Does Your Investment Strategy Talk?

Depending on the type of investment analysis that an investor does, that analysis should give the investor an idea of where the value is in the market. Top-down investment approaches rely more on the investor’s ability to refine their investment approach or style to try to take advantage of where they believe there is value in the market. Therefore, a top-down approach might involve shifting the portfolio’s focus from various combinations of value, growth, or momentum stocks across various industries, countries or regions depending on what their research is telling them.

Fortunately, a bottom-up approach does all the legwork for you assuming that your strategy is fundamentally sound and identifies those fundamental stock characteristics that are indicative of future market outperformance. After identifying those fundamental characteristics, your strategy should do all the talking for you as it should tell you exactly where you can expect to find outperforming stocks regardless of the type of stock market or economic environment.

At Investoristics, we have identified those characteristics that are indicative of future market performance with back-tests showing investment performance of over 20 percent a year on average over the last 20 years. Our bottom-up style provides our subscribers with the best combination of value, growth, and momentum stocks to hold in any market environment with great down-side protection in volatile markets.

So, what is our current analysis telling us about where the value is in the current market using one of our investment approaches? Of our 40 highest ranked stocks in our all-cap database, the consumer cyclicals sector seems to be where there is the most value if you are willing to invest in small and mid-cap stocks. Consumer cyclicals represent 45 percent of our top 40 while small and mid-cap stocks represent 70 percent of our top 40. If you have the right strategy, then there should rarely be any reluctance to focus on buying those stocks that are poised for outperformance regardless of which industry they represent.

Understanding how your investment strategy works and how to adjust certain fundamental characteristics to get the return results you want means time spent upfront doing fundamental research. However, once you discover those specific characteristics that are indicative of future outperformance, then you are in complete control of getting your investment strategy to perform well in all market cycles. As an example, you can use larger cap stocks as a means of providing downside protection without sacrificing investment return. If your investment strategy talks, then you should listen but if you do not have time to do your own research then join “The Collective” and enjoy a smooth and comfortable ride to the top and go beyond where passive investing can take you.