My name is David. I am an engineer and a do-it-yourself investor. Due to having a demanding full-time job, I make investment decisions during evenings and mostly weekends. Most of my strategies have to pass computer simulations first to ensure favorable return/risk ratio. I am writing this blog to share my investments with friends and keep myself disciplined.
This blog is for informational purposes only. Do not take it as financial advice for your personal situation. Always consult with an appropriate expert.
Exchange-traded Fund (ETF) is an investment fund traded on stock exchanges like stocks. An ETF holds investment assets such as stocks, bonds and commodities and is expected to be traded at its net asset value. It is very attractive to individual investors due to following advantages.
- Low or no trade commission
- Tax efficiency
- Large investment choices
- Trade throughout the day market opens
- An intermediate-term factor
- Robust across different RS calculation methods
- Works in different markets and sectors
- Objective and adaptive investment factor
- Combines well with value strategies
- Lags at the market turns
Basic facts about Relative Strength
There are many ETF investment strategies out there. I find that the best is Relative Strength (RS). It is a proven strategy by investing in top performing ETFs. Academics have tested RS extensively. There are more than 300 research papers on this strategy since 1990. In practice, quants have successfully implemented investment operations using RS factors. I have written computer programs to test and confirm the good performance and reliability of this strategy myeslf.