18/13 – 1/25/13. The Dorsey, Wright Polo Shirt Raffle continues to drive advisor participation, and we greatly appreciate your support! This round, we had 63 advisors participate in the survey. If you believe, as we do, that markets are driven by supply and demand, client behavior is important. We’re not asking what you think of the market—since most of our blog readers are financial advisors, we’re asking instead about the behavior of your clients. Then we’re aggregating responses exclusively for our readership. Your privacy will not be compromised in any way.
After the first 30 or so responses, the established pattern was simply magnified, so we are fairly comfortable about the statistical validity of our sample. Some statistical uncertainty this round comes from the fact that we only had four investors say that thier clients are more afraid of missing a stock upturn than being caught in a downdraft. Most of the responses were from the U.S., but we also had multiple advisors respond from at least two other countries. Let’s get down to an analysis of the data! Note: You can click on any of the charts to enlarge them.
Question 1. Based on their behavior, are your clients currently more afraid of: a) getting caught in a stock market downdraft, or b) missing a stock market upturn?
Chart 1: Greatest Fear. From survey to survey (it’s been just over 1 month), the S&P; 500 rose nearly +5%, and our indicators responded as expected. The fear of downdraft group fell from 83% to 75%, while the upturn group rose from 17% to 25%. The market is off to a strong start this year, and client sentiment is showing strong signs of improvement after a lackluster end of 2012.
Chart 2: Greatest Fear Spread. Another way to look at this data is to examine the spread between the two groups. The spread dropped by a large margin, down from 65% to 49%.
Question 2. Based on their behavior, how would you rate your clients’ current appetite for risk?
Chart 3: Average Risk Appetite. Average risk moved strongly upwards, from 2.54 to 2.83.
Chart 4: Risk Appetite Bell Curve. This chart uses a bell curve to break out the percentage of respondents at each risk appetite level. This round, over 85% of all respondents wanted a risk appetite of 3 or less.
Chart 5: Risk appetite Bell Curve by Group. The next three charts use cross-sectional data. The chat plots the reported client risk appetite separately for the fear of downdraft and for the fear of missing upturn groups. We can see the upturn group wants more risk, while the fear of downturn group is looking for less risk.
Chart 6: Average Risk Appetite by Group. This round, the upturn group’s risk appetite average fell, while the downturn group’s rose.
Chart 7: Risk Appetite Spread. This is a chart constructed from the data in Chart 6, where the average risk appetite of the downdraft group is subtracted from the average risk appetite of the missing upturn group. The spread fell this round.
The S&P; shot out of the gate for 2013, and client sentiment responded favorably. The fear of losing money in the market percentage declined to 75%. Average risk appetite climbed steadily with the market. If the stock market can manage to put together a rally over the first six months of the year, we definitely have a chance at seeing some of the best client sentiment in the history of this survey.
No one can predict the future, as we all know, so instead of prognosticating, we will sit back and enjoy the ride. A rigorously tested, systematic investment process provides a great deal of comfort for clients during these types of fearful, highly uncertain market environments. Until next time, good trading and thank you for participating.
Barry Ritholtz has posted a 5 minute clip of some of Ben Bernanke’s public comments between 2005-2007 on the housing market and the broader economy. The point of me posting this is not to say that Bernanke is a complete moron because I have little doubt that he is one of the brightest financial minds in the country. However, talk about being dead wrong! If you relied on these opinions in order to make investment decisions, you likely got torched. If you can’t rely on expert opinion when making investment decisions, then what options do you have?
This highlights the value of trend-following systems. Trend following requires zero reliance on expert opinion; it simply allows the investor to adapt to whatever trends the market offers, whether or not experts expected things to play out in a given way. With trend following, you’ll have plenty of losing trades, but you’ll also avoid sitting in losing trades for long periods of time. Furthermore, systematic trend-following has an excellent track record (see here and here.) Trend following allows you to cut your losses short and to hold on to your winners. Frequently, the strongest trends end up being very different from what even the brightest experts predicted.
—-this article originally appeared 2/11/2010. Well, heck, if you can’t trust Ben Bernanke, who can you trust? The answer should be obvious: follow the price trend and forget about the random guessing of experts.
James Montier, the investment strategist at GMO, published a long piece on financial repression in Advisor Perspectives in November 2012. It’s taken me almost that long to read it—and I’m still not sure I completely understand its implications. Financial repression itself is pretty easy to understand though. Along with a humorous description of Fed policy, Montier describes it like this:
Put another way, QE sets the short-term rate to zero, and then tries to persuade everyone to spend rather than save by driving down the rates of return on all other assets (by direct purchase and indirect effects) towards zero, until there is nothing left to hold savings in. Essentially, Bernanke’s first commandment to investors goes something like this: Go forth and speculate. I don’t care what you do as long as you do something irresponsible.
Not all of Bernanke’s predecessors would have necessarily shared his enthusiasm for recklessness. William McChesney Martin was the longest-serving Federal Reserve Governor of all time. He seriously considered training as a Presbyterian minister before deciding that his vocation lay elsewhere, a trait that earned him the beautifully oxymoronic moniker of “the happy puritan.” He is probably most famous for his observation that the central bank’s role was to “take away the punch bowl just when the party is getting started.” In contrast, Bernanke’s Fed is acting like teenage boys on prom night: spiking the punch, handing out free drinks, hoping to get lucky, and encouraging everyone to view the market through beer goggles.
So why is the Fed pursuing this policy? The answer, I think, is that the Fed is worried about the “initial condition” or starting point (if you prefer) of the economy, a position of over-indebtedness. When one starts from this position there are really only four ways out:
i.Growth is obviously the most “popular” but hardest route.
ii.Austerity is pretty much doomed to failure as it tends to lead to falling tax revenues, wider deficits, and public unrest. 2
iii.Abrogation runs the spectrum from default (entirely at the borrower’s discretion) to restructuring (a combination of borrower and lender) right out to the oft-forgotten forgiveness (entirely at the lender’s discretion).
iv.Inflation erodes the real value of the debt and transfers wealth from savers to borrowers. Inflating away debt can be delivered by two different routes: (a) sudden bursts of inflation, which catch participants off guard, or (b) financial repression.
Financial repression can be defined (somewhat loosely, admittedly) as a policy that results in consistent negative real interest rates. Keynes poetically called this the “euthanasia of the rentier.”3 The tools available to engineer this outcome are many and varied, ranging from explicit (or implicit) caps on interest rates to directed lending to the government by captive domestic audiences (think the postal saving system in Japan over the last two decades) to capital controls (favoured by emerging markets in days gone by).
The effects of financial repression are easy to see: very low yields in debt instruments, and the consequent temptation to reach for yield elsewhere. Advisors see the effects in clients every day.
If you are feeling jovial, I highly recommend reading Montier’s whole piece as an antidote to your good mood. His forecast is rather bleak—poor long-term returns in most all asset classes for a long period of time. My take-away was a little different.
Let’s assume for a moment that Montier is correct and long-term (they use seven years) equity real returns are approximately equivalent to zero. In fact, that’s pretty much exactly what we’ve seen during the last decade! The broad market has made very little progress since 1998, a period going on 15 years now. Buy-and-hold (we prefer the terminology “sit-and-take-it”) clearly didn’t work in that environment, but tactical asset allocation certainly did. Using relative strength to drive the process, tactical asset allocation steered you toward asset classes, sectors, and individual securities that were strong (for however long) and then pushed you out of them when they became weak.
I have no idea whether Montier’s forecast will pan out or not, but if it does, tactical asset allocation might end up being one of the few ways to survive. There’s almost always enough fluctuation around the trend—even if the trend is flat—to get a little traction with tactical asset allocation.
Source: Monty Python/Youtube
[In fact, might I suggest the Arrow DWA Balanced Fund and the Arrow DWA Tactical Fund as considerations? You can find more information at www.arrowfunds.com.]
We are fond of relative strength. It’s a solid investment method that have proven itself over a long period of time. Sure, it has its challenges and there are certainly periods of time during which it underperforms, but all-in-all it works and it’s been good to us. It’s always nice, though, when I run across another credible source that sings its praises. Consider the following excerpt from an article on the Optimal Momentum blog:
Momentum, on the other hand, has always made sense. It is based on the phrase “cut your losses; let your profits run on,” coined by the famed economist David Ricardo in the 1700s. Ricardo became wealthy following his own advice. [Editor’s note: We wrote about this in David Ricardo’s Golden Rules.] Many others, such as Livermore, Gartley, Wycoff, Darvas, and Driehaus, have done likewise over the following years. Behavioral finance has given solid reasons why momentum works. The case for momentum is now so strong that two of the fathers of modern finance, Fama and French, call momentum “the premier market anomaly” that is “above suspicion.”
Momentum, on the other hand, is pretty simple. Every approach, including momentum, must determine what assets to use and when to rebalance a portfolio. The single parameter unique to momentum is the look back period for determining an asset’s relative strength. In a 1937, using data from 1920 through 1935, Cowles and Jones found stocks that performed best over the past twelve months continued to perform best afterwards. In 1967, Bob Levy came to the same conclusion using a six-month look back window applied to stocks from 1960 through 1965. In 1993, using data from 1962 through 1989 and rigorous testing methods, Jegadeesh and Titman (J&T;) reaffirmed the validity of momentum. They found the same six and twelve months look back periods to be best. Momentum is not only simple, but it has been remarkably consistent over the past seventy-five years.
Momentum, on the other hand, is one of the most robust approaches in terms of its applicability and reliability. Following the 1993 seminal study by J&T;, there have been nearly 400 published momentum papers, making it one of the most heavily researched finance topics over the past twenty years. Extensive academic research has shown that price momentum works in virtually all markets and time periods, from Victorian ages up to the present.
Of course, momentum is just the academic term for relative strength. For more on the history of relative strength—and how it became known as momentum in academia—see CSI Pasadena: Relative Strength Identity Theft. The bigger point is that relative strength has a lot of backing from both academics and practitioners. There are more complicated investment methods, but not many that are better than relative strength.
The table below shows the performance of a universe of mid and large cap U.S. equities, broken down by relative strength decile and quartile and then compared to the universe return. Those at the top of the ranks are those stocks which have the best intermediate-term relative strength. Relative strength strategies buy securities that have strong intermediate-term relative strength and hold them as long as they remain strong.
Last week’s performance (1/21/13 – 1/25/13) is as follows:
Relative strength calculations rely on a single input: price. We like price because it is a known quantity, not an assumption. In this deconstruction of the Price-to-Earnings Growth (PEG) ratio, the author, Tom Brakke, discusses all of the uncertainties when calculating even a simple ratio like PEG. And amidst all of the uncertainties he mentions is this:
In looking at that calculation, only one of the three variables has any precision: We can observe the market price (P) at virtually any time and be assured that we have an accurate number. The E is a different matter entirely. Which earnings? Forward, trailing, smoothed, operating, adjusted, owner? Why? How deep into accounting and the theory of finance do you want to go?
For most investors, not very far. We like our heuristics clean and easy, not hairy. So, in combining the first two variables we get the P/E ratio, the “multiple” upon which most valuation work rests, despite the questionable assumptions that may be baked in at any time. The addition of the third element, growth (G), gives us not the epiphany we seek, but even more confusion.
The emphasis is mine. This isn’t a knock on fundamental analysis. It can be valuable, but there is an inherent squishiness to it. The only precision is found in price. And price is dynamic: it adapts in real time as expectations of the asset change. (Fundamental data is often available only on a quarterly schedule.) As a result, systematic models built using relative strength adapt quite nicely as conditions change.
—-this article originally appeared 2/10/2010. We still like using prices as an input, especially now that there are so many cross-currents. Every pundit has a different take on what will happen down the road, but prices in a free market will eventually sort it all out.
No one ever knows what is going to happen in any market. The best we can hope to do is accurately measure where the relative strength is—and then try to stay with it. Presented without much comment is an article from Business Insider dating back to December 2010, just over two years ago. Here’s the headline:
After 20 Years Of Misery, Here’s Why Japanese Stocks Are Ready To Soar
And here is a chart of the Japan ETF versus the S&P; 500 over the last two years:
Source: Yahoo! Finance (click to image to enlarge)
As you can see, Japan is down more than 10%—and 25% in relative terms—despite its supposedly compelling valuation. In fact, it could be completely correct that Japan is incredibly undervalued. Certainly the CFA who wrote the article is more qualified than me to make a judgement. It may also be true that eventually this spread will go to other way, due to the difference in valuation—but even two years has not been enough to prove out this thesis so far.
So far it’s just been an expensive lesson in learning that markets can do whatever they want for as long as they want. The only way for a forecast to come true is for the price to move in the forecasted direction—and that means relative strength will shift too. Rather than guessing what will happen, we can trust relative strength to adjust if things change.
Mutual fund flow estimates are derived from data collected by The Investment Company Institute covering more than 95 percent of industry assets and are adjusted to represent industry totals.
The chart below measures the percentage of high relative strength stocks that are trading above their 50-day moving average (universe of mid and large cap stocks.) As of 1/22/13.
The 10-day moving average of this indicator is 96% and the one-day reading is 97%.
It’s well known in behavioral finance that investors experience a loss 2-3x more intensely than a gain of the same magnitude. This loss aversion leads investors to avoid even rational bets, according to a Reuters story on a recent study by a Cal Tech scientist.
Laboratory and field evidence suggests that people often avoid risks with losses even when they might earn a substantially larger gain, a behavioral preference termed ‘loss aversion’,” they wrote.
For instance, people will avoid gambles in which they are equally likely to either lose $10 or win $15, even though the expected value of the gamble is positive ($2.50).
The study indicates that people show fear at even the prospect of a loss. Markets are designed to generate fear, not to mention all of the bearish commentators on CNBC. Fear leads to poor decisions, like selling near the bottom of a correction. Unless you are planning to electrically lesion your amygdala, the fear is going to be there–so what’s the best way to deal with it?
The course we have chosen is to make our investment models systematic. That means the decisions are rules-based, not subject to whatever fear the portfolio managers may be experiencing at any given time. Once in a blue moon, excessive caution pays off, but studies suggest that more errors are made being excessively cautious than overly aggressive. A rules-based method treats risk in a even-handed, mathematical way. In other words, take risks that historically are likely to pay off, and keep taking them regardless of your emotional state. Given enough time, the math is likely to swing things in your favor.
—-this article originally appeared 2/10/2010. In the two years since this was written, investors have continued to pay a high price for their fear as the market has continued to advance. There are always scary things around the corner, but a rules-based process can often help you navigate through them. Investors seem to have a hard time learning that scary things don’t necessarily cause markets to perform poorly. In fact, the opposite is often true.
The table below shows the performance of a universe of mid and large cap U.S. equities, broken down by relative strength decile and quartile and then compared to the universe return. Those at the top of the ranks are those stocks which have the best intermediate-term relative strength. Relative strength strategies buy securities that have strong intermediate-term relative strength and hold them as long as they remain strong.
Last week’s performance (1/14/13 – 1/18/13) is as follows:
Here we have the next round of the Dorsey, Wright Sentiment Survey, the first third-party sentiment poll. Participate to learn more about our Dorsey, Wright Polo Shirt raffle! Just follow the instructions after taking the poll, and we’ll enter you in the contest. Thanks to all our participants from last round.
As you know, when individuals self-report, they are always taller and more beautiful than when outside observers report their perceptions! Instead of asking individual investors to self-report whether they are bullish or bearish, we’d like financial advisors to weigh in and report on the actual behavior of clients. It’s two simple questions and will take no more than 20 seconds of your time. We’ll construct indicators from the data and report the results regularly on our blog–but we need your help to get a large statistical sample!
With the elimination of traditional pensions in many workplaces, Americans are left to their own devices with their 401k plan. For many of them, it’s not going so well. Beyond the often-poor investment decisions that are made, many investors are also raiding the retirement kitty. Business Insider explains:
Dipping into your 401(k) plan is tantamount to journeying into the future, mugging your 65-year-old self, and then booking it back to present day life.
And still, it turns out one in four workers resorts to taking out 401(k) loans each year, according to a new report by HelloWallet –– to the tune of $70 billion, nationally.
To put that in perspective, consider how much workers contribute to retirement plans on average: $175 billion per year. That means people put money in only to take out nearly half that contribution later.
That’s not good. Saving for retirement is hard enough without stealing your own retirement money. Congress made you an investor whether you like it or not—now you need to figure out how to make the best of it.
Here are a couple of simple guidelines:
save 15% of your income for your entire working career.
if you can max out your 401k, do it.
diversify your portfolio intelligently, by volatility, asset class, and strategy.
resist all of the temptations to mess with your perfectly reasonable plan.
if you can’t discipline yourself, for heaven’s sake get help.
I know—easier said than done. But still, if you can manage it, you’ll have a big headstart on a good retirement. Your 401k is too important to abuse.
According to a fascinating study discussed in Time Magazine based on 27 million hands of Texas Hold’em, it turns out that the more hands poker players win, the more money they lose! What’s going on here?
I suspect it has to do with investor preferences–gamblers often think the same way. Most people like to have a high percentage of winning trades; they are less happy with a lower percentage of winning trades, even if the occasional winner is a big one. In other words, investors will often prefer a system with 65% winning trades over a system with 45% winning trades, even if the latter method results in much greater overall profits.
People overweigh their frequent small gains vis-à-vis occasional large losses,” Siler says.
In fact, you are generally best off if you cut your losses and let your winners run. This is the way that systematic trend following tends to work. Often this results in a few large trades (the 20% in the 80/20 rule) making up a large part of your profits. Poker players and amateur investors obviously tend to work the other way, preferring lots of small profits–which all tend to be wiped away by a few large losses. Taking lots of small profits is the psychological path of least resistance, but the easy way is the wrong way in this case.
—-this article was originally published 2/10/2010. Investors still have irrational preferences about making money. They usually want profits—but apparently only if they are in a certain distribution! Real life doesn’t work that way. Making money is a fairly messy process. Only a few names turn out to be big winners, so you’ve got to give them a chance to run.
Mutual fund flow estimates are derived from data collected by The Investment Company Institute covering more than 95 percent of industry assets and are adjusted to represent industry totals.
Paul Britt of IndexUniverse, after noting the strong inflows of the PowerShares DWA Technical Leaders ETF (PDP), had the following to say about its appeal:
In the end, PDP’s performance over more recent periods should bolster its appeal to those willing to take a bit more risk in search of more return.
This makes it a viable middle-ground alternative between purely passive super-low-cost ETFs like VTI and traditional actively managed mutual funds, which often come with higher costs.
Without a doubt, PDP is just one of many ETFs that offer an alternative to pure-vanilla U.S equity exposure.
But importantly, PDP stands out from many in this crowd, as its strong liquidity, hefty asset base and history of avoiding radical risk clearly suggest.
Britt also noted that turnover in the index last year was 96%. As we discussed in our article Tax-Efficient Alpha, the combination of the tax-efficient ETF structure and our unique relative strength approach to indexing makes for a compelling investment solution.
See www.powershares.com for more information. Past performance is no guarantee of future returns.
IndexUniversehighlights a significant milestone for the PowerShares Dorsey Wright Technical Leaders ETFs:
PowerShares, the No. 4 U.S. ETF firm by assets, today trumpeted the fact that the four ETFs it, along with technical-analysis guru Tom Dorsey, brought to market beginning almost six years ago together now have more than $1 billion in assets under management.
Almost three-quarters of those assets are in the oldest of the quintet, the $771 million PowerShares DWA Technical Leaders Portfolio (PDP), which outperformed the S&P; 500 Index last year, PowerShares said today in a press release.
The four portfolios make use of the “point and figure” relative strength technical analysis Dorsey and his firm Dorsey Wright & Associates have championed for 25 years. The funds are part of the ETF world that is focused on so-called strategy indexing that amounts to an attempt to outperform—in a rules-based, quasi-active way—the broader market, as measured by capitalization-weighted indexes like the S&P.;
The four funds, their launch dates, and their assets are as follows:
PowerShares DWA Technical Leaders Portfolio (PDP), March 2007, $771.0 million
PowerShares DWA Emerging Markets Technical Leaders Portfolio (PIE), December 2007, $275.9 million
PowerShares DWA Developed Markets Technical Leaders Portfolio (PIZ), December 2007, $132.3 million
PowerShares DWA SmallCap Technical Leader s Portfolio (DWAS), July 2012, $18.1 million
PDP, the granddaddy of the four funds, returned 17.87 percent last year compared with the S&P; 500’s 16 percent, PowerShares said.
The Wheaton, Ill.-based fund company also said the fund has risen 14.93 percent in the past three years, compared with 10.86 percent for the S&P.;
“It was a big deal when Dorsey Wright and Invesco PowerShares introduced the Technical Leaders ETFs beginning in 2007; it really gave investors a new way to implement relative strength strategies,” Tom Dorsey said in the press release.
“We believe that money managers will increasingly seek out well-designed alpha-seeking investments like the PowerShares DWA Technical Leaders ETFs that have demonstrated the potential to improve portfolio performance.”
We at Dorsey, Wright & Associates are very proud to have reached this significant milestone, and want to thank all of you, our clients, for your support of these robust relative strength-based ETF solutions.
See www.powershares.com for more information. Past performance is no guarantee of future returns.
The chart below measures the percentage of high relative strength stocks that are trading above their 50-day moving average (universe of mid and large cap stocks.) As of 1/15/13.
The 10-day moving average of this indicator is 95% and the one-day reading is 96%.
Seeking to understand the relationship between the economy and the stock market is a rather complex undertaking. We can certainly argue that the economy impacts corporate earnings in terms of revenues and costs. Stock prices generally reflect investor expectations for future corporate earnings and future economic growth. As a result, one might expect that there is a fairly direct relationship between U.S. GDP growth and U.S. stock market performance. However, it is also generally accepted that the stock market is a leading indicator and its movements should precede U.S. economic growth. Stocks and the economy don’t always move in lockstep. Let’s look at some real life examples and see what conclusions can be drawn.
Consider the following chart which shows U.S. GDP growth since the early 1980s. The shaded areas indicate U.S. recessions.
The table below shows GDP growth and stock market performance in the years following the last four recessions.
It can be observed that U.S. economic growth following the most recent recession is weaker than that of the preceding three—and yet the stock market performance was the second highest return of those shown. In other words, the strength of U.S. economic growth has not always been a good indicator of stock market performance. What is driving those returns then? Monetary policy? Fiscal policy? Globalization? A combination of many, many different factors?
At Dorsey Wright, our investment decisions are based on relative strength models that seek to capitalize on trends. We spend little time trying to understand the exact relationship between price movement and the various fundamental factors influencing those price returns. After all, investors are not primarily concerned about making sure that whatever gains or losses they have in their portfolio are symbiotic with the prevailing economic and financial theories of the day. Rather, they want to make as much money as possible given their risk management considerations.
I suspect that many investors are failing to fully take advantage of the returns in the financial markets because they correctly observe the rather weak economic growth and then incorrectly assume that the stock market must necessarily also be doing poorly. The financial markets don’t wait for us to feel good before generating strong returns, nor do they seem to worry much about behaving in a way that fits anyone’s philosophical theories. It’s up to us to respond and seek to profit from whatever the financial markets throw our way. The good news for investors is that the financial markets have a long history of providing ample return (and risk) for investors who are seeking to build and manage wealth.
Source: National Bureau of Economic Research, U.S. Department of Commerce, Global Financial Data
In the table that shows subsequent three-year average GDP growth, I began measuring the three year GDP growth in the first full quarter following the end of the recession, as defined by the National Bureau of Economic Research. S&P; 500 returns are total returns, inclusive of dividends. Past performance is no guarantee of future returns.
The chart below is the spread between the relative strength leaders and relative strength laggards (universe of mid and large cap stocks). When the chart is rising, relative strength leaders are performing better than relative strength laggards. As of 1/14/2013:
