Junk bonds are probably an asset class that very few traders are involved in. Junk bonds tend to correlate with the stock market, but junk bonds seem to trend more than stocks, which opens possibilities to make uncorrelated junk bond trading strategies. This article explains what a junk bond is, why it correlates to the…
TLT vs SPY – Bond Rotation Strategy. Some days ago we published an ETF rotation strategy that rotates between SPY, TLT, and EEM based on monthly momentum. Today we look at a similar ETF sector momentum/rotation strategy but we exclude EEM: A SPY and TLT strategy (S&P 500 and 20 years Treasury bond). The SPY…
How and when should you exit a trade? Most articles about trading center around when to buy (or sell short) or how to deal with the psychological aspects. Hardly anything can be found about exits, even though when to exit a trade is probably just as important as the entry. How and when should you…
Channel trading can be profitable when used correctly. It can help you to track and speculate on the prevailing market trend, especially if you are a swing trader. But it can also be used in range-bound markets. Both mean-reversion traders and trend-following swing traders can make use of channel trading strategies. Let’s find out what…
Many have argued that pump and dump strategies are serving a purpose because many get rich. Isn’t it good when stock prices rise in value? What’s not to like? The problem is that the price drops when the scheme is over. We have repeatedly written on this blog that short-term trading is mainly a zero-sum…
Jack Bogle’s famous advice was to avoid searching for individual stocks, sectors, or markets that may perform better and simply invest in the entire market. This means using index funds to build a diversified portfolio. The Bogleheads 3 Fund Portfolio (global stocks, U.S. bonds) and Bogleheads 4 Fund Portfolio (global stocks, global bonds) are good…
William Bernstein is a former neurologist turned financial expert and writer. He believes, like many other successful investors, that index investing is better than selecting individual stocks and that how you allocate your assets is more crucial than choosing specific assets or timing your trades. He explains these concepts in depth in his debut book,…
If the economy is bad and you aren’t making excess money, you probably won’t fancy dining in a luxury restaurant or buying luxury goods. These discretionary consumer products or services are not necessary for survival, and their demand depends on economic conditions and the wealth of individuals. Let’s take a look at the sector. What…
The Magic Formula Strategy, popularized by Joel Greenblatt’s book The Little Book That Beats the Market, has received mixed reactions from the stock market. Some investors have reported positive results using the strategy, while others criticize it for lacking a solid theoretical basis and not taking into account company-specific factors. Let’s find out what the…
Rob Arnott is the founder and chairman of the board of Research Affiliates — a giant in wealth management with $193 billion in assets under management. Research Affiliates is famous for publishing seminal research and investing based on that research. It created the Rob Arnott Portfolio. Let’s see what the portfolio strategy is about. The…
