The biggest trend in the market today is the move to quantitative investing.
The world’s biggest fund managers are sacking their stock pickers and replacing them with quantitative strategies.
Even dinosaurs like AMP are making the change.
If the subject is quantitative investing, keep in mind, I wrote the book on the subject, Stock Market Strategies That Work In Australia, published in 2010.
My book is the Australian version of the classic What Works On Wall Street by James O’Shaughnessy.
My book is the first and only book of its kind in Australia, and you can read it for free when you join. Or you can get it at Dymocks and other good bookstores.
What is a quantitative investment strategy?
The short answer is very straightforward.
Quantitative investing simply means ranking stocks based on set criteria and investing in the highest ranked companies.
For example, index investing is a quantitative strategy.
Yes, investing in the index is a quantitative strategy because the index is derived from a ranking based on size.
The ASX 200 is the 200 biggest companies listed on the ASX.
The All Ordinaries Index is the 500 biggest companies on the ASX.
The criteria for inclusion in the index is size, which is based on market capitalization.
Therefore, if you invest in the index you have a quantitative investment strategy based on size.
Obviously this is a successful quant strategy because more than 80% of investors fail to match the performance of the indexes in any given year.
Size is therefore a good criteria by which to assess companies, and as we know, larger companies are a lower risk proposition than smaller companies, generally speaking.
But there is an even better way to rank stocks, a better way than doing so based on size.
We tested ranking stocks based on every possible criteria, and we found that one metric outperforms ALL others.
That metric is relative strength.
It is an empirical fact that portfolios comprised of stocks with the highest relative strength have outperformed all other investment strategies and approaches over the last 23 years.
That is a point of fact. The empirical proof is in my book.
The big banks and big fund managers know it to be true, that is why they are changing to quant strategies.
Those who have read my book and seen the data also know it to be true.
The evidence is so overwhelming and compelling for this type of investing that The Super Investor provides The Top 10 for Members.
The Top 10 is a list of 10 companies that rank above all others based on an algorithm dominated by relative strength.
The Top 10 does not use the same formula referred to in the book, it has since evolved and now has a lower risk, lower volatility profile than what was presented in the book, which was published in 2010.
Since inception of the current algorithm in August 2014 The Top 10 has risen 126.2%.
That compares brilliantly with the 22.8% gain in the All Ords Accumulation Index in the same period.
The return is over 5 fold that of the index.
It is crazy to now consider the fact that The Top 10 is a lower risk investment strategy.
Yes, returns 5 fold the index have been achieved with what can be considered a low risk strategy!
The Top 10 companies are all large and stable companies and it is therefore the PERFECT stock market strategy for self managed super funds and other long term investors who want to optimize their outcomes.
I invite you to join The Super Investor today and take advantage of this responsible, proven and stress free approach to investing in the share market.
It makes no sense to invest any other way.
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