From World Beta
As a number of readers have pointed out, there are various drawbacks to the method/test I have presented here. The big ones are:
1. Fixed measurement period. I used a simple one-month and one-year absolute measure, but its is possible that 3, 6, X months would work better (or a combination of measurement periods).
2. Fixed holding period. This is the biggie to me – it doesn’t make sense to me to sell an asset class that is moving up. And, on the downside, to be "stuck" in an investment that is declining. In the following articles we will detail a system using moving averages – basically a trend following methodology – that allows you to stay in asset classes that are moving up while exiting those that are declining. The method is detailed in my white paper, "A Quantitative Approach to Tactical Asset Allocation."
Sponsored: Tips for Investing
A financial advisor can help you understand the advantages and disadvantages of investment properties. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Investing in real estate can diversify your portfolio. But expanding your horizons may add additional costs. If you’re an investor looking to minimize expenses, consider checking out online brokerages. They often offer low investment fees, helping you maximize your profit.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Editors' Picks
