Bob's Stocks - Best Investment Strategy

What Is The Best Investing Strategy

There are many investment strategies, but a lot of my readers and friends ask me, “What is the BEST Investing Strategy?”.

Here are my thoughts. A stream of income from ones investments is always nice but it comes at the risk of having your net worth drop considerably in bear markets.  “Buy and Hold” is really difficult for most people because they don’t want 50% drawdowns. When they fear that level of loss they “Buy and Fold.”

No Strategy Is Perfect – So What’s My Best Investing Strategy?

Best Investing Strategy - Bob's Stocks

 

My Belief System As A Scientist And Innovator

I believe that large trends like big bull and bear markets can be predicted. Being an atmospheric scientist and forecaster I think I was pretty good at forecasting big events. The stock market has repeatable patterns just like weather. So if one could catch say 80% of large multi year trends in either direction, one could increase their risk adjusted returns buy being in a market index ETF during big bull markets and being in cash during the big and even more violent big bear. That is my main strategy and it works!

In the 1990s I began developing my own stock market forecast model.  It is called the Model/Method (MM).  My inspiration for development was simple.  I was making good money and saving a reasonable percentage because I believe in paying yourself first!

Often Problems Are The Catalyst For Innovation

Someone once said,”It isn’t how much you make that is important.  It is how much you keep!  Unfortunately for me I wasn’t a good “Buy and Hold” investor.  Fear gripped me in market downturns so I sold and took losses.  Does this sound at all familiar?

Next problem, I was paying too much money to trade stocks, bonds and other asset classes and the account fees were over the top.

Combined, the two problems were costing me hard earned money.  Being a scientist I was very upset I could predict the weather but couldn’t manage my own investments in a way that I  was “keeping” my money.  With a negative return, I had to do something about it.

Innovation Can Be An Iterative Process But With Great Results

The MM was the answer.  Over years I developed pattern recognition techniques and combined that with geometric relationships that many pattern types seem to repeat over and over again.  Over time the MM took shape and by 2000, I was able to use it to inform my investments.

Here is what I learned.

  • Patterns in the stock market repeat over and over again just like weather patterns do!
  • Patterns have a rhyme. When one pattern occurs the next pattern can be highly predictable.
  • Stringing high confidence patterns together creates trends.
  • Being on the right side of patterns is about 80% of investment success.

Yes, these 4 insights changed my results. As time moved on, realizing that big trends make big  money helped me to become a rational investor.  The MM made me rational as I could trust it enough so I did not panic and Buy and Fold!

Predicting major trends keeps me in the market during high bull phases and keeps me out in high bear phases. Bull markets occur about 2/3 of the time but bear  markets fall about 3 times faster than bull markets rise.

My AhHa moment was in 2000 when the MM gave a sell signal.  I moved my money to cash and avoided a horrible bear market.  The same thing happened in 2008 and I acted on the signal and sold before an even worse bear market occurred and ushered in the Great Recession!  I realized the Trend Is Your Friend Until It Ends.

Following the MM I have had a tool to keep this scientist rational and I act.  While being in the market 2/3 of the time and in cash the other third sounds easy to do, it really isn’t physiologically easy.  That is why the MM is a powerful tool.

Conventional Wisdom says you can’t time the market.  I say, YES YOU CAN!  After hearing weather can not be predicted when I was young, I can tell you nothing is perfect but when I say there is a 90% chance for rain, you had better bring your umbrella!

Since 2000 the MM has made under 10 signals both buy and sell.  Each signal was predicting either a major uptrend or downtrend pattern.  So in 17 years there has been fewer than 10 trades!  The results have been pretty good!  If you had invested $1 in 2000 and just followed the signals of the MM the results would be:

  • 453% return
  • 33% in dividends
  • trading costs under $100
  • less than 10 trades overall
  • 30 minutes of your time a month

How’s that for results, ease of use, low fess?  Keeping it simple!

Perhaps the biggest advantage is my trades are now based on criterial that have been successful in the past and I don’t have the physiological trauma of emotional investing to deal with anymore.

What Can You Do

Why not give my newsletter service a try? I will give you my best forecast based on years and years of forecasting experience and show you what I am doing.  You can look over my shoulder and learn how to become a better investor leveraging my experience.

Click here for details.  I can’t promise you perfection but I an give you the same tools I use that over time have been exceptional!

If you’re not quite ready to subscribe, but you want to learn more from me and get my latest opinions on trends in the stock market, then I recommend you connect with me on linkedin.