To attain knowledge, add things every day. To attain wisdom, subtract things every day.—-Lao-Tzu
There are many theories about investing in the market. Some are simple, while others are mind-numbingly complex. Relative strength is one of the simple methods. Because it is simple, it is robust and much more difficult to break than a multi-factor method that relies on many relationships between factors. Complicated things are fragile and tend to break easily. That’s not to say that relative strength is perfect—it will underperform periodically like every other method. But relative strength subtracts everything except price, and asserts that strong price action is typically a precursor of good relative performance. History bears that out.
