Long-time readers should know by now that I LOVE investment systems.
The benefits of a well-defined, data-driven, and rules-based investment strategy are many.
For one, it removes the emotional component of your decision-making process (and, at the same time, capitalizes on the inefficiencies created by other investors’ emotional decisions). You can also test and validate its effectiveness based on historical data. Plus, it allows for a depth and breadth of data processing that would otherwise be impossible if a human analyst were to do it on a manual, or discretionary, basis.
As Dent Research’s Chief Investment Strategist, I’ve spent the past five years pointing readers to the very best investment systems.
Because even as far back as 2011, the Dent team recognized the unprecedented and extraordinary influence that central bank policies were exerting on financial markets around the world. In many ways, economic theory has been practically useless alongside the Fed’s continuous easing.
And that’s precisely why I’ve been emphatic about using rules-based investment systems to navigate today’s wacky, Fed-driven markets.
Investment Strategies Don’t Have to be Difficult!
You see, most investors recognize that financial markets are complex beasts, which are more often than not very difficult to understand. But that doesn’t make finding a profitable investment solution any easier.
I’ve addressed this topic several times at past Irrational Economic Summits.
Last year I shared with attendees my view of complexity, and simplicity, as they relate to the world of investing. The take-home message was this:
Financial markets are complex. Yet, counter to the intuition of many, the most successful investment strategies are very simple.
The complex nature – or, at least, the perception of complexity – comes from the plethora of interconnections between markets and market-driving variables… and the unimaginably large number of data points which are nearly impossible to tease apart.
Yet, the simple nature of the best investment strategies comes from their ability to hone in on one specific (and exploitable) phenomenon – one which is ubiquitously present across markets, market participants and throughout time.
“Hype” can loosely be called one such phenomenon.
Investors are emotional beings. And with that comes all the trappings of wishful thinking and great expectations. Basically, we’re hard-wired to buy into the hype… the hope… for pots of gold, which sit, waiting to be discovered, just around the corner.
Reality, of course, tends to unfold a bit differently than our rosiest expectations. Often, it’s the seemingly “sure bet” that goes bust… and the “long shot” that, quietly, comes to fruition.
And while many market trends are rather steady and predictable (i.e. Coca-Cola’s revenue growth), others are volatile and wildly unpredictable.
Ironically, very little has changed in the last five years. The world is as complex as ever. The Fed is as opaque and confusing as ever. And shoot-from-the-hip investors – those who simply make educated guesses and gut-feel assessments about the market’s next move – well, they’re still getting jerked around like a plastic bag in a wind storm.
Don’t Trust Your Gut
Fortunately, for Dent Research subscribers… we offer you the “better way.”
When I partnered with Harry and Rodney five years ago, I was our group’s only investment analyst. But now our team has grown. And even though each of us approaches the market a bit differently, we all share one thing in common…
We all rely on investment systems – not gut feel – to deliver actionable investment advice to our readers.
Myself… I manage two investment system services, Cycle 9 Alert and Max Profit Alert.
Rodney Johnson employs a rules-based strategy via his Triple Play service. Essentially, he identified a small basket of stocks positioned to enjoy baby boomer demand… and then he uses a system to assess, each month, which three stocks are most likely to outperform.
Ben Benoy has a system, too, which monitors and analyzes social media data. Doing so, he’s able to hone in on opportunities based on market sentiment.
John Del Vecchio, Dent’s resident forensic accountant, has a system which ranks companies based on the strength (and shadiness) of their balance sheets. He uses his system to identify companies that will offer huge payouts in the future… and also companies that are thinly-veiled scams, due for a dirt nap.
What to Expect from IES
All told, Dent Research runs on time-tested, rules-based investment systems.
These systems are very simple to implement, requiring of readers less than an hour of their time a week. And we feel these investment systems are, bar none, the very best way to navigate the complex financial world we live in.
Each of us will go into our own unique trading systems later this week at the Irrational Economic Summit. While we all may differ a bit in terms of what we look at, we all agree on following our systems through to the end – and leaving any hint of emotion (another way of saying vulnerability) at the door.
For those of you not joining us in person, there is another way to tune into all of the presentations that this year’s Summit has to offer. For more information about our LIVE Stream, go here.
See you at Palm Beach!
Editor, Cycle 9 Alert