Today, we end our “Twelve Days of Christmas” series with a look at one of the slides in the presentation on our website titled, "We Are Not Your Old Stockbroker." This slide provides a compelling conclusion to any discussion on the Point & Figure methodology, relative strength, and tactical investing. The message behind the slide is simple: everyone has an ideal plan or vision that they THINK or HOPE will happen, but when reality kicks in, things can suddenly go awry. In order to be a successful investor (or advisor), we most certainly don’t have to be perfect. But we do need to have a plan that will act as our guide, telling us when to focus on wealth accumulation versus wealth preservation. This is where our rules-based, relative strength strategies come into play. No matter the model or strategy that we employ, the answers to the following questions remain the same. Will we catch the exact top of the market and get out using Relative Strength (RS)? No. Will we catch the exact bottom to get back in? No. Will there be times the portfolio is down? Absolutely. Will the portfolio be positioned to adapt to and take advantage of major themes in leadership? Yes.
The overall goal of these Relative Strength strategies is to help us navigate the financial waters – whether the seas are calm or choppy – so that one day we can arrive at our end destination. Those without a strategy for knowing when to be invested and when to wait on the sidelines have a high probability of finding themselves shipwrecked on a deserted island. The small changes made during the course are at first imperceptible, but down the road, as you are making your way towards your final destination, those small changes add up and can make the difference in arriving in one piece versus getting stuck in the storm. While we'll never know what the future holds, we can be confident that using a rules-based, emotionless strategy will position us toward those investments that are most likely to outperform in the future.
Until next time, cheers!
Jim