{"id":6982,"date":"2013-09-25T14:54:35","date_gmt":"2013-09-25T21:54:35","guid":{"rendered":"http:\/\/www.marketriders.com\/investing\/?p=6982"},"modified":"2016-12-21T07:28:23","modified_gmt":"2016-12-21T15:28:23","slug":"investment-strategy-for-all-seasons-the-no-strategy-strategy","status":"publish","type":"post","link":"https:\/\/www.marketriders.com\/investing\/investment-strategy-for-all-seasons-the-no-strategy-strategy\/","title":{"rendered":"Investment Strategy For All Seasons: The ‘No Strategy’ Strategy"},"content":{"rendered":"

Investment strategy has only recently come into vogue on\u00a0Wall Street. Once upon a time the major investment houses employed brokers, traders, technicians of various types and even economists, but no strategists per se.<\/p>\n

The \u201cmarket strategist\u201d came to the fore as demand increased among the firms\u2019 clients for a sense of what to do as markets changed tack. They wanted a plan, even if the plan changed often.<\/p>\n

\"investment<\/a><\/p>\n

You can blame the news media for this trend, in part. The media runs on change, on the idea of the new thing coming, not the old thing that we already know and understand.<\/p>\n

Like so many toddlers chasing a single new toy on the playground, the media pack is fascinated with the novel, the interesting, the new \u2014 even if the new thing is mathematically impossible.<\/p>\n

Even better if the impossible turns illegal and there is scandal to report. We probably won\u2019t be reforming the media today or anytime soon, but we can get better at seeing through the narratives they present.<\/p>\n

The other driver of the strategist-as-advisor approach is the occasionally demonstrable result of\u00a0market timing<\/a>. Every firm seems to have its key figure, a media-friendly guru with graying sideburns who was really right that one time back in 1987, or 2002, or about gold or whatever happened.<\/p>\n

Resting on those laurels, he (or she) quietly cranks out dense whitepapers meant to burnish the credibility of the firm. Their trading ideas are concrete enough, but often the timeframes are stretched over years or decades \u2014 impossible to prove or disprove until far too late.<\/p>\n

Their advice is doled out with an eyedropper to the media to generate interest, and these market strategist types do often have a legitimate advisory job to do, even if it’s just showing up at meetings and speaking in public once a month.<\/p>\n

Does having a strategy matter, assuming you could even access this level of advice? Not really.<\/p>\n

In fact, the research shows that the best strategy is no strategy. Don\u2019t hide out in\u00a0cash<\/a>, waiting for a down market to buy. Don\u2019t load up on stocks and ignore bonds, or vice versa.<\/p>\n

The \u201cno strategy\u201d strategy is to own the market, all of it. You buy the benchmarks using\u00a0index\u00a0ETFs<\/a>\u00a0and spread your money out across multiple asset classes, according to your tolerance for risk.<\/p>\n

Investment strategy buckets<\/h2>\n

When the market veers in a given direction, you buy or sell from each bucket, accordingly. The only rule is to put your asset classes back into balance with regularity, and to keep cost minimized.<\/p>\n

Does this approach work? You bet it does.\u00a0Burt Malkiel<\/a>, the Princeton professor and author of \u201cA Random Walk Down\u00a0Wall Street,\u201d found that, over the past 15 years, rebalancing afforded investors a 1.5% premium over the stock market return.<\/p>\n

Given that the market alone returned about double what retail investors have experienced over the past 20 years, according to research from Dalbar Associates, that\u2019s quite a bump for no strategy at all.<\/p>\n","protected":false},"excerpt":{"rendered":"

Investment strategy has only recently come into vogue on\u00a0Wall Street. Once upon a time the major investment houses employed brokers, traders, technicians of various types and even economists, but no … Read more →<\/span><\/a><\/p>\n","protected":false},"author":8,"featured_media":6985,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_wp_rev_ctl_limit":""},"categories":[3],"tags":[43,37],"yoast_head":"\nInvestment Strategy For All Seasons: The 'No Strategy' Strategy | MarketRiders.com<\/title>\n<meta name=\"description\" content=\"In fact, research shows that the best investment strategy is no strategy. Don\u2019t hide out in cash. 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