Author Topic: Dual Momentum Investing  (Read 160445 times)

brooklynguy

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Re: Dual Momentum Investing
« Reply #550 on: July 12, 2015, 11:27:44 AM »
No. if you are overweight equities, the only thing that will help you in terms of other investors behavior is if they invest in EQUITIES.  And If you have in the default MMM forum approved total market lazy portfolio approach, any equities will do. Gold?  Not helpful.  Commodities? Not helpful.  Junk bonds? Not helpful. You get the point

That's exactly what I said.  If your portfolio consists entirely of an equity index fund, you will be benefited by other investors investing in any equities covered by that index, whether they are following an index strategy or some active strategy (so, again, as sol said, it doesn't benefit indexers to persuade other investors to become indexers if they're already investing in the asset class (or sub-class) covered by the applicable index anyway (but, to your point, it would benefit indexers to persuade other investors to tilt their portfolio towards those assets if they're not already doing so, or to persuade non-investors to become investors who invest in those assets)).

Quote
I'm just pointing out that your explanation for Sol's argument fails to differentiate itself from advocating simple indexing.

The difference is that in the case of dual momentum, it benefits users of that strategy for others to adopt the same specific strategy, while the same is not true for users of an indexing strategy (even though it does benefit indexers for other investors to invest in the asset class (or sub-class) covered by their index). [EDIT:  That is, it doesn't benefit users of an index strategy for other investors to adopt the same specific strategy any more so than it would for those other investors to adopt a different strategy (i.e., an active investing strategy) that also involves investing in assets covered by the applicable index.]
« Last Edit: July 12, 2015, 11:53:06 AM by brooklynguy »

milesdividendmd

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Re: Dual Momentum Investing
« Reply #551 on: July 12, 2015, 12:02:21 PM »
We are all making active choices with our portfolio. Yours is to overweight equities (and perhaps domestic equities) relative to the actual world economy.

If other people overweight equities passively as you advocate, or by any means it benefits you.

Its actually a different story for DM. If I advocate for someone else to utilise DM (which by the way I don't) and they use a different look back period from me that could just as easily harm as help me.

For you and sol it's much more predictable. Anyone who adopts your strategy, benefits you (trivially).
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bdbrooks

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Re: Dual Momentum Investing
« Reply #552 on: July 12, 2015, 02:23:01 PM »
I think it's important to realize how market price is determined. It is only based off what people are willing to buy it for and what people are willing to sell it for. Hypothetically, if all MMM readers piled into a small stock it would drive the price up, but then it would normalize to a reasonable level based on the fundamentals. So if you weren't buying or selling until 2025 and all of a sudden 10 trillion dollars of cash started buying up equities in 2015, it wouldn't affect you because prices would normalize well before you ever started to sell it.

As far as DM there is much more of an affect on the market than convincing people to index because DM involves more trading than indexing. Even if you have to rebalance in a buy and hold strategy, it involves trading less dollars than if once a year you trade 100% of your account (I think Miles said it averaged 1.3 trades a year and that would be an average turnover of 130%). These trades will have a much bigger impact on the market than indexing. I think that DM is a better strategy than indexing, but trying to say that tons of people following a DM strategy will have similar affect as convincing tons of people to index is just silly.

The thing that most people don't realize that owners that aren't going to sell or buy are actually having no impact on the market (this is a positive for indexing). It is solely based off the bids, offers, and the market orders. These all involve people wanting to buy/sell either right now or at a given price. So even if the market goes up or down for a while if you aren't going to buy/sell 1) those fluctuations won't affect you and 2) you won't impact the market.

milesdividendmd

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Dual Momentum Investing
« Reply #553 on: July 12, 2015, 02:42:39 PM »
BD

A couple of points.

DM with a 12 month look back trades < 1/year.

Indexers buy and sell to increase their stakes, rebalance, and liquidate, so they also effect and are effected by the market.

The question is smaller than the one you entertain about whether or not "tons of people" DMing vs indexing would effect the market more.

Markets are effected in proportion to trading volume pure and simple.

The question is whether there is any more self interest in defending DM vs advocating for a buy and hold equity strategy, as Sol implied.

Obviously I find This contention to be uniquely unconvincing, overly dramatic, and poorly defended but I don't ascribe any malice to those who advocate buy and hold.

The desire to justify ones own decisions is a pervasive human tendency.

Sadly a less pervasive but more insidious tendency is to ascribe selfish intentions to others who make decisions different from your own, and to presume ones own ethical purity.
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bdbrooks

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Re: Dual Momentum Investing
« Reply #554 on: July 12, 2015, 03:20:44 PM »
BD

A couple of points.

DM with a 12 month look back trades < 1/year.

Indexers buy and sell to increase their stakes, rebalance, and liquidate, so they also effect and are effected by the market.

The question is smaller than the one you entertain about whether or not "tons of people" DMing vs indexing would effect the market more.

Markets are effected in proportion to trading volume pure and simple.

The question is whether there is any more self interest in defending DM vs advocating for a buy and hold equity strategy, as Sol implied.

Obviously I find This contention to be uniquely unconvincing, overly dramatic, and poorly defended but I don't ascribe any malice to those who advocate buy and hold.

The desire to justify ones own decisions is a pervasive human tendency.

Sadly a less pervasive but more insidious tendency is to ascribe selfish intentions to others who make decisions different from your own, and to presume ones own ethical purity.

I'm sorry. I could have been more clear. Even though I think that DM has greater market impact than buy and hold, I think it is more likely to hurt DM than help it (note that I said said an advantage of indexing is less market impact). 

Sol, here is where you are wrong. If DM calls for people to sell CBA buy ABC on the first of the month, then CBA will likely be selling lower and ABC would be selling higher. You would be selling for less and buying for more. A few days later and the ABC and CBA will likely gravitate closer to where they started. The more volume following DM will at a minimum start to diminish risk adjusted returns. I think it is a strong enough and robust enough strategy that it will persist, but I would expect a little more volatility and whipsaw a than in the past. It is completely unfair to say Miles is being self serving by trying to get more people to pile in to help himself (first based on no evidence that it would help him and secondly it think it is pretty clear that he is genuinely trying to inform people about something he believes will work).

Miles, as you said, "Markets are effected in proportion to trading volume pure and simple." Indexing is probably the best way to not affect the market. If you invest in only 1 index then you don't even have rebalancing. If you have multiple funds then you will have to rebalance but that usually won't affect more than 10% of the portfolio. That means you could go 10 years before getting the same volume as 1 DM trade. I understand that you don't actually have to trade that often, but they do happen and when they do, they are much more significant than a buy and hold rebalance. It would take a truly massive amount of volume following DM to have a significant market impact (probably in the neighborhood of a trillion dollars not hundreds of millions or billions).

sol

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Re: Dual Momentum Investing
« Reply #555 on: July 12, 2015, 04:15:07 PM »
But hopefully sol will weigh in with additional thoughts, because I'm curious if he's really arguing that your advocacy for DM is knowingly motivated by a desire to increase personal gain, or merely that that's a subconscious bias existing in the background, or something else.

Don't get too excited.  I'm not really interested in quoting miles back to miles, even if he now denies he ever said the things he said.  He can go reread his own posts from the early pages of this thread, where he discusses the positive feedback mechanism of momentum strategies, and how crowding impacts the strategy's future returns, and maybe he'll see for himself.

Momentum traders are, by definition, irrational market timers.  They are a force of chaos in the market, seeking to disrupt the relationship between prices and earnings by amplifying short term volatility.  When stocks are down, they effectively short them because they want the downward trend to continue.  When stocks are up, they are long because they want the trend to continue.  In both cases they completely ignore market fundamentals.  They don't care about economic conditions or profitability or any sort of sector evolution projections, they only trade on price and they trade on price in such a way that amplifies market volatility.  It's not exactly evil, but it sure doesn't contribute to market stability either.  If you've ever wondered why markets appear to be so inefficient, it's at least partly due to momentum traders trying to cash in on volatility.

DM traders profit by joining the extreme wings of the market makers, either the hardcore bulls or the hardcore bears.  They want other people to believe as they do, in both directions, so that their trading decisions become more profitable by other people subsequently following suit.  Indexers only want the market to go up, so the similarity to DM traders is only half reflected, and it's worse than that because DM traders are sector rotating in such away to increase volatility between sectors even when the overall market is steady.

DM strategies are no threat to indexers, so I don't really care what miles or others do.  My returns will not be significantly impacted by their decisions.  My only motivation for participating in this thread is the same one I feel in all threads about market timing, to discourage new readers from being misled into making decisions that will cost them money. 

But looking at the poster history in this thread, all I see is die-hard DM advocates posting over and over again, and a couple of die-hard indexers occasionally responding to them, and then giving up.  I'm giving up.  I don't think this thread has enough of an audience outside of entrenched participants to be worth my time sprinkling in the occasional warnings about the dangers of market timing.  I'm not here to talk to the DM proponents; they don't value my opinions anyway.  Since it doesn't appear anyone else is present anymore, I'll bow out.

Happy trading, everyone.  I hope we all get rich.

milesdividendmd

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Re: Dual Momentum Investing
« Reply #556 on: July 12, 2015, 06:06:32 PM »

But hopefully sol will weigh in with additional thoughts, because I'm curious if he's really arguing that your advocacy for DM is knowingly motivated by a desire to increase personal gain, or merely that that's a subconscious bias existing in the background, or something else.

Don't get too excited.  I'm not really interested in quoting miles back to miles, even if he now denies he ever said the things he said.  He can go reread his own posts from the early pages of this thread, where he discusses the positive feedback mechanism of momentum strategies, and how crowding impacts the strategy's future returns, and maybe he'll see for himself.

Momentum traders are, by definition, irrational market timers.  They are a force of chaos in the market, seeking to disrupt the relationship between prices and earnings by amplifying short term volatility.  When stocks are down, they effectively short them because they want the downward trend to continue.  When stocks are up, they are long because they want the trend to continue.  In both cases they completely ignore market fundamentals.  They don't care about economic conditions or profitability or any sort of sector evolution projections, they only trade on price and they trade on price in such a way that amplifies market volatility.  It's not exactly evil, but it sure doesn't contribute to market stability either.  If you've ever wondered why markets appear to be so inefficient, it's at least partly due to momentum traders trying to cash in on volatility.

DM traders profit by joining the extreme wings of the market makers, either the hardcore bulls or the hardcore bears.  They want other people to believe as they do, in both directions, so that their trading decisions become more profitable by other people subsequently following suit.  Indexers only want the market to go up, so the similarity to DM traders is only half reflected, and it's worse than that because DM traders are sector rotating in such away to increase volatility between sectors even when the overall market is steady.

DM strategies are no threat to indexers, so I don't really care what miles or others do.  My returns will not be significantly impacted by their decisions.  My only motivation for participating in this thread is the same one I feel in all threads about market timing, to discourage new readers from being misled into making decisions that will cost them money. 

But looking at the poster history in this thread, all I see is die-hard DM advocates posting over and over again, and a couple of die-hard indexers occasionally responding to them, and then giving up.  I'm giving up.  I don't think this thread has enough of an audience outside of entrenched participants to be worth my time sprinkling in the occasional warnings about the dangers of market timing.  I'm not here to talk to the DM proponents; they don't value my opinions anyway.  Since it doesn't appear anyone else is present anymore, I'll bow out.

Happy trading, everyone.  I hope we all get rich.

Sol,

Are you not interested in quoting me back to myself or simply unable to find a quote that supports your prior poorly considered assertions?

You made a claim that you can't back up. In order to support your claim you would have to prove the following.

1.  That DM investors materially benefit from others adopting their strategy.

And

2.  That they benefit in a manner that is distinct from other investors benefitting from others adopting their strategy.

You of course have provided zero evidence or even a credible argument for either.

So what's your next move?

You keep on digging.

You come up with a hair brained theory that momentum investors are responsible for financial instability!

Then you claim you are posting for the benefit of the poor new readers who might be swayed away from the safety of your orthodoxy.

What a guy!

So explain this: how is making sloppy unsupported arguments going to convince other people to come to your way of seeing things?

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arebelspy

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Re: Dual Momentum Investing
« Reply #557 on: July 13, 2015, 11:49:46 AM »
I think the frustrating thing about trying to discuss things with you miles is that you don't argue fairly.

You won't ever admit someone else made a good point.  You won't directly answer questions, but you sidetrack to questions not asked.  You move the goalposts when people answer your concerns.  You switch positions, without being willing to defend what you've said previously (or deny you've said them, and then when quoted back claim it's out of context, or try to shift what you meant by it).

Surely things can come out of context, or be misspoken, but a genuine person would say "Oh, I said that wrong, you are correct that I said that, but what I meant was XYZ" rather than "No, that doesn't mean that" when it's clear to everyone that it did; you seem unwilling to admit an error, ever.

Sometimes I think it's a language issue, other times I think you're being deliberately obtuse.  Maybe it's a mixture of both.

It's maddening trying to actually have a real debate with you, because the goal of a debate should be mutual understanding and learning from the other, rather than to win, but you seem to prefer the latter.

Here's an example.

He can go reread his own posts from the early pages of this thread, where he discusses the positive feedback mechanism of momentum strategies, and how crowding impacts the strategy's future returns, and maybe he'll see for himself.

Are you not interested in quoting me back to myself or simply unable to find a quote that supports your prior poorly considered assertions?

Sol said you talked about positive feedback and crowding helps future returns.  Which you surely did.

So here is the quote for you:

The point that I was making is that if everyone theoretically adopted such a strategy, it would still be difficult to arbitrage away  it's strengths because of the unique properties of momentum (its paradoxical positive feedback loop to crowding.)

You go on to spew other stuff like:

Quote
You made a claim that you can't back up. In order to support your claim you would have to prove the following.

1.  That DM investors materially benefit from others adopting their strategy.

And

2.  That they benefit in a manner that is distinct from other investors benefitting from others adopting their strategy.

No.  Sol wouldn't have to prove those, because he didn't make claims regarding that.  He made a claim about you talking about how crowding and positive feedback helps DM returns. Which it does, and you said so.

You try to claim he said much more than he did, which is disingenuous.  You often seem to misstate others points, changing what their claims were, and then "refuting" them.

But there you go. There's the quote proof of what you said, exactly as it related to Sol's claim.  It has nothing to do with what you claim Sol's claim was.
« Last Edit: July 13, 2015, 11:52:06 AM by arebelspy »
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Re: Dual Momentum Investing
« Reply #558 on: July 13, 2015, 11:57:35 AM »
I think the frustrating thing about trying to discuss things with you miles is that you don't argue fairly.

You won't ever admit someone else made a good point.  You won't directly answer questions, but you sidetrack to questions not asked.  You move the goalposts when people answer your concerns.  You switch positions, without being willing to defend what you've said previously (or deny you've said them, and then when quoted back claim it's out of context, or try to shift what you meant by it).

Surely things can come out of context, or be misspoken, but a genuine person would say "Oh, I said that wrong, you are correct that I said that, but what I meant was XYZ" rather than "No, that doesn't mean that" when it's clear to everyone that it did; you seem unwilling to admit an error, ever.

Sometimes I think it's a language issue, other times I think you're being deliberately obtuse.  Maybe it's a mixture of both.

It's maddening trying to actually have a real debate with you, because the goal of a debate should be mutual understanding and learning from the other, rather than to win, but you seem to prefer the latter.

+1

Again, you haven't even looked at the thread, or given any scrutiny to the spreadsheet I linked. I'll give you a pass if you don't comprehend, because what I'm laying down is some next level shit here. IME it does take some MDs an inordinate amount of time and handholding to understand enigmatic ideas.

It appears as though all you care about is "winning".

I'd gladly continue if I felt anyone else was following/remotely interested. Give a "yes" if you'd like me to continue. Otherwise, happy trails.

milesdividendmd

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Re: Dual Momentum Investing
« Reply #559 on: July 13, 2015, 01:00:28 PM »

I think the frustrating thing about trying to discuss things with you miles is that you don't argue fairly.

You won't ever admit someone else made a good point.  You won't directly answer questions, but you sidetrack to questions not asked.  You move the goalposts when people answer your concerns.  You switch positions, without being willing to defend what you've said previously (or deny you've said them, and then when quoted back claim it's out of context, or try to shift what you meant by it).

Surely things can come out of context, or be misspoken, but a genuine person would say "Oh, I said that wrong, you are correct that I said that, but what I meant was XYZ" rather than "No, that doesn't mean that" when it's clear to everyone that it did; you seem unwilling to admit an error, ever.

Sometimes I think it's a language issue, other times I think you're being deliberately obtuse.  Maybe it's a mixture of both.

It's maddening trying to actually have a real debate with you, because the goal of a debate should be mutual understanding and learning from the other, rather than to win, but you seem to prefer the latter.

Here's an example.

He can go reread his own posts from the early pages of this thread, where he discusses the positive feedback mechanism of momentum strategies, and how crowding impacts the strategy's future returns, and maybe he'll see for himself.

Are you not interested in quoting me back to myself or simply unable to find a quote that supports your prior poorly considered assertions?

Sol said you talked about positive feedback and crowding helps future returns.  Which you surely did.

So here is the quote for you:

The point that I was making is that if everyone theoretically adopted such a strategy, it would still be difficult to arbitrage away  it's strengths because of the unique properties of momentum (its paradoxical positive feedback loop to crowding.)

You go on to spew other stuff like:

Quote
You made a claim that you can't back up. In order to support your claim you would have to prove the following.

1.  That DM investors materially benefit from others adopting their strategy.

And

2.  That they benefit in a manner that is distinct from other investors benefitting from others adopting their strategy.

No.  Sol wouldn't have to prove those, because he didn't make claims regarding that.  He made a claim about you talking about how crowding and positive feedback helps DM returns. Which it does, and you said so.

You try to claim he said much more than he did, which is disingenuous.  You often seem to misstate others points, changing what their claims were, and then "refuting" them.

But there you go. There's the quote proof of what you said, exactly as it related to Sol's claim.  It has nothing to do with what you claim Sol's claim was.

ARS,

If you have an axe to grind, grind away.

This doesn't concern you in the least and last I checked the title of this thread was not,

"What's frustrating about Miles?"

Maybe you could start a new thread?

I can point you to multiple times where I've admitted I was wrong, but I certainly won't admit it when I am not.

I could write a treatise about your debating shortcomings, and the downsides of engaging with you personally but again that's not the point of this thread. And frankly no one is likely to learn much from such petty drivel.


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milesdividendmd

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Re: Dual Momentum Investing
« Reply #560 on: July 13, 2015, 01:04:51 PM »
(And the reason that Sol did not quote that quote is presumably because he is smart enough to know that a factor having a paradoxical positive feedback loop to crowding does not mean that it's practitioners benefit from others adopting the strategy as has already been dicussed.)

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arebelspy

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Re: Dual Momentum Investing
« Reply #561 on: July 13, 2015, 01:36:44 PM »
Just trying to explain to you why sol does not seem to be interested in engaging any more.  It does not have to do with lack of support for his arguments.
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Re: Dual Momentum Investing
« Reply #562 on: July 13, 2015, 01:45:04 PM »
I don't remember anyone  asking for an explanation of Sol's decision to post or not to post.

Your second statement is merely an opinion. No more. No less.
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brooklynguy

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Re: Dual Momentum Investing
« Reply #563 on: July 13, 2015, 01:53:37 PM »
I don't remember anyone  asking for an explanation of Sol's decision to post or not to post.

This forum is a shining beacon of intelligent discourse in the internet's general sea of drek.  When an outstanding contributor like sol walks away from an ongoing debate, it's in all of our interests to ask ourselves why and reflect upon the potential answers.

arebelspy

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Re: Dual Momentum Investing
« Reply #564 on: July 13, 2015, 01:57:14 PM »
I don't remember anyone  asking for an explanation of Sol's decision to post or not to post.

You did, with your false dichotomy.

Sol posted:
I'm not really interested in quoting miles back to miles

And you asked:
Quote
Are you not interested in quoting me back to myself or simply unable to find a quote that supports your prior poorly considered assertions?

Since it seemed unlikely he would answer this, I was explaining why his lack of answer does not have to do with being unable to support his arguments.  His lack of a response is not proof of your being right.
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milesdividendmd

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Re: Dual Momentum Investing
« Reply #565 on: July 13, 2015, 02:13:04 PM »
It's called a rhetorical question, ARS.

I think (hope) you are smart enough to recognize that.

If not, it's no fault of your own.

If so then it is you who are being disingenuous.







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milesdividendmd

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Re: Dual Momentum Investing
« Reply #566 on: July 13, 2015, 02:15:44 PM »

I don't remember anyone  asking for an explanation of Sol's decision to post or not to post.

This forum is a shining beacon of intelligent discourse in the internet's general sea of drek.  When an outstanding contributor like sol walks away from an ongoing debate, it's in all of our interests to ask ourselves why and reflect upon the potential answers.

I don't disagree with your statement.

But it is not germane to the usefulness (or worthlessness)  of ARS' comment.
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milesdividendmd

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Re: Dual Momentum Investing
« Reply #567 on: July 13, 2015, 02:17:26 PM »
In any case, I would propose we move this discussion away from petty personality conflicts and back to the topic at hand.
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forummm

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Re: Dual Momentum Investing
« Reply #568 on: July 13, 2015, 02:39:33 PM »
There have been a lot of "petty personality conflicts" on this thread. Especially compared to others. Even ones where people disagree.

milesdividendmd

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Re: Dual Momentum Investing
« Reply #569 on: July 13, 2015, 02:45:30 PM »

There have been a lot of "petty personality conflicts" on this thread. Especially compared to others. Even ones where people disagree.

Agreed.

It's also been a particularly interesting and in depth thread.

Let's get back to that part.
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bdbrooks

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Re: Dual Momentum Investing
« Reply #570 on: July 13, 2015, 06:30:18 PM »
Back to something on subject. I beleive that people crowding into momentum strategies will only returns.

"If DM calls for people to sell CBA buy ABC on the first of the month, then CBA will likely be selling lower and ABC would be selling higher. You would be selling for less and buying for more. A few days later and ABC and CBA will likely gravitate closer to where they started. The more volume following DM will at a minimum start to diminish risk adjusted returns."

milesdividendmd

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Dual Momentum Investing
« Reply #571 on: July 13, 2015, 07:14:57 PM »
Back to something on subject. I beleive that people crowding into momentum strategies will only returns.

"If DM calls for people to sell CBA buy ABC on the first of the month, then CBA will likely be selling lower and ABC would be selling higher. You would be selling for less and buying for more. A few days later and ABC and CBA will likely gravitate closer to where they started. The more volume following DM will at a minimum start to diminish risk adjusted returns."

BD,

I think you can argue it either way.

A world in which everyone invested is using  DM, is a tough thing to imagine.

On one hand momentum perpetuates momentum, which is why it's so difficult to arbitrage away, in which case mass adoption should strengthen the relative momentum effect.

On the other hand increasing the amplitude of downward momentum, or worse the frequency of whipsaws would dramatically lessen the drawdown protection of absolute momentum, which is by far the more important half of DM.

In addition as you point out being late in the momentum curve could force you to buy higher and sell lower than in the current state of the world. (Though being early might allow you to enjoy more of the ride up, and less of the ride down.

The only honest conclusion that I can come to is that I have no idea whether more DM investors is a good thing or a bad thing for me personally.

This is in stark contrast to equity-centric buy and holders who without doubt benefit if there is mass adoption of their strategy.

All things being equal think I would prefer for the market not to change dramatically and for there not to be mass adoption since DM has performed so well everywhere it has been studied to date.
« Last Edit: July 13, 2015, 08:31:26 PM by milesdividendmd »
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Mirwen

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Re: Dual Momentum Investing
« Reply #572 on: July 17, 2015, 10:50:34 AM »
I've finally made my way through this entire thread.  I find the subject interesting and I have read most of the technical papers linked (that don't require an account).  I do believe that momentum is a real phenomenon and  that it has something to do with the fact that our economy is large and does not turn on a dime.  The times when this strategy fails are when there are behavioral anomalies like panics that are not related to underlying fundamentals.  Since I don't think our economy is likely to be cycling more rapidly in the future, I think a DM (or similar) model could be predictive most of the time. 

However, there's a big downside that not many people have discussed.  The closest I've seen is someone mentioning going surfing instead of reading financial papers.  Let's assume (a big assumption) for the moment that a DM strategy could beat a BH stategy most of the time, would you still do it?  I've decided that I wouldn't. 

I started investing regularly back in 2006.  I'm not one for watching the news (low-information diet) and so when I found out about the 2008 crash was when I was mailed a year end report from my 401k early in 2009.  I remember feeling slightly disappointed that I didn't make any money that year as my contributions just about covered my losses.  I felt no desire to do anything about my investment strategy.  It didn't even occur to me.  Until this discussion I had never heard of the "blip" in October 2011.  It just never registered.  So despite loving to play with spreadsheets and read technical papers, I don't think this strategy is a good one from a behavioral point of view because it forces one to regularly play close attention to what the market is doing and make changes in how you are investing based on what the market is doing.  This could lead at a minimum to one starting to have a background worry about what the market is doing and worst lead to changing investment strategy regularly (as new information is learned/published/discovered) leading to large losses with no cohesive plan over the decades.

So I guess I'm going to have agree with jlcollinsnh that stuffing it and forgetting about it is a really good strategy, at least for me.  Any active management can lead to behavioral inefficiencies.  For anyone choosing DM or another active management strategy, are you prepared to stick to this strategy even if you find something "better" later?  How many years are you committing to this plan?  Do you think the added stress about what the markets are doing is worth the possible extra return?  Are you choosing this plan because you've found that you worry about the market in any case and so that is not a factor for you? I'm genuinely interested if the DM followers have considered the personal costs of implementation rather than just, "can it beat the index on a risk adjusted basis?" 
« Last Edit: July 17, 2015, 11:09:06 AM by Mirwen »

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Re: Dual Momentum Investing
« Reply #573 on: July 17, 2015, 11:32:32 AM »
Mirwen,

All good points that you make, and I don't disagree with a single one of them.

For all of your behavioral reasons my default recommendation for all investors is to buy and hold low cost index funds.

So why did I switch over to DM in my retirement accounts personally?

1.  I checked the stock market compulsively, even when I was buy and hold, so doing a momentum screen once a month and making a trade once a year is no hassle for me, and may even be a benefit for me personally. I'm weird. I enjoy it.

2.  The chief attraction for me is not market beating performance, it it derisking my portfolio. I find the likelihood of experiencing diminished drawdowns to take a lot of the stress of market volatility away for me personally. If it gets too bad, I know I'll be on the sidelines in safe assets.

3.  The drawdown protection allows me to take on more equity exposure than I would otherwise. When I was buy and hold I was 75/25 equity/bonds. I am now 100% equity in my tax protected accounts allowing me to comfortably take on more equity volatility.

4.  That it is at least an even money bet to beat an equity index long term is simply gravy not the main draw.

5.  I expect to use some variant of this approach for the rest of my life because it is such a good fit for me personally, but I doubt I'll ever change from advocating for passive buy and hold as my default recommendation. I think that's a very safe bet for most investors.
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arebelspy

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Re: Dual Momentum Investing
« Reply #574 on: July 17, 2015, 11:47:04 AM »
I can't quite put my finger on why, but it bothers me when people say someone should invest in a different way than they do themselves.

Do as I say, not as I do?  The whole eat your own cooking thing I guess.  Seems hypocritical.

Maybe part of it is that it feels condescending--"this is good for me, but not for you--you wouldn't understand it, or wouldn't have the risk tolerance for it" or whatever.

Just me?  Anyone else bothered by that type of thing?
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Re: Dual Momentum Investing
« Reply #575 on: July 17, 2015, 11:58:08 AM »
I understand that you see it that way arebelspy. Yet, I also understand miles's approach.

Given that you do not know your behavioural aspects with regards to investing, B&H is the safest approach.

Given that you do know your behavioural aspects with regards to investing, a different approach may be a better personal fit.

It's kinda like the question "should you stop for a red light" the answer is generally yes. If however, you have a 10 ton trailer behind you and it'll ram you from behind, I'd change the answer to "no". You can't know the specifics of the psychology of every investor, yet with broad assumptions you can take a position.

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Re: Dual Momentum Investing
« Reply #576 on: July 17, 2015, 12:10:51 PM »
Yeah, that's why I can't put my finger on why it bothers me.

Because we do say "it depends" when people want to know how to invest.  An AA is very personal, and depends on the person's situation, age, risk tolerance, knowledge, etc.

So it's not completely disingenuous to advise one thing while doing something else.  Yet it still feels wrong.

I guess because the "it depends" opens up a conversation and assumes agency for the other, whereas "you do this, not what I'm doing" does the opposite.
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milesdividendmd

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Re: Dual Momentum Investing
« Reply #577 on: July 17, 2015, 12:11:15 PM »
I know what you mean ARS. I frankly try to shy away from telling other people how they should invest, other than they should keep it cheap, for this very reason. (Not always successful in this effort of course.)

But the fact is that the base rate scenario for any active strategy, is to underperform the broad market after costs.

Furthermore any active strategy (even those that beat the market) will have tracking error which is a tough sell for anyone, especially if they don't see it coming.

So advising that others do as I do seems very presumptuous and unwise to me.

As an example, I am the de facto financial advisor for both of my parents and I have counseled them to keep it simple cheap and passive even after I adopted DM.

My belief is that DM is a very good bet to decrease drawdowns, and a good bet to beat the broad market after costs long term.

But as true believer fundamentalist indexers like you (who accuse me both of defending my choice for selfish and self serving reasons while simultaneously criticizing me for being condescending by not advocating it for others) have done a good job pointing out it's definitely swimming upstream to adopt such a strategy.

So I'd feel weird recommending my approach for everyone.



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arebelspy

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Re: Dual Momentum Investing
« Reply #578 on: July 17, 2015, 12:20:29 PM »
Thanks for validating that feeling miles.  I do understand where you're coming from.

As an example, I am the de facto financial advisor for both of my parents and I have counseled them to keep it simple cheap and passive even after I adopted DM.

Don't you feel that the decreased draw downs would benefit them?  And doesn't the once/month check seem simple enough?  What is the reason why you wouldn't have your parents do the same DM strategy you do?
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Re: Dual Momentum Investing
« Reply #579 on: July 17, 2015, 12:31:11 PM »
1. I don't think they're financially literate enough to do it for themselves. The fact that I am advising them speaks to this.

2.  I've spent a lot of time thinking about this strategy. I've modeled it. I have an idea of what to expect, with years of underperformance probable and the real possibility of whipsaws. I know there will be times when I am in short term treasuries and the market is doing great. I know what a 100% equity portfolio looks like in a volatile market. (Ie very different from a 50/50 portfolio.). They know none this. 

3.  As I mentioned I follow the market because I enjoy it. I can't help myself. They don't.

For all of these reasons I think that buy and hold fits them whereas DM doesn't.

Since I love them and will presumably one day inherit some of their money i think our interests are pretty well aligned.

Perhaps that seems condescending to you, but to me it it just seems reasonable.
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Re: Dual Momentum Investing
« Reply #580 on: July 17, 2015, 12:40:07 PM »
I can't quite put my finger on why, but it bothers me when people say someone should invest in a different way than they do themselves.

Do as I say, not as I do?  The whole eat your own cooking thing I guess.  Seems hypocritical.

Maybe part of it is that it feels condescending--"this is good for me, but not for you--you wouldn't understand it, or wouldn't have the risk tolerance for it" or whatever.

Just me?  Anyone else bothered by that type of thing?


Warren Buffet must drive you crazy.

Jack Bogle too, for that matter.
« Last Edit: July 17, 2015, 12:44:33 PM by Crushtheturtle »

arebelspy

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Re: Dual Momentum Investing
« Reply #581 on: July 17, 2015, 12:58:11 PM »
Warren Buffet must drive you crazy.

Good point--that fits exactly with what I was saying.  Buffett can say that the majority of people should index, while he shouldn't, because he is an exception. When I say it's arrogant or condescending, it's because most people haven't earned the right to say they're special or elite.  He definitely has, so it's not arrogant for him to say "you can't do what I do."
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milesdividendmd

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Re: Dual Momentum Investing
« Reply #582 on: July 17, 2015, 01:00:19 PM »
Warren Buffet must drive you crazy.

Good point--that fits exactly with what I was saying.  Buffett can say that the majority of people should index, while he shouldn't, because he is an exception. When I say it's arrogant or condescending, it's because most people haven't earned the right to say they're special or elite.  He definitely has, so it's not arrogant for him to say "you can't do what I do."

And Bogle?
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arebelspy

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Re: Dual Momentum Investing
« Reply #583 on: July 17, 2015, 01:08:51 PM »
I honestly haven't thought about it. 

Your comment of "my default recommendation for all investors is to buy and hold low cost index funds" reminded me of similar comments you've made, here and on your blog, and I extemporaneously wrote that comment about how it bugs me, but I can't quite place why.

Jack Bogle isn't on threads here posting defending one investment type but advocating for another.  I suppose if he did, it might catch my attention as well.
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Re: Dual Momentum Investing
« Reply #584 on: July 17, 2015, 02:22:20 PM »
I can't quite put my finger on why, but it bothers me when people say someone should invest in a different way than they do themselves.

Do as I say, not as I do?  The whole eat your own cooking thing I guess.  Seems hypocritical.

Maybe part of it is that it feels condescending--"this is good for me, but not for you--you wouldn't understand it, or wouldn't have the risk tolerance for it" or whatever.

Just me?  Anyone else bothered by that type of thing?

Like Warren Buffett saying almost everyone should index? I guess it's condescending. But I think it's warranted. He's clearly going to get better deals than I am. And he spends way more time understanding markets than I do. And the average person is just not intellectually or emotionally suited to be good enough at investing to be able to beat the market when including all expenses, taxes, etc.

I think DM is different though. It's super easy to do. A few hundred posts ago someone posted a link where you could just click on the link 1 day each month and the link would tell you which fund had done the best, so you buy (or keep holding) that with your entire portfolio.

And DM seems to be exactly what most people want to do--get out of the market/fund when it's not performing well. There are people with over 1000 posts on this forum wanting to get out of the S&P500 because it's been flat for a year (they think) and instead go into YYY fund that has done well. It seems well suited to performance chasers.

Crushtheturtle

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Re: Dual Momentum Investing
« Reply #585 on: July 17, 2015, 02:25:18 PM »
Executing a momentum based strategy seems to require discipline: the disciple to look at the evidence and decide whether it works for you, the discipline to take the risk to enact such a strategy, the discipline to concentrate into a single "thing," the discipline to check up on the markets on a monthly (or whatever) basis, and the discipline to switch as necessary and keep the whole thing going for the long term.

Other non buy and hold strategies require the same discipline, effort, and time- not to mention the risk of going against the herd. For example, Warren Buffett goes against the grain and invests considerable time and brainpower concentrating his capital into individual businesses. Bogle made his wealth starting a business and selling index funds. They are hardworking, intelligent and disciplined. But they (quite rightly) assume that the average investor lacks their discipline and "sophistication", so they advise the masses to just blindly plow their capital into index funds and pray for mercy from the gods of long term averages.

Even though that's not what they did to create and grow wealth.

It's not really hypocrisy or arrogance, it's a realization that index funds are a nice "safe" place where the average moron retirement investors can't really hurt themselves. It's like Bogle and Buffett are the mom and dad who take the big scissors away from us toddlers and then hand us the kid safe plastic kindergarden scissors. "Use these instead, sport. That way you won't hurt yourself."

Put another way, my favorite quote from Scott Adams:
"Beware the advice of successful people; they do not seek company."

I think it's ok to look at the evidence of a different strategy, have self-confidence in your own intelligence and ability, and take an (educated) chance.

milesdividendmd

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Re: Dual Momentum Investing
« Reply #586 on: July 17, 2015, 02:26:03 PM »

I can't quite put my finger on why, but it bothers me when people say someone should invest in a different way than they do themselves.

Do as I say, not as I do?  The whole eat your own cooking thing I guess.  Seems hypocritical.

Maybe part of it is that it feels condescending--"this is good for me, but not for you--you wouldn't understand it, or wouldn't have the risk tolerance for it" or whatever.

Just me?  Anyone else bothered by that type of thing?

Like Warren Buffett saying almost everyone should index? I guess it's condescending. But I think it's warranted. He's clearly going to get better deals than I am. And he spends way more time understanding markets than I do. And the average person is just not intellectually or emotionally suited to be good enough at investing to be able to beat the market when including all expenses, taxes, etc.

I think DM is different though. It's super easy to do. A few hundred posts ago someone posted a link where you could just click on the link 1 day each month and the link would tell you which fund had done the best, so you buy (or keep holding) that with your entire portfolio.

And DM seems to be exactly what most people want to do--get out of the market/fund when it's not performing well. There are people with over 1000 posts on this forum wanting to get out of the S&P500 because it's been flat for a year (they think) and instead go into YYY fund that has done well. It seems well suited to performance chasers.

Well said, Forummm.

Which is to say it's well suited to humans.
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sol

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Re: Dual Momentum Investing
« Reply #587 on: July 17, 2015, 02:41:40 PM »
So has the mustachian horde officially endorsed market timing as the new standard advice for all newcomers?  I'm seeing an awful lot of love in here for what looks to me like really bad advice, but I don't drive this train.

If you are all actually serious about this "market timing is totally fine" advice you're rolling around in, can I at least suggest you dispense that advice with a required disclaimer?  Something like "we generally recognize that market timing is always a losing game in the long run, but we recommend it anyway because..." then fill in the blank with whatever your current justification is for reducing diversification and making big contrarian bets on the market.  That way people have at least been warned that you're trying to fuck up their shit.

brooklynguy

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Re: Dual Momentum Investing
« Reply #588 on: July 17, 2015, 02:48:09 PM »
Well said, Forummm.

Which is to say it's well suited to humans.

Uh, then why do you have a different default recommendation for all investors again?  I read forummm's post as an explanation for why it makes sense for Buffett to recommend that others do as he says rather than as he does, while it doesn't make sense for a DM advocate to do the same.

milesdividendmd

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Re: Dual Momentum Investing
« Reply #589 on: July 17, 2015, 02:52:50 PM »
Just a quip Brooklyn. As in we are all performance chasers.

Sorry for the levity.
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Crushtheturtle

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Re: Dual Momentum Investing
« Reply #590 on: July 17, 2015, 03:01:52 PM »
"What if I told you that long term Buy and Hold investing is just momentum investing with a multi-decade look back period?"





Source: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2328254
« Last Edit: July 17, 2015, 03:04:04 PM by Crushtheturtle »

Mirwen

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Re: Dual Momentum Investing
« Reply #591 on: July 17, 2015, 03:43:06 PM »
So has the mustachian horde officially endorsed market timing as the new standard advice for all newcomers?  I'm seeing an awful lot of love in here for what looks to me like really bad advice, but I don't drive this train.

If you are all actually serious about this "market timing is totally fine" advice you're rolling around in, can I at least suggest you dispense that advice with a required disclaimer?  Something like "we generally recognize that market timing is always a losing game in the long run, but we recommend it anyway because..." then fill in the blank with whatever your current justification is for reducing diversification and making big contrarian bets on the market.  That way people have at least been warned that you're trying to fuck up their shit.

I certainly don't know enough to endorse a particular investing strategy, but I'm not going to dismiss it out of hand and ignore it just because is conflicts with popular advice.  I'm having a great time investigating this new idea, and it has helped me evaluate why I take the position that I do.  There's also room for your much needed advisories to new investors.  I appreciate that this is a place where I can discuss things that I can't discuss elsewhere and generally have a thoughtful response.

arebelspy

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Re: Dual Momentum Investing
« Reply #592 on: July 17, 2015, 03:44:29 PM »
So has the mustachian horde officially endorsed market timing as the new standard advice for all newcomers?  I'm seeing an awful lot of love in here for what looks to me like really bad advice, but I don't drive this train.

If you are all actually serious about this "market timing is totally fine" advice you're rolling around in, can I at least suggest you dispense that advice with a required disclaimer?  Something like "we generally recognize that market timing is always a losing game in the long run, but we recommend it anyway because..." then fill in the blank with whatever your current justification is for reducing diversification and making big contrarian bets on the market.  That way people have at least been warned that you're trying to fuck up their shit.

I think the vast majority of the people here don't recommend any market timing; DM is no different.  There's a small vocal minority who do market time.  Before smedley led the charge, now Miles does.  Doesn't change what most of us do.

Well said, Forummm.

Which is to say it's well suited to humans.

Uh, then why do you have a different default recommendation for all investors again?  I read forummm's post as an explanation for why it makes sense for Buffett to recommend that others do as he says rather than as he does, while it doesn't make sense for a DM advocate to do the same.

Ditto.

Why does it make sense for a DM advocate to not say everyone should do it, if it's easy and beneficial, and available to everyone?
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brooklynguy

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Re: Dual Momentum Investing
« Reply #593 on: July 17, 2015, 03:55:01 PM »
"What if I told you that long term Buy and Hold investing is just momentum investing with a multi-decade look back period?"

This argument was made earlier in this thread but it's a false comparison that doesn't hold water.  For ease of reference, here is the response I gave to that claim the first time it was made (in post # 406 of this thread):


Essentially B&H investors is a special case of the absolute momentum strategy, specifying a lookback period of infinite (or at least 20+ years). Stocks have historically shown to have the best results, and as such, we extrapolate that to the future and pick stocks as the asset class of choice for returns.

At the risk of reopening the whole "a priori / a posteriori" debate, I think you have articulated an elegant way of describing the argument Miles advocated for earlier that all the buy and hold index investors in the world picked their strategy because, and only because, they looked to the past and saw that it worked.

But, again, I don't think this is true, even if we assume, for the sake of argument, that it is history's "indexing worked" lesson that first put that strategy on the radar of every indexer in the world.  Instead, I think at least some B&H indexing proponents (including the strategy's founder) evaluated the logic of the strategy (which, of course, history tells us has worked in the past) and found it compelling.  And, even if that were not true, the fact remains that there is an underlying logic behind the strategy capable of being described.

Your argument is equivalent to saying that we expect the sun to rise tomorrow solely because we know it has done so every day in the past, and not because we expect the same physical forces that caused it to do so in the past (as evidenced by its uninterrupted track record of doing so every morning for the entire existence of the Earth) to continue to operate tomorrow.

sirdoug007

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Re: Dual Momentum Investing
« Reply #594 on: July 17, 2015, 04:17:37 PM »
This post from Ben Carlson of A Wealth of Common Sense helped me in thinking about why this strategy may work for some people but not others.

Quote
"You have to know yourself as an investor when considering this type of strategy. It’s more about knowing yourself than understanding the strategy. Here are some questions to think about in terms of dual momentum:

Momentum may continue to work, but will it work for you personally?
Do you understand this type of system enough to force yourself to follow it?
Will this type of strategy allow you to make fewer emotionally charged decisions during market losses?
Would adding a trend following rule reduce or accentuate your behavioral biases?
Would it make you more or less emotional about your portfolio decisions?

It’s almost impossible to recommend this or any system to an investor without first understanding where they’re coming from. Even simple strategies are never easy. This system has worked in the past, but investors have to define what “works” means to them. I say an investment strategy “works” if you’re to follow it over many different cycles. It never “works” if you bail out at the first sign of trouble or relative underperformance."

http://awealthofcommonsense.com/my-thoughts-on-gary-antonaccis-dual-momentum/

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Re: Dual Momentum Investing
« Reply #595 on: July 17, 2015, 04:57:58 PM »
I too have enjoyed investigating this alternative investment strategy.  I have read most of the linked pdfs, miles' blog, the boglehead thread, and other articles but have not performed my own backtesting yet or read Gary's book.  To me it seems that accurate backtesting requires index fund data and that goes back to the early 90s, maybe early 70s (not really that long).  Then we can you use market indexes to more loosely match the strategy back even further, maybe the early 1900s.  Then the author and other researchers pointed to evidence that momentum has always has existed in every type of market, and use this claim to try and defend the timeless of the strategy (does support the concept of momentum but not so much the actual GEM strategy). 

There definitely seems to be evidence that there is momentum in the markets.  And I do not agree with complete EMH.  But like other critics I get a spidy sense that it's too easy, "there's no free lunch", and this strategy really does increases ROI and decrease draw downs it wouldn't take long for all the smart money to follow it.  I guess my one specific question for miles is: you indicate you prefer this investment strategy not for the increased gains but for the protection from losses.  However, for me it is easy to imagine a poorly timed flash crash that due to your look back period causes you to sell high and buy very low while 100% concentrated in an asset class.  And if this happened when you were retired it could effectively give you less purchasing power than if you had just stacked money in a bank account.  However, it is hard to imagine actually losing purchasing power through a balanced and diversified portfolio with rebalancing without the total economic collapse that would wipe out all strategies.  So is that the increased risk that balances out the reward for utilizing the momentum strategy?   

EngiNerd

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Re: Dual Momentum Investing
« Reply #596 on: July 17, 2015, 04:59:02 PM »
Good article sirdoug!

milesdividendmd

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Dual Momentum Investing
« Reply #597 on: July 17, 2015, 07:42:00 PM »
I too have enjoyed investigating this alternative investment strategy.  I have read most of the linked pdfs, miles' blog, the boglehead thread, and other articles but have not performed my own backtesting yet or read Gary's book.  To me it seems that accurate backtesting requires index fund data and that goes back to the early 90s, maybe early 70s (not really that long).  Then we can you use market indexes to more loosely match the strategy back even further, maybe the early 1900s.  Then the author and other researchers pointed to evidence that momentum has always has existed in every type of market, and use this claim to try and defend the timeless of the strategy (does support the concept of momentum but not so much the actual GEM strategy). 

There definitely seems to be evidence that there is momentum in the markets.  And I do not agree with complete EMH.  But like other critics I get a spidy sense that it's too easy, "there's no free lunch", and this strategy really does increases ROI and decrease draw downs it wouldn't take long for all the smart money to follow it.  I guess my one specific question for miles is: you indicate you prefer this investment strategy not for the increased gains but for the protection from losses.  However, for me it is easy to imagine a poorly timed flash crash that due to your look back period causes you to sell high and buy very low while 100% concentrated in an asset class.  And if this happened when you were retired it could effectively give you less purchasing power than if you had just stacked money in a bank account.  However, it is hard to imagine actually losing purchasing power through a balanced and diversified portfolio with rebalancing without the total economic collapse that would wipe out all strategies.  So is that the increased risk that balances out the reward for utilizing the momentum strategy?

Enginerd,

A flash crash with a rapid recovery is the worst case scenario for dual momentum, or really any trend following strategy.  There's really no way around that.

One can imagine ways of circumventing this scenario, but since there has been only one of these events that would have had any affect on a dual momentum strategy (1987)  in the entire history of the stock market, there is really no effective way of backtesting how such an circumvention would work.

Fortunately there has been only one such crash in the US stock market to date, versus dozens of bear markets.  Ie significant/flash crashes that erase 6 to 12 months of equity returns with rapid recoveries have historically been very rare.

Unfortunately, every approach has its own unique weakness(es.)

As an example domestically oriented equity-centric buy and hold does very poorly in prolonged equity bear markets, as Japanese investors learned in the post bubble era.

The best we can do is to pick our poison and stick to our strategy through thick and thin.

And I believe that knowing that such a worst case possibility exist before it happens, can be helpful in terms of sticking to one's approach when the shit hits the fan.

In terms of the retirement question, there's no reason for one to have to be 100% equities in retirement regardless of his/her approach.

One could implement a dual momentum strategy in which One half of ones portfolio toggled between total bond market/long term treasuries/short term treasuries, and the other half of your portfolio toggled between domestic equities/International  equities/short-term treasuries.

One thing is certain, I personally would be much more comfortable with a dual momentum approach in retirement then with a 100% equity portfolio. Betting that dual momentum will continue to have smaller drawdowns than a pure equity portfolio is not a longshot by any rational metric.
« Last Edit: July 17, 2015, 07:45:21 PM by milesdividendmd »
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innerscorecard

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Re: Dual Momentum Investing
« Reply #598 on: July 17, 2015, 07:42:28 PM »
I can't quite put my finger on why, but it bothers me when people say someone should invest in a different way than they do themselves.

Do as I say, not as I do?  The whole eat your own cooking thing I guess.  Seems hypocritical.

Maybe part of it is that it feels condescending--"this is good for me, but not for you--you wouldn't understand it, or wouldn't have the risk tolerance for it" or whatever.

Just me?  Anyone else bothered by that type of thing?

I actually think it's far more ethical. The reverse is often extremely detrimental, when the strategy that the teacher is following has a limited carrying capacity. For example, history or English professors telling their students to get history or English PhDs is unethical, because there are far less positions for professors than students.
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innerscorecard

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Re: Dual Momentum Investing
« Reply #599 on: July 17, 2015, 07:50:14 PM »
Executing a momentum based strategy seems to require discipline: the disciple to look at the evidence and decide whether it works for you, the discipline to take the risk to enact such a strategy, the discipline to concentrate into a single "thing," the discipline to check up on the markets on a monthly (or whatever) basis, and the discipline to switch as necessary and keep the whole thing going for the long term.

Other non buy and hold strategies require the same discipline, effort, and time- not to mention the risk of going against the herd. For example, Warren Buffett goes against the grain and invests considerable time and brainpower concentrating his capital into individual businesses. Bogle made his wealth starting a business and selling index funds. They are hardworking, intelligent and disciplined. But they (quite rightly) assume that the average investor lacks their discipline and "sophistication", so they advise the masses to just blindly plow their capital into index funds and pray for mercy from the gods of long term averages.

Even though that's not what they did to create and grow wealth.

It's not really hypocrisy or arrogance, it's a realization that index funds are a nice "safe" place where the average moron retirement investors can't really hurt themselves. It's like Bogle and Buffett are the mom and dad who take the big scissors away from us toddlers and then hand us the kid safe plastic kindergarden scissors. "Use these instead, sport. That way you won't hurt yourself."

Put another way, my favorite quote from Scott Adams:
"Beware the advice of successful people; they do not seek company."

I think it's ok to look at the evidence of a different strategy, have self-confidence in your own intelligence and ability, and take an (educated) chance.

Adams is very correct. I have learned so much from Buffett and Munger. But their general life advice they give at shareholder meetings ("just do what you love") is terrible (mostly because just asking for generic life advice from them is a bad question in the first place).
« Last Edit: July 17, 2015, 07:55:22 PM by innerscorecard »
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