Category: Trend Following

We saw earlier how a simple trend-following strategy can capture most of the high yield market’s good times and miss most of its bad times, by switching out of high-yield bond funds and into lower volatility bonds when the going gets rough. The chart below shows this same trend-following strategy, using a 10-month Simple Moving Average (SMA), but this time we've applied it to a high-yield bond index. ...
Trend-following is an active investment strategy that works well on many different asset classes such as stocks, bonds, real estate, commodities, and currencies. The effectiveness of trend-following is supported by academic and practitioner research, published in hundreds of papers and investment books over the past decades. We won't attempt to summarize the trend-following literature, but encourage inve...