From the desk of Jerry Robinson...
A few years ago, I stumbled across an interesting white paper entitled Relative Strength Strategies for Investing written by Meb Faber of Cambria Investment Management. The paper demonstrated a powerful (but simple) investment strategy that outperformed the typical “buy-and-hold” strategy nearly 70% of the time.
Faber’s research, which was based upon 80+ years of stock market data, revealed an astoundingly simple way to beat the market. Put simply, the strategy involves buying sector-based ETFs that have recently outperformed their peers.
Instead of simply buying a plain vanilla S&P 500 index fund (like SPY), this strategy seeks to beat the return of the benchmark index by investing in the underlying S&P 500 sectors displaying the most relative strength.
Here at Followthemoney.com, we have adopted Faber's approach and have created a model ETF portfolio based upon his sector research.
So far, the results have been impressive.
As of Q3 2019, our Sector ETF model portfolio (+22.8%) of just three sector ETFs was beating the S&P 500 index (+19.1%).
In 2018, our Sector ETF Rotation Portfolio (-2.00%) beat the performance of the annual performance S&P 500 index (-4.38%). Though the market closed in the red for the year, our sector rotation strategy managed to lose less on the year.
In 2017, our Sector ETF Rotation Portfolio (+22.22%) beat the annual performance of the S&P 500 index (+19.42%).
In 2016, our Sector ETF Rotation Portfolio (+11.01) slightly underperformed the S&P 500 index (+11.24%).
So, here's how it all works...
We track and analyze the price and volume data from the 11 sector ETFs each quarter to determine the three strongest ETFs to hold into our model portfolio.
Our members receive a quarterly email alert containing any changes to the Sector ETF model portfolio along with Jerry Robinson's latest charts and sector commentary.
Members can view our current Sector ETF model portfolio here.
Not a member? View plans/pricing here