Overview

Equity (i.e. stock market) investment is perhaps the most popular and (many times) chaotic and confusing. Investment strategies range from no strategy (i.e. impulsive or emotional, which believe or not, might be the most popular and most dangerous) to buy and hold to trading as frequently as in day trading.

ValidFi provides strategies based on valuation (such as S&P price earning ratio), technical/timing (especially momentum) and various others utilizing mutual funds and closed end funds.

At this moment, ValidFi only provides those based on mutual funds, ETFs and closed end funds. We are planning on offering individual stock investment strategies in the future.

Here is the list of equity investment strategies

Tutorials

There are numerous materials on stock market investment. It is well recognized that the market itself (representing general economic conditions), size (large capitalization or small capitalization), value (book to market) and the momentum factor (price momentum) are the major 4 factors influencing the stock investment outcome. Fundamental (valuation) and technical (price movement) are the two most popular techniques.

• Fundamental analysis: Benjamin Graham's timeless classic book on value investment.
• Technical analysis: a comprehensive technical analysis book.
• Randomness in stock market: Burton Malkiel's influential book on efficient market.
• Mutual fund and ETFs investing: Gerald Appel's well written book with several actionable strategies. ValidFi maintains a multiple sector strategy proposed by the book.

Categories of Equity Strategies

Equity (stock) investment has drawn the most attention among all asset investments. There are numerous strategies ranging from technical to fundamental to mutual fund selection.

• Fundamental based investment strategies:
  • Relative value across asset classes: this includes Fed model, Beating the Dow with bonds, tactical global asset allocation based on valuation.
  • Use Price to Earning, Price to Book and other fundamental factors to time whether to invest the stock market based on those proposed by Ben Stein's book: Yes, you can time the market.
  • Dogs of Dow, cats of dow...
• Fund based strategies:
  • Last year's best diversified no load equity fund: a strategy proposed by Sheldon Jacobs, an investment newsletter editor (Non Load Fund Investors).
  • FundX: momentum based fund upgrading strategy proposed by Janet Brown.
  • Closed end fund strategy based on the discount rate of a closed end fund.
  • Sharpe/Alpha Dynamic strategies: based on the best Sharpe/alpha among diversified no load equity funds.
• Technical trading strategies:
  • Moving average strategies: simple moving averages (SMAs) and exponential moving averages (EMAs). There are also variations of short or Cash only when a sell signal is issued.
  • RSI-5 on Nasdaq-100 (QQQQ): it plays the reversal of QQQQ as follows: when RSI-5 is less than 30, buy QQQQ and when RSI-5 is bigger than 50, sell QQQQ.
  • Gerald Appel's MACD based strategies: buy and sell based on the faster MA crossing the slower MA.
  • Dow theory: a long running theory based on the convergence/of Dow Jones Industrial and Transportation Averages.
• Seasonality strategies: ValidFi collects a calendar trading strategy proposed by Norman Fosback and long being tracked by Mark Hulbert in marketwatch.com. It also maintains Sy Harding's "sell in May and go away" strategy.